Youth Labour Market Integration Across Europe

ABSTRACT

Young people in Europe face great difficulties nowadays when entering the labour market. Unemployment and temporary employment are high among youth, although considerable differences exist between European countries. In this article, we study to what extent cyclical, structural, and institutional factors explain cross-national variation in youth labour market integration. In addition, we examine educational differences in the impact of these macro-characteristics. To answer these questions, we use data on young people from 29 countries who were interviewed in the European Social Survey of 2002, 2004, 2006, or 2008 and left day-time education in the period 1992–2008. Both unemployment and temporary employment are regarded as a lack of labour market integration, compared to the situation of permanent employment. The empirical results first of all show that high unemployment hinders young people to smoothly integrate into the labour market. In addition, economic globalisation positively affects youth labour market integration. We also demonstrate that young people experience less difficulties with labour market integration as the educational system is more vocationally specific. Intermediate and higher educated particularly profit from the positive effect of the vocational specificity of the educational system. Finally, as the employment protection legislation of incumbent workers is stricter, young people experience more difficulties with labour market integration, especially higher educated youth.

Key words:

• youth labour market integration
• school-to-work transitions
• youth unemployment
• comparative research
• European Social Survey

Notes

¹ It is also argued that, during economic downturn, temporary employees are the first to be fired in order to reduce labour costs. Although this would actually result in fewer temporary employment contracts, this may be especially true for existing employees whose temporary contract might not be extended or repeated during a recession and consequently become unemployed. Labour market entrants, as outsiders, are at the start of their career and are, therefore, not expected to experience this same problem as those in flexible types of employment. Even if the number of temporary jobs would actually decrease during a recession, it is still more likely that young people get employed in temporary jobs instead of in permanent employment.

² Instead, Gross Domestic Product (GDP) could have been used, although we think that GDP is more an indicator of a country's general prosperity level than a measurement of macro-economic fluctuations. However, it turned out that this variable strongly correlates with economic globalisation, leading to problems of multicollinearity. Also, we did not use adult unemployment. The reason is that we aim to study the full macro-economic context, which includes youth unemployment too. Although it is very likely that aggregate unemployment positively affects the individual unemployment risk, we do not regard this as tautological. First, our unemployment measure is not aggregated from the micro-data, but originates from an external source. Second, there is a time-lag between aggregate unemployment and individual unemployment. The former is measured at the moment of school-leaving, whereas the latter refers to a time-point somewhere between the moment of school-leaving and interview (maximally 10 years after school-leaving). Third, our dependent variable, strictly spoken, does not measure the likelihood of being unemployed (versus employed), but indicates the contrast between unemployment or temporary employment and permanent employment.

³ From Cazes and Nesporova (2003), we used EPL measures for Bulgaria and Slovenia (1992–2000). For 2001–2004, measures for these countries were provided by Tonin (2009). From Muravyev (2010), we used EPL measures for Estonia, the Russian Federation, and the Ukraine (1992–2008). For Israel and Luxemburg, OECD EPL measures for 2008 were used for the period 1992–2007. Finally, for Cyprus, the average of the OECD EPL measures for Greece and Turkey (1992–2008) was used.

⁴ Baranowska and Gebel (2010) point towards a possible heterogeneous effect of these two sub-indicators of EPL on the incidence of temporary employment. They argue that strict regulation of permanent contracts creates incentives for the use of temporary contracts, while strict regulation of temporary contracts prevents employers from using such contracts. Lowering regulation on temporary employment, conversely, may lead to job creation, substitution of permanent workers by temporary workers, and traps of repeated temporary employment. However, this mainly induces temporary employment among the established workforce, but not necessarily among labour market entrants, in our view. Stricter regulation of temporary contracts would create fewer jobs, which may leave labour market entrants in unemployment instead of temporary jobs; it may lead to less substitution of permanently employed workers by temporarily employed, which strengthens the dichotomy between insiders and outsiders; and finally, it may lead to fewer repeated temporary jobs among employees, which does not improve labour market entrants’ prospects on a permanent job either. In brief, we expect that stricter EPL on temporary employment, just like EPL on permanent employment, reduces youth labour market integration. The overall EPL indicator is therefore a powerful and parsimonious measurement of labour market regulation.

⁵ In 2002, information on field of study was not included in the data. An additional dummy is therefore included in the models to indicate this.

Additional information

Notes on contributors

Marloes de Lange

Marloes de Lange is a Postdoctoral researcher in the Department of Sociology, Radboud University Nijmegen, The Netherlands. She recently finished her dissertation on labour market flexibilisation among young people in The Netherlands.

Maurice Gesthuizen

Maurice Gesthuizen is an Assistant Professor in the Department of Sociology, Radboud University Nijmegen, The Netherlands. He is interested in educational inequality, economic vulnerability, social capital and their interrelationships. He studies these topics in longitudinal and comparative perspective.

Maarten H.J. Wolbers

Maarten H.J. Wolbers is an Associate Professor in the Department of Sociology, Radboud University Nijmegen, The Netherlands. He previously worked at the Research Centre for Education and the Labour Market, Maastricht University and the Department of Social Research Methodology, VU University Amsterdam. His research interests include social stratification issues in general and school-to-work transitions in particular.