In the Right Place at the Wrong Time: The Role of Firms and Luck in Young Workers' Careers

Till von Wachter and Stefan Bender ()

No 1348, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We exploit administrative data on young German workers and their employers to study the long-term effects of an early job loss. To account for non-random sorting of workers into firms with different turnover rates and for selective job mobility, we use changes over time in firm- and age-specific labor demand as an instrument for displacement. We find that wage losses of young job losers are initially 15% but fade to zero within five years. Only workers leaving very large establishments suffer persistent losses. A comparison of estimators implies that initial sorting, negative selection, and voluntary job mobility may have biased previous U.S. studies finding permanent effects of early displacements.

Keywords: adverse selection; job displacement; job search; initial assigment (search for similar items in EconPapers)
JEL-codes: J63 J65 (search for similar items in EconPapers)
Pages: 59 pages
Date: 2004-10
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Citations: View citations in EconPapers (3)

Published - published in: American Economic Review, 2006, 96 (5), 1679-1705

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Journal Article: In the Right Place at the Wrong Time: The Role of Firms and Luck in Young Workers' Careers (2006)
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