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

Author(s): Gianni De Fraja, Sara Lemos, James Rockey
Publication Date: February 2017
Keyword(s): Lifetime earnings, Scarring effect, youth unemployment
JEL(s): J31, J64
Programme Areas: Labour Economics, Public Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=11852

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.