Involuntary Unemployment and the Labor Market Returns to Interim Jobs

71 Pages Posted: 3 Oct 2017 Last revised: 11 Jul 2018

Date Written: October 2, 2017

Abstract

I investigate the wage and employment effects of taking up interim jobs after displacement. Proposing a novel approach, I decompose the wage losses along the distribution into a channel due to the take up of interim employment and a channel which accounts for all other factors. I find that being employed in an interim job has negative effects on future wages over the whole distribution. I provide evidence that this is due to a trade-off between the probability of finding stable employment and higher wages. Assessing the sensitivity of my results, I show that they are robust to specific failures of my identifying assumptions.

Keywords: Job Loss, Unemployment, Interim Job, Wage Ladder, Wage Loss, Quantile Treatment Effects, Direct Effect, Indirect Effect, Causal Channels

JEL Classification: C21, C31, J31, J63, J65

Suggested Citation

Schmidpeter, Bernhard, Involuntary Unemployment and the Labor Market Returns to Interim Jobs (October 2, 2017). Available at SSRN: https://ssrn.com/abstract=3046577 or http://dx.doi.org/10.2139/ssrn.3046577

Bernhard Schmidpeter (Contact Author)

University of Essex ( email )

Wivenhoe Park
Colchester, CO4 3SQ
United Kingdom

HOME PAGE: http://https://sites.google.com/site/bernhardecon/

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