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.

We provide evidence on wage profiles of immigrants using Current Population Survey data from 1979 to 2003, taking into account that changes in labor market conditions impact natives and immigrants differently. High rates of immigrant wage assimilation, in general, and relatively high wages of immigrant cohorts that arrived during the 1990s, in particular, can to a large extent be explained by a negative trend in unemployment in the data. Relating immigrant and native period effects to local labor market unemployment, we find that wage assimilation among lesser-educated immigrants is negligible. For high-school– and college-educated male immigrants, rates of wage assimilation during early years in the United States are procyclical, suggesting that rising unemployment slows accumulation of U.S.-specific human capital.

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.