Labor-Market Scars When Youth Unemployment Is Extremely High: Evidence from Macedonia

Marjan Petreski (), Nikica Mojsoska-Blazevski () and Marcelo Bergolo

No 10342, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: The objective of this study is to assess how the duration of the unemployment spell of Macedonia youth affects later employment (the employment 'scarring' effect) and wage outcomes (the wage 'scarring' effect). To that end, we first devise a model in which the unemployment spell is determined by individual and household characteristics and work attitudes and preferences. Discrete-time duration method is used to estimate this model. Then, we rely on a standard employment and Mincer earnings functions. We repeatedly impute missing wages to address the selection on observables, and use the regional unemployment rate when individual finished school as an instrument to mitigate the selection on unobservables. The School to Work Transition Survey 2012 is used. Results robustly suggest a presence of employment scar as those young persons who stay unemployed over a longer period of time were found to have lower chances to find a job afterwards. On the other hand, the study does not provide evidence for the existence of the wage scar.

Keywords: extremely high unemployment; wage scarring; employment scarring; Macedonia (search for similar items in EconPapers)
JEL-codes: E24 J24 J64 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2016-11
New Economics Papers: this item is included in nep-lab, nep-mac and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Published - published in: Eastern European Economics, 2017, 55 (2), 168 - 196

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Related works:
Journal Article: Labor-Market Scars When Youth Unemployment is Extremely High: Evidence from Macedonia (2017)
Working Paper: Labor-market scars when youth unemployment is extremely high: Evidence from Macedonia (2016)
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