DP11852 | The Wounds That Do Not Heal. The Life-time Scar of Youth Unemployment

Publication Date

02/15/2017

JEL Code(s)

  • J64, J31

Keyword(s)

  • youth unemployment, Lifetime earnings, Scarring effect

Programme Area(s)

  • Labour Economics, Public Economics

Abstract

This paper finds that unemployment shocks affect young workers for the rest of their lives. This scar of youth unemployment is concentrated in the first few years after entry in the labour market: one month of unemployment at age 18-20 cause a permanent income loss of 2%. However, unemployment after that age has no long term effect.