The Impact of Labor Market Entry Conditions on Initial Job Assignment, Human Capital Accumulation, and Wages

Beatrice Brunner () and Andreas Kuhn ()
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Beatrice Brunner: Zurich University of Applied Sciences (ZHAW)
Andreas Kuhn: Swiss Federal Institute for Vocational Education and Training

No 5360, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We estimate the effects of labor market entry conditions on wages for male individuals first entering the Austrian labor market between 1978 and 2000. We find a large negative effect of unfavorable entry conditions on starting wages as well as a sizeable negative long-run effect. Specifically, we estimate that a one percentage point increase in the initial local unemployment rate is associated with an approximate shortfall in lifetime earnings of 6.5%. We also show that bad entry conditions are associated with lower quality of a worker's first job and that initial wage shortfalls associated with bad entry conditions only partially evaporate upon involuntary job change. These and additional findings support the view that initial job assignment, in combination with accumulation of occupation or industry-specific human capital while on this first job, plays a key role in generating the observed wage persistencies.

Keywords: initial job assignment; specific human capital; endogenous labor market entry; initial labor market conditions (search for similar items in EconPapers)
JEL-codes: E3 J2 J3 J6 M5 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2010-12
New Economics Papers: this item is included in nep-bec, nep-hrm, nep-lab and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

Published - revised version published as `The impact of labor market entry conditions on initial job assignment and wages' in: Journal of Population Economics, 2014, 27(3), 705-738

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