This paper estimates the impact of unemployment on earnings following re-employment for a large and representative sample of British men, 1984±94. Unemployment incidence is found to have only a temporary effect, an average earnings setback of 10% on initial re-engagement largely eroding over two years. The effect of unemployment duration, by contrast, is permanent, a one-year spell adding a further penalty of 10 percentage points. These wage penalties are least for young men and the low paid ± those most at risk of unemployment ± and greatest for prime age and highly paid men.
Investigates changes in skilled and unskilled employment over the
1980s using UK data skills from the Labour Force Survey and the New
Earnings Survey Panel Data set, matched with industrial data from the
Census of Production. The major findings are: that there was a rise in
non‐manual wage and employment shares over the 1980s but only a slight
rise in that of the skilled; and that in industries where foreign
competition intensified the manual wage share fell, but there was no
significant effect on the unskilled.
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