Working Paper: NBER ID: w6142
Authors: David Card; Thomas Lemieux
Abstract: We use comparable micro data sets for the U.S. and Canada to study the responses of young workers to the external labor market forces that have affected the two countries over the past 25 years. We find that young workers adjust to changes in labor market opportunities through a variety of mechanisms, including changes in living arrangements, changes in school enrollment, and changes in work effort. In particular, we find that poor labor market conditions in Canada explain why the fraction of youth living with their parents has increased in Canada relative to the U.S. recently. Paradoxically, this move back home also explains why the relative position of Canadian youth in the distribution of family income did not deteriorate as fast as in the U.S.
Keywords: Youth Employment; Labor Market; Living Arrangements; School Enrollment
JEL Codes: J13; J24; J62
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Poor labor market conditions in Canada (F66) | Increase in the fraction of youth living with their parents (J13) |
| Cyclical conditions and local wage rates (J39) | Decisions regarding school enrollment and work effort among youth (I21) |