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Implications of Unemployment

The longer a worker is unemployed, the more significant the income loss. But according to David Wiczer's essay "Earnings Losses Through Unemployment and Unemployment Duration," these losses vary across individuals and occupations. For individuals unemployed one month, their losses are close to zero; but for those unemployed a year, their next job pays about one-sixth less than their previous one. When the data are examined based on occupation, there is a wide range of earnings losses between 0 and 4 months and a wide range of earnings losses between approximately 7 and 12 months. However, workers unemployed 4 to 6 months tend to narrow the earnings gap. This could indicate that if a worker is unemployed but can be selective about career choices, waiting until a better match comes along may mitigate earnings loss. Read the full essay here