Long-Term Effects of Early Life Outcomes
Paper Session
Sunday, Jan. 3, 2021 3:45 PM - 5:45 PM (EST)
- Chair: David Autor, Massachusetts Institute of Technology
The Effect of Labor Market Conditions at Entry on Workers’ Long-Term Skills
Abstract
This paper studies the impact of labor market conditions during the education-to-work transition on workers’ long-term skill development. Using representative survey data on measures of work-relevant cognitive skills for adults from 19 countries, I document four main findings: i) cohorts of workers who faced higher unemployment rates at ages 18–25 have lower skills at ages 36–59; ii) unemployment rates faced at later ages (26–35) do not have such an effect; iii) the former findings hold even though, on average, people get more formal education as a response to higher unemployment in their late teens and early twenties; iv) skill inequality is affected: workers whose parents were less educated bear most of the negative effects. These findings can be rationalized by on-the-job learning during the early twenties being an important factor of skill-development, and such learning being negatively impacted by bad macroeconomic conditions. Using German panel data on skills, I show that young workers at large firms experience higher skill growth than those at small firms. This finding suggests firm heterogeneity in human capital provision to young workers as a potential mechanism since, in bad economic times, young workers disproportionately match with small firms.Pure-Chance Jobs vs. a Labor Market: The Impact on Careers of a Random Serial Dictatorship for First Job Seekers
Abstract
Does a worker's first job affect her long-run career? Do any such first job effects vary across workers of different types? If so, can policy improve upon a "free" labor market by altering initial matches between workers and employers? We begin to study "market design" policy's impact on entry-level labor markets' aggregate performance by comparing 20 years when Norway assigned doctors to their first job---residencies---through a Random Serial Dictatorship with the post-2013 era when the RSD mechanism was replaced with decentralized job-finding. We first estimate the consequences for long-run earnings of different employers for male and female workers. We do so by exploiting RSD-generated random, individual level variation in workers' initial choice set over employers. We then decompose preferences over employers into a component that is due to first job effects and another that is due to the "amenity value" workers of a given type associate with employers of a given type. Finally, we show how realized first job effects, amenity values, and overall worker welfare differ, for each group and in total, in a decentralized labor market compared to a randomized-choice-sets system, by describing how worker*employer matches changed after 2013.Initial Industry Choices and Long-Term Growth in Earnings
Abstract
This paper examines the relationship between the initial industry choice made by an individual and their long term earnings growth. We study this question using data from the 1966, 1979 and 1997 National Longitudinal Surveys. We estimate a strong positive relationship between employment growth in initial industry and wage growth over 10 years for all three samples and over 20 years for the NLSY 1979. After conditioning on detailed individual demographics and measures of ability such as standardized test scores, we find that a one standard deviation increase in employment growth is associated with 1/10th of a standard deviation increase in wage growth over 10 years for 1979, and the estimated appears to grow over time with the smallest estimate in 1966 and largest in 1997. The magnitude estimates are stable to the inclusion of family background and geographic region controls conditional on the individual attributes observed in the National Longitudinal Surveys. When examined in greater detail, the results also indicate that the effects are concentrated among occupation types which involve more routine and manual tasks and fewer abstract tasks, as well as among tasks that are more easily off-shored. Interestingly, this relationship does not depend on the persistence or “length of stay” within the initial industry.Discussant(s)
Adriana Lleras-Muney
,
University of California-Los Angeles
Abigail Wozniak
,
Federal Reserve Bank of Minneapolis
John C. Haltiwanger
,
University of Maryland
David Autor
,
Massachusetts Institute of Technology
JEL Classifications
- J3 - Wages, Compensation, and Labor Costs
- J2 - Demand and Supply of Labor