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The Wounds That Do Not Heal: The Lifetime Scar of Youth Unemployment

De Fraja, Gianni; Lemos, Sara; Rockey, James

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Authors

Sara Lemos

James Rockey



Abstract

This paper uses UK administrative data to study the long-term effects of unemployment on earnings. It is the first paper to pinpoint accurately the relative importance of the timing of employment shocks within workers' lives. We find a strong effect of events in the first few years after entry into the labour market: each month of unemployment between ages 18 and 20 causes a permanent income loss of 1.2% per year. This scar effect of youth unemployment is lower when it happens when the worker's age is between 21 and 23, and it disappears altogether in the next three-year age period. The scar effect is most severe for individuals at the lower end of the ability distribution.

Citation

De Fraja, G., Lemos, S., & Rockey, J. (2021). The Wounds That Do Not Heal: The Lifetime Scar of Youth Unemployment. Economica, 88(352), 896-941. https://doi.org/10.1111/ecca.12384

Journal Article Type Article
Acceptance Date May 25, 2021
Online Publication Date Aug 4, 2021
Publication Date 2021-10
Deposit Date May 26, 2021
Publicly Available Date Aug 5, 2023
Journal Economica
Print ISSN 0013-0427
Electronic ISSN 1468-0335
Publisher Wiley
Peer Reviewed Peer Reviewed
Volume 88
Issue 352
Pages 896-941
DOI https://doi.org/10.1111/ecca.12384
Keywords Youth unemployment; Lifetime earnings; Scarring effect
Public URL https://nottingham-repository.worktribe.com/output/5573819
Publisher URL https://onlinelibrary.wiley.com/doi/10.1111/ecca.12384
Additional Information This is the peer reviewed version of the following article: De Fraja, G., Lemos, S. and Rockey, J. (2021), The Wounds That Do Not Heal: The Lifetime Scar of Youth Unemployment. Economica, 88: 896-941 which has been published in final form at https://doi.org/10.1111/ecca.12384. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Use of Self-Archived Versions.

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