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Labor Turnover and Youth Unemployment

In: The Youth Labor Market Problem: Its Nature, Causes, and Consequences

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  • Linda Leighton
  • Jacob Mincer
Abstract
The main question of concern in this paper is why youth unemployment is high relative to unemployment of adults. The analysis is based largely on longitudinal micro-data in the NLS and MID panels of men, surveyed in the 1966-1976 decade. Since the duration of unemployment increases with age, incidence that is the probability of experiencing unemployment is the main focus of our analysis. The basic finding is that the at first rapid and then decelerating decline with age in the probability of unemployment stems from a similarly shaped relation between the probability of separation (from a job) and working age. The age patterns are, in turn, mainly due to the decline of probabilities as tenure lengthens. Indeed, at given levels of tenure, unemployment incidence does not at all decline with age, except among blacks and in periods of high unemployment. We conclude that the short tenure level of the young is the main reason for the age differential in unemployment. To check this we compare youth with short-tenured groups which are not adversely selected, migrants who were not unemployed before migration and immigrants. The comparison reveals that youth are in the same situation as others with little accumulated tenure. We do note, however, that unemployment declines more slowly for youth than for others, reflecting the gradually increasing commitment to work in the transition from school to work and from parental to own household. Increases in the duration of unemployment with age are ascribed, within a search model framework, to a decline in the probability of finding job vacancies among older movers. The inference of increasing difficulty in job finding is also consistent with observed increases in the probability of unemployment conditional on separation, declines in the quit/layoff ration, and in wage gains from moves as workers age.
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Suggested Citation

  • Linda Leighton & Jacob Mincer, 1982. "Labor Turnover and Youth Unemployment," NBER Chapters, in: The Youth Labor Market Problem: Its Nature, Causes, and Consequences, pages 235-276, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberch:7876
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    References listed on IDEAS

    as
    1. Jacob Mincer & Boyan Jovanovic, 1981. "Labor Mobility and Wages," NBER Chapters, in: Studies in Labor Markets, pages 21-64, National Bureau of Economic Research, Inc.
    2. Robert J. Flanagan, 1978. "Discrimination Theory, Labor Turnover, and Racial Unemployment Differentials," Journal of Human Resources, University of Wisconsin Press, vol. 13(2), pages 187-207.
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    Cited by:

    1. Charles T. Carlstrom, 1989. "Turnover, wages, and adverse selection," Economic Review, Federal Reserve Bank of Cleveland, vol. 25(Q I), pages 18-28.
    2. Gabriel, Stuart A. & Nothaft, Frank E., 2001. "Rental Housing Markets, the Incidence and Duration of Vacancy, and the Natural Vacancy Rate," Journal of Urban Economics, Elsevier, vol. 49(1), pages 121-149, January.
    3. Corseuil, Carlos Henrique & Foguel, Miguel N. & Gonzaga, Gustavo, 2019. "Apprenticeship as a stepping stone to better jobs: Evidence from Brazilian matched employer-employee data," Labour Economics, Elsevier, vol. 57(C), pages 177-194.
    4. H. J. Holzer & R. J. LaLonde, "undated". "Job Change and Job Stability among Less-Skilled Young Workers," Institute for Research on Poverty Discussion Papers 1191-99, University of Wisconsin Institute for Research on Poverty.
    5. Mijares, John C., 1997. "Early drug use and quits and discharges among adolescent males," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 26(4), pages 439-458.
    6. Steven J. Davis & R. Jason Faberman & John Haltiwanger & Ron Jarmin & Javier Miranda, 2010. "Business Volatility, Job Destruction, and Unemployment," American Economic Journal: Macroeconomics, American Economic Association, vol. 2(2), pages 259-287, April.
    7. Davis, Steven J. & Faberman, R. Jason & Haltiwanger, John, 2012. "Labor market flows in the cross section and over time," Journal of Monetary Economics, Elsevier, vol. 59(1), pages 1-18.
    8. Wolfgang Franz, 1979. "The Duration of Youth Unemployment in West Germany: Some Theoretical Considerations," NBER Working Papers 0397, National Bureau of Economic Research, Inc.
    9. Lisa M. Lynch, 1986. "The Youth Labor Market in the 80s: Determinants of Re-Employment Probabilities for Young Men and Women," NBER Working Papers 2021, National Bureau of Economic Research, Inc.
    10. Gustman, Alan L & Steinmeier, Thomas L, 1988. "A Model for Analyzing Youth Labor Market Policies," Journal of Labor Economics, University of Chicago Press, vol. 6(3), pages 376-396, July.
    11. Peter Jackson & Edward Montgomery, 1986. "Layoffs, Discharges and Youth Unemployment," NBER Chapters, in: The Black Youth Employment Crisis, pages 115-143, National Bureau of Economic Research, Inc.
    12. Fallick, Bruce Chelimsky, 1993. "The Industrial Mobility of Displaced Workers," Journal of Labor Economics, University of Chicago Press, vol. 11(2), pages 302-323, April.
    13. Alan L. Gustman, 1980. "Analyzing the Relation of Unemployment Insurance to Unemployment," NBER Working Papers 0512, National Bureau of Economic Research, Inc.
    14. W. Kip Viscusi, 1979. "Specific Information, General Information, and Employment Matches Under Uncertainty," NBER Working Papers 0394, National Bureau of Economic Research, Inc.
    15. Jacob Mincer, 1986. "Wage Changes in Job Changes," NBER Working Papers 1907, National Bureau of Economic Research, Inc.
    16. Steven J. Davis & R. Jason Faberman & John Haltiwanger, 2006. "The Flow Approach to Labor Markets: New Data Sources and Micro-Macro Links," Journal of Economic Perspectives, American Economic Association, vol. 20(3), pages 3-26, Summer.
    17. Davis, Steven J. & Faberman, Jason & Haltiwanger, John C., 2005. "The Flow Approach to Labor Markets: New Data Sources, Micro-Macro Links and the Recent Downturn," IZA Discussion Papers 1639, Institute of Labor Economics (IZA).
    18. Cunningham, Wendy, 2009. "Unpacking youth unemployment in Latin America," Policy Research Working Paper Series 5022, The World Bank.
    19. Fernando Coloma & Bernardita Vial, 2003. "Desempleo e Inactividad Juvenil en Chile," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 40(119), pages 149-171.
    20. Elena Bugudui, 2016. "The Use of Multivariate Techniques for the Unemployment Analysis," Academic Journal of Economic Studies, Faculty of Finance, Banking and Accountancy Bucharest,"Dimitrie Cantemir" Christian University Bucharest, vol. 2(2), pages 134-146, June.

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