Youth School-To-Work Transitions: from entry jobs to career employment

In this report, we examine the way in which some of the labour market policies and institutions that inform flexibility and/or security in the labour market, affect the early labour market experience of young people in different European countries. Our focus is in particular on the type of employment trajectories that characterize the first years of labour market entry, and the possibility for young people to reach a good-quality employment condition within five-six years after leaving education. The central policy concern is whether active and passive labour market policies, besides employment protection legislation (with particular reference to temporary contracts), enhance the possibilities for young people to reach a long-enough good-quality employment condition within a reasonable period of time after leaving education. Since a higher degree of flexibility of the labour market implies a higher level of mobility across jobs, we evaluate employment quality and employment security, rather than jobquality and job-security. The main steps and results of our analysis are the following. First, we identify different types of trajectories from education to the first relevant employment spell, and we analyse how labour market policies and institutional characteristics affect the probability of entering one type of trajectory or the other. Although by looking at simple unconditional correlations expenditures on active and passive labour market policies appear positively correlated with successful pathways and negatively correlated with unsuccessful pathways, once we control for individual characteristics, country and time dummies, they have either no significant effect, or a very limited one. Employment protection legislation concerning the use of temporary contracts, instead, displays some influence on school-to-work transitions. Stricter norms appear to limit the degree of instability of school-to-work trajectories, and provide some incentives to improve individual employability through a return to education. From a policy perspective, these results suggest that: i) since the actual mix of labour market policies is not effective, new policy tools should be implemented to increase young people’s chances of achieving a relevant employment spell within a reasonable period of time; ii) a reduction in the strictness of the rules regulating the use of temporary contracts is not an effective policy tool to improve employment outcomes, especially when labour demand is weak, and it may worsen youth employment outcomes. Second, we focus on the subsequent temporal phase of labour market experience (i.e., about 4 to 6 years after leaving education), and we analyse the performance of young people in terms of employment and economic security, and in terms of economic success and good educationaloccupational match. We also analyse the type of employment trajectory that unsuccessful and insecure individuals are following. The empirical analysis reveals that more stringent norms on the use of fixed-term contracts enhance security for both low-educated individuals and females. On the contrary, an increase in expenditures for active labour market policies is effective in increasing the probability to achieve a secure employment condition only for high-school and university graduates, but not for low-educated and females. Passive labour market policies have no effects on security, but they improve the quality of employment trajectories for insecure individuals (by helping young people to find, or pushing them to search better for, a more stable/continuous employment). However, they seem to have some adverse effects for females, by increasing their probability of being inactive and reducing that of being always or prevalently employed. From a policy point of view, these results are in line with what we have underlined above. In particular, they suggest that: i) the actual mix of active and passive labour market policies is not effective and new policies should be designed and targeted to less educated individuals and females; ii) more stringent norms on the use of temporary contracts should be encouraged given their effectiveness in enhancing labour market outcomes of more disadvantaged individuals. Third, we present a synthetic index of the overall level of employment security associated with schoolto-work trajectories of young people entering the labour market. The index is constructed in such a way that it can incorporate explicitly different value judgements in terms of whether insecurity is increased or not by the total number of periods of unemployment, the time at which they occur, and their consecutiveness. An explorative empirical application is presented. Our analysis shows that there are huge cross-country differences in the degree of insecurity associated with the labour market entry, and that these differences are generally enlarged if we give higher weights to sequences with more than one period in unemployment, and to those in which unemployment lasts longer. From a policy perspective, these results suggest that policy makers should move beyond a ‘one-policy-fits-all’ view. New policies to fight youth unemployment should take into account country specificities and the transient or more structural/persistent nature of unemployment.