The Effects of Macroeconomic Conditions on the Education and Employment Outcomes of Youth

Abstract

This paper examines the impact of macroeconomic conditions on the education and employment outcomes of youths in school-to-work transition. The dataset is based on five cohorts from the Youth in Transition surveys (YIT) and the Longitudinal Surveys of Australian Youth (LSAY) and covers the period from 1985 to 2006, long enough to control explicitly for different macroeconomic conditions. The multivariate analyses show that both the unemployment rates, and to a lesser extent economic growth rates impact on youths’ education and employment outcomes. Although the effects vary significantly by gender and education level, overall the
results reveal that poor macroeconomic conditions tend to drive young people out of full-time work and into inactivity or part-time work. Young men who did not complete secondary school suffer the largest increase in unemployment risks as the unemployment rate increases.