Scars of Recessions in a Rigid Labor Market

42 Pages Posted: 20 Mar 2015

See all articles by Bart Cockx

Bart Cockx

affiliation not provided to SSRN; Ghent University - Sherppa - Faculty of Economics and Business Administration; IRES, Université Catholique de Louvain; Institute for the Study of Labor (IZA); CESifo (Center for Economic Studies and Ifo Institute)

Corinna Ghirelli

Bank of Spain

Multiple version iconThere are 2 versions of this paper

Date Written: March 19, 2015

Abstract

We study the impact of graduating in a recession in Flanders (Belgium), i.e. in a rigid labor market. In the presence of a high minimum wage, a typical recession hardly influences the hourly wage of low educated men, but reduces working time and earnings by about 4.5% up to twelve years after graduation. For the high educated, the working time is not persistently affected, but the penalty on the hourly wage (and earnings) increases with experience, and attains roughly -6% ten years after labor market entry. We also contribute to the literature on inference with few clusters.

Keywords: scars, graduating, labor market rigidity, recession, few clusters, cluster robust

JEL Classification: C120, C410, E320, I210, J220, J230, J310, J600

Suggested Citation

Cockx, Bart L. W. and Cockx, Bart L. W. and Ghirelli, Corinna, Scars of Recessions in a Rigid Labor Market (March 19, 2015). CESifo Working Paper Series No. 5240, Available at SSRN: https://ssrn.com/abstract=2580795 or http://dx.doi.org/10.2139/ssrn.2580795

Bart L. W. Cockx (Contact Author)

Ghent University - Sherppa - Faculty of Economics and Business Administration ( email )

Ghent, B-9000
Belgium

affiliation not provided to SSRN

No Address Available

IRES, Université Catholique de Louvain

Place Montesquieu, 3
Louvain-la-Neuve
Belgium

Institute for the Study of Labor (IZA)

P.O. Box 7240
Bonn, D-53072
Germany

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Corinna Ghirelli

Bank of Spain ( email )

Calle Alcala, 48
Madrid, 28014
Spain

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