Adult Labour Market Outcomes: the Role of Economic Conditions at Entry into the Labour Market

This study investigates whether local economic conditions at entry into the labour market affect adult career outcomes. If the stage of the business cycle determines later outcomes, then there are long-term costs associated with entering the labour market in a recession. The focus is on the local unemployment rate (LUR) at entry at detailed regional level and its overall effects on earnings and experience accumulation.These outcomes are investigated throughout the adult life-cycle, using detailed German register data (IABS). Results draw upon variation in LURs related to both the moment and place of entry. We find small but significant adverse effects of economic conditions at entry on earnings. Moreover, the negative effect on earnings gains in strength throughout the career. Work experience does not seem negatively affected in the early stages of the adult career and involves only very small adverse effects later on in the life-cycle.