Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/215365 
Year of Publication: 
2020
Series/Report no.: 
IZA Discussion Papers No. 12969
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
I study the long-term effects of landing a first job at a large firm versus a small one using Spanish social security data. Size could be a relevant employer attribute for inexperienced workers since large firms are associated with greater training, higher wages, and enhanced productivity. The key empirical challenge is selection into first jobs – for instance, more able people may land jobs at large firms. I address this challenge developing an instrumental-variables approach that, while keeping business-cycle conditions fixed, leverages variation in the composition of labor demand that labor-market entrants face. I find that initially matching with a larger firm substantially improves long-term outcomes such as lifetime income, and that these benefits persist through subsequent jobs. Additional results point to mechanisms related to search frictions and better skill-development at large firms. Together, these findings shed light on how heterogeneous firms persistently impact young workers' trajectories.
Subjects: 
first job
employer size
firm heterogeneity
young workers
lifetime income
on-the-job skills
JEL: 
E24
J23
J24
J31
J62
Document Type: 
Working Paper

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