Do business cycle conditions at the time of labour market entry affect future unemployment?

Abstract

Labour market conditions at the time and place of potential entry into the labour market are shown to have a substantial and persistent impact on adult labour market performance.Birth cohorts that face particularly depressed labour markets when they graduate from primary- and/or secondary education are – other things equal - subject to relatively high rates of unemployment during their whole prime-age work career. Building on a unique combination of micro- and macro data from Norway, we show that these effects are robust with respect to model-specifications and conditioning variables, and that they are not limited to particularly disadvantaged groups of workers.