Can a work-readiness program mitigate unemployment scarring: the case of a co-operative education job market

Abstract

ABSTRACT Using a two-year-long longitudinal dataset that follows co-operative education (co-op) students’ employment situations, this paper examines how unemployment in the first scheduled co-op work term is associated with un(der)employment in subsequent work terms. Drawing from unemployment scarring theory, the paper also investigates the role of a work-readiness intervention in reversing the potentially negative consequences of unemployment in the first scheduled co-op work term. The results suggest that unemployment in the first co-op work term is associated with underemployment in a subsequent work term. Compared to those who were employed in their first scheduled work term, students who were initially unemployed were just as likely to be employed in their second work term, but they got jobs later, were in jobs with lower seniority, and were paid less than expected. By the third scheduled work term, employment and underemployment were similar between all groups, except that initially employed students continued to earn more, suggesting an earnings penalty for initial unemployment that is consistent with unemployment scarring theory. Critically, participation in a work-readiness intervention reversed this narrative. Intervention participants did better than their unemployed peers in subsequent work terms, and their employment situation was more like that of the initially employed students.