ERIC Number: EJ746506
Record Type: Journal
Publication Date: 2006
The Long-Term Effects of Youth Unemployment
Mroz, Thomas A.; Savage, Timothy H.
Journal of Human Resources, v41 n2 p259-293 Spr 2006
Using NLSY data, we examine the long-term effects of youth unemployment on later labor market outcomes. Involuntary unemployment may yield suboptimal investments in human capital in the short run. A theoretical model of dynamic human capital investment predicts a rational "catch-up" response. Using semiparametric techniques to control for the endogeneity of prior behavior, our estimates provide strong evidence of this response. We also find evidence of persistence in unemployment. Combining our semiparametric estimates with a dynamic approximation to the lifecycle, we find that unemployment experienced as long ago as ten years continues to affect earnings adversely despite the catch-up response.
Descriptors: Unemployment, Youth, Labor Market, Human Capital, Models, Responses, Prediction, Economic Impact, Persistence, Wages, Salaries
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Publication Type: Journal Articles; Reports - Evaluative
Education Level: N/A
Authoring Institution: N/A