Abstract
The effects of unemployment, public relief jobs, and labor-market training on subsequent hourly earnings are examined in a sample of Swedish youth. Earnings equations are estimated using both cross-section and panel data methods, and biases due to sample selection, endogeneity of unemployment and program participation, and omitted individual effects are considered. The main finding is that one year of unemployment reduces earnings by two percent, while the effects of labor-market programs are negligible. However, the negative unemployment effect is eliminated when time-invariant individual effects are accounted for. Copyright 1991 by The editors of the Scandinavian Journal of Economics.
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