Long-term effects of initial labor market conditions on young Mexicans

In this paper, we analyze the long-term effects of initial labor market conditions on young Mexicans. We construct a synthetic panel from the National Survey of Occupation and Employment. The sample is grouped according to region, educational level, year of interview, and year of entry into the labor force. The results indicate that the condition of the labor market at the time of entry has long-term effects, especially on income and the discouraged population. As the young population faces greater adversity in the year of entry, income decreases while the discouraged young population increases, but unemployment and informality do not change substantially. The effects are greater when the initial shock increases informality in the region of residence. The effects on income are robust to the inclusion of current conditions in the labor market. We recommend that employment policies should focus on bringing young people into formal employment.