New Mapineq research warns of the long-lasting consequences faced by young Europeans when entering the labour market during periods of poor macroeconomic conditions, with women and the less educated paying the highest price.
Young adults entering the labour market during periods of high regional unemployment are at greater risk of becoming trapped in insecure work or excluded from the labour market for years to come. This is the key finding of a major new study which used European Labour Force Survey data to analyse the employment outcomes of young people who began working between 1994 and 2011 up until 2021.
The study shows that poor macroeconomic conditions do not just hurt in the short term; they leave behind scars. Workers who started their careers during periods of high unemployment are more likely to be in temporary jobs, low-skilled roles, or non-employed five to ten years after entering the labour market.
The effects are far from equal. Men and women with only lower secondary education are significantly more exposed to these long-term risks. Women in particular face higher risk of long-term non-employment when entering the labour market during poor macroeconomic conditions.
Conversely, tertiary-educated workers appear to weather difficult labour market situations far better, with no evidence of long-term disadvantages. This suggests that education is a powerful buffer and highlights the need to invest more in educational and training opportunities for the most vulnerable.
Labour market policies play a double-edged role. In regions with stricter employment protection for permanent jobs, young adults who start out in bad times and do not yet have such permanent contracts are more likely to remain stuck in temporary contracts.
Additionally, strict rules for temporary contracts may increase the non-employment risk of young adults, fuelling ongoing debates about the merits of deregulation. Spending on active and passive labour market policies, such as unemployment benefits or training schemes, was not found to significantly mitigate the effects of a tough job market upon entry.
These findings call for more targeted policy responses. Continued education, especially for young people facing the toughest prospects, could improve individuals’ respective outcomes while easing entry into employment for similarly educated peers by relieving pressure on regional labour markets. With regard to less-educated women facing the steepest deterioration in labour market prospects, policymakers are urged to address the intersection of gender and education more directly, possibly looking for explanations and solutions in areas beyond labour market policy, such as family-related policy and infrastructure.