A decade of damaged prospects for the recession’s school leavers

The scars of the recession on a generation’s jobs and wages will be evident a decade later, according to major new research into the impact of the recession on the labour market.

Professor Mark Taylor’s study for the ESRC Research Centre on Micro-social Change has examined the impact of the ‘Great Recession’ on employment prospects for young people. The research found that the damage of leaving school during the recession was having a much longer term impact on an individual’s work life than previously anticipated. Alarmingly, the research reveals the impact of leaving school during high unemployment was still having statistically significant detrimental effects on job prospects and earning potential ten years later.

The study, funded by the Economic and Social Research Council, looked at cohorts of young people leaving school, entering the labour market and competing for jobs at a time when labour demand is low. Using data from the BHPS and Understanding Society, Professor Taylor followed young people leaving school between 1991 and 2008 and monitored their ability to find employment, and permanent employment in particular, long term and short term.

The research showed a definite impact, more pronounced for men than women, with those leaving during times of higher unemployment earning less and inevitably finding it harder to get a full time permanent job. Leaving school when unemployment rates are relatively high translates into a reduction in wages for these young people by up to 17% in the short term and up to 7% long term.

Professor Taylor said

“For men in particular, a higher unemployment rate on leaving full time education reduces their propensity to be employed, especially in full time and permanent jobs, reduces their wages and occupational attainment and increases their propensity to be unemployed and NEET (Not in Employment, Education or Training) both in the short term and in the medium to long term.”

Professor Taylor concludes:

“The clear implications from these findings are that the policy focus during periods of low labour demand shouldn’t be only on those leaving education who do not find employment – a group which have been the focus of many past policy initiatives such as the current Work Programme and Youth Contract. Those who enter employment on leaving school should do so through high quality, lasting jobs that contribute to their continued development of skills and human capital. Policies which help reduce unemployment, through training and skills developments (and will also prevent the prevailing unemployment rate from rising too far) will have longer lasting effects on young people by reducing their propensity to experience unemployment in the future.”

The labour market impacts of leaving education when unemployment is high: evidence for Britain by Professor Mark Taylor was funded by the Economic and Social Research Council


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