To Shape the Future: How Labor Market Entry Conditions Affect Individuals' Long-Run Wage Profiles

Beatrice Brunner (beatrice.brunner@zhaw.ch) and Andreas Kuhn (andreas.kuhn@ehb.swiss)
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Beatrice Brunner: Zurich University of Applied Sciences (ZHAW)
Andreas Kuhn: Swiss Federal Institute for Vocational Education and Training

No 4601, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We study the long-run effects of initial labor market conditions on wages for a large sample of male individuals entering the Austrian labor market between 1978 and 2000. We find a robust negative effect of unfavorable entry conditions on starting wages. This initial effect turns out to be quite persistent and even though wages do catch up later on, large effects on lifetime earnings result. We also show that initial labor market conditions have smaller and less persistent effects for blue-collar workers than for white-collar workers. We further show that some of the long-run adjustment takes place through changes in job-mobility and employment patterns as well as in job tenure. Finally, we find that adjustments at the aggregate level are key to explain wages' adjustment process in the longer run.

Keywords: business cycle; unemployment; persistence of labor market shocks; long-run wage profiles; initial labor market conditions; labor market cohorts (search for similar items in EconPapers)
JEL-codes: E3 J2 J3 J6 M5 (search for similar items in EconPapers)
Pages: 64 pages
Date: 2009-11
New Economics Papers: this item is included in nep-lab and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

Published - completely revised version published as IZA DP No. 5360

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