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Young people and the labour market

All forecasts suggest that the Covid-19 pandemic will cause a major recession in the UK. This will stem not just from the initial lockdown of many industries, but a longer-term loss of consumer confidence and desire for precautionary saving even among those who have kept their jobs. Apart from an expansion of Universal Credit, none of the government’s measures to replace lost earnings or protect jobs make any provision for those not already working. With hiring freezes from employers large and small, the overall drop in economic activity will have a uniquely damaging effect on those entering, or about to enter, the labour market this year. MiSoC research points to this cost predominantly being borne by those from disadvantaged backgrounds.

Recent work by MiSoC Director Emilia Del Bono and Greta Morando (Del Bono and Morando, 2020) tells us what happened as a result of the 2008 recession in the UK. While high SES graduates stayed longer in full-time education, low-SES graduates were more likely to become unemployed. Gaps also widened in earnings and access to managerial and professional positions among those who managed to find jobs within 6 months of graduating. Noticeably, low SES graduates were much less likely to find a job with a new employer, and (correspondingly) more likely to continue working with a previous employer. In most cases, this meant that they continued working in a job not related to their qualification. This points to unequal access to professional networks as a potential channel to explain SES inequalities during tough labour market conditions. A similar finding is echoed in two studies by MiSoC researcher Angus Holford, who highlighted significant socio-economic inequalities in access and returns to unpaid internships across the entire graduate population (Holford 2017) and for science graduates specifically (Fournier et al. 2019).

Read Del Bono and Holford’s blog for the ESRC’s new Economics Observatory on the prospects of young people trying to enter the labour market during this economic downturn.

A less obvious mechanism for the damaging long-run effects on labour market outcomes is the evaporation of opportunities for teenagers to gain extra-curricular experience while still at school. Holford (2020) studied the long-term effects of such work experience on labour market outcomes up to age 25, and found that, holding their GCSE results constant, students who held a part-time job while at school could expect less time in unemployment and, and (for females only) to work in a ‘managerial or professional’ occupation. The current cohort of 14-16 year-olds will have fewer opportunities to accumulate this extra-curricular experience and will therefore stand at a disadvantage compared with their older and younger peers.

To mitigate the long shadow of widening labour market outcome gaps by socio-economic background caused by the Covid-19 pandemic, high quality work experience opportunities during and between stages of education should be developed and targeted at pupils from low-socioeconomic backgrounds. One important initiative in this respect is the Nuffield Research Placements scheme for sixth-formers from low socio-economic status backgrounds. Several MiSoC researchers are volunteering to take part in the scheme this year and are looking forward to host their placements remotely if this needs to be the case.

References

Del Bono, E. and G. Morando, (2020): For Some, Luck Matters More: The Impact of the Great Recession on the Early Careers of Graduates from Different Socio-Economic Backgrounds, unpublished paper.

Fournier AMV, Holford AJ, Bond AL, Leighton MA (2019); Unpaid work and access to science professions. PLoS ONE 14(6): e0217032.

Holford, A., (2017), ‘Access to and returns from unpaid graduate internships’, IZA Discussion Paper 10845.

Holford, A., (2020), ‘Youth Employment, Academic Performance and Labour Market Outcomes’, Labour Economics, 63, 101806.

https://www.nuffieldfoundation.org/students-teachers/nuffield-research-placements