Staying on the dole: Profiling the risk of long-term unemployment among young people in Ireland

1. Staying on the dole: Profiling the risk of long-term unemployment among young people in Ireland Elish Kelly, Seamus McGuinness and Philip O’Connell The Economic and Social Research Institute, Dublin, Ireland Foundation P&V Conference Brussels, 7-8 March 2013

2. Outline • Motivation • Objectives • Data and Methodology • Results • Conclusions

3. Motivation and Objectives

4. Motivation I • Young people short spells of unemployment during school-to-work transition (OECD, 2009) • Severity of current downturn means increasing number of young people danger of getting trapped in unemployment, particularly disadvantaged youths that left school early  risk becoming Long-Term Unemployment (LTU)

5. Unemployment trends of young people (18-24) by Educational Attainment: 2007-2010 Source: Constructed with data from the Quarterly National Household Survey (Q1) 2010, Central Statistics Office

6. Motivation II • Preventing youths from falling into LTU is a key priority of Governments • Measures need to be introduced that target youths most at risk of losing contact with the labour market i.e. those most at risk of becoming LTU (OECD, 2009) • Who are these individuals that are at risk i.e. what are the characteristics associated with youth LTU risk?

7. Objectives • What are the characteristics associated with youth long-term unemployment risk in Ireland? • Are the factors the same for males and females? • How do the characteristics associated with youth long-term unemployment risk compare with those for older individuals? • Research may assist policy-makers to develop youth LTU preventative measures

8. Data • Specially devised questionnaire administered to all individuals that registered an unemployment claim between September and December 2006 • Claimants were subsequently tracked up to June 2008 • Captured information on a wide variety of individual and human capital characteristics, along with employment / unemployment / job history and transport information • Additional data on marital status, children, spousal earnings and geographic location obtained from administrative database (Live Register)

9. Sample Information - I • New social welfare claimants between September and December 2006: 60,189 • Awarded Jobseeker’s Allowance (JA) and Jobseeker’s Benefit (JB) claimants: 44,732 • Questionnaire information: 33,754 • Unknown reason for signing off the Live Register: 30,762 (final sample) - Youth Sample (aged 18 to 24): 6,366 (61% males and 39% females) - Older Sample (aged 25-67): 24,396 (57% males and 43% females)

10. Sample Information - II • Definition of LTU: claimants that continued to sign-on the Live Register for 12 months or more – hereafter referred to as “Stayers” • “Leavers”: claimants that had exited the Live Register to employment prior to 12 months • 37% of youths remained on the Live Register for 12 months or more, while 63% left before this time point • 40% of older claimants remained unemployed for 12 months or more and 60% exited to employment

11. Methodology • Probit Models: Dependent variable equals 1 if claimant had exited the Live Register to employment before 12 months - Separate gender models for youth and older claimants • Pooled models and interaction terms used to test for between model differences in the various characteristics associated with LTU • Covariates included in specifications came from survey questionnaire and Live Register database

12. Results

13. Determinants of leaving unemployment to employment before 12 months: Young males Note: Males with recent labour market attachment, employed in last month or year, more likely to exit unemployment before 12 months.

14. Determinants of leaving unemployment to employment before 12 months: Young females Note: Females with recent labour market attachment, employed in last month or year, more likely to exit unemployment before 12 months.

15. Do the factors associated with youth LTU risk have a differential gender effect?

16. Do the characteristics associated with young peoples’ LTU risk differ to those for older claimants? • Males • - Age, educational qualifications and recent labour market attachment all have a higher relative impact on young males’ likelihood of exiting unemployment before 12 months • - Health status is more important for older males • - Scarring effects of short-term unemployment spells appear more severe for younger males, while for older males the effects are more negative for longer periods of unemployment • Females • - Age, educational qualifications and recent labour market attachment all important predictors of young females’ likelihood of exiting unemployment before 12 months • - Children, number of claims and spousal earnings in excess of €351 per week, each have a negative impact on younger and older female claimants, but the negative effect is much larger for younger females  less likely to exit unemployment

17. Summary and Conclusions • Summary of Findings: - Youths with literacy/numeracy problems, no formal education qualifications and/or previous experience of LTU have a higher risk of becoming LTU - Presence of children, spousal earnings and number of claims are additional factors that are specific to young females - Relative to older claimants, educational qualifications and recent labour market attachment have a positive impact on young peoples’ probability of exiting unemployment before 12 months

18. Summary and Conclusions • Policy Implications: 1. Measures need to be introduced to deal with basic literacy/numeracy problems and low levels of education, particularly as the unemployment rate of early school leavers in Ireland has increased to almost 50% over the course of the most recent recession - Minimise early school leaving: some progress has been made in this area in the last decade – retention rates to completion of upper secondary now exceeds 90% - Provision of second-chance education needs to be developed and expanded for those that have dropped out of secondary school, in order increase the skills of this vulnerable group 2. Provision of effective active labour market programmes targeted to meet the needs of young unemployed individuals in order to ensure that they are adequately prepared to compete in the labour market 3. Development of initiatives to deal with the negative impact children have on young females probability of exiting unemployment before 12 months – e.g. introduction of more affordable childcare facilities

19. Thank You