The high rates of youth unemployment experienced in a number of OECD economies has raised concerns about the effect of this on subsequent earnings. Using the Australian Youth Survey (AYS) a longitudinal survey of Australian youth, Mathew Gray estimates the effects of unemployment on subsequent hourly and weekly earnings. The estimates suggest that, when unobserved heterogeneity is taken into account, it is only long histories of unemployment which have a negative effect on hourly wages. The high rates of youth unemployment experienced in a number of OECD economies has raised concerns about the effect of this on subsequent earnings. Using the Australian Youth Survey (AYS) a longitudinal survey of Australian youth, Mathew Gray estimates the effects of unemployment on subsequent hourly and weekly earnings. The estimates suggest that, when unobserved heterogeneity is taken into account, it is only long histories of unemployment which have a negative effect on hourly wages.