Beating the Odds: Impact of the Economic Recession on Young People in the UK

Abstract

This paper has three aims: a) to assess the role of multiple independent risk factors shaping the transition from school to work during a major economic recession; b) to identify protective factors enabling young people to beat the odds; and c) to take into account the wider socio-historical context by comparing transition experiences and findings across two age cohorts making the transition from school to work during the current and the 1980s recession in the UK. Drawing on nationally representative data collected for two age cohorts born in 1989/90 (the Longitudinal Study of Young People in England LSYPE) and in 1970 (British Cohort Study BCS70), we aim to deepen the understanding of the impacts of financial crises (past and present) on young people’s transition into early adulthood. We explore the factors that protect young people from the multiple risks coming to the fore during a recession and help them avoid long-term negative effects expressed, for example, in lower levels of education, higher rates and longer spells of unemployment and life-long lower income. The LSYPE comprises a cohort of young people who, having turned 14 in 2004, began their transition into adulthood at the height of the recent economic downturn. We compare their experiences with those of young people in the 1970 British Cohort Study who made their school-to-work transition during the 1980s recession. We map variations in school-to-work transitions across the two age cohorts, focusing in particular on young people making the step into further and higher education, those entering employment (with or without training) after completion of compulsory education, and those who are not in education, employment or training (NEET) between ages 16-18 and beyond. Historically, in Great Britain rates of participation in further education and training have lagged behind those in other OECD economies, resulting in a workforce with fewer skills and qualifications compared to other developed countries. Education enrollment rates for 15-19 year olds in the UK are currently well below the OECD average (69.7% in the UK versus 81.5% OECD average) and a comparatively large share of 25-34 year olds have not completed upper secondary education (OECD, 2008, 2010). The UK also has a relatively high rate of youth unemployment, which in 2010 reached a record high with 1 in 5 of all 16 to 19 year olds being unemployed ( the jobless total nudged 2.5 million, the worst total since the mid-1990s). While many studies have reported associations between cumulative multiple disadvantage and youth unemployment or NEET status, few studies have established the factors that are independently associated with transition outcomes. Risk factors generally include socio-demographic - as well as area-level characteristics - yet most studies have failed to account for the extent to which different exposures are correlated or clustered. Here we establish risk factors that are independently associated with problems in the labor market or with education transitions to inform understanding about the relative impact of risk factors on the individual. We further assess the antecedent factors which help enable young people to “beat the odds” during a period of recession and, when increasing numbers of young people are failing to make a successful transition into the labour market, not become NEET. Our interest lies in understanding what family, individual and school-level factors can help protect against becoming NEET during a period of recession. In particular we focus on the role of prior academic attainment, career aspirations of the young people and their parents, as well as school motivation and prior engagement in the labour market. Findings from LSYPE suggest that in 2009, at age 18/19 over 16% of the sample are categorised as not in education, employment or training (NEET). Becoming NEET is significantly associated with parental social and family status, as well as social housing, gender and ethnicity. Our results also highlight distinct risk patterns for young people on different transitions to adulthood. Those who become NEET, for example, come from the most disadvantaged families while those who go onto university (28% of the sample) come from the more privileged backgrounds. On the other hand, the step into early employment (40% of the sample) appears to be driven by family economic factors: those from low income households who may need to earn their own living are more likely to work while those who grow up in workless families are less likely to be employed. There might thus be different pathways for young people experiencing financial hardship at home.Our results also highlight that not all young people exposed to multiple risk factors become NEET. Figure 1 shows a strong relationship between the number of social risks experienced by young people and the likelihood of becoming NEET, but also that of those who become NEET just over 30% had no risks. We furthermore show that a significant proportion of young people overcome adversity: around 30% of those in university have at least one risk factor, controlling for prior achievement. Factors that reduce the cumulative risk effect enabling young people to ‘beat the odds’ include mathematics attainment at age 11, school motivation and engagement, some school characteristics (such as average pupil attainment and the social composition of the school), as well as earlier engagement with the labour market. Young people from ethnic minority groups (in particular Indian and Black African) are all less likely to be NEET than White young people, after controlling for family social background, area characteristics, academic capability and motivation.