Why Don't Firms Hire Young Workers During Recessions?

• 成果类型: Article
• 署名作者: Forsythe, Eliza
• 署名单位: University of Illinois System; University of Illinois Urbana-Champaign; University of Illinois System; University of Illinois Urbana-Champaign
• 刊物名称: ECONOMIC JOURNAL
• ISSN/ISSBN: 0013-0133
• DOI: 10.1093/ej/ueab096
• 发表日期: 2022
• 页码: 1765-1789
• 关键词: biased technological-change; wage inequality; business-cycle; real wages; LABOR; unemployment; cyclicality; mobility

摘要

Recessions are known to be particularly damaging to young workers' employment outcomes. I find that during recessions the hiring rate falls faster for young workers than for more experienced workers. I show that this cannot be explained by the composition of jobs or workers' labour supply decisions, and I conclude that firms preferentially hire experienced workers during periods of high unemployment. I develop a new model of cyclical upgrading that relaxes the classic assumptions of exogenous firm size and rigid wages. I show that this model predicts larger log wage decreases during recessions for young workers than for experienced workers, a prediction that is supported by the data. I conclude that policymakers should consider extending unemployment insurance coverage during recessions to new labour market entrants.