Heterogeneous Scarring Effects of Full-Year Nonemployment | Zendy

Fatih Guvenen | Zendy; Fatih Karahan | Zendy; Serdar Ozkan | Zendy; Jae Song | Zendy

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Heterogeneous Scarring Effects of Full-Year Nonemployment

Author(s) -

Fatih Guvenen,

Fatih Karahan,

Serdar Ozkan,

Jae Song

Publication year - 2017

Publication title -

american economic review

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 16.936

H-Index - 297

eISSN - 1944-7981

pISSN - 0002-8282

DOI - 10.1257/aer.p20171012

Subject(s) - earnings , economics , social security , demographic economics , distribution (mathematics) , labour economics , finance , mathematical analysis , mathematics , market economy

Drawing on administrative data from the Social Security Administration, we find that individuals that go through a long period of non-employment suffer large and long-term earnings losses (around 35-40 percent) compared to individuals with similar age and previous earnings histories. Importantly, these differences depend on past earnings, and are largest at the bottom and top of the earnings distribution. Focusing on workers that are employed 10 years after a period of long-term non-employment, we find much smaller earnings losses (8-10 percent). Furthermore, the large earnings losses of low-income individuals are almost entirely due to employment effects.

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