Limited access Past event
Applied Microeconomics Group Seminar Understanding the Effects of Labor Market Entry Conditions: The Role of Skill Match
Speaker: Dr Dita Eckardt, Warwick University, IFS, and IZA
Abstract: Young workers' careers are crucially affected by the economic conditions around their time of labour market entry. This paper studies skill match as a mechanism behind these effects. Using administrative data on German workers who completed training in an occupation, I show that higher entry unemployment persistently reduces a worker's likelihood to match their training occupation. I quantify the importance of this channel in explaining wage effects. A simple model of selection into occupations sheds light on the underlying mechanisms. Working in an occupation different from one's training comes at a cost but may be optimal in response to occupation-specific shocks. Novel data on unemployment in target occupations confirms the role of skill match in mitigating these shocks. These results have important implications for policies aimed at alleviating the effects of entry conditions for young workers.
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