Employment Path Dependency and Scarring
RCTReview
In urban labor markets, taking temporary or informal early-career employment fails to serve as a stepping stone to formal jobs, leading to persistent low earnings and job insecurity. Early employment quality dictates long-term career trajectories rather than overall employment experience alone.
Picture this
Accepting short-term, low-skill jobs traps workers on a secondary track where skills are underutilized and future recruiters interpret frequent job switches as a negative signal. It is like taking a temporary detour on an unpaved dirt road: instead of eventually merging onto the highway, the vehicle remains stuck on rough terrain.
What the evidence says
Having temporary or informal work after 1 year showed zero statistically significant correlation with 4-year earnings compared to remaining unemployed. Short-run permanent work status accounted for 23% and short-run earnings accounted for 56% of the total 4-year earnings treatment effect.
- Who was studied
- N = 3,052 young job-seekers aged 18–29 in Addis Ababa, Ethiopia.
- How
- Randomized controlled trial with fortnightly phone panel tracking and long-term follow-up at 4 years, analyzed via causal mediation analysis.
What to do
Implement early-career placement assistance that prioritizes secure, contract-backed formal employment over immediate temporary placement to prevent career scarring.
From the source
"Most strikingly, having any job after one year is not correlated with earnings at all after controlling for having a permanent or formal job. That is, individuals who had temporary or informal jobs after year do not have higher earnings that those that were unemployed."
Anonymity_or_Distance_Job_Search_and_Labour_Market_Exclusion_in.pdf