Labor Market Entry Research Articles

2 Employment and social trends by region

Chapter 2 provides an analysis of the impacts of the COVID‐19 crisis since its onset, and of the divergent courses of recovery initiated across the world’s regions in 2021, as determined by the incidence of new waves of the virus, vaccine roll‐out, renewed containment measures, fiscal policies and other macroeconomic factors. For each region, key labour market indicators are first analysed, alongside an assessment of the region’s recovery prospects by 2023. The regional sections then focus on structural issues made more urgent by the pandemic. Specifically, these are the challenges of realigning growth and the creation of decent work in Africa, initiating structural change and private sector development in the Arab States, curbing growing capital–labour imbalances in North America, intensifying formalization in Latin America and the Caribbean, improving working conditions and productivity in the rapidly growing services subsectors in Asia and the Pacific, and facilitating labour market entry and labour force participation in Europe and Central Asia. The Chapter argues that recovery policies must address the root causes of decent work deficits, and that multilateral action and global solidarity are more important than ever to counter widening gaps and set the world back on a more equitable and sustainable trajectory.

It's not late entry: human capital, welfare states and the pension penalty experienced by post-war migrants who retired in the European Economic Area

AbstractSince the 2000s, migration within and into the European Economic Area (EEA) has increased significantly. Some migrants will retire in their destination countries. This makes questions about their retirement protection increasingly relevant for social policy. To address this, we examine past experience. Using the Survey of Health, Ageing and Retirement in Europe (SHARE), we compared the pensions of post-1945 migrants, who settled in their host country, with non-migrants. We considered migrants who moved into and within the EEA, from poorer and richer countries. Where pensions were lower we sought to explain this in relation to the migration literature. As expected, we found some evidence that migrants’ pensions were lower, although significant variations were observed between EEA migrants and non-EEA migrants. However, surprisingly there were few indications that migrant pensions were lower because migrants as a whole were disadvantaged through late labour market entry or employment discrimination. Instead educational disadvantage mattered most, particularly for the highly educated: all highly educated migrants received lower rewards for their human capital than comparable non-migrants. Migrants who settled in countries with less-protective pension systems were also disadvantaged. Making retirement outcomes for migrants more equal would, thus, mean improving career opportunities for highly educated migrants and steps towards more-inclusive pension systems everywhere.

Higher education non-completion, employers, and labor market integration: Experimental evidence

Theories of job assignment suggest that employers give a lot of weight to achieved educational credentials. But what if credentials are missing? We theorize how college non-completion affects the hiring chances, identify its causal effect in different labor market segments, and assess which factors facilitate labor market entry for dropouts. Based on a simulated hiring process with N = 1382 German employers who rated more than 10,000 fictitious CVs, we show that college non-completion is not a scar per se, but rather depends on the educational attainment of the competitors who constitute the labor queue, and on the degree of occupational closure which varies on a granular level between firms that hire for the same occupations. We also find that employers, when rating dropouts, attach most value to CV attributes that signal a high stock of job-relevant skills, such as good performance during college or an occupation-specific internship. We conclude by discussing implications of our work for research on the labor market integration of dropouts.

Equality at the Starting Line? A Study of Gender- and Race-Related Differences at Law Graduates’ Labor Market Entry

The aim of this study is to examine the critical transition from law school to the labor market in order to better understand the pervasive gender- and race-related social and economic inequalities in the United States. Law school graduates are the focus because their profession is a typical demonstration of the prolonged impact of initial employment on individuals’ long-term professional and economic status. In this study, data from a national longitudinal survey are used to investigate how the number of job offers law school graduates received from private and public employers is related to individuals’ social, cultural, human and economic capitals, and how job offers as an outcome of educational investment influence their income after controlling for other income-generating factors. The results indicated that women and minorities received significantly lower numbers of job offers from private employers than their counterparts after controlling for factors such as law school ranking and finance of education. In addition, the number of job offers from private employers had a strong positive impact on the annual income two years after graduation for both males and females. The significant gender- and race-related differences are a clear indication of hiring practices that systematically reinforce professional and economic inequalities in the legal profession.

Anticipatory psychological contracts of young labour market entrants: a multi-country study with a Confucian work ethic 'twist'

We explore institutional and cultural effects on anticipatory psychological contracts (APCs) of young labour market entrants in four countries: China and South Korea (Confucian East Asia) and Poland and Slovenia (Central and Eastern Europe). We identify prevailing APC types and compare country APC scores, applying the concept of a Confucian work ethic. Using matched country samples of 953 undergraduate business students as future labour market entrants, our results challenge the hypothesised prevalence of the transactional APC type within this generational cohort. Overall, the balanced APC type was most desirable for employee obligations, while the relational APC type was most desirable for employer obligations. Expectations regarding personal development (balanced APC) were universally high. However, a Confucian work ethic can be linked to higher performance orientation (balanced APC) in terms of employee obligation and higher loyalty (relational APC) in terms of employer obligation in China and South Korea. We discuss implications for attracting, managing and retaining young talents.

Are first jobs in the German public sector more stable? An examination under consideration of the institutional structure

In recent decades, Germany has turned away from regular employment for the non-established, with employment entrance becoming the most insecure phase of a career. The public-sector employment regime, with its specific institutional setting, has been seen as a "model employer” for disadvantaged groups, but reforms and restructuring are increasingly calling this special status over the private-sector into question. This article examines whether the public sector provides more stable employment for entrants than the private sector. It is investigated whether the institutional structure of the public sector positively influences employment stability. In a decomposition-analysis, it tests potentially stabilizing (working in a service relationship, high occupational closure, participation in further education) and destabilizing institutional factors (fixed-term and part-time employment) to explain the stability of first jobs in the public sector. Using the labour market entry cohorts 1995 to 2012 of the retrospective life history data of the Starting Cohort six of the National Education Panel Study (NEPS). The results show that the public sector is offering more stable first jobs, and stabilizing factors, like further education are influential. However, destabilizing factors, like the intensive use of fixed-term contracts, have a significant negative impact. This suggests that the stabilising institutional structure of the public sector, while functioning, is under pressure and thus offers potential for polarisation.

Dual Returns to Experience

In this paper we study human capital accumulation and wage trajectories of young workers in a dual labor market. Using rich administrative data for Spain, we follow workers since labor market entry to measure experience accumulated under different contractual arrangements and relate it to current wages. We show that returns to experience accumulated in fixed-term contracts are, on average, lower than the returns to experience acquired in permanent jobs. However, this gap masks significant heterogeneity across individuals. The gap in returns widens along the skill distribution, where workers in the upper tail have the largest difference in returns. Moreover, among equally experienced workers, higher incidence of temporary employment in the past is associated with substantially lower wages. Ultimately, heterogeneous returns to experience translate into significant changes in the position of workers along the distribution of wage growth after 15 years in the labor market, bearing implications for life-cycle wage inequality.

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

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

Changes in the returns to education at entry into the labour market in West Germany.

This article studies to what extent societal processes such as educational expansion, economic modernisation and business cycles have affected the returns to educational certificates of women and men entering the labour market in West Germany. Using longitudinal data, long-term changes in cohort- and period-specific effects on socio-economic status attainment at entry into the labour market are investigated between 1945 and 2008. Analyses demonstrate that the entrants' average socio-economic prestige scores have clearly risen in the process of modernisation. Despite educational expansion, increasing skill demands for highly qualified graduates resulted in rising rates of returns for the most highly educated entrants across birth cohorts. While educational expansion and economic modernisation have boosted socio-economic returns at entry into the labour market for women from all educational levels, it has not been the case for men with the lowest levels of education. Both educational expansion and rising skill requirements of occupations led to an increasing polarisation of inequality between tertiary educated labour-market entrants and less-qualified school leavers. Educational expansion in West Germany has therefore never exceeded the occupational skill demands at entry into the labour market.

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

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

Human Capital Investments Among Veterinarians

Professional labor markets can be affected by alternating periods of excess or scarcity in labor. The phenomenon is most prevalent in labor markets where a substantial lag occurs between occupational choice and labor market entry. In this paper, a unique longitudinal dataset from veterinary labor markets is used to identify factors significantly associated with volatility in labor supply. Our econometric analysis establishes a statistically significant relationship between boom-bust cycles in labor and certain pertinent variables: entry-level earnings, a demand proxy, and supply-side features. Results support the notion that decision-makers gauge the expected levels of these variables when making career choices.

Gender differences in the labour market entry of STEM graduates

ABSTRACT Many women do not work in science, technology, engineering, and mathematics (STEM) occupations even though they have degrees in these subjects. To shed light on this problem, we use information from the German Graduate Panel and show a significant gender gap among STEM graduates working in degree-related occupations after graduation. Therefore, we focus on university graduates’ transition into the labour market and include male and female non-STEM and STEM graduates. We find that male STEM graduates are more likely to work in a degree-related field than other men. A gender gap in degree-related work in STEM occupations shows that this is not the case for women. Separating STEM into engineering and computer science (EngComp) and mathematics and natural sciences (MatNat) shows that EngComp graduates are the main driver of the STEM effects. The estimations remain robust to a comprehensive set of individual background information. Moreover, bearing children before graduation or at the beginning of one’s professional career does not explain the lower entry behaviour of female EngComp graduates. Possible channels for why women with an EngComp degree are not as likely as men to start their professional life in an EngComp occupation are discussed.

Why Don’t Firms Hire Young Workers During Recessions?

Abstract Recessions are known to be particularly damaging to young workers’ employment outcomes. I find that during recessions the hiring rate falls faster for young workers than for more experienced workers. I show that this cannot be explained by the composition of jobs or workers’ labour supply decisions, and I conclude that firms preferentially hire experienced workers during periods of high unemployment. I develop a new model of cyclical upgrading that relaxes the classic assumptions of exogenous firm size and rigid wages. I show that this model predicts larger log wage decreases during recessions for young workers than for experienced workers, a prediction that is supported by the data. I conclude that policymakers should consider extending unemployment insurance coverage during recessions to new labour market entrants.

Social origin and secondary labour market entry: Ascriptive and institutional inequalities over the early career in Italy and Germany

This paper investigates how labour market flexibilisation strengthens the role of social origin in conditioning inter- and intragenerational mobility chances. Drawing on the upper-class aversion to downward mobility, we explore mechanisms through which advantaged social origin directly compensate for the socioeconomic penalty that arises from initial contractual instability over the career. Conversely, we examine whether a bad start for less-socially privileged entrants represents a source of cumulative disadvantage. The Italian and German labour markets are compared since optimal national cases of labour market duality and rigidity yet differing in their educational and labour market institutions and mobility regimes. We perform growth curves under a matching framework to counterfactually compare the career development of service- and working-class entrants in the two countries, who began with similar socioeconomic status. We reveal that social origin contributes to unequal trajectory developments in both contexts, especially for the low- and middle-educated. No significant DESO over the career emerges among degree holders in either country. Finally, attending university entirely reduces the flexibility penalty in Italy, whereas for German graduates, initial instability serves as a gateway to more prestigious jobs.

Conditions for cross-border policy transfer and cooperation: Analysing differences between higher education and vocational training

Against the backdrop of an increasingly interconnected world as well as the growing role of inter- and supranational organizations, policy transfer has become a widespread phenomenon, not least in the realm of education. While policy transfer research has focused predominantly on isolated education sectors, less is known about the overall institutional conditions that favour or inhibit policy movement in different education sectors. We argue that the conditions for cross-border policy synthesis, as a central form of policy transfer, differ systematically between the two main education sectors preparing for labour market entry, namely higher education (HE) and vocational education and training (VET). Taking the case of the cross-border region of France, Germany and Switzerland as an example, the institutional analysis shows that demand-side, programmatic, contextual and application conditions are more favourable towards cross-border policy synthesis in HE than VET.

Corrigendum to: Intergenerational Class Mobility of Labour Market Entrants in Germany and the UK since the 1950s

Corrigendum to: Intergenerational Class Mobility of Labour Market Entrants in Germany and the UK since the 1950s

Does free movement of workers boost immigrant employment? New evidence from Germany

Abstract Extending free movement of workers (FMW) to the new Member States from Central and Eastern Europe was one of the most controversial political decisions in the history of the European Union. In this article, we study how the introduction of FMW affected immigrants’ labor market integration in Germany. Using data from the IAB-SOEP Migration Sample,1 we show that the introduction of FMW was associated with a higher influx of skilled workers. Moreover, FMW has increased the probability of labor market entry within one year after arrival by 12 percentage points. Correspondingly, FMW improved welfare not only by increasing the scale of migration but also by raising immigrants’ skill level and reducing the time before entry into the labor market. Our findings thus yield new insights on the beneficial effects of FMW on labor market integration of immigrants in the Common Market.

Effects of cohort size on college premium: Evidence from China's higher education expansion

In this paper, we document the lesser-known heterogeneous trends of college/non-college earnings premium across age groups from 1995 to 2013 in China. Specifically, the college premium in 2013 for the younger group (age 25–34) was about 30 percentage points, similar to the level in 1995, while the college premium in 2013 for the older group (age 45–54) increased to 50 percentage points, nearly double that of 1995. To attribute these divergent trends of the college premium to the changes in the relative size of college workers, we use the model by Card and Lemieux (2001), which incorporates imperfect substitution between similarly educated workers in different age cohorts. Due to the distinctions of these trends in China, our identification is free of the overestimation issue that the existing studies suffer. Our results are similar to those in the U.S., U.K., Canada, and Japan. Holding the age cohort and survey year constant, a one unit increase in log relative size of college workers is associated with about 10 percentage points decrease in college/non-college premium and about 18 percentage points decrease in college/high school premium. We further find that the negative effect is much more substantial among the new entrants (age 25–29) than experienced workers (age 30–54). By this pattern, we demonstrate that the new labor market entrants are more sensitive to their own cohort size and argue that the confounding ability composition effect should not be a serious issue.

Typical school-to-work transitions of young adults with disabilities in Germany – a cohort study of recipients of vocational rehabilitation services after leaving school in 2008

Purpose In Germany, vocational rehabilitation (VR) for young people with disabilities (YPWD) aims to counteract disadvantages on the training and labour markets. However, the school-to-work transitions (STWT) among YPWD are underexplored. This study investigates to what extent and for whom VR provides an institutional bridge into employment. Materials and methods Based on representative administrative data of the German Federal Employment Agency, young people in VR are observed for 6.5 years after completing lower or intermediate secondary education in 2008. Using optimal matching and cluster analysis, six typical STWT trajectories are identified. Results Most of the YPWD completed company-external vocational training, some undertook regular in-firm training. These forms of training often lead to regular employment, albeit with a delay for some. Other young people are guided from training in sheltered workshops into sheltered employment. Another group exhibits problematic STWTs in which recurring unemployment and (non-training) programmes fail to lead to training or employment. Conclusions VR combined with in-firm or company-external vocational training can facilitate the STWTs of people with disabilities. However, individuals from poor families are less likely to benefit from VR. Similarly, restricted capabilities and problematic STWTs are observed when young people drop out of VR due to poor cooperation. Implications for rehabilitation Vocational training often is a prerequisite for labour market entry; however, if the structural conditions on the local labour market are unfavourable, young people with disabilities do not take up employment. Training within sheltered workshops often leads to highly institutionalised trajectories that should be reconsidered to permit greater permeability into the regular labour market. As young people with problematic STWT more often come from poor households, they should be targeted to a greater extent in the context of VR counselling.

Marriage migration and women's entry into the German labour market

Objective: We analyse the employment patterns of childless first-generation migrants to Germany. In particular, we focus on the behaviour of female "marriage migrants". Marriage migrants are defined as individuals who married after their spouse had moved to Germany.
 Background: Demographic studies have illustrated that marriage migrants have particularly high childbirth rates upon arrival. There is, however, little empirical evidence on how the childbearing behaviour of migrant women is related to their employment behaviour.
 Method: We use event history techniques to study women's labour market entry after migration in relation to their childbearing behaviour. We draw on data from the German Socio-Economic Panel (GSOEP). The analytical sample is restricted to immigrant women who moved while childless to Germany between 1990 and 2016 (n=981).
 Results: Compared to other groups, marriage migrants have very low chances of entering the labour market. Only 32 per cent of the migrants in our sample had ever participated in the labour market in the five-year period after their arrival in Germany. A large share of the differences between these migrants and other migrants can be attributed to the socio-demographic composition of these women, and to their tendency to transition to parenthood soon after their arrival.
 Conclusion: We argue that the low employment rates of female marriage migrants must also be viewed in the context of Germany’s migration policies, which do not provide many routes for female third-country nationals to move to Germany. One of the few available channels is that of marriage migration. We conclude by discussing the social policy implications of these findings at a time when Germany is gradually becoming a dual-earner society.