New Working paper: Explaining consequences of employment insecurity

Three young people in street. Photo:

“Explaining consequences of employment insecurity: The dynamics of scarring in the United Kingdom, Poland and Norway” working paper presents the study on scarring effects of early employment insecurities.

This study goes beyond the traditional analysis to better understand the trade-offs experienced by young workers faced with an insecure labour market integration. The studies from the UK, Poland and Norway pay a special attention to gender and education as potential moderating variables of scarring effects.

Scarring effects in the UK

Margherita Bussi and Jacqueline O’Reilly of University of Brighton propose a modified index of complexity to measure early employment insecurity and its effects in the United Kingdom. In the context of an increasingly fragmented, flexible and fragile labour market it is useful to think of (early-) employment insecurity rather than of (early-) job insecurity, as the notion of employment insecurity is better at capturing how precariousness affects labour market integration.

Drawing on the methodology of sequence analysis, the authors have developed an index of complexity that not only measures the lengths of different kind of job- and unemployment sequences and the number of transitions between them, but which also takes the quality of the experienced sequence states into account.

The modified index of complexity permits them to go beyond a dichotomous approach to understanding employment and unemployment transitions and to provide a richer and more accentuated picture of how early periods of precariousness affect later labour market outcomes.

The authors are investigating the relation between the complexity in individuals’ trajectories and later labour market outcomes, thereby reinforcing established findings about the long-term scarring effects of early labour market insecurity.

The psychological costs of unemployment among young persons in Poland

The contribution of Dominik Buttler and Piotr Michoń from Poznan University of Economics, is focusing on how previous and current unemployment influences the well-being of young people in Poland.

Whereas previous research on scarring effects has privileged the analysis of pecuniary effects, the Polish study is focusing on the psychological costs of unemployment among young persons. Using the longitudinal survey ‘Social Diagnosis’ the authors model the relationship between unemployment and wellbeing among young individuals in Poland.

They examine the direct and indirect effects of unemployment on well-being, the latter being proxied by life assessment and the occurrence of depression symptoms.

The results show that past experience of unemployment has a detrimental effect on individual’s well-being regardless of the current employment status. Thereby, the non-pecuniary costs of unemployment on psychological well-being are larger than the costs associated with loss of income.

The Polish study increases our understanding of the individual and societal costs of unemployment beyond pecuniary costs.

Some are more scarred than others

Furthermore, Norwegian study by Dawit S. Abebe and Christer Hyggen addresses the mechanisms behind scarring effects of precarious labour market experiences during early adulthood with a special focus on factors that moderate the strength of scarring.

Using the ‘Young in Norway’ longitudinal study the authors investigate how individual and family characteristics (gender, social origin, level of education, psychological well-being) moderate the impact of early unemployment on the young people’s employment chances – with respect to both unemployment and wages – during their transition to adulthood.

Whereas the Polish study analyses how unemployment has lasting effects on well-being, the Norwegian study looks at how psychological well-being moderates potential detrimental effects of early precarious employment experiences in the long-term.

The results confirm that unemployment cuts deeper and leaves more visible scars on some than on 6 others.

The findings suggest that gender, levels of education, parental education and psychological well-being all moderate the effects of an early unemployment episode on the long-term labour market outcomes.

Read the full working paper “Explaining consequences of employment insecurity: The dynamics of scarring in the United Kingdom, Poland and Norway” (pdf)