Journal article

Scarring effects: A review of Australian and international literature

Jeffrey Borland

Australian Journal of Labour Economics | Centre for Labour Market Research | Published : 2020


Scarring occurs when an adverse experience for a worker – associated with macroeconomic conditions - has negative long-term impacts on their labour market outcomes. For example, a worker who is entering the labour market during a macroeconomic downturn may experience a spell of unemployment or have to take a job for which they are over-qualified – and those experiences then affect the worker’s labour market outcomes in future years. Recent studies find that scarring effects are substantial: for example, the main Australian study on scarring finds that graduates entering the labour market at a time when the youth rate of unemployment rate is 5 ppts above average lowers annual earnings of grad..

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University of Melbourne Researchers