Employment Risk over the Life Cycle

In this paper we focus on the relative role of job finding and job exit in shaping the employment risk over the life cycle. Using Italian labor market data we document that the risk of being fired and the chance of reemployment display substantial heterogeneity depending on age, cohort and occupational characteristics. We show how the two risk combine in shaping the employment risk. Our results evidence that the life cycle employment probability profile is hump shaped with a peak at adult age and that this dynamic is mainly driven by the “U” –age profile of transitions from employment to unemployment. Moreover, we find that differences in job finding probabilities are mainly responsible for the heterogeneity in the employment risk across working groups.