FROM SCHOOL TO UNEMPLOYMENT?

FROM SCHOOL TO UNEMPLOYMENT?

11 Also by P. N. Junankar THE COSTS OF UNEMPLOYMENT MARX'S ECONOMICS INVESTMENT: Theories and Evidence

From School to Unemployment? The Labour Market for Young People Edited by P. N. Junankar Lecturer in Economics University of Essex M MACMILLAN PRESS

P. N. Junankar 1987 Chapters 3 and 5 Crown Copyright 1987 All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No paragraph of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright Act 1956 (as amended), or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, 33-4 Alfred Place, London WCIE 7DP. Any person who does any unauthorised act in relation to this publication may be liable to criminal prosecution and civil claims for damages. First published 1987 Published by THE MACMILLAN PRESS LTD Houndmills, Basingstoke, Hampshire RG21 2XS and London Companies and representatives throughout the world Typeset by Latimer Trend & Company Ltd Plymouth British Library Cataloguing in Publication Data From school to unemployment? : the labour market for young people. I. Youth-Employment-Great Britain I. Junankar, P. N. 331.3'4'0941 HD6276.G7 ISBN 978-0-333-39843-2 ISBN 978-1-349-18942-7 (ebook) DOI 10.1007/978-1-349-18942-7

Contents Notes on the Contributors Acknowledgements Preface The Labour Market for Young People P. N. Junankar Vll X XI 15 PART I RELATIVE WAGES AND EMPLOYMENT: TIME-SERIES STUDIES 2 Youth Pay in Some OECD Countries since 1966 15 David Marsden 3 The Relative Pay and Employment of Young People 51 William Wells 4 Relative Wages and the Youth Labour Market 79 P. N. Junankar and Adrian Neale 5 Relative Wages and the Youth Labour Market: A Reply 108 William Wells 6 Relative Wages and the Youth Labour Market: A Rejoinder 116 P. N. Junankar and Adrian Neale 7 Trade Unionism and the Pay of Young Workers 119 Paul Ryan PART II CHARACTERISTICS OF THE YOUTH LABOUR MARKET 8 Earnings, Expected Earnings and Unemployment Amongst School Leavers 145 Brian G. M. Main 9 Individual Differences in the Youth Labour Market: A Cross-section Analysis of London Youths Lisa M. Lynch 185 v

VI Contents PART III POLICIES FOR THE YOUTH LABOUR MARKET I 0 YTS: Training or a Placebo? 217 Patricia Dutton II Small Expectations: The First Year of the Youth Training Scheme 238 David Raffe 12 The Young Workers' Scheme: A Preliminary Assessment 263 Amin Rajan Bibliography 292 Index 302

Notes on the Contributors Patricia Dutton is a Research Fellow at the Institute for Employment Research. She has worked extensively on the engineering industry and on the youth labour market. She has published widely in several journals and contributed to Mergers and Economic Performance (K. Cowling eta!.) and Economic Change and Employment Policy (edited by R. M. Lindley). P. N. Junankar is a Lecturer in Economics at the University of Essex. He was a Principal Research Fellow at the Institute of Employment Research at the University ofwarwick, 1984--5. He has been a Lecturer in Government at the University of Durham ( 1966--9), Visiting Assistant Professor at Northwestern University, USA (1972-3), Visiting Associate Professor at Queen's University, Canada (1978-9), Visiting Fellow at the Indian Statistical Institute, New Delhi, India and at the Australian National University in Canberra, Australia. He has worked on labour economics, macroeconomics, development economics and Marxian economics. He has published widely in several journals including Economica, Economic Journal, Oxford Economic Papers and Journal of Development Studies. He has published books on Investment, Marx's Economics and Costs of Unemployment. Lisa M. Lynch is an Assistant Professor of Industrial Relations at the Massachusetts Institute of Technology and Faculty Research Fellow at the National Bureau of Economic Research, USA. Her previous appointments include Assistant Professor of Labor and Human Resources at Ohio State University (1983-5) and Lecturer in Economics, Bristol University (1982-3). Her publications in labour economics (mainly on youth unemployment) have appeared in the Journal of Econometrics, Oxford Economic Papers, and the British Journal of Industrial Relations. Brian G. M. Main is a Reader in Economics at the University of Edinburgh. He has been a Visiting Associate Professor at the Graduate School of Business Administration, University of California Berkeley, USA (1980--1 ), Associate Fellow of the Institute for Employment Research, University of Warwick (1981-) and Member of the Centre for Educational Sociology, University of Edinburgh (1982-). He has VII

Vlll Notes on the Contributors published widely in the field of labour economics in several journals including the American Economic Review, International Economic Review, Review of Economics and Statistics, Economica, Oxford Economic Papers, Journal of Human Resources, and the Scottish Journal of Political Economy. He has recently published a research report with Peter Elias on Women's Working Lives. David Marsden is a Lecturer in Industrial Relations at the London School of Economics. He has been Research Fellow at the Laboratoire D'Economie et de Sociologie du Travail, Aix-en-Provence (1973-5), a Senior Research Officer at the Department of Employment ( 1975-6), and Research Fellow at the University of Sussex (1976-80). He has published several articles and books including Pay Inequalities in the European Community (with C. T. Saunders), The Car Industry; Labour Relations and Industrial Adjustment, and The End of Economic Man? Custom and Competition in the Labour Markets (with T. Morris eta!.). Adrian Neale is a Research Officer at Nuffield College, Oxford. Prior to that he was Fellow at the Institute for Employment Research, University of Warwick ( 1980-4). His main research interests lie in the area of labour economics, econometrics and econometric computing. He has researched and published on the determination of employment, occupational structure and hours of work. Since 1984 he has been involved in a major econometric project at Nuffield College, designed to look at disequilibrium in economic relationships, the interaction of feedback and feedforward mechanisms, and on properties of long-run economic relationships. David Raffe is a Reader in Education and Deputy Director of the Centre for Educational Sociology at the University of Edinburgh. He has worked extensively on the Scottish School Leavers' Survey, looking in particular at the youth labour market, secondary and further education and the transition from school. His publications include Reconstructions of Secondary Education (co-author), Fourteen to Eighteen (editor) and several papers and contributed chapters in books. Amin Rajan is a Senior Research Fellow at the Institute of Manpower Studies, University of Sussex. Prior to that he worked as an Economic Adviser at the National Economic Development Office ( 1969-74), the Cabinet Office ( 1974-7), and Her Majesty's Treasury ( 1977-80). He has worked extensively on labour market problems and published several reports and papers on the subject.

Notes on the Contributors ix Paul Ryan is a Fellow of King's College and Lecturer in Economics at the University of Cambridge. He has been an Associate Fellow of the Institute for Employment Research, University of Warwick, since 1983. He is a member of the Academic Reference Group on the Study of Funding of Vocational and Education Training, Manpower Services Commission ( 1968-). He was a Principal Economist at the Energy Resources Company, Cambridge, Mass., USA (1974--7). He has published several articles in books and journals (including the British Journal of Industrial Relations) and with G. Eliasson has written The Development and Utilisation of Human Resources in the Context of Technological Change and Economic Reconstruction. William Wells is Economic Adviser at the Department of Employment. Prior to joining the government Economic Service he was a Temporary Lecturer in Economics at Queen Mary College, University of London ( 1976---7). He has worked on labour economics and published in the Employment Gazette as well as, in the Department of Employment working paper series, Relative pay and Employment of Young People.

Acknowledgements The editor and publishers wish to thank the Controller of Her Majesty's Stationery Office for permission to reproduce the Crown copyright material in Chapters 3 and 5; also to IMS for permission to reproduce the questionnaire in the appendix to Chapter 12. X

Preface The chapters in this volume were first presented as papers to the young Persons' Labour Market Conference' held at the Institute for Employment Research, University of Warwick in 1984. This conference was made possible by a generous grant from the Department of Employment to the IER, Warwick. This help is gratefully acknowledged. Neither the IER nor the Department of Employment is responsible for the views expressed in this volume. The volume includes a selection of the papers from this conference which were completely revised for publication in the light of referees' and editorial comments. Much new material has been added so that the volume is a freestanding contribution to the literature on youth labour markets, rather than being merely a conference volume. I should like to thank Sheila Ogden and Pamela Keech for helping with the preparation of this book. P. N. JUNANKAR XI