A study recently published by researchers at SACES tested how the pathways young people follow from school into the labour market influence their long-run earnings, personal debt and satisfaction with employment opportunities.
The study by Andreas Cebulla and Steve Whetton analysed data on a cohort of people aged 15 to 24 years in the first year of the HILDA survey in 2001 until 2015. It compared the reported earnings, personal debt and personal assessments of employment opportunities of young people who had taken different pathways into training and work after leaving compulsory schooling. Drawing on previous research by the Productivity Commission, statistical analysis identified five distinct pathways, including one leading predominantly to inactivity or unemployment. Two pathways involved transitions from typically higher education into the labour market; one pathway described transitions from largely secondary education into work; a fifth pathway involved frequent churning between work (and workplaces) and study, and was characteristic of young people with typically vocational education and training (VET) qualifications.
The study confirmed previous research that earnings, debt and self-assessments of job opportunities 10 + years after leaving school vary strongly with socio-economic background. In addition, pathways themselves independently affected earnings outcomes, but not debt or opportunity assessments.
Somewhat surprisingly the ‘churning’ pathway, which has traditionally been thought of as undesirable, had amongst the best earnings and employment outcomes, but only if spells in unemployment remained brief. The other high earning group were those who followed the more “traditional” pathway of concentrating on tertiary education (often at university) with only limited work for the first few years after school before transitioning fully to work. Young people who combined study with spells in work, or started with work (with any study coming later) did less well in terms of earnings.
The findings highlight the importance to earnings of avoiding unemployment during early transitions into the labour market, and the benefits of seamless transitions between work and study. In such circumstances, frequently changing one’s primary labour market status and/or employer, as typical for churners, need not be disadvantageous and may indeed further the labour market prospects of those with intermediate (e.g. vocational) qualifications.
The findings also show that, in contrast, combining or alternating study with work over longer periods in typically higher (e.g. tertiary) education should perhaps be avoided. Instead, a focus on study at least in the early years, is ultimately beneficial. However, there may be other factors at play, too, such as choice of study subject. The study was not able to explore their influence.
Potential policy implications include the facilitation of fast, uninterrupted labour market transitions, and facilitation of focussed study in tertiary education.
The original research was funded by the Australian Government Department of Employment. The views expressed are not necessarily those of the Department.
The paper was published in the Journal of Youth Studies.