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

28 Pages Posted: 9 Aug 2017

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 Sørensen

Aarhus University

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Date Written: September 2017

Abstract

Do business cycle fluctuations and changes in employment produce cohorts with permanently different labour market attachment? Taking an explicit cohort perspective and based on Danish register data, we find noticeable age dependent 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 than older workers for whom persistence is stronger. Moreover, following the employment trajectories of cohorts, no cohorts have been permanently ‘scarred’ in terms of employment due to a sequence of adverse shocks. Finally, an explicit account of overlapping cohorts is shown to affect assessments of persistence in aggregate employment rates.

Suggested Citation

Andersen, Torben M. and Maibom, Jonas and Svarer, Michael and Sørensen, Allan, Do Business Cycles Have Long‐Term Impact for Particular Cohorts? (September 2017). LABOUR, Vol. 31, Issue 3, pp. 309-336, 2017, Available at SSRN: https://ssrn.com/abstract=3013934 or http://dx.doi.org/10.1111/labr.12095

Torben M. Andersen (Contact Author)

University of Aarhus - Department of Economics ( email )

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Centre for Economic Policy Research (CEPR)

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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 Sørensen

Aarhus University ( email )

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