Does the first job affect current youth working status in Bangladesh?

Abstract

PurposeThis paper evaluates how the first job when individuals entered the labor market affects the probability of youth being currently employed in formal or informal work in Bangladesh.Design/methodology/approachThe analysis is based on data from the ILO School-to-Work Transition Surveys. The authors use a full-information maximum likelihood approach to estimate a two-equation model, which accounts for selection into the labor market when estimating the impact of entry status on current work outcomes. The main equation outcome follows a multinomial distribution thus avoiding a priori assumptions about the level of individual’s utility associated with each work status.FindingsThe authors find that entering the labor market in a vulnerable employment position (i.e. contributing family work or self-employment) traps into vulnerable employment and prevents the transition to both informal and, especially, formal paid work. This finding holds when accounting for endogeneity of the entry status and it is valid both in the short and in the long run. Young women are less likely to enter the labor market, and once entered they are less likely to access formal paid wok and more likely to being inactive than young men. Low education anticipates the entry in the labor market, but it is detrimental for future employment prospects.Originality/valueThe findings indicate the presence of labor market segmentation between vulnerable and non-vulnerable employment and suggest the endpoint quality of the school-to-work transition is crucial for later employment prospects of Bangladeshi youth.