The Persistent Effects of Initial Labor Market Conditions for Young Adults and Their Sources
Journal of Economic Perspectives
vol. 34,
no. 4, Fall 2020
(pp. 168-94)
(Complimentary)
Abstract
Unlucky young workers entering the labor market in recessions suffer a range of medium- to long-term consequences. This paper summarizes the findings of the growing empirical literature on this subject and uses it to assess economic models of career development. The literature finds large initial effects on earnings, labor supply, and wages that tend to fade after ten to fifteen years in the labor market, and that are accompanied by changes in occupation, job mobility, and employer characteristics. Adverse initial labor market entry also has persistent effects on a range of social outcomes, including timing and completed fertility, marriage and divorce, criminal activities, attitudes, and risky alcohol consumption. There is also evidence that early exposure to depressed labor market lowers health and raises mortality in middle age, patterns accompanied by a reopening of earnings gaps.Citation
von Wachter, Till. 2020. "The Persistent Effects of Initial Labor Market Conditions for Young Adults and Their Sources." Journal of Economic Perspectives, 34 (4): 168-94. DOI: 10.1257/jep.34.4.168Additional Materials
JEL Classification
- E24 Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
- E32 Business Fluctuations; Cycles
- I12 Health Behavior
- J13 Fertility; Family Planning; Child Care; Children; Youth
- J22 Time Allocation and Labor Supply
- J31 Wage Level and Structure; Wage Differentials
- J60 Mobility, Unemployment, Vacancies, and Immigrant Workers: General
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