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This paper studies the impact of labor market conditions during the education-to-work transition on workers' long-term skill development. Using representative survey data on measures of work-relevant cognitive skills for adults from 19 countries, I document four main findings: (1) cohorts of workers who faced higher unemployment rates at ages 18-25 have lower skills at ages 36-59; (2) unemployment rates faced at later ages (26-35) do not have such an effect; (3) the former findings hold even though, on average, people get more formal education as a response to higher unemployment in their late teens and early twenties; and (4) skill inequality is affected: workers whose parents were less educated bear most of the negative effects. These findings can be rationalized by on-the-job learning during the early twenties being an important factor of skill development, and such learning being negatively impacted by bad macroeconomic conditions. Using German panel data on skills, I show that young workers at large firms experience higher skill growth than those at small firms. This finding suggests firm heterogeneity in human capital provision to young workers as a potential mechanism since, in bad economic times, young workers disproportionately match with small firms.

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We present evidence consistent with large disparities across firms in the on-the-job learning their young employees experience, using administrative datasets from Brazil and Italy. We categorize firms into discrete 'classes' using a clustering methodology which groups together firms with similar distributions of unexplained earnings growth. Equipped with this categorization of firms - which our conceptual framework interprets as skill-learning classes - we document three main results. First, Mincerian returns to experience vary substantially across experiences acquired in different firm classes, and the magnitude of this heterogeneity is associated with significant shifts across the distribution of early-career wage growth. Second, past experience at firms with better on-the-job learning is associated with subsequent jobs featuring greater non-routine task content. Third, firms' observable characteristics only mildly predict on-the-job learning opportunities. Our findings hold among involuntarily displaced workers who have no seniority at their new jobs, which is consistent with a portable skills interpretation.

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