Youth, recession, and the buffering role of institutions: a cross-country comparison

Abstract

How do labour market and education institutions affect youth’s initial or early labour market outcomes during a recession compared to the pre-recession period? Does the impact of institutions on youth’s labour market outcomes during a recession vary across different types of youth? These questions are at the heart of this dissertation which brings together both economic and sociological literature to develop a model of individual youth adjustment in response to a recession. My central assumption is that youth respond to a recession by trading-off the quality work attained, in terms of occupational status or job security, to reduce time spent in unemployment. Although all individuals are expected to make this trade-off to some extent, both the ability and willingness to trade-off the quality of work as well as the expected benefits from doing so, are likely to be influenced by a range of individual and country level characteristics. At the individual level, characteristics such as gender, family income and, in turn, educational attainment will influence whether individuals have the resources or inclination to extend their job search period and hold out for higher quality work. At the national level, a number of education and labour market characteristics will determine the range and quality of work available to individual youth and the level of competition they will face in securing this work, both generally and in a recession.

I bring these individual and institutional components together to compare youth employment outcomes across the pre-recession to post-recession period, considering outcomes such as 1) employment, 2) work type (i.e. full-time or temporary) and 3) occupational status. These outcomes are explored across three chapters using EU-SILC longitudinal data for up to 19 countries, over the period 2003 to 2015 for secondary and postsecondary educated youth. The first chapter explores the impact of labour market institutions on youth employment and full-time work participation, considering the effect of adaptive (i.e. collective bargaining) compared to static (i.e. Employment Protection Legislation) forms regulation over the business cycle. The second analysis chapter considers the role of family income on initial full-time work attainment, exploring how these family income effects vary according to the level of tracking and education quality within an education system. Finally, I examine the impact of gender on full-time and non-standard work attainment, considering the moderating role of education tracking and gender empowerment, both generally and during a recession.

Institutions are shown to play a key role in shaping youth responses to a recession, with these effects moderated by individual characteristics. Chapter 2 illustrates the adaptive nature of collective bargaining institutions, with significantly different institutional effects observed between the pre- and post-recession periods. This results in benefits to youth in terms of employment and full-time work attainment where bargaining coverage is broader. Family income is found to play an important role in youth responses to a recession, as shown in Chapter 3, with family income effects increasing where the level of tracking in education is high, particularly during a recession. At the same time, increasing education quality weakens, the effect of family income, benefiting youth from lower-income backgrounds. Chapter 4 lends support to demand-side theories of gender segregation, with male youth appearing to hold a stronger position in the labour market. This is used to trade-down into traditionally female roles during a recession, crowding-out women from full-time work. Additionally, both Chapters 3 and 4 highlight the role of vocation-specific education in segmenting the labour market, with the differential skills provided creating an effective barrier to ‘trading-down’ during a recession, protecting those with weaker positions within the jobs queue.