Labor market conditions at the time and place of potential entry into the labor market are shown to have a substantial and persistent effect on adult employment prospects. Individuals who face particularly depressed local labor markets when they graduate from secondary education, are—other things equal—subject to relatively high rates of nonemployment during their whole prime-age work career. Building on a unique combination of micro and macro data from Norway, we show that these effects are robust with respect to model specification and conditioning variables, and that they are not limited to individuals with a particularly disadvantaged background.

Life cycle employment of minority labor migrants who entered Norway in the early 1970s diverges from that of natives. Immigrant employment was nearly complete during early years but declined to 50% by the year 2000 (compared to 87% for a native comparison group). We find that immigrant employment is particularly sensitive to the business cycle and that economic downturns of the 1980s and 1990s accelerated their labor market exit. We trace part of the decline to migrants being overrepresented in shrinking industries. But we also identify welfare disincentives that contribute to poor life cycle employment performance of immigrants with many dependent family members.

In most countries, employers are financially responsible for sick pay during an initial period of a worker’s absence spell, after which the public insurance system covers the bill. Based on an empirical evaluation of a quasi-natural experiment in Norway, where pay liability was removed for pregnancy-related absences, we show that the system of short-term pay liability creates a sick pay trap: firms are discouraged from letting long-term sick workers back into work since they then face the financial risk associated with subsequent relapses. We present evidence indicating that this disincentive effect is both statistically and economically significant.

In a paper published in the Journal of Political Economy, Carneiro, Løken, and Salvanes (2015) reported large positive effects on offspring outcomes of a reform they described as introducing paid maternity leave in Norway. Causal identification rested on a discontinuity implying that only mothers giving birth after a specific cutoff date were entitled to paid leave. We show that the analysis relied on an incorrect description of the reform. The reform did not introduce paid maternity leave, but extended it by 5–6 weeks. The postulated discontinuity never existed as treatment and control groups had the same maternity leave conditions.

We evaluate the impact on youth crime of a welfare reform that tightened activation requirements for social assistance clients. The evaluation strategy exploits administrative individual data in combination with geographically differentiated implementation of the reform. We find that the reform reduced crime among teenage boys from economically disadvantaged families. Stronger reform effects on weekday versus weekend crime, reduced school dropout, and favorable long-run outcomes in terms of crime and educational attainment point to both incapacitation and human capital accumulation as key mechanisms. Despite lowered social assistance take-up, we uncover no indication that loss of income support pushed youth into crime.