Understanding the scarring effect of recessions Christopher Huckfeldt
By: Huckfeldt, Christopher
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Material type: 
ArticleSubject(s): RECESIONES ECONOMICAS | DESEMPLEO | TRABAJADORES | SALARIOS | MERCADO DE TRABAJO | ESTADOS UNIDOS | MODELOS ECONOMETRICOS
In:
The American Economic Review v. 112, n. 4, April 2022, p. 1273-1310Summary: This paper documents that the earnings cost of job loss is concentrated among workers who find reemployment in lower-skill occupations, and that the cost and incidence of such occupation displacement is higher for workers who lose their job during a recession. I propose a model where hiring is endogenously more selective during recessions, leading some unemployed workers to optimally search for reemployment in lower-skill jobs. The model accounts for existing estimates of the size and cyclicality of the present value cost of job loss, and the cost of entering the labor market during a recession.
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Resumen.
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This paper documents that the earnings cost of job loss is concentrated among workers who find reemployment in lower-skill occupations, and that the cost and incidence of such occupation displacement is higher for workers who lose their job during a recession. I propose a model where hiring is endogenously more selective during recessions, leading some unemployed workers to optimally search for reemployment in lower-skill jobs. The model accounts for existing estimates of the size and cyclicality of the present value cost of job loss, and the cost of entering the labor market during a recession.
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