Department of Economics and Business Economics

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

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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.

Original languageEnglish
Pages (from-to)309-336
Number of pages28
Publication statusPublished - 1 Sep 2017

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