Education is key factor in labour market entry of young people

Schulze-Marmeling, Sebastian

Overview

Article

Education is key factor in labour market entry of young people

Published: 31 July 2012

A study (in French, 401Kb PDF) [1] published by the Ministry of Employment’s Office for Research, Studies and Statistics (Dares [2]) in February 2012 used data from the French Labour Force Survey [3] (LFS) carried out by National Institute of Statistics and Economic Studies (Insee [4]) to analyse recent developments in the entry of young people into the labour market in terms of their level of educational attainment.[1] http://travail-emploi.gouv.fr/IMG/pdf/2012-013-2.pdf[2] http://www.travail-emploi-sante.gouv.fr/etudes-recherche-statistiques-de,76/[3] http://www.insee.fr/fr/themes/theme.asp?theme=3&souspop=[4] http://www.insee.fr

Data from the French Labour Force Survey was used to analyse the situation and evolution of new entrants to the labour market, focusing on level of educational attainment, employment rate, unemployment rate, working conditions and pay. Educational level and experience were the key determinants for explaining differences within the group of new entrants, as well as between them and the total workforce. Overall, the patterns identified are relatively stable over time.

Introduction

A study (in French, 401Kb PDF) published by the Ministry of Employment’s Office for Research, Studies and Statistics (Dares) in February 2012 used data from the French Labour Force Survey (LFS) carried out by National Institute of Statistics and Economic Studies (Insee) to analyse recent developments in the entry of young people into the labour market in terms of their level of educational attainment.

Educational attainment

Following a marked increase in the number of people undertaking higher education since the late 1970s, levels have been relatively stable since the mid-1990s. A comparison of the highest level of educational attainment attained in the periods 2002 to 2004 and 2007 to 2009 showed only marginal changes between the two periods (Table 1). However, more women (30%) obtained a university degree in the period 2007–2009 than men (22%). In addition, the proportion of men with no qualification has increased substantially. In 1978, the proportion of men and women without a diploma or certificate was equal, but by 2010, 70% of those without a qualification were male.

**Table 1: Highest education level attained**
Diploma	2002–2004			2007–2009
Diploma	Total	Men	Women	Total	Men	Women
Total	697,000	353,000	344,000	701,000	350,000	351,000
University degree	25,000	22,000	27,000	26,000	22,000	30,000
Vocational diploma	18,000	15,000	21,000	16,000	13,000	18,000
High-school diploma	41,000	42,000	40,000	41,000	42,000	40,000
No diploma/certificate	16,000	20,000	12,000	17,000	23,000	12,000

Source: Lerhun and Minni (2012, Table 1)

Employment and unemployment

Participation rate

Between 1975 and 2010, the participation rate of new entrants to the labour market (that is, those with between one and four years of experience) was relatively stable at around 90%. In 2010, the activity rate was at 89% (91% for men and 87% for women). This proportion increases with the highest level of diploma obtained (see figure below). Whereas 73% without a diploma/certificate degree were active in the labour market in 2010, this figure was 94% for those with a university degree. In addition, participation rates dropped for the low-skilled over the period but were relatively constant for people with higher levels of educational attainment.

The economic and financial crisis had relatively little effect on the participation rate of new labour market entrants. It has dropped slightly since the third quarter of 2008, mainly due to a more pronounced drop in the participation of the low-skilled.

Participation rate of new labour market entrants, by highest level of diploma obtained

Note: Young people with 1–4 years of experience

Source: Lerhun and Minni (2012, Graph 1)

Employment and unemployment rates

For new entrants to the labour market of all ages, the employment rate increased with experience (as measured by the length of time since finishing education) between the first quarter of 2006 and the fourth quarter of 2010 (Table 2). Moreover, higher levels of educational attainment lead to a faster convergence of the employment rate towards the overall level.

The employment level of new entrants is sensitive to the economic cycle. Employment rates for employees with little experience dropped below the average between 2008 and 2009, but recovered quicker in 2010.

Like the employment rate, the unemployment rate decreased significantly with increasing labour market experience between the first quarter of 2006 and the fourth quarter of 2010, and was lower the higher the educational level (Table 2). However, the initial differences in unemployment for different skill levels decreased with experience. The variations reported in the study are constant since 1975 when comparable data were first recorded.

Again like the employment rate, the unemployment rate of new labour market entrants is sensitive to economic conditions, particularly for the low-skilled. The increase in the unemployment rate of new labour market entrants exceeded the increase for the total workforce, but drops since 2009 were more substantial. In general, however, unemployment rates at all the times reported in the study and for almost all educational categories were higher for new entrants than for the overall labour force. Nevertheless, education is reported to be the key factor against unemployment even when controlling for economic volatility.

**Table 2: Employment and unemployment rate for new labour market entrants (%)**
	2006 Q1	2008 Q1	2009 Q4	2010 Q4
Employment rate
Total (15–64 years old)	63.4	64.9	63.7	63.8
Education finished:
Previous year	60.6	76.2	60.4	64.3
1–4 years ago	73.0	78.0	70.0	71.4
5–10 years ago	79.9	81.5	80.0	79.3
More than 11 years ago	70.1	71.1	70.0	70.2
Highest diploma for those who have education finished 1–4 years ago:
Higher diploma	83.8	90.6	85.0	85.3
Baccalaureate	74.7	78.5	70.4	71.8
Vocational high-school diploma	68.2	72.0	63.0	65.1
No diploma/certificate	45.2	48.8	37.2	39.5
Unemployment rate
Total population	9.1	7.2	9.6	9.3
Education finished:
Previous year	28.5	17.9	29.5	25.0
1–4 years ago	18.2	13.6	21.0	19.5
5–10 years ago	10.4	9.3	11.2	11.4
More than 11 years ago	7.2	5.5	7.4	7.4
Highest diploma for those who have finished education 1–4 years ago:
Higher diploma	10.6	6.2	10.9	10.0
Baccalaureate	15.6	11.5	18.7	18.1
Vocational high-school diploma	23.9	19.6	29.8	27.2
No degree/certificate	41.1	35.9	49.0	45.1

Source: Lerhun and Minni (2012, Table 2)

Working conditions

Part-time employment

Part-time employment per se was lower in 2010 for labour market entrants than for all employees (Table 3). However, this part-time employment was more often involuntary. Both voluntary and involuntary part-time contracts were more common among the low-skilled.

**Table 3: Proportion of part-time employment, 2010 (%)**
	Part-time	Involuntary part-time
Total (15–64 years old)	17.6	5.9
Education finished:
1–4 years ago	16.1	9.8
5–10 years ago	13.4	5.9
More than 11 years ago	18.2	5.5
Highest degree for those who have finished education 1–4 years ago:
Higher degree	10	6
Baccalaureate	21	13
Vocational high-school diploma	22	16
No degree/certificate	24	15

Source: Lerhun and Minni (2012, Table 4)

Temporary employment

All forms of atypical employment captured by the study decreased in 2010 with both experience on the job market and level of educational attainment (Table 4). Of note is that the use of permanent contracts is overall less pronounced in the public sector than in the private sector. This provides further evidence in the debate in France that the state is no longer being a ‘model employer’ and that working conditions in the public sector are often more precarious than in the private sector.

**Table 4: Proportion of agency workers, fixed-term and permanent employment, 2010 (%)**
	Time since finished education			Diploma level of those who finished education 1–4 years ago
	1–4 years	5–10 years	> 11 years	Higher	High school	None
Not employed (e.g. self-employed)	4	7	14	6	3	2
Private sector employees	77	73	66	72	82	85
Agency worker	7	4	2	4	8	11
Fixed-term contract	24	9	5	19	28	33
Permanent contract	69	87	93	77	64	56
Public sector employees	18	20	21	22	15	13
Fixed-term contract	46	21	9	35	63	66
Permanent contract	54	79	91	65	37	34

Source: Lerhun and Minni (2012, Table 5)

Wages and salaries

The wage gap between labour market entrants (that is, those with one to four years of experience) and those with at least 10 years of employment has remained relatively stable since the early 1990s at around 20%.

In 2010, the average new labour market entrant with a university degree earned a net monthly salary of €1,820, the average worker with a vocational diploma received €1,480 per month, employees with a high-school diploma had an average €1,280 per month (€1,200 if they had a vocational high-school diploma) and the average non-skilled worker with one to four years of experience earned €1,160 per month. These wage levels had been relatively stable since the 1990s with the exception of the highly-skilled group who experienced a substantial drop between 1990 and 1995.

The study found that wage–skill differentials had not changed significantly since the mid-1990s. Overall, wages for all groups showed significant resistance to the impact of the crisis.

Commentary

Most of the patterns identified by the Dares study are characterised by a high degree of stability. Contrary to all public discussion, obtaining a university degree remains the most significant predictor of being in employment, having stable working conditions and earning higher wages.

Probably the most interesting finding from this analysis is that working conditions in the public sector may be more precarious than in the private one. Unfortunately, the authors only provide information on employment contracts in the public and private sectors. It would of great interest to see how wages and working conditions for new labour market entrants differ more generally according to this distinction.

Reference

Lerhun, B. and Minni, C. (2012), Evolution récente de l’insertion des jeunes sur le marché du travail selon le niveau de diplôme (401Kb PDF), Dares Analyses, No. 13.

Sebastian Schulze-Marmeling, IRShare

Eurofound recommends citing this publication in the following way.

Eurofound (2012), Education is key factor in labour market entry of young people, article.