Youth unemployment, churn and stalled careers: The UK youth labour market in the 2008/9 recession

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1 Youth unemployment, churn and stalled careers: The UK youth labour market in the 2008/9 recession Dr Neil Lee Department of Geography & Environment / Centre for the Analysis of Social Exclusion LSE n.d.lee@lse.ac.uk

2 The presentation 2008/9 financial crisis led to significant increases in youth unemployment in the UK Youth unemployment rate: 12 18% (Hills et al. 2013) Raising the gap with the adult rate (5 8 %) Unemployment is only a snapshot: What happened to other indicators in the labour market? Structure of today Three indicators: Lock-out, churn or stalling Data Evidence on these indicators (bivariate / multivariate) Implications

3 The UK youth labour market Churn, cycling in the youth labour market Low-pay, no-pay cycle (Shildrick et al 2010) Wolf (2011) job hopping with poor quality training Progression Reduced demand for labour Upward movements harder without vacancies Implications of lock-out, churn or lack of progression May lead to wage scarring Have different policy implications Different groups will experience things differently Bumping down (Green, Gordon)

4 The data The Longitudinal Labour Force Survey (5QLFS) Individuals sampled for 5 quarters Only those aged Combines longitudinal element with large sample size Issues: attrition bias, selective non-response (weights applied) For clarity, data amalgamated into periods based on entry into sample Period 2002/3 2004/5 2006/7 2008/9 2010/11 Total Sample size 7,181 7,216 5,964 4,966 3,188 28,515

5 The data (2) Following Dorsett & Lucchino (2013), young people are divided into four groups: Unemployed those who are not currently in employment but are actively seeking it. Full time education defined, according to LFS guidelines, as full time students, those at school or on sandwich courses. In employment those defined as in employment according to the ILO measure. Note that this will include people who are in part time employment. Not economically active The remainder of the youth population this will include those not currently seeking work, with caring or childcare responsibilities and the disabled.

6 Concepts and indicators Concept Locked out Churn Indicator Labour market flows Change between states (includes changes in and out of work Job mobility Occupational mobility Stalling Temporary employment Transitions from temp to perm Pay changes in single year (Net weekly wage Q5 Q1)

7 Labour market flows State in Q1 versus state in Q5 (selected options) Period 02/03 04/05 06/07 08/09 10/11 Average Ed Ed Ed Emp Ed NEA Ed Un Emp Ed Emp Emp Emp Un NEA Ed NEA NEA Un Emp Un - Un

8 Changes between D&L states Percentage making any change between unemployment, employment, FTE and NEA Period 02/03 04/05 06/07 08/09 10/11 Average No change change

9 Job mobility Job mobility % reporting at least one change in job over period (of those remaining in employment throughout) Period 02/03 04/05 06/07 08/09 10/11 Average No change change

10 Occupational mobility Occupational mobility Percentage reporting different occupation between any two quarters (includes those out of work) Period 02/03 04/05 06/07 08/09 Average No change change Note: Data not available for 10/11

11 Temporary employment % of young people in temporary work 02/03 04/05 06/07 08/09 10/11 Average Other Temporary work % of young people in temporary work in Q1 still in temp work in Q5 02/03 04/05 06/07 08/09 10/11 Average Other Temporary work

12 Distribution of pay increases (Net weekly pay of those in employment in both Q1 and Q5, 500 maximum change) Mean St. Dev Min Max 2002/ / / / / Adjusted to 2002 prices (RPI)

13 Testing for cohort structure Approach Logit model (OLS for wages) Should control for (1) changing educational / age composition, (2) allow interactions between years and education Control variables Age (year) NVQ1 5 Migrant status (not uk born) Gender (Male) Disability (DDA disabled) Ethnicity (Mixed, Asian, Asian Brit, Black Brit, Chinese, Other) Region (10 dummies)

14 Results: Basic regressions (1) (2) (3) (4) (5) (6) (7) (8) Probability of making change between U, E, FTE and NEA Job mobility (reports change in job, but in continuous employment) Occupational mobility (Has changed occupation at least once in 5 quarters) Progression. Change in net weekly incomes between Q1 Q5 2004/ *** 0.134*** * * 5.389** (0.0341) (0.0389) (0.0394) (0.0439) (0.0334) (0.0370) (2.324) (2.418) 2006/ *** 0.201*** *** 11.34*** (0.0357) (0.0425) (0.0416) (0.0487) (0.0351) (0.0410) (2.641) (2.842) 2008/ *** 0.261*** *** ** * (0.0375) (0.0446) (0.0445) (0.0517) (0.0372) (0.0430) (2.903) (3.072) 2010/ *** 0.344*** ** (0.0431) (0.0576) (0.0519) (0.0686) (4.095) (5.739) Obs 28,515 26,066 28,515 26,066 25,327 24,250 6,942 6,479 Controls No Yes No Yes No Yes No Yes Estimation method Logit Logit Logit Logit Logit Logit OLS OLS

15 Summary of results Lock-out Strong evidence that young people in the recession were unable to get into the labour market Churn Lack of jobs meant young people were not able to enter employment in the first place There was some churn, but outside of employment For many, low-pay/no-pay became no-pay/no-pay Progression Young people were less likely to progress from temp to perm Greater inequality in wage increases amongst young people (McKnight) Differences between graduate and low qualifications labour market (not reported here)

16 Some policy implications Lock-out Definite support for job-subsidies (Future Jobs Fund) Churn (job retention / work retention) May be addressed through sustainability programmes (subsidies, childcare) Important, but less immediate issue in crisis Progression Focus on career ladders, training

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