Wage Scarring Research Papers - Academia.edu (original) (raw)
Unemployment has a strong influence on the economic prospects of the UK economy as a whole. The effect of unemployment can be long-lasting, and as an experience can imply lasting effects on future employment outcomes. In order to avoid... more
Unemployment has a strong influence on the economic prospects of the UK economy as a whole. The effect of unemployment can be long-lasting, and as an experience can imply lasting effects on future employment outcomes. In order to avoid unemployment, individuals may decide take jobs they are overqualified for as a stepping stone to a better match when such positions become available. If over-qualification is a negative productivity signal, then this could reduce future career mobility. This thesis aimed to gain some insights into the impact of where individuals live, within the UK, on their unemployment and employment experiences. With that in mind, detailed data sets were constructed in order to answer the questions of interest. Moreover, flexible econometric techniques were employed.
I test the hypothesis that unemployment experienced in high unemployment regions is less likely to be viewed by employers as a negative productivity signal, and more as a characteristic of the region. This predicts that unemployment's... more
I test the hypothesis that unemployment experienced in high unemployment regions is less likely to be viewed by employers as a negative productivity signal, and more as a characteristic of the region. This predicts that unemployment's short-run negative wage effects will be mitigated if experienced in high unemployment regions. If so, then what long-term implications does this have for future wage growth (Wage Scarring)? How important is regional heterogeneity in driving wage outcomes? Continuous work-life histories are matched to the regional context in which individuals reside. This novel data set permits control for the timing of career disruptions, as well as regional location at the time of displacement, whilst searching and at re-employment. Persistent wage penalties are found, conditional on previous labour market status. Seminal UK research concludes that the first spell of non-employment carries the highest penalty. Considering unemployment and inactivity, no reduction in the penalty associated with incidence of inactivity is found. Strong regional differences are found in the impact of redundancy on wage growth. This is contingent on labour market tightness and urbanity of the region in which unemployment was experienced. Redundancy followed by unemployment in areas of high economic activity is equally damaging for future earnings potential, independent of age. Moreover, robust evidence is found supporting the main hypothesis in the UK, on average and for over 45s made redundant in their previous jobs.
Continuous work-life histories are constructed using matched BHPS-LFS data, in order to test for regional variation in the impact of unemployment experience on future wage growth. The main hypothesis under test is whether unemployment... more
Continuous work-life histories are constructed using matched BHPS-LFS data, in order to test for regional variation in the impact of unemployment experience on future wage growth. The main hypothesis under test is whether unemployment spells experienced in high unemployment regions are seem by future employers as more a characteristic of the region than a negative productivity signal. Consistent with previous studies, empirical results highlight signi cant and persistent average wage penalties due to interruption that depends on previous labour market status. Strong regional di erences are found in the impact of redundancy on wage growth. This is contingent on the labour market tightness and urbanity of the regional in which this unemployment was experienced. However, no evidence is found supporting the main hypothesis in the UK. It is likely that human capital explanations still play a substantial role, given that average unemployment durations are likely to be lower in tight labour markets with better re-employment prospects.
Continuous work-life histories are constructed using matched BHPS-LFS data, in order to test for regional variation in the impact of unemployment experience on future wage growth. The main hypothesis under test is whether unemployment... more
Continuous work-life histories are constructed using matched BHPS-LFS data, in order to test for regional variation in the impact of unemployment experience on future wage growth. The main hypothesis under test is whether unemployment spells experienced in high unemployment regions are seem by future employers as more a characteristic of the region than a negative productivity signal. Consistent with previous studies, empirical results highlight signi cant and persistent average wage penalties due to interruption that depends on previous labour market status. Strong regional di erences are found in the impact of redundancy on wage growth. This is contingent on the labour market tightness and urbanity of the regional in which this unemployment was experienced. However, no evidence is found supporting the main hypothesis in the UK. It is likely that human capital explanations still play a substantial role, given that average unemployment durations are likely to be lower in tight labour markets with better re-employment prospects.