Do Business Cycles Have Long-Term Impact for Particular Cohorts?

40 Pages Posted: 21 Dec 2013

See all articles by Torben M. Andersen

Torben M. Andersen

University of Aarhus - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute); Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics

Jonas Maibom

Aarhus University - School of Business and Social Sciences

Michael Svarer

Aarhus University - Department of Economics and Business Economics; Institute for the Study of Labor (IZA)

Allan Sorensen

Aarhus University, Economics and Business

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Abstract

Will the current employment crisis produce lost generations with permanently lower labour market attachment? Taking an explicit cohort perspective and based on Danish data we do not find strong persistence in employment rates at the cohort level. Younger workers tend to be more exposed to business cycle fluctuations than older workers, but importantly they recover more quickly from such set-backs than older workers for whom persistence is stronger. Moreover, no cohorts have been disproportionately affected by exposure to a sequence of adverse shocks. An explicit account of overlapping cohorts is shown to affect assessments of persistence in aggregate employment rates.

Keywords: persistence, lost generations, employment

JEL Classification: J6, E32

Suggested Citation

Andersen, Torben M. and Maibom, Jonas and Svarer, Michael and Sorensen, Allan, Do Business Cycles Have Long-Term Impact for Particular Cohorts?. IZA Discussion Paper No. 7817, Available at SSRN: https://ssrn.com/abstract=2370783

Torben M. Andersen (Contact Author)

University of Aarhus - Department of Economics ( email )

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CESifo (Center for Economic Studies and Ifo Institute)

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Centre for Economic Policy Research (CEPR)

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IZA Institute of Labor Economics

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Jonas Maibom

Aarhus University - School of Business and Social Sciences ( email )

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Michael Svarer

Aarhus University - Department of Economics and Business Economics ( email )

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Institute for the Study of Labor (IZA)

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Allan Sorensen

Aarhus University, Economics and Business ( email )

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Aarhus V, 8210
Denmark

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