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The Review of Black Political Economy

, Volume 18, Issue 4, pp 13–36 | Cite as

Race and sex differences in the effects of early unemployment on wages

  • Stephen M. Hills
Articles

Abstract

Youth unemployment is shown to have significant depressing effects on black long-run earnings over and above the loss in work experience which accompanies unemployment. Estimates were similar for men and women, showing that for each week of unemployment black youth incurred early in their work careers, wages were reduced by about one half a percentage point five years later. A six month bout with unemployment in 1979 was related to a 13 percent drop in wage rates five years later. For white youth, joblessness, but not unemployment per se, had a significant negative impact on subsequent wage rates.

Keywords

Wage Rate Youth Unemployment Black Youth White Youth Human Resource Research 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Notes

  1. 1.
    See M. Corcoran, “The Employment and Wage Consequences of Teenage Women’s Unemployment;” D. Ellwood, “Teenage Unemployment: Permanent Scar or Temporary Blemish?” and R.H. Meyer and D.A. Wise, “High School Preparation and Early Labor Force Experience,” in R.B. Freeman and D.A. Wise (eds.), The Youth Labor Market Problem: Its Nature, Causes, and Consequences, (Chicago: University of Chicago Press, 1982). See also J. Heckman and G.J. Borjas, “Does Unemployment Cause Further Unemployment? Definitions, Questions and Answers from a Continuous Time Model of Heterogeneity and State Dependence,” Economica (August* 1980); P. Osterman, Getting Started (Cambridge, MA: MIT Press, 1980); and W. Stevenson, “The Relationship Between Early Work Experience and Future Employability,” in A. Adams et al., The Lingering Crisis of Youth Unemployment (Kalamazoo, MI: W.E. Upjohn Institute for Employment Research, 1978).Google Scholar
  2. 2.
    See B. Becker and S. Hills, “Teenage Unemployment: Some Evidence of the Long-Run Effect on Wages,” Journal of Human Resources (Summer 1980); “The LongRun Effects of Job Changes and Unemployment: Some Evidence of the Long-Run Effects on Wages,” Journal of Human Resources (Summer 1983); and “The Nature and Consequences of Teenage Unemployment in the School to Work Transition Period,” in S. Hills, Market Defenses: Early Work Decisions of Today’s Middle-Aged Men (Columbus, Ohio: Center for Human Resource Research, The Ohio State University, 1983).Google Scholar
  3. 3.
    T.K. Pollard, “Changes over the 1980s in the Employment Patterns of Black and White Young Men,” In Pathways to the Future. Vol. 2: A Final Report on the National Longitudinal Survey of Youth Labor Market Experience 1980 (Columbus, OH: Center for Human Resource Research, The Ohio State University, 1982).Google Scholar
  4. 4.
    For more information on the separate NLS cohorts, see the National Longitudinal Surveys Handbook (Columbus, Ohio: Center for Human Resource Research, 1988).Google Scholar
  5. 5.
    See D. Ellwood, “Teenage Unemployment: Permanent Scar or Temporary Blemish?” in R.B. Freeman and D.A. Wise (eds.), The Youth Labor Market Problem: Its Nature, Causes, and Consequences (Chicago: University of Chicago Press, 1982).Google Scholar
  6. 6.
    D. Ellwood, “Teenage Unemployment: Permanent Scar or Temporary Blemish?” in R.B. Freeman and D.A. Wise (eds.), The Youth Labor Market Problem: Its Nature, Causes, and Consequences (Chicago: University of Chicago Press, 1982).Google Scholar
  7. 7.
    B. Becker and S. Hills, “The Long-Run Effects of Job Changes and Unemployment: Some Evidence of the Long-Run Effects on Wages,” Journal of Human Resources (Summer 1983), p. 199.Google Scholar
  8. 8.
    Work experience is often measured very crudely as current age minus the age when last left school, for instance. Note that our definition of work experience is simply the number of weeks worked since a given point in the lifecycle (e.g., date of leaving school or date at which respondent was age eighteen).Google Scholar
  9. 9.
    B. Becker and S. Hills, “The Long-Run Effects of Job Changes and Unemployment: Some Evidence of the Long-Run Effects on Wages,” Journal of Human Resources (Summer 1983).Google Scholar
  10. 10.
    The approximation holds for small changes in the value of a given independent variable (e.g., a one unit change). Large changes are converted using the following formula: ex-1 where x = the regression coefficient.Google Scholar
  11. 11.
    The coefficients for “union” in regressions by race and sex are converted to these percentages using the formula described in footnote 10 above.Google Scholar
  12. 12.
    B. Becker and S. Hills, “The Long-Run Effects of Job Changes and Unemployment: Some Evidence of the Long-Run Effects on Wages,” Journal of Human Resources (Summer 1983), Table 3.Google Scholar
  13. 13.
    B. Becker and S. Hills, “The Long-Run Effects of Job Changes and Unemployment: Some Evidence of the Long-Run Effects on Wages,” Journal of Human Resources (Summer 1983), p. 209.Google Scholar
  14. 14.
    The models used in the present study differ slightly from the models estimated by Becker and Hills. More emphasis is placed on the job mobility variables in this study, with and without unemployment. In an additional set of regressions not shown here a model was estimated that contained the same set of unemployment variables used by Becker and Hills. The results were the same as those reported here.Google Scholar
  15. 15.
    This does not mean that a loss in work experience has no effect on the subsequent wages of black women. The average effects of losing work experience over the five year period are already captured by the work experience and tenure variables. The OLF variables indicate what additional influence work experience may have if lost early in the woman’s work career (i.e., in 1979).Google Scholar
  16. 16.
    The previous larger sample included youth who had left school in years prior to 1979 and is a cross section of youth analyzed at two points in time. The smaller sample is a cohort of school leavers who were analyzed in the year they left school and across the next five years of time.Google Scholar
  17. 17.
    To make sure the difference in estimates was not due to different regression models, the model was reestimated for the larger sample of youth with the same reduced set of variables used in the smaller sample of school leavers. The work experience variable retained a value of approximately 0.1 percent for men and women alike.Google Scholar
  18. 18.
    The correlation coefficient between weeks of work in 1979 and weeks of work for young men in 1980 was .641, for example.Google Scholar

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© Springer 1990

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  • Stephen M. Hills

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