The college-to-work transition during the 1990s: evidence from Sweden

Abstract

This article analyses the time it takes for Swedish college graduates to start a full time job that lasts for 6 months or more. The focus is on the transition over time during the period 1991 to 1999. This period covers both upturns and downturns of the business cycle, providing a unique opportunity to consider the importance of the timing of graduation. The results show that the risk of unemployment and the unemployment duration have varied considerably with the business cycle, both within and between cohorts. For example, the field of education is of more importance for the outcomes during recessions. Further, the relative risk of unemployment has decreased over time for individuals with the highest degree of education whereas the unemployment duration has increased, indicating that the selection into unemployment for this group may have changed over time. This is interesting, not least in the light of the sharp expansion of the higher educational system during the study period.

Acknowledgements

Financial support and data from IFAU is gratefully acknowledged. The author is grateful for valuable comments from Gunnar Andersson, Mahmood Arai, Thomas Lindh, Håkan Regnér, Oskar Nordström Skans, an anonymous referee and seminar participants at SUDSWEc 2007, Institute for Futures Studies 2007, IFAU 2008 and ESPE 2008.

Notes

¹ Gartell (2009) shows that Swedish college graduates who get unemployed at graduation have considerably lower future earnings as compared to college graduates who do not experience any unemployment at graduation. Holmlund et al. (2006) show that working experience subsequent to graduation is important for individual incomes at 35 years of age. Nordström Skans (2004), studying high school graduates, shows that unemployment during the first year after high school graduation has serious long-term effects on future incomes.

² Thoursie (1998) studies individuals with different educational levels and shows that the effect of education on the unemployment duration varies with the business cycle. Her study covers the population of 24–54 years old in Sweden.

³ The Swedish Labour Force Survey, see Gartell (2010) for details.

⁴ See e.g. Nordström Skans (2005), who shows that a large youth cohort has a positive effect on the local labour market in terms of unemployment rates for young workers.

⁵ See Lancaster (1979) for a more detailed model, and Jans (2002) for a simplification of the same model.

⁶ However, there are some changes in the coding of data over time. There are some previous studies using models for competing risks at re-employment; these studies show that different transitions are governed by different mechanisms (Edin, 1989; Thoursie, 1998).

⁷ See e.g. Betts et al. (2000), where 6 months is used to define a stable employment.

⁸ This may be compared to the median duration for Canadian college students which is 15 month (Betts et al., 2000).

⁹ There is information about number of children in different age groups in the household, but no information about whom the children belong to. Consequently, for students living at home, it is possible that they will be registered as having e.g. children older than 18, but those children are in fact themselves (or possibly siblings). Therefore, children above the age 18 will be excluded from the analysis. A variable for ‘had a child during the first year after graduation’ will be included as a sensitivity analysis.

¹⁰ The other unemployed individuals are not considered to be able to accept a job offer immediately for a number of different reasons. In the previous studies on unemployment duration, only individuals able to accept a job immediately are considered; only these individuals may end their unemployment immediately upon receiving a job offer.

¹¹ See Blossfeld and Rohwer (2002) and Lillard and Panis (2003) for description of the model.

¹² See e.g. Andersson (2000) for a discussion of how to identify age, period and cohort effects, respectively.

¹³ More than 90% of the individuals reporting unemployment where registered as unemployed at a public employment office. Moreover, the share of individuals reporting unemployment who have been in contact with a public unemployment office has been rather stable during 1992 to 1997. See Statistics Sweden (1993) and the Swedish National Labour Market Board (1998).

¹⁴ See National Agency for Higher Education (2004, 2006, 2007) for details on higher education in Sweden.

¹⁵ Weights were applied, but did not influence the results. Hence, nonweighted estimates are presented.

¹⁶ The shape of the base line is very similar across individuals graduating during the spring and fall semesters, respectively. The results are not presented but may be obtained from the author upon request.

¹⁷ Also, to have a child during the first year after graduation has a significant and negative effect. However, it does not affect the other estimates. I chose to leave this variable out of the basic specification since the exact timing of childbirth is unknown.

¹⁸ The results are not presented but may be obtained from the author upon request. The year of first registration was included both as a continuous variable and as dummy variables.

¹⁹ A variable for ‘had a child during the first year’ was included; the results were robust for this inclusion.

²⁰ Grades from high school were included for a sub sample of 4254 individuals. The estimated risk of exiting unemployment is 1.10, i.e. higher grades mean a higher risk of exiting unemployment. The other estimates are stable for the inclusion, however, the baseline between 18 and 24 months changes to positive but are not significant.

²¹ A majority of students that graduate during spring and who experience unemployment have an unemployment period that begins before or during the summer.

²² Also, type of unemployment benefit was included; the results are stable for this inclusion. The results may be obtained from the author upon request.

²³ Some estimations have been done on a sub-sample including only Swedish born individuals, and the results are robust. The results can be obtained from the author upon request.

²⁴ Moreover, average grades from high school were included for a sub sample of 21 959 individuals. The estimate is significant and negative (−0.09), i.e. higher grades means lower risk of unemployment. However, to include grades did not have much effect on the other estimates.

²⁵ In this case, only the individuals included in the hazard are included in the probit model. The result for the probit model using this sample is presented in Table A7.