Unemployment and its scarring effect on wages in Germany: evidence from linked employer-employee data

PurposeAssess and compare scarring effects of unemployment in Germany to other countries and to consider firm heterogeneity.Design/methodology/approachThe author uses linked employer-employee data to analyze the effect of unemployment and its duration on future wages in Germany. Using administrative data on workers and firms in Germany and considering registered and unregistered unemployment episodes, the results show long-lasting wage losses caused by unemployment incidences. Furthermore, the estimations indicate that unemployment duration as well as selectivity into firms paying lower wages is of particular relevance for the explanation of wage penalties of re-employed workers.FindingsUnemployment causes massive and persistent wage declines in the future, which depend on the unemployment duration. Furthermore, reduced options of unemployed workers and selectivity in firms contribute to a large part of unemployment scarring.Practical implicationsFindings are relevant for current debates on unemployment and can help design measures to avoid huge costs of unemployment.Originality/valueThis paper analyses long-term unemployment scarring by considering not only unemployment duration but also selectivity in firms and its effect on the scarring effect.

Duración del desempleo y la migración en México ante la crisis financiera

This article examines structural breaks in the effect of the unemployment duration for the population of Mexico on the probability of migrating, both internal and internationally. Data from the National Survey of Occupation and Employment for 2007, 2008, and 2010 is used, and estimations are made from both binary and multinomial response models. Furthermore, a Chowtype test is used to estimate structural breaks in the unemployment duration effect after the financial crisis, and sensitivity tests are carried out using different specifications of the migration and unemployment duration variables. The results show that after the crisis the unemployment duration effects on the probability of migrating have been reduced, leading to restrictions on the free mobility of the labor factor

Does Entrepreneurial Career Choice Lessen the Graduate Unemployment Problem? The Case of Malaysian Graduates

Entrepreneurship has been long regarded as able to lessen the problem of graduate unemployment. This ability of entrepreneurship has been frequently quoted by numerous studies as a motivation of study to engage into the studies of graduate entrepreneurial career choice. Nevertheless, the relationship between the entrepreneurial career choice and graduate unemployment is yet to be explored. This paper aims to estimate the impact of entrepreneurial career choice on the Malaysian graduate unemployment. The targeted population of the present paper was the Universiti Utara Malaysia (UUM) and Universiti Malaysia Kelantan (UMK) graduates. A sample of 1,723 graduates was collected using self-administered questionnaires. The descriptive statistics, cross-tabulation tables and econometrics analysis are employed. Graduate entrepreneurial career choice is found to be unrelated to the chance of being unemployed and unable to reduce the probability of being unemployed among the low employability graduates. Thus, graduate entrepreneurial career choice does not lessen the graduate unemployment problem. However, there is some evidence that entrepreneurial career choice could reduce the unemployment duration and hinder the occurrence of long-term unemployed among the low employability graduates. The Malaysian government policy to combat the graduate unemployment problem could not rely mainly on the entrepreneurial career choice. The graduate entrepreneurial career choice, however, could be relied on reducing the occurrence of long-term unemployment. Future studies are suggested to use the sample of all graduates to validate the findings.