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P. 95
Chapter 1: The legacy of the crisis: resilience and challenges
Annex 2: Review Table 5: Example of studies on scarring effects
of literature on on future employment outcomes
scarring effects
Paper Country/target group Main results
Impact on future employment Skans (2011) Teenagers’ first labour Significant scarring effects
outcomes market experience and of unemployment spells
subsequent labour market resulting in higher risks
According to the review of literature in performance of Swedish of unemployment up to
Eurofound (2012) ‘there is widespread youths graduating in the 5 years later.
agreement that early labour market recession years of 1991–94
experiences can have a long-term scar- Gregg (2001) Youth in the United Kingdom An extra three months
ring effect on labour market perfor- unemployment before age
mance both in terms of labour force 23 led to another extra
participation and future earnings’. Table two months out of work
5 includes a few studies illustrating (inactive or unemployed)
impacts of early-career unemployment between ages 28 and 33.
spells on future employment opportuni- Cockx and Picchio (2011) Trajectories of young If they remain a further
ties of young people. Belgians after they had year in unemployment,
remained unemployed for their probability of finding
Impact on future earnings nine months after leaving a job in the following two
school years falls substantially
According to Scarpetta et al (2010), most (from 60 % to 16 % for men
studies find that early youth unemploy- and from 47 % to 13 %
ment has stronger negative effects on for women)but the duration
incomes than on future risk of unem- of the unemployment spell
ployment. Many scholars attempted to hardly affects the quality of
estimate the so-called ‘wage penalty’ on subsequent employment.
future earnings (see Table 6). Gregg and Tominey (2005) United Kingdom It is unemployment spells
experienced early in the
Moreover, for Sweden, Edin and Gus- career that matter, as
tavsson (2008) found strong evidence unemployment experienced
of a negative relationship between work after the age of 33 has
interruptions and skills levels: a full year much less explanatory
of non-employment was associated with power for future
a decline in their relative skill position unemployment probability.
within their age group. There is a link with
the recent OECD survey on adult compe -
tencies (PIAAC) as this found that people Table 6: Example of studies on scarring effects on future earnings
accumulate skills relatively quickly dur-
ing the early years of their careers (see Paper Country/target group Main results
Chapter 2) and that the level of skills of Gregg (1998) United Kingdom Workers who fall
individuals is strongly correlated to the unemployed tend to work
accumulation of experience and the use at a lower rate of pay and
of skills (i.e. practice effects independent often suffer a permanent
of education levels). pay reduction. This may
stem from the fact
Other impacts that young people who
experience unemployment
Beyond the direct impact on the risk of accumulate less work
future unemployment or the wage effects, experience which is one the
several papers document the impact that Arulampalam (2001) British men (aged 16–58) determinant of wages.
Unemployment carries a
early-career unemployment spells can wage penalty of about
have on other dimensions of well-being.
6 % on re-entry into a job
and of about 14 % after
Finally, there are other societal conse- three years.
quences to unemployment (and inactiv- Gregg and Tominey (2005) United Kingdom There is a wage penalty
ity) such as the risk that if independent but that can be reduced
housing is not affordable for young peo - if repeated spells of
ple, they are likely to remain living with unemployment are avoided
their family and delay founding their — in other words, there
own family, thereby worsening demo- can be a strong catch-
graphic trends and prospects (see also up effects.
Section 3.2 on this point).
93
Annex 2: Review Table 5: Example of studies on scarring effects
of literature on on future employment outcomes
scarring effects
Paper Country/target group Main results
Impact on future employment Skans (2011) Teenagers’ first labour Significant scarring effects
outcomes market experience and of unemployment spells
subsequent labour market resulting in higher risks
According to the review of literature in performance of Swedish of unemployment up to
Eurofound (2012) ‘there is widespread youths graduating in the 5 years later.
agreement that early labour market recession years of 1991–94
experiences can have a long-term scar- Gregg (2001) Youth in the United Kingdom An extra three months
ring effect on labour market perfor- unemployment before age
mance both in terms of labour force 23 led to another extra
participation and future earnings’. Table two months out of work
5 includes a few studies illustrating (inactive or unemployed)
impacts of early-career unemployment between ages 28 and 33.
spells on future employment opportuni- Cockx and Picchio (2011) Trajectories of young If they remain a further
ties of young people. Belgians after they had year in unemployment,
remained unemployed for their probability of finding
Impact on future earnings nine months after leaving a job in the following two
school years falls substantially
According to Scarpetta et al (2010), most (from 60 % to 16 % for men
studies find that early youth unemploy- and from 47 % to 13 %
ment has stronger negative effects on for women)but the duration
incomes than on future risk of unem- of the unemployment spell
ployment. Many scholars attempted to hardly affects the quality of
estimate the so-called ‘wage penalty’ on subsequent employment.
future earnings (see Table 6). Gregg and Tominey (2005) United Kingdom It is unemployment spells
experienced early in the
Moreover, for Sweden, Edin and Gus- career that matter, as
tavsson (2008) found strong evidence unemployment experienced
of a negative relationship between work after the age of 33 has
interruptions and skills levels: a full year much less explanatory
of non-employment was associated with power for future
a decline in their relative skill position unemployment probability.
within their age group. There is a link with
the recent OECD survey on adult compe -
tencies (PIAAC) as this found that people Table 6: Example of studies on scarring effects on future earnings
accumulate skills relatively quickly dur-
ing the early years of their careers (see Paper Country/target group Main results
Chapter 2) and that the level of skills of Gregg (1998) United Kingdom Workers who fall
individuals is strongly correlated to the unemployed tend to work
accumulation of experience and the use at a lower rate of pay and
of skills (i.e. practice effects independent often suffer a permanent
of education levels). pay reduction. This may
stem from the fact
Other impacts that young people who
experience unemployment
Beyond the direct impact on the risk of accumulate less work
future unemployment or the wage effects, experience which is one the
several papers document the impact that Arulampalam (2001) British men (aged 16–58) determinant of wages.
Unemployment carries a
early-career unemployment spells can wage penalty of about
have on other dimensions of well-being.
6 % on re-entry into a job
and of about 14 % after
Finally, there are other societal conse- three years.
quences to unemployment (and inactiv- Gregg and Tominey (2005) United Kingdom There is a wage penalty
ity) such as the risk that if independent but that can be reduced
housing is not affordable for young peo - if repeated spells of
ple, they are likely to remain living with unemployment are avoided
their family and delay founding their — in other words, there
own family, thereby worsening demo- can be a strong catch-
graphic trends and prospects (see also up effects.
Section 3.2 on this point).
93
