Labor-Market Scars when Youth Unemployment is Extremely High: Evidence from Macedonia

The objective of this article is to assess how the duration of unemployment spells for Macedonian youth affects their later employment (employment “scarring”) and wage outcomes (wage “scarring”). The discrete-time duration method is used to determine the unemployment spell and the standard employment and Mincer earnings functions. The School-to-Work Transition Survey 2012 is used. The results robustly suggest the presence of employment scarring: youth who remain unemployed over longer time periods have lower chances to find a job afterwards. However, the article provides no evidence for the existence of wage scarring in the Macedonian labor market.