Bad Times, Bad Jobs? How Recessions Affect Early Career Trajectories

Parag Mahajan, Dhiren Patki and Heiko Stüber

No 22-12, Working Papers from Federal Reserve Bank of Boston

Abstract: Workers who enter the labor market during recessions experience lasting earnings losses, but the role of non-pay amenities in either exacerbating or counteracting these losses remains unknown. Using population-scale data from Germany, we find that labor market entry during recessions generates a 6 percent reduction in earnings cumulated over the first 15 years of experience. Implementing a revealed-preference estimator of employer quality that aggregates information from the universe of worker moves across employers, we find that one-quarter of recession-induced earnings losses are compensated for by non-pay amenities. Purely pecuniary estimates can therefore overstate the welfare costs of labor market entry during recessions.

Keywords: earnings inequality; recessions; non-pay amenities (search for similar items in EconPapers)
JEL-codes: E32 J24 J31 J32 (search for similar items in EconPapers)
Pages: 58
Date: 2022-10-01
New Economics Papers: this item is included in nep-hrm and nep-lma
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Related works:
Working Paper: Bad Times, Bad Jobs? How Recessions Affect Early Career Trajectories (2024)
Working Paper: Bad Times, Bad Jobs? How Recessions Affect Early Career Trajectories (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedbwp:94884

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DOI: 10.29412/res.wp.2022.12

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