Labour market prospects of young adults in Europe: differential effects of social origin during the Great Recession

ABSTRACT

Research on the direct effect of social origin (DESO) focuses on how background influences later labour market outcomes after accounting for education. Growing up in a household of low social origin might decrease the chances of certain future outcomes; however, the extent to which this matters is contingent on the economic cycle. Using the EU Statistics on Income and Living Conditions (EU-SILC) and the European Social Survey (ESS) between 2002 and 2014, we analyse whether the gap in the DESO in terms of employment and earnings widened following the Great Recession for young adults (25-34) in France, Germany, Italy, Poland, Spain and the United Kingdom. Our results suggest that young adults of high social origin faced more disadvantages in terms of employment than young adults of low social origin in France, Spain and the United Kingdom. On the other hand, analyses show that young adults of low social origin experienced more disadvantages in terms of earnings than their counterparts of high social origin in Spain.

KEYWORDS:

• Intergenerational transmission
• Great Recession
• transition to adulthood
• DESO

Acknowledgment

For helpful discussions or relevant feedback to this article, I thank L. Iván Canzio, Alessandro Di Nallo, Michael Grätz, Patrick McDonald and the three anonymous reviewers at European Societies. Special thanks to Daniel Oesch for extensive feedback.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 Even though Poland experienced a currency devaluation at the onset of the Great Recession, the literature suggests that Poland was one of the European countries that was least affected by the 2008 financial crisis (Polanski 2014; Allington and McCombie 2016; Giugni and Grasso 2018).

2 The EU-SILC data are harmonised and suitable for comparison; however, for Italy and Spain, there is information only on net earnings in both modules, while Germany and the United Kingdom are missing information on net earnings in 2011. The rest of the countries include information on gross and net earnings. The Spearman correlation between the two indicators reveals that they are closely linked, with a correlation of 99%. Therefore, we use net earnings in Italy and Spain and gross earnings in the rest of the countries.

3 We recode zero earnings to one before taking the natural logarithm.

4 In case of missing information on one of the parent’s education, the educational attainment of the other parent was selected.

5 Earnings are measured in Euro in the EU-SILC. The large decrease in earnings of young adults in the United Kingdom is strongly influenced by the devaluation of the British Pound relative to the Euro between 2005 and 2011.

6 We plot the predicted probabilities of the logistic regression models in Figure A1. The results suggest that the use of linear probability models or logistic regression models leads to identical substantive findings.

7 To check whether our findings change substantively in case earnings are used instead of log earnings, we compare the change in the gap of the direct effect of social origin for both outcomes in Figure A3. The figure suggests that there is no substantive difference between both outcomes in all countries except for Poland. This divergence in Poland seems to be influenced by the highly negative skewness in the earnings variable. This is clear in Figure A4 where we plot the density of earnings and log earnings. Figure A4 also shows that the tail of the distribution of log earnings is less skewed than the one of earnings in all countries. This is not surprising as log earnings are used to avoid issues with non-normality and growing error variance (see Ermini and Hendry 2008).

Additional information

Notes on contributors

Jad Moawad

Jad Moawad is a PhD candidate at the University of Lausanne. His core research interest lies in the field of social stratification and mobility.