American Economic Review Vol. 96 No. 5 2006
In the Right Place at the Wrong Time: The Role of Firms and Luck in Young Workers' Careers
Abstract
We exploit administrative data on young German workers and their employers to study the long-term effects of an early job loss. To account for non-random sorting of workers into firms with different turnover rates and for selective job mobility, we use changes over time in firm- and age-specific labor demand as an instrument for displacement. We find that wage losses of young job losers are initially 15% but fade to zero within five years. Only workers leaving very large establishments suffer persistent losses. A comparison of estimators implies that initial sorting, negative selection, and voluntary job mobility may have biased previous U.S. studies finding permanent effects of early displacements.
- DOI
- 10.1257/aer.96.5.1679
- Volume
- 96
- Issue
- 5
- Pages
- 1679-1705
- Language
- en
- Sources
- openalex crossref bibtex:phds-export.bib