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American Economic Review: Vol. 96 No. 5 (December 2006)
AER Volume. 96, Issue 5 | 
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AER Forthcoming Articles
In the Right Place at the Wrong Time: The Role of Firms and Luck in Young Workers
Article Citation
von Wachter, Till, and
Stefan Bender. 2006. "In the Right Place at the Wrong Time: The Role of Firms and Luck in Young Workers."
American Economic Review,
96(5): 1679-1705.
DOI: 10.1257/aer.96.5.1679
DOI: 10.1257/aer.96.5.1679
Abstract
We examine administrative data on young German workers and their employers to
study the long-term effects of an early career job loss. To account for nonrandom
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 percent, but drop 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 biases ordinary
least squares estimates toward finding permanent negative effects of early displacements.
(JEL J13, J23, J24, J62, J63, M53)
Article Full-Text Access
Full-text Article
Additional Materials
Data Availability (12.63 KB) | Link to Additional Materials (381.86 KB)
Authors
von Wachter, Till
Bender, Stefan
Bender, Stefan
