Unemployment and Subsequent Earnings: Estimating Scarring Among British Men 1984-94

This paper estimates the impact of unemployment on earnings following re-employment for a large and representative sample of British men, 1984-94. Unemployment incidence is found to have only a temporary effect, an average earnings setback of 10% on initial re-engagement largely eroding over two years. The effect of unemployment duration, by contrast, is permanent, a one-year spell adding a further penalty of 10 percentage points. These wage penalties are least for young men and the low paid--those most at risk of unemployment--and greatest for prime age and highly paid men.

[1]  Susanne Ackum.  YOUTH UNEMPLOYMENT, LABOR MARKET PROGRAMS AND SUBSEQUENT EARNINGS , 1991 .

[2]  R. Topel.  Specific capital and unemployment: Measuring the costs and consequences of job loss , 1990 .

[3]  Henry S. Farber,et al.  The Incidence and Costs of Job Loss: 1982-1991 , 1993 .

[4]  Dale T. Mortensen,et al.  Wages, Separations, and Job Tenure: On-the-Job Specific Training or Matching? , 1988, Journal of Labor Economics.

[5]  M. Podgursky,et al.  The Distribution of Economic Losses among Displaced Workers: A Replication , 1991 .

[6]  A. Oswald,et al.  The Wage Curve , 1989 .

[7]  Paul Gregg,et al.  The impact of youth unemployment on adult unemployment in the NCDS , 2001 .

[8]  Robert J. LaLonde,et al.  Long-term earnings losses of high-seniority displaced workers , 1993 .

[9]  D. Blanchflower,et al.  Fear, Unemployment and Pay Flexibility , 1990 .

[10]  M. Gregory,et al.  Earnings Transitions of the Low‐paid in Britain, 1976‐91: A Longitudinal Study , 1994 .

[11]  C. Belzil.  Unemployment Duration Stigma and Re-Employment Earnings , 1995 .

[12]  J. Mincer.  Schooling, Experience, and Earnings , 1976 .

[13]  R. Topel.  Specific Capital, Mobility, and Wages: Wages Rise with Job Seniority , 1990, Journal of Political Economy.

[14]  D. Hamermesh.  What Do We Know About Worker Displacement in the U.S.? , 1987 .

[15]  G. Becker,et al.  Human Capital: A Theoretical and Empirical Analysis with Special Reference to Education, Third Edition , 1993 .

[16]  Michael Podgursky,et al.  Job Displacement and Earnings Loss: Evidence from the Displaced Worker Survey , 1987 .

[17]  Paul O. Flaim,et al.  Displaced Workers of 1979-83: How Well Have They Fared? , 1985 .

[18]  P. Portugal,et al.  Job Displacement, Relative Wage Changes, and Duration of Unemployment , 1989, Journal of Labor Economics.

[19]  Christopher J. Ruhm,et al.  Are Workers Permanently Scarred by Job Displacements , 1991 .

[20]  Jonathan S. Leonard,et al.  The Duration of Unemployment and the Persistence of Wages , 1995 .