An Empirical Analysis of Cohort Effects on Earnings Stemming from Graduation into a Slack Labour Market

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Title: An Empirical Analysis of Cohort Effects on Earnings Stemming from Graduation into a Slack Labour Market
Authors: Cheng, Yuming
Date: 2014-05-15
Abstract: This paper studies the effects of graduating from university or college during a recession on workers’ annual earnings. Using data from the 2006 Census of Canada, individuals graduated between 1979 and 2004 are categorized into cohorts by age in five-year intervals. The estimated equations used in this paper predict a negative relationship between log earnings and the youth unemployment rate that prevailed in the year of their graduation. The results indicate that a 1% point increase of the unemployment rate will lead to a 3.1% decline in earnings, and these earnings losses tend to last for 23 years throughout an individual’s career. In addition, individuals in different cohorts are affected disproportionally by the slack labour market. The results show that young workers with fewer years of potential work experience suffer larger wage losses compared to mature workers with at least ten years’ potential experience.
URL: http://hdl.handle.net/10393/31120
CollectionScience économique - Mémoires // Economics - Research Papers
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