THE EFFECT OF AN EARLY CAREER RECESSION ON SCHOOLING AND LIFETIME WELFARE

• 成果类型: Article
• 署名作者: Guo, Naijia
• 署名单位: Chinese University of Hong Kong
• 刊物名称: INTERNATIONAL ECONOMIC REVIEW
• ISSN/ISSBN: 0020-6598
• DOI: 10.1111/iere.12312
• 发表日期: 2018
• 页码: 1511-1545
• 关键词: labor-market conditions; youth unemployment; directed search; business-cycle; job; workers; DYNAMICS; losses; shocks; IMPACT

摘要

This article evaluates the lifetime welfare and labor market consequences of experiencing a recession during youth, using a directed search equilibrium model with heterogeneous agents and aggregate shocks. In particular, the model allows for endogenous schooling decisions over the business cycles. The counterfactual analysis shows that experiencing the 1981-82 recession in youth causes a 1.6%-2.3% loss in lifetime welfare. Endogenizing the schooling decision avoids overestimation of welfare loss because of the selection effect and the human capital effect. I also decompose lifetime wage changes into different channels: changes from schooling, work experience, and job mobility.