To Shape the Future: How Labor Market Entry Conditions Affect Individuals' Long-Run Wage Profiles
University of Zurich - Department of Economics Library
University of Zurich; Institute for the Study of Labor (IZA)
November 1, 2009
Institute for Empirical Research in Economics, University of Zurich Working Paper No. 457
We study the long-run effects of initial labor market conditions on wages for a large sample of male individuals entering the Austrian labor market between 1978 and 2000. We find a robust negative effect of unfavorable entry conditions on starting wages. This initial effect turns out to be quite persistent and even though wages do catch up later on, large effects on lifetime earnings result. We also show that initial labor market conditions have smaller and less persistent effects for blue-collar workers than for white-collar workers. We further show that some of the long-run adjustment takes place through changes in job-mobility and employment patterns as well as in job tenure. Finally, we find that adjustments at the aggregate level are key to explain wages' adjustment process in the longer run.
Number of Pages in PDF File: 63
Keywords: Labor market cohorts, initial labor market conditions, long-run wage profiles, persistence of labor market shocks, unemployment, business cycle
JEL Classification: E3, J2, J3, J6, M5working papers series
Date posted: December 9, 2009 ; Last revised: March 21, 2010
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