Labor Market Entry Research Articles

Dual returns to experience

In this paper we study how labor market duality affects human capital accumulation and wage trajectories of young workers. Using rich administrative data for Spain, we follow workers since their entry into the labor market to measure experience accumulated under different contractual arrangements and we estimate their wage returns. We document lower returns to experience accumulated in fixed-term contracts compared to permanent contracts and show that this difference is neither due to unobserved firm heterogeneity nor match quality. Instead, we provide evidence that the gap in returns is due to lower human capital accumulation while working under fixed-term contracts. In line with skill-learning complementarity. our results suggest that the widespread use of fixed-term work arrangements reduces skill acquisition of high-skilled workers, holding back life-cycle wage growth by up to 16 percentage points after 15 years since labor market entry.

Skill Endowment Through Vocational Education and Training Programmes and Early Career Mobility

This article addresses inequalities in short‐ and medium‐term career outcomes of workers with different vocational education and training (VET) programmes during the early career. In particular, we examine how the degree of vocational specificity of VET programmes affects occupational status mobility throughout individuals’ early careers, a topic that has hitherto received little attention. We adopt a life course perspective and combine an individual‐level theoretical approach (human capital and signalling theory) with an institutional approach. The former focuses on individuals’ skill acquisition during VET and across the early career. The latter emphasises that individuals’ allocation to a training programme influences the amount and types of skills they acquire. The multinomial logistic regression analyses are based on a combination of detailed curricula‐based occupation‐level data on the specificity of training programmes and individual‐level data from the Transitions From Education to Employment (TREE) longitudinal dataset. The results show, firstly, that labour market allocation at the beginning of a career has consequences for later labour market outcomes. Second, practical occupation‐specific education and training facilitate status stability at labour market entry, while general skills and knowledge are decisive for long‐term upward mobility.

Lifetime Earnings in the United States over Six Decades

Between the 1957 and 1983 labor market entry cohorts, median lifetime earnings declined by 10–19 percent for men and increased by 22–33 percent for women, albeit relative to very low median lifetime earnings for the early cohorts. The difference between newer and older cohorts comes from differences in median earnings at the time of labor market entry. Inequality in lifetime earnings has increased significantly within each gender group, but the closing lifetime gender gap has kept overall lifetime inequality flat. The increase among men is largely attributable to subsequent cohorts entering the labor market with progressively higher levels of inequality. (JEL D15, J16, J31, J32)

Race, work history, and the employment recidivism relationship

AbstractRecent studies have found that race, work history, postprison employment, and recidivism are intertwined, suggesting that race and work history may shape the employment–recidivism relationship in nuanced, yet underexplored ways. Additionally, the literature has yet to settle on what kinds of employment patterns matter most for recidivism. These issues are especially important to resolve given contemporary concerns about mass incarceration and racial disparities among citizens returning from prison. To investigate these questions, we analyze administrative prison records, unemployment insurance (UI) quarterly data, and a recidivism follow‐up documenting multiple failures for approximately eight years. Frailty models, which address unobserved heterogeneity among those prone to multiple recidivism events, reveal that establishing a recent work history unlocks the protective effect of employment, and that the relationship between postprison employment and recidivism does not vary by race. We also find that being sporadically employed is as protective as being more consistently employed. Our findings imply that employment contributes to racial disparities in recidivism via racialized barriers to labor market participation rather than via differential effects. Our results further suggest that addressing barriers to employment, especially for those with no work history and those facing racialized barriers to labor market entry, could significantly reduce recidivism.

Government regulation and wages: Evidence from continuing coverage mandates

We examine the wage effects of health insurance market regulations that compel private insurers to offer continuing coverage to beneficiaries in the United States. We model wages at various points across the career as a function of the mandated number of months of continuing coverage at labor market entrance. More generous mandated continuing coverage at labor market entrance causes an initial wage decline of 1% that reverses after five years in the labor market, leading to higher wages later in the career. In particular, wage increases are observable up to 30 years after labor market entrance. We provide suggestive evidence that increased job mobility early in the career is a mechanism for observed wage effects.

Greater local supply of language courses improves refugees’ labor market integration

ABSTRACT Utilizing the German residential allocation and residency obligation policies, which can be regarded as a natural experiment, we investigate the causal effect of the local supply of language courses on refugees' labor market integration. By restricting refugees’ initial and post-arrival regional mobility, these policies allow us to circumvent the potential problems of initial and post-arrival residential selection. Moreover, we examine the intermediary outcomes – language proficiency, language course completion and certification, and contacts with natives – through which the local opportunity structure of language courses shape refugees’ economic integration. Our results reveal that the local supply of language courses positively affects refugees’ employment probability, and this effect persists over the duration of stay. We further find that greater supply of language courses in the assigned county increases probability of learning the German language, completing the course and receiving language certificates. From a policy perspective, our findings imply that the local provision of language courses should be considered in refugees’ residential allocation to facilitate immigrants' integration. This is because limited access to such courses can delay host country language learning, language certificate obtainment, and labor market entry, thus slowing the integration of recently arrived immigrants.

The fundamental role of tax systems in the relationship between workfare and inequality in the lower half of the income distribution

In recent decades, many affluent democracies moved from traditional welfare states to workfare systems. Meanwhile, income inequality developed differently across countries, even when they made apparently similar shifts from welfare to workfare. It is a matter of debate why welfare state change had such heterogeneous consequences across countries. This article proposes that different incentives to take up low-wage work set by tax reforms in the wake of welfare-to-workfare transitions alter consequences on inequality in the lower half of the income distribution. To support this argument, we contrast the trends between the U.S. and Germany. The German and U.S. tax systems were used in very different ways to incentivize low-wage work. The U.S. provided strong incentives to take up low-wage, high-hour work through refundable tax credits. They act as in-work subsidies and represent an enormous public income support program. In contrast, in Germany, payroll taxes were reduced for marginal employment. These jobs were intended to serve as a stepping stone to full employment. Germany aimed to reduce barriers to labor market entry, but did not increase subsidies for those working higher hours in low-wage jobs. We hypothesize that the German path led to increased income inequality within the lower half of the income distribution, whereas the large U.S. tax-based subsidies in the U.S. significantly counteracted it. Decompositions of unconditional quantile regressions based on the SOEP and the CPS-ASEC for 1992 and 2014 strongly support these assumptions. Households with no labor market integration lost ground with the workfare reforms in both countries, increasing inequality in the lower half. However, U.S. households that conformed to the new workfare system by taking low-wage jobs received additional after-tax income through tax cuts and credits. This additional income of the beneficiary households increased the percentile values between the 10th and 30th percentiles by about 6 per cent, thus reducing income inequality in the lower half. Germany, on the contrary, lacked such compensatory subsidies for compliant households. Thus, increased take-up of low-wage work was associated with an increase in income inequality in the lower half. We conclude that tax systems are important in understanding why the shift towards workfare was associated with heterogeneous trends in income inequality across countries.

Regional differences in initial labour market conditions and dynamics in lifetime income trajectories.

We use longitudinal register data from Sweden to study patterns and dynamics in lifetime income trajectories. We examine divergences in these income trajectories by local economic conditions at labour market entry, in combination with other factors such as gender, education level and socio-economic background. We cannot assume that these relationships are constant over the course of individuals' working lives. Therefore, we use methods from functional data analysis, allowing for a time-varying relationship between income and the explanatory variables. Our results show a large degree of heterogeneity in how lifetime income trajectories develop for different subgroups. We find that, for men, entering the labour market in an urban area is associated with higher cumulative lifetime income, especially later in life. The exception is men with only primary education, for whom those starting their working lives in a large city have lower incomes on average. This divergence increases in size over time. Women who enter into a large urban labour market receive higher lifetime income at all education levels. This relationship is strongest for women with primary education but decreases in strength over time for these women.

Analysis of the Importance by Areas of Labor Market Entry Support Program for Youth

Analysis of the Importance by Areas of Labor Market Entry Support Program for Youth

Employment Status and Well-Being Among Young Individuals. Why Do We Observe Cross-Country Differences?

In this paper we analyse why in some countries the difference in subjective well-being between employed and unemployed young individuals is substantial, whereas in others it remains small. The strength of this relationship has important consequences, hence it affects the intensity of the job search by the unemployed as well as the retention and productivity of employees. In the analysis we are focused on youth and young adults who constitute a group particularly exposed to the risks of joblessness, precarious or insecure employment. We expect that in economies where young people are able to find jobs of good quality, the employment–well-being relationship tends to be stronger. However, this relationship also depends on the relative well-being of the young unemployed. Based on the literature on school-to-work transition we have identified macro-level factors shaping the conditions of labour market entry of young people (aged 15–35), which consequently affect their well-being. The estimation of multilevel regression models with the use of the combined dataset from the European Social Survey and macro-level databases has indicated that these are mainly education system characteristics (in particular vocational orientation and autonomy of schools) and labour market policy spending that moderate the employment–well-being relationship of young individuals.

Where DESO Disappears: Spatial Inequality and Social Stratification at Labour Market Entry

Abstract At country-level, a host of evidence suggests there is a sizeable direct effect of social origin (DESO) on initial labour market outcomes, net of educational attainment. What is true at country-level is not always true below country-level, however. Using data from the UK Household Longitudinal Survey and the German Socio-Economic Panel, we show that variable spatial opportunity structures moderate the size of DESO at labour market entry, such that there are places where DESO disappears. Social origins assume greater importance as local labour market conditions deteriorate: in weak local labour markets, non-graduates are approximately 16 percentage points less likely to find employment if their parents are care workers rather than secondary school teachers, while graduates typically obtain first jobs that are 7–9 ISEI points lower in status. These findings highlight the distinctive geography of social stratification processes at labour market entry and potentially beyond.

Opening a door to politics? Labour market entrance and political candidacy among refugees

ABSTRACT In this study, we explore whether the economic integration of immigrants may function as a stepping stone to their political integration. We show that there are strong theoretical reasons to expect entrance into the labour market to be pivotal for the political socialisation of immigrants in the new host country and in extension for their opportunities to stand for office. Empirically, we make use of Swedish register data and study whether labour market entrance among refugees affects their chances of being nominated for political office in Swedish municipal councils. We focus on refugees that arrived in Sweden between 1985 and 1994 and explore whether they became political nominees in seven consecutive elections between 1994 and 2014. Our results indicate that getting an early foothold in the labour market has a significant positive effect on the likelihood of running for office. These results hold even when we make use of more exogenous variation in the labour market conditions that refugees encountered when they arrived in Sweden, which provides some support that labour market entrance may have a causal effect on political candidacy among refugees.

Creating Our Gendered Selves-College Experiences, Work and Family Plans, Gender Ideologies, and Desired Work Amenities Among STEM Graduates.

Studies often cite climate issues in science, technology, engineering, and mathematics (STEM) employment to explain the lack of diversity by gender and race. Yet, little research directly attends to gender and racial differences in the college experiences, expected family roles, and ideological beliefs about gender that create the racialized "gendered selves" graduates bring to STEM occupations. We examine the experiences and beliefs of graduating chemistry and chemical engineering majors at two U.S. universities, showing where they coalesced into intersectional gender groups whose work and family involvement and desired working conditions substantially differ. Gendered family expectations and workplace beliefs at labor market entry subsequently predict career confidence and family-based limits on job searching, both important factors affecting retention in STEM employment. We find that women at career entry are more likely to have lower confidence and more limits on their job search, though patterns differ by ethnicity. This occurs in part because both male and female graduates who report greater expected family responsibility also report lower confidence and more limits in job searching. Overall, aspirational fulfillment is easier for men whose intersectional gender identities fit the dominant STEM workplace culture, and harder for women and non-white graduates with more flexible gender ideologies and greater anticipated household responsibilities.

It ain’t where you’re from, it’s where you’re at: Hiring origins, firm heterogeneity, and wages

Sequential auction models of labor market competition predict that the wages required to successfully poach a worker from a rival employer will depend on the productivities of both the poached and poaching firms. We develop a theoretically grounded extension of the two-way fixed effects model of Abowd et al. (1999) in which log hiring wages are comprised of a worker fixed effect, a fixed effect for the “destination” firm hiring the worker, and a fixed effect for the “origin” firm, or labor market state, from which the worker was hired. This specification is shown to nest the reduced form for hiring wages delivered by semi-parametric formulations of the canonical sequential auction model of Postel-Vinay and Robin (2002b) and its generalization in Bagger et al. (2014). Fitting the model to Italian social security records, origin effects are found to explain only 0.7% of the variance of hiring wages among job movers, while destination effects explain more than 23% of the variance. Across firms, destination effects are more than 13 times as variable as origin effects. Interpreted through the lens of Bagger et al. (2014)’s model, this finding requires that workers possess implausibly strong bargaining strength. Studying a cohort of workers entering the Italian labor market in 2005, we find that differences in origin effects yield essentially no contribution to the evolution of the gender gap in hiring wages, while differences in destination effects explain the majority of the gap at the time of labor market entry. These results suggest that where a worker is hired from tends to be relatively inconsequential for their wages in comparison to where they are currently employed.

Higher Education Students’ Perception of the E-Portfolio as a Tool for Improving Their Employability: Weaknesses and Strengths

This study analyzes the strengths and weaknesses of the professional e-portfolio as a tool for preparing students in higher education to enter the labor market. It also examines students’ level of planning to enter professional employment, and the help that they receive with this task from the university. The research is quantitative and observes the students’ opinions before and after they create their own professional e-portfolio, as a case study. We used the analysis of means to determine the trend in the aspects analyzed over time, and the Student’s t-test and Cohen’s d to determine the effect size. We also performed correlation analysis between the different categories and subcategories proposed. The results show that the e-portfolio is a tool with strengths for labor market entry, while also revealing the weaknesses that students find in it. At the very least, the e-portfolio was useful to the students in planning their entry into the workforce. The correlations show high levels among the strengths but not among the weaknesses analyzed.

The Short-Term Effect of the COVID-19 Crisis on Employment Probabilities of Labour-Market Entrants in the Netherlands

This research documents employment opportunities of labour-market entrants during the COVID-19 crisis in the Netherlands. Two recent cohorts of graduates are studied and compared to two pre-COVID-19 cohorts: the 2019 cohort was unexpectedly hit by the COVID-19 crisis about six months after entering the labour market and the 2020 cohort graduated and entered the labour market in the midst of a lockdown. Our estimation results suggest short-term effects of lockdowns on employment probabilities, specifically for relatively lower educated labour-market entrants. The effects appear to be relatively small in size and seem to fade when the lockdown measures are eased. Men seem to have suffered more than women and some sectors are hit harder than others, which could result in short-run mismatches. Overall the effects appear to be less severe than during an economic recession, which is most likely due to the tight labour market and the strong measures taken by the government to mitigate the labour-market impact of the COVID-19 crisis.

Labour market integration of FRY refugees in Sweden vs. Denmark

AbstractWe compare the long‐run labour market integration of the Former Republic of Yugoslavia (FRY) refugees who arrived in the 1990s to the Scandinavian countries in the settings of Sweden and Denmark, respectively. These otherwise similar countries faced different economic conditions at the time of arrival and over the observation period. They also differed in terms of the restrictiveness of asylum policies and in attitudes towards immigration. Using register data from Statistics Sweden and Statistics Denmark, we show that FRY refugees, in both child and adult generations at arrival, are better integrated 12–15 years later in Sweden than in Denmark, even though Sweden experienced a higher level of unemployment than Denmark throughout the period. Our findings suggest that asylum policies promoting early labour market entry and early exposure to a host country's schooling system, as well as access to disability pension and social assistance, are important factors affecting refugee labour market integration.

Does graduate education abroad matter? Evidence from Burkina Faso

ABSTRACT This paper addresses international student migration, return migration and labor market entry by examining the effects of graduate educational migration on employment, type of employment, wage and wait time to obtain employment. Using primary data collected in 2021 on 1774 burkinabè graduates, including non-migrants and migrants (returnees and non-returnees), the results are mixed. Migration for studies does not provide better access to employment for returnees because they take longer to get a job despite having degrees from schools abroad and earning more. Controlling for selection bias, Ph.D. graduates take longer to find jobs than do Master's graduates. Arbitrating between unemployment and a lower-skilled job, the findings highlight that the returnees prefer unemployment. Assignment and queuing theories are supported for returnees.

Regional and Ethnic Disparities of School-to-Work Transitions in Bulgaria

Bulgaria’s educational and economic landscapes are marked by substantial regional disparities that are interlaced with ethnic inequalities in school-to-work transitions. Young adults from Roma and Turkish origins particularly suffer from disadvantages with respect to education and labour market participation. We ask how ethnicity affects labour market entry in Bulgaria once educational resources of different ethnic groups are accounted for, and how regional contexts impact ethnic disparities in employment insecurities. Building on comparative school-to-work transition (STWT) concepts and on the labour queueing approach, we assume that ethnic disparities in the STWTs of youths in Bulgaria depend on the degree of urbanisation and the strength and structure of the regional economy. The study draws on data from the Bulgarian School Leaver Survey 2014 of 2103 young adults who had left education in the five years preceding the survey. Descriptive analysis and multilevel logistic regression models were applied to analyse STWT patterns with a special focus on education, regional contexts, and ethnicity. The results highlight that STWT risks differ considerably across the Bulgarian regions. The strength of the local economy thereby moderates ethnic disparities. Young people from Roma and Turkish origins are much less disadvantaged to transition towards employment compared to ethnic Bulgarians the stronger the local economy gets. Our study has several policy implications. In addition to the development of public and private employment opportunities for disadvantaged young people, special attention should also be paid to the development of quality vocational education at the national and regional level.

‘This isn’t forever for me’: Perceived employability and migrant gig work in Norway and Sweden

Information asymmetry regarding local job prospects, imperfect portability of qualifications and a lack of host country language skills combine to reduce migrants’ perceptions of their own employability. As a result, platform mediated gig work has become a common labour market entry point for new migrants. However, there is a near-universal expectation among workers is that gig work will be undertaken short-term, rather than as the first step of a longer gig-career. While research has explored the individual and structural factors, there has been limited attention as to how the specific occupational context in which a worker is embedded can also shape workers’ perceived employability. In this article, I therefore present the results of 37 semi-structured interviews with migrant Foodora couriers across Norway and Sweden, exploring how the specific occupational context of gig work intersects with migrants’ perceived employability. This article identifies, firstly, that obtaining employment in gig work was not perceived to be a reflection of workers’ own local employability. Secondly, workers’ short-term temporal orientations shape how participants are able to cope with the physical, emotional and identity demands of gig work. Thirdly, workers have to re-frame their perceived employability in the face of what is perceived to be widespread discrimination in the local labour market context. Lastly, the specific occupational context of gig work was considered to be either of no value to future local employers, or a negative signal as to a worker’s skills and labour market integration.