Longer-term Labour-market Consequences of Economic Inactivity during Young Adulthood: A Swedish National Cohort Study

Abstract

We used national register data for more than 560,000 young persons living in Sweden to examine the longer-term labour-market consequences of being economically inactive. The study group consisted of the entire population born between 1969 and 1973 living in Sweden in 2003. Two observation groups of economically inactive young adults in the age range 20–24 years were identified and compared with cohort peers. The observation period was 1993–94, when youth unemployment peeked in Sweden; the follow-up year was 2001, the latest possible due to availability of statistics. One observation group consisted of those who had been inactive one year out of the two possible (n=41,496), and the other consisted of young people who had experienced two consecutive years of inactivity (n=19,188). Both inactivity and various labour-market positions were defined through Sweden's Total Enumeration Income Register. Logistic regression models were used to compute odds ratios for different marginalized labour-market outcomes in the evaluation year (i.e. seven years after the inactivity period). Our analyses show that individuals who were economically inactive when they were 20–24 years old in 1993–94 have a significantly elevated risk of being economically inactive when followed-up seven years later. Also, in comparison with individuals in other unstable labour-market positions there is a significant excess risk of a marginalized outcome among the inactive groups. Especially for the two-year inactive group, the odds ratio for remaining inactive seven years later was strikingly high. Although the results show that the inactivity rate is especially high among foreign-borns and those with the lowest level of education, the higher risks for inactivity remain even when controlling for demographic and socio-economic background factors and potential health-selection bias. Economic inactivity in young adulthood is discussed as a step in a marginalization process that has begun in earlier ages but where the time spent in economic inactivity plays an important role in the process.