Here - Tilburg University

Data
We use matched employer-employee longitudinal data for two samples of
5,000 workers that are initially employed in 302 firms from the Datawarehouse
of the Belgian Crossroadsbank for Social Security. The Datawarehouse offers
employment information at the trimester-level and unemployment information at
the monthly level. The first sample was selected in the first trimester of 1998
and workers were followed until the last trimester of 2003. The second sample
was initially selected in the first trimester of 2002 and workers were followed
until the last trimester of 2007.
Results
Our results indicate that current experiences of temporary unemployment
are associated with lower wages for workers that have been employed by the
firm for more than 1.5 years. This effect is stronger for older workers. In
contrast, for workers that have been employed for shorter periods, no effect of
recent temporary unemployment is found. Past experiences of temporary
unemployment are especially harmful for workers 25-30 years old. As in the
case of recent experiences of temporary unemployment, this effect increases
with tenure. For workers with long tenure in the firm, the length of past
temporary unemployment matters as well. Specifically, for these workers, the
longer they have been in temporary unemployment the last year the lower their
wage is. In contrast, for workers older than 30, past experiences of temporary
unemployment are not associated with the a lower wage. Therefore, it seems
that temporary unemployment has some scarring effect on the career of young
workers but is not harmful for the career of prime-age or older workers.