The wage scar from male youth unemployment

(2005) - Paul Gregg, Emma Tominey

Journal: Labour Economics
Link:: https://linkinghub.elsevier.com/retrieve/pii/S0927537105000345
DOI:: 10.1016/j.labeco.2005.05.004
Links::
Tags:: #paper #NCDS #Unemployment #Gender #LabourMarket
Cite Key:: [@greggWageScarMale2005]

Abstract

We utilise the National Child Development Survey to analyse the impact of youth unemployment upon the wage up to twenty years later. We find a large and significant wage penalty, even after controlling for education, region and a wealth of family and individual characteristics. Our estimates are robust to an instrumental variables technique, indicating that the relationship estimated between youth unemployment and the wage is causal. Our results suggest a scar from early unemployment in the magnitude of 13–21% at age 42. However, this penalty is lower, at 9–11%, if individuals avoid repeat exposure to unemployment.

Notes

“analyse the impact of youth unemployment upon the wage up to twenty years later.” (Gregg and Tominey, 2005, p. 487)

“We find a large and significant wage penalty, even after controlling for education, region and a wealth of family and individual characteristics” (Gregg and Tominey, 2005, p. 487)

“a large raw wage gap at 23 is evident between those experiencing 5+ months of unemployment compared to those with no or very little youth unemployment.” (Gregg and Tominey, 2005, p. 494)

“a history of 13+ months of unemployment between the ages of 16 and 23 is associated with a 30% average reduction in earnings of at age 23.” (Gregg and Tominey, 2005, p. 494)

“A modest residual wage scar of around 9–11% persists up to twenty years later even for those who have no further unemployment experience.” (Gregg and Tominey, 2005, p. 506)

“Finally IV estimation suggests that these estimates are not biased upward by unobserved heterogeneity across individuals.” (Gregg and Tominey, 2005, p. 506)