No Youth Left behind? The Long-Term Impact of Displacement on Young Workers

Abstract

We investigate short- and long-term impacts on labour market outcomes of experiencing a displacement for young workers. The period under study is 2000–2009. The end of the observation period is characterised by a shrinking labour market, coinciding with the start of the financial crisis. The main merit of the study is the inclusion of a wide battery of dependent variables. In general we find sizeable short-term effect on both unemployment and wage-employment. Furthermore, the results indicate that displacement has a long-term negative effect on wage employment. Part of this pattern seems to be masked by an increased likelihood of self-employment. A positive effect on self-employment is desirable from a policy perspective. Finally, among those who are employed in the final observation year, we find a small negative effect of displacement on hourly wages. This is solely explained by the foregone work experience of the displaced workers in the years after displacement.