Report Summaries (WP17/27)

Does leaving education in a recession have a lasting impact on living standards?

Date: 30 November 2017
Publisher: The IFS
ISBN: 978-1-911102-74-8

Almost a decade ago, the Great Recession saw increased levels of youth unemployment and particularly large falls in the earnings of young adults. This has led to a further concern about whether having entered the labour market during a recession will have long-lasting negative effects on the living standards of these people. It is important for policymakers to understand the extent to which young adults are persistently affected by the economic conditions in which they first look for a job, in terms of not only their employment and pay, but also more comprehensive measures of their material living standards. This short note summarises the results of new IFS research, which estimates the effects of entering the labour market when the economy is weak. As set out in detail in the full working paper, we use data from the Family Expenditure Survey and the Family Resources Survey spanning the last 40 years (almost 200,000 people) to effectively compare the outcomes of individuals who entered the labour market at similar times but nevertheless faced different initial economic conditions due to sharp swings in the economic cycle.