The persistent effects of entering the labour market in a recession : evidence from Portugal

• Autor(a) principal: Lopes, Catarina Inês Claro
• Data de Publicação: 2020
• Tipo de documento: Dissertação
• Idioma: eng
• Título da fonte: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
• Texto Completo: http://hdl.handle.net/10400.14/31272
• topic: Scarring effect; Labour market; Recession; Great Recession of 2008-2012; Higher education; Unemployment; Annual earnings; Efeito de “Scarring”; Mercado de trabalho; Recessão; Grande Crise de 2008-2012; Habilitações superiores; Desemprego; Rendimento anual; Domínio/Área Científica::Ciências Sociais::Economia e Gestão

This paper examines the effects of entering the labor market during a recession on subsequent labor market outcomes. Using longitudinal matched employer-employee data from Portugal for the period 2002-2017, this paper estimates the impacts of the unemployment rate at the time of labour market entry on subsequent earnings of university graduates. Using a fixed effects model controlling for potential experience, regional and labour market entry-year, it finds that university students that graduated during the Great Recession of 2008-2012 were negatively affected by the initial conditions even after these conditions have subsided. The so-called “unlucky” cohort, that graduated between 2008 and 2012, has a penalty on the initial level of annual earnings of around 8 percent. This penalty fades over time but is still present in 2017. The effect on initial earnings is stronger and more prolonged among women than men, suggesting that recessions can be a potential source of gender wage inequality in Portugal. The results presented are supportive of persistent, and, large negative impacts on youth of the Great Recession of 2008-2012 in Portugal.