Scars of Youth Non-Employment and Labour Market Conditions

46 Pages Posted: 14 Apr 2021

Date Written: December 23, 2020

Abstract

In this paper I analyse whether non-employment periods at the initial stages of an individual’s career may increase workers’ propensity to experience non-employment also in subsequent years. The study is based on data on young individuals in Italy. The paper uses an instrumental variables approach to separate the effect of early non-employment from any residual unobserved heterogeneity. The results provide strong evidence of negative effects induced by early non-employment, but the size of these effects depends on individual and regional labour market characteristics. The negative repercussions of early non-employment are smaller during economic downturns or in regions with high unemployment rates.

Keywords: non-employment, labor market conditions, instrumental variables

JEL Classification: J64, C26, C34

Suggested Citation

Tanzi, Giulia Martina, Scars of Youth Non-Employment and Labour Market Conditions (December 23, 2020). Bank of Italy Temi di Discussione (Working Paper) No. 1312, Available at SSRN: https://ssrn.com/abstract=3826414 or http://dx.doi.org/10.2139/ssrn.3826414

Giulia Martina Tanzi (Contact Author)

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

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