Changing Labour Markets and Early Career Outcomes: Labour Market Entry in Europe over the Past Decade

The paper addresses the issue of the driving forces behind recent changes in labour market entry outcomes in Europe. Based on data for 12 European countries from the 1988-1997 European Community Labour Force Survey, the empirical analyses estimate panel data models to assess the effects of cyclical changes in aggregate economic conditions, changing youth cohort sizes, increasing educational expansion and structural changes in labour demand on market entrants unemployment risks and occupational allocation. In general, it is found that unemployment risks have closely followed the evolution of aggregate economic conditions with only little impact of demographic factors. Changes in occupational allocation, in turn, are much dependent on the relative evolution of educational expansion and professionalization tendencies. In addition, these trends do not affect all leavers evenly: the lowest qualified are most heavily affected by cyclical changes in economic conditions, while leavers from tertiary level education have been more strongly affected by trends of changing occupational attainment. Most discomforting, however, increasing labour force professionalization is found to contribute to increasing labour market difficulties among the lowest qualified.