Drawing on administrative data from the Social Security Administration, we find that individuals that go through a long period of non-employment suffer large and long-term earnings losses (around 35-40 percent) compared to individuals with similar age and previous earnings histories. Importantly, these differences depend on past earnings, and are largest at the bottom and top of the earnings distribution. Focusing on workers that are employed 10 years after a period of long-term non-employment, we find much smaller earnings losses (8-10 percent). Furthermore, the large earnings losses of low-income individuals are almost entirely due to employment effects.
- Kehoe, Pujolàs, Rossbach: Improving the Analysis of Trade Policy
- Luttmer: Slow Convergence in Economies with Organization Capital
- Cavallo, Del Negro, Frame, Grasing, Malin, Rosa: Fiscal Implications of the Federal Reserve’s Balance Sheet Normalization
- Boerma, Karabarbounis: Inferring Inequality with Home Production
- Bhandari, McGrattan: Sweat Equity in U.S. Private Business
Subscribe to receive email alerts when economists from the Federal Reserve Bank of Minneapolis publish new Staff Reports, Working Papers or Economic Policy Papers. Occasionally other important news will be shared.