Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/145203
Authors: 
Glatt, Jordan
Wunnava, Phanindra V.
Year of Publication: 
2016
Series/Report no.: 
IZA Discussion Papers 10069
Abstract: 
The scarring effect is defined as an increase in the probability of future unemployment spells and the reduction of subsequent wages as the result of joblessness early in one's working years. Many youths get into a rut at the beginning of their professional careers when they become unemployed, hindering future individual prospects and producing negative consequences for the economy as a whole. Because there is considerable evidence in the United States that early job displacement is followed by a higher risk of subsequent unemployment and lower trajectory for future earnings after re-entry, it is crucial to gain a better understanding of the economic factors that influence the youth unemployment rate in order to reduce the consequences on youths' future outlooks (Arulampalam, Gregg, and Gregory, 2001). This study not only demonstrates that the scarring effect is real but also allows for policy recommendations to be obtained from this analysis.
Subjects: 
scarring
youth unemployment
unemployment spells
job displacement
earnings
re-entry
Great Recession
JEL: 
J24
J31
J64
I21
Document Type: 
Working Paper

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