links for 2009-10-25
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Lisa Kahn of the Yale School of Management found that an increase in unemployment produces a significant and enduring negative wage effect.... [A] one percentage point increase in the national unemployment rate is associated with a 6 to 7 percent loss in initial wages [for those entering the labor market that year]. The annual wage loss declines over time, but is still statistically significant 15 years later. Comparing the wages earned by the class of 1982 (a peak unemployment year) with the wages of the class of 1988 (a peak employment year) over the first 20 years of a career, the wage difference resulted in a difference of nearly $100,000 in cumulative earnings in net present value. The long-term effect isn’t just a residual of low first-year wages: the author suggests that poor job match, lower prestige placements, and fewer opportunities for training and promotion also play a role.... [R]ecession hits young people particularly hard, knocking them off course with effects that last
