Emerging Trends in The Social and Behavioral Sciences

Labor Market Instability, Labor Market Entry, and Early Career Development

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Labor Market Instability, Labor Market Entry, and Early Career Development

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Labor Market Instability, Labor
Market Entry, and Early Career
Development
MICHAEL GEBEL

Abstract
Many young people experience episodes of unemployment and precarious
employment such as insecure temporary jobs and skill-inadequate jobs during their
school-to-work transition period. This essay summarizes key theoretical ideas and
main previous empirical findings on the determinants and career consequences of
having such a nonoptimal start into the working life. Then, this essay highlights
cutting-edge research that has advanced our knowledge by providing more detailed
insights into the individual-level career dynamics as well as the macro-level
institutional and structural determinants of cross-country differences. This article
concludes with a discussion of five key issues for future research. First, there is
need for a better understanding of the institutional and structural influences on
the career consequences of having a nonoptimal labor market entry. Second, the
experiences during the economic crisis of 2008/2009 and its aftermath ask for a
better understanding of why some countries performed better than other countries
in protecting youths from that severe crisis. Third, a more detailed analysis of
different forms of nonemployment and precarious employment is required in order
to account for the strong variation of labor market experiences of youths. Fourth, to
fully assess not only the risks but also the chances of taking up temporary jobs and
skill-inadequate jobs at labor market entry, we have to complement the standard
“upward comparison” to regular employment with a “downward comparison” to
the alternative of nonemployment. Finally, this entry calls for an interdisciplinary
and integrative approach analysing not only the work career consequences of bad
labor market starts but also the social, economic, psychological, health, and familial
consequences.

INTRODUCTION
The transition from education to work is a central stage in the individual
life course. It is strongly interrelated to other processes of the transition to
adulthood such as leaving parental home, gaining economic independence,

Emerging Trends in the Social and Behavioral Sciences. Edited by Robert Scott and Stephen Kosslyn.
© 2015 John Wiley & Sons, Inc. ISBN 978-1-118-90077-2.

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and the family formation. Finding a stable, adequate job is often seen as a
central precondition to make successful transitions on the way to become
an adult. However, young people often face difficulties in finding a stable,
adequate job and they experience periods of unemployment and precarious
employment (such as temporary jobs or skill-inadequate jobs) at the start of
their working career. Against this background, questions arise why this is the
case and what it means for the future life of young men and women. More
specifically, why do young people more often face unemployment and precarious employment? With regard to social inequality, which subgroups of
youths are most at risk of having to accept such low-quality jobs? And what
are the consequences of these nonoptimal labor market entries for the career?
Do initial periods of unemployment and precarious employment damage an
entrant’s career opportunities in the long run? Or, are these only transitory
effects in the individual life course?
To answer these questions, this entry summarizes central theoretical
ideas and main empirical findings from the existing literature, particularly
from the fields of sociology and economics. Moreover, this entry highlights
cutting-edge research that has recently advanced our knowledge in two
important aspects. First, recent research has addressed the consequences
of a nonoptimal start with a specific focus on the career dynamics and the
issue of causality. Second, recent research has tried to explain the strong
country differences in the probability of having a nonoptimal career start
and its consequences. In order to explain the country variation, the role of
institutional and structural country differences has been emphasized.
Despite the promising cutting-edge research, however, research on the
topic of nonoptimal career starts and their consequences is not yet completed
and many aspects remain puzzling. Specifically, there is need for innovative
research designs, new data, as well as broader and interdisciplinary perspectives on the research topic. Therefore, this entry concludes with a discussion
of five key issues for future research.
FOUNDATIONAL RESEARCH
Previous research has shown that young people particularly face higher
risks of labor market exclusion in terms of unemployment but they are also
most at risk of needing to accept precarious work, such as temporary jobs
and skill-inadequate employment. But why are labor market entrants most
affected by risks of unemployment, temporary jobs, and skill-inadequate
employment? And what are the consequences of such nonoptimal labor
market entries for the career?

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DETERMINANTS OF NONOPTIMAL LABOR MARKET ENTRIES
From a theoretical perspective, it is usually argued that young job applicants
are at high risk of unemployment and precarious jobs because, being
outsiders, they lack experience, seniority, and networks in contrast to the
more experienced workers, who represent the insiders (Lindbeck & Snower,
1989). Strong insider–outsider cleavages go hand in hand with labor market
segmentation, that is, the division of the workforce into (mainly older) insiders with good jobs located in the primary labor market segment and (mainly
younger) outsiders with precarious jobs located in the secondary labor
market segment (Doeringer & Piore, 1971). Employers—with the support of
insiders—have incentives to form such a buffer stock of precarious jobs and
pool of unemployed workers, making it possible to respond to short-term
market volatilities without having to dismiss any of the core workers.
Furthermore, youths’ problems of finding a (good) job are explained by
information problems that arise in the two-sided matching process of young
job applicants and employers (Sørensen & Kalleberg, 1981). Employers have
difficulty assessing the expected productivity and trainability of applicants
fresh out of school, while labor market entrants themselves are still learning about what kind of work they want and fit to. These information problems delay the process of matching young people to jobs and, hence, the
school-to-work transition is a prolonged period characterized by unemployment, temporary employment, and skill-inadequate jobs.
Employers try to overcome uncertainty in the hiring process by relying
on unalterable attributes—so-called “indices”—(such as ethnicity) and
alterable characteristics—so-called “signals”—(such as education) in order
to assess the unknown productivity and trainability of young applicants
(Spence, 1973). Thus, particularly those young people who have the “right”
signals and indices are more attractive for employers and in a better position. However, this implies that the risks of unemployment, temporary
employment, and skill-inadequate employment are unequally distributed
between different subgroups of young people. A large body of research has
shown that especially youths with low levels of education and immigration
background are disadvantaged in the job search process and may even
experience statistical discrimination and stigmatization based on their
group membership (e.g., Kalter & Kogan, 2006; Solga, 2002). Besides the
level of education, vocational education and training is a valuable signal in
the race for good labor market positions among young job seekers (Shavit &
Müller, 1998). However, if the education system does not offer clear signals,
many young workers end up in skill-inadequate employment (Wolbers,
2003). Specifically, the problem of overqualification arises if young workers

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attended higher levels of education than the level of education that is
actually required to perform the job tasks.
CAREER CONSEQUENCES OF NONOPTIMAL LABOR MARKET ENTRIES
In consideration of the fact that many young people experience unemployment and precarious employment, and, because the school-to-work transition is a central stage in the individual life course, the question arises how an
initial period of nonemployment and precarious employment affect the work
careers. Do nonoptimal starts damage an entrant’s future career opportunities? Or, are these only transitory effects?
Looking at the literature, it is often argued that experiencing unemployment at the beginning of the working life lowers future employment
chances and wages in the long run. These so-called scar effects are related
to the depreciation or loss of skills and work experience as well as the loss
of social networks that occur during the period of unemployment. It is
argued that these scars may last for the entire working career because initial
unemployment induces a stigmatizing signal in future hiring decisions
and, thus, recurrent spells of unemployment. An opposing view is that
initial disadvantages diminish when unemployed youths find their way to
employment and get access to training and networks. In this respect, frequent job moves and recurrent periods of unemployment in the early career
are seen as necessary and unproblematic steps in the process of finding the
right job. Which view is the right one? Empirical findings suggest that there
is some catching-up process but unemployment still damage youths’ careers
in the long run (Gregg & Tominey, 2005; Mroz & Savage, 2006). Particularly,
unemployed youths with low levels of education experience such adverse
long-term career effects (Burgess, Propper, Rees, & Shearer, 2003).
With regard to the career consequences of a start in precarious employment, such as temporary jobs and skill-inadequate jobs, there are also two
opposing scenarios (Gebel, 2010; Scherer, 2004). According to the entrapment
hypothesis, precarious jobs are located in the secondary labor market offering only limited chances of skill acquisition, which hinders upward mobility.
Furthermore, a worker who begins his or her professional life in a precarious
job might be viewed as a bad hire by future employers, inducing a stigmatizing signal. In contrast, the integration hypothesis assumes that precarious entry
jobs only induce transitory disadvantages, that is, youths who had a failed
start can easily catch up. For example, according to the screening argument,
employers convert temporary entry jobs into permanent jobs if the young
employee fulfils the employer’s expectations. Thus, in this regard, temporary
jobs can be seen as “entry ports” or “stepping stones” into insider positions.
Similarly, with respect to skill-inadequate employment, Sicherman’s (1991)

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career theory claims that starting the career as an overqualified worker is
associated with better promotion chances across firm-internal career ladders
into skill-adequate positions. Thus, overqualification is just a temporary phenomenon occurring at the beginning of the working career and it does not
induce any long-term damage to the future career. It may even represent the
fastest track toward skill-adequate work, offering important work experience
and avoiding unemployment scars if the alternative is continued unemployment. This is in line with the idea that “job shopping” is necessary at the
beginning of the career in order to find the right job.
Is the entrapment hypothesis or the integration hypothesis empirically
supported? With regard to temporary employment at labor market entry,
empirical studies are rather mixed when analyzing the early career consequences. Results vary across countries. For example, Barbieri and Scherer
(2009) show for Italy that entering the labor market via temporary jobs has
strong and long-lasting negative career consequences in terms of lower
employment chances and lower chances to end up in stable employment. In
contrast, McGinnity, Mertens, and Gundert (2005) find for Germany that the
unemployment rates of those who started with a temporary job are higher
in the short run but tend to converge with those of permanent-contract
workers after five years. Similarly, Gebel (2010) shows that British and
German youths who start their working life in temporary jobs suffer from
initial wage penalties and risks of temporary employment cycles, but that
those differences compared to entrants with permanent contracts diminish
during the early career. The integration scenario works most effectively in
the United Kingdom. In terms of subgroup differences of young persons,
previous research has shown that the integration hypothesis is confirmed
for the youths with high levels of education, whereas the segmentation
perspective applies more often to the youths with low levels of education
(Gebel, 2010). With regard to overqualification, empirical studies are more in
line with the entrapment hypothesis (Baert, Cockx, & Verhaest, 2012; Scherer,
2004). There is some degree of catching up but initial disadvantages are not
fully compensated for during the early career (Scherer, 2004). Moreover,
there is again evidence that the results vary across countries.
CUTTING-EDGE RESEARCH
CAUSAL ANALYSES AND LONGITUDINAL DATA
Recent empirical studies emphasized that it is important to address the
methodological problem of causality when analysing the career consequences of early spells of unemployment and precarious employment
based on nonexperimental data. When analyzing the career consequences

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of nonoptimal starts into the working life, nonrandom selection into unemployment and precarious employment has to be taken into account. As
outlined, initial labor market positions are the result of a two-sided choice
process, that is, spells of initial unemployment and precarious employment are not randomly assigned to the young persons. These two-sided
selection processes induce compositional differences in terms of employee
and employer characteristics. Thus, it is an open question whether career
differences between successful and unsuccessful labor market entrants
are really causal or just the result of different workers’ and employer
characteristics. For example, lower educated and less motivated youths
might be overrepresented among young unemployed people and young
people in precarious employment. If we find career disadvantages for these
groups, the estimated effects may partly reflect preexisting educational or
motivational differences and are therefore not causal. Hence, to understand
the career effects of nonoptimal labor market entries, one has to account for
such selectivity-induced compositional differences. If these differences are
adequately statistically controlled for, the remaining effect can be causally
attributable to the nonoptimal start. The bulk of empirical research answers
the question of causality with standard regression techniques producing
biased results if selectivity is not consciously and adequately accounted for.
However, recent empirical studies applied methods of modern causal analysis such as propensity-score matching (e.g., Gebel, 2010), the timing of events
approach (e.g., Baert et al., 2012) or random effects models (Baranowska,
Gebel, & Kotowska, 2011) in order to address the problem of causality in a
more convincing way.
Moreover, recent empirical studies on the school-to-work transition and
the career consequences of nonoptimal labor market entries highlighted
the importance of taking a more detailed dynamic career perspective (e.g.,
Brzinsky-Fay, 2007; Gebel, 2010; McGinnity et al., 2005). In this respect, longitudinal data, either in the form of individual level panel or retrospective life
history data, are necessary to get a full picture of the career dynamics taking
place after labor market entry. Moreover, these recent studies have shown
that a long-term individual-level dynamic analysis based on longitudinal
data is necessary in order to assess whether nonoptimal labor market entries
cause only transitory effects or long-term negative career effects (e.g., Barbieri & Scherer, 2009; Luijkx & Wolbers, 2009; Steijn, Need, & Gesthuizen, 2006).
THE IMPACT OF INSTITUTIONAL AND STRUCTURAL FACTORS
A second cutting-edge topic in recent research is the explanation of the strong
cross-country variation in the incidence of youth unemployment and precarious employment. The role of various structural and institutional conditions

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has been highlighted. From a policy perspective, it is particularly important
to learn about the best design of institutions in order to guarantee youths’
employability.
With regard to structural factors, unfavourable economic conditions tighten
the competition among graduates and hinder a successful labor market integration of young people, especially for youths with low levels of education
(Gangl, 2002; Verhaest & Van der Velden, 2012; Wolbers, 2007). In contrast,
stronger competition due to demographic pressures, as measured by youth
cohort size, does not seem to be an important explanatory factor for youth
labor market problems (Gangl, 2002). The structural trend of education expansion has been especially made responsible for the phenomenon of overqualification among labor market entrants (Verhaest & Van der Velden, 2012). It
is argued that educational expansion induced a “credential inflation,” which
led to displacement processes from the top, leaving higher educated to take
up low-skilled job that were previously occupied by less qualified workers.
However, it has been shown that these crowding-out processes have been
partly offset by an upgrading of the occupational structure due to technological change (Gangl, 2002). Another structural factor that has been highlighted in recent research is globalization (e.g., Blossfeld, Buchholz, Bukodi, &
Kurz, 2008). However, the quantitative empirical evidence on the impact of
globalization is still scarce and rather ambiguous. All in all, although these
recent studies emphasize the role of structural factors, quantitative empirical
research on the impact of structural factors is still rather scarce.
With regard to institutional factors, previous research has developed a
variety of country-level typologies to explain cross-country variation in
youth labor market outcomes. However, recent research challenged these
ideas of country typologies arguing that it is important to differentiate
between single institutional dimensions. Particularly, from a policy perspective, it seems important to understand which specific institutions support
or hinder youth labor market integration. In contrast, country typologies
just leave the researcher with a bunch of potential explanations such that no
clear policy recommendations can be given.
Previous research has particularly highlighted the role of education and
training institutions. It is argued that in contrast to education programs teaching general skills, vocational-specific education facilitate school-to-work
transition if employers are involved such as in the form of firm-based
vocational training (Shavit & Müller, 1998). A classic example is the “dual
system” practiced in Germany and other Central European countries, which
combines school-based education with workplace-based training. Participating in firm-based training creates a screening opportunity for employers.
Moreover, in this on-the-job training process, individuals obtain specific,
portable, and up-to-date skills that are aligned with employers’ needs. While

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previous empirical studies confirmed the strong benefits of dual-system
education (Breen, 2005; Shavit & Müller, 1998; Wolbers, 2003, 2007), most
recent findings cast doubts. For example, Kogan, Noelke, and Gebel (2011)
find equal benefits of dual-system and school-based vocational education
in Central and Eastern Europe. Moreover, recent research has shifted the
focus from secondary education toward higher education institutions in
view of the expansion and differentiation of higher education. For example,
Noelke, Gebel, and Kogan (2012) reveal the importance of the vertical
differentiation of higher education system, in terms of different degree
levels (post-secondary vocational degrees vs Bachelor degrees vs Master
degrees), and the vertical differentiation of higher education, in terms of
the occupational specificity of different field of studies, for patterns of the
transition from higher education to work.
Furthermore, rigid labor market institutions have been identified as the main
factors causing this strong cross-country variation in youth labor market
outcomes. For example, minimum wages may induce wage floors and hamper
youth labor market integration chances (Neumark & Wascher, 2004). Strong
unions, mainly representing the interests of labor market insiders by pushing
for higher wages and employment protection for older workers, can also be
to the disadvantage of youths’ employment chances (Baranowska & Gebel,
2010). In addition, rigid employment protection legislation (EPL) has been
blamed for youths’ integration problems in previous empirical studies (e.g.,
Breen, 2005). While strict EPL reduces hiring and firing rates, it has been
argued that employers particularly refrain from hiring young workers in an
environment of high firing costs. Against this background, many European
countries reacted with the deregulation of employment protection. The
most common form of EPL deregulation was the partial deregulation of
temporary work contracts while keeping the protection of regular contracts
at high levels. However, in the recent empirical literature, doubts on the
effectiveness of the EPL reforms—in terms of the effectiveness of reducing
youth unemployment—occurred (Noelke, 2011). Moreover, recent empirical
findings show that the partial deregulation of temporary contracts just
aggravated social inequalities in terms of an increasing spread of temporary
jobs among youths but it did not succeed in reducing youth nonemployment
risks (Gebel & Giesecke, 2012). These recent studies on EPL have also made
an important methodological contribution. While previous studies suffered
from potentially biased results as they relied on comparing countries with
different levels of EPL, recent studies looked at the effects of various reforms
of EPL in each country (Gebel & Giesecke, 2012).
Finally, youths’ employability is shaped by the welfare state in terms of the
national design of active and passive labor market policy. While young school

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leavers rarely have the working experience that grants eligibility for financial support from the state, diverse measures of active labor market policy
(ALMP), such as help with job search, further training or subsidized work,
have been implemented across countries in order to facilitate youth labor
market integration. However, a recent meta-analysis of ALMP evaluation
studies shows that youth programs are significantly less likely to be effective
(Kluve, 2010).
KEY ISSUES FOR FUTURE RESEARCH
Although previous research produced important insights, and although
recent research has brought innovative research designs and addressed
highly topical new issues, there are still many underexplored topics of
research. In the following, I highlight five main topics of an agenda of future
research.
INSTITUTIONAL AND STRUCTURAL DETERMINANTS OF SUBSEQUENT CAREER CHANCES
As described, recent empirical studies have challenged conventional wisdom on the institutional determinants of a successful integration of young
people into their first job. We still do not know much about the institutional
and structural determinants of subsequent career chances. The very few
comparative studies that look at the career consequences of nonoptimal
labor market starts have revealed strong country differences (Gebel, 2010;
Scherer, 2004; Verhaest & Van der Velden, 2012). What we still lack is robust
quantitative evidence on which institutional and structural explain country
differences. Are the subsequent career chances determined by macroeconomic conditions, or can policy makers influence the career chances via
policy reforms? We have to know how to best design the institutional
environment of the education and training system, labor market regulation
and the welfare state in order to mitigate the any negative career effects of
bad starts into the labor market. For example, do rigid labor markets, due
to strong unionization and strict employment protection of regular jobs,
reduce young people’s chances to make up for any initial disadvantages? In
this respect, there are some first hints that youth have the best chances to get
out of precarious jobs in flexible labor markets, whereas mobility barriers
are stronger in rigid labor markets (Gangl 2003; Gebel, 2010; Scherer, 2004).
Another question is whether the effects of institutions may differ with
regard to labor market entry chances and career chances, producing potential
trade-offs. For example, vocational-specific education systems may reduce
the incidence of unemployment and precarious employment at labor market
entry but, at the same time, they may aggravate the negative consequences

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of nonoptimal career starts by deepening labor market segmentation. Specifically, the additional segmentation of the labor market across occupations
may make it difficult for young workers trained in one specific occupation
to profit from better jobs in another occupational segment.
To identify the institutional and structural determinants of subsequent
career chances, we need new comparative longitudinal data that allow us
to track the career of youth in an individual-level dynamic perspective.
The few suitable large-scale national panel surveys such as the German
Socioeconomic Panel (SOEP), British Household Panel Survey (BHPS), or
the US-American Panel Study on Income Dynamics (PSID) are too few
in number in order to allow for a quantitative cross-country comparison.
Higher degrees of data comparability as well as the larger number of
countries are necessary for a more rigorous analysis of country differences.
Existing comparative panel data such as the European Union Statistics on
Income and Living Conditions (EU-SILC) do not offer sufficient number of
observations and information about the careers of young persons. Furthermore, the individual-level panel component is lacking in some countries
and the panel component of following individuals up to 4 years is too short
in order to evaluate the long-term consequences of nonoptimal starts.
YOUTH LABOR MARKETS IN THE GREAT RECESSION
The economic crisis of 2008/2009 and its aftermath have been seen as a prime
example that young people represent the most disadvantaged age group in
the labor market (Bell & Blanchflower, 2011; Verick, 2009). Against this background, concerns have been raised that this crisis has produced a “lost generation” of young people. It is not only expected that youth experience more
often spells of unemployment and precarious employment during that crisis
but also that youths have suffered more in terms of scarring than in previous
times. Having a “lost generation” would also have detrimental effects for the
social integration of our societies. Thus, future research needs to keep track
of the youth generation that experienced the crisis of 2008/2009.
Another important issue is to explain country differences in the reaction
of youth labor markets to the crisis of 2008/2009. Some countries in Southern and Eastern Europe have suffered from disastrous effects of that crisis,
while youth employment chances even improved in other countries such as
Germany. Why did some countries perform better in that crisis than other
countries do? Which policy reforms help to mitigate the effects of the crisis?
Future research needs to address these policy-relevant questions by analyzing how economic shocks and institutions/policies interact in their effects on
youth labor market chances. In order to better disclose the effects of interactions between economic shocks and institutions/policies, trend studies that

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compare the impact of the crisis of 2008/2009 with the impact of previous
economic downturns might be very powerful.
DIFFERENT FORMS OF NONEMPLOYMENT AND PRECARIOUS EMPLOYMENT
Previous research mainly focused on youth unemployment when analyzing
youth risk of not having a job. However, this youth unemployment indicator misses important cases. For example, in reaction to scarce employment
opportunities, youths may give up the job search and become discouraged,
inactive workers. Moreover, parenthood represents an alternative role model
particularly for young women when employment opportunities are rare. Or,
young people may avoid competition for scarce jobs by extending their studies or returning to the education system. Thus, in addition to the standard
unemployment indicator, a broader nonemployment definition such as the
NEET indicator (young people “not in employment, education nor training”)
is necessary to fully capture the problem of missing employment opportunities for young people (e.g., Eurofound, 2012).
Similarly, it is important to differentiate between different forms of precarious employment. While previous studies already distinguished different
forms of precarious work such as temporary jobs and skill-inadequate
employment, there is still a strong heterogeneity within these subgroups
and some forms of precarious work such as informal jobs have been
rather neglected in research. Finally, all measures need to take the time
dimension into account. It should be a difference whether you suffer from
nonemployment or precarious work just for one month or for several years.
UPWARD AND DOWNWARD COMPARISONS
When analyzing the career consequences of a nonoptimal labor market entry,
previous studies made an “upward” comparison of young people who were
unemployed or in precarious employment to young people in good jobs. Not
surprisingly, most studies found disadvantages for those with nonoptimal
starts. While young job seekers generally prefer good jobs that guarantee
secure, skill-adequate employment, these jobs are scarce. Thus, many young
job seekers just face the choice of either accepting a precarious job or remaining unemployed. If the job seeker only receives a bad job offer, he or she
has to decide whether to accept the offer or to continue the search. Hence,
we need to know whether precarious jobs are still better than remaining
unemployment. More specifically, is precarious work a “stepping-stone” for
the unemployed youths? Thus, the “upward comparison” has to be complemented by a “downward comparison” of precarious work to unemployment.
From a theoretical perspective, it remains unclear whether on-the-job search

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in precarious jobs or off-the-job search in unemployment is more effective to
reach the ultimate goal of finding a good job. Hence, future research should
address this important question.
MULTIDIMENSIONAL OUTCOMES
The literature discussed in this entry focused on the labor market career
consequences of nonoptimal starts into the working life. However, there is
no reason to limit research to the labor market domain. In order to get a full
picture of the consequences, it is important to understand all dimensions
of social consequences. Career insecurities may translate into economic
marginalization (i.e., sharp drops in living standards and increased poverty
risks), social exclusion (i.e., social isolation) as well as lower psychological
well-being and health problems. Furthermore, failure and problems in the
transition from education to work may delay other transitions to adulthood
such as family formation. While there are already studies on single aspects,
we still miss a comprehensive picture on the interrelationships between
different consequences. Future research could piece the puzzle together.
An interdisciplinary approach is required as the suggested topics cover the
fields of sociology, economics, psychology, health, and social policy.
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Labour Economics, 12(4), 487–509. doi:10.1016/j.labeco.2005.05.004
Kalter, F., & Kogan, I. (2006). Ethnic inequalities at the transition from school to work
in Belgium and Spain: Discrimination or self-exclusion? Research in Social Stratification and Mobility, 24(3), 259–274. doi:10.1016/j.rssm.2005.10.002
Kluve, J. (2010). The effectiveness of European active labor market programs. Labour
Economics, 17(6), 904–918. doi:10.1016/j.labeco.2010.02.004
Kogan, I., Noelke, C., & Gebel, M. (2011). Making the transition: education and labor
market entry in Central- and Eastern Europe. Stanford, CA: Stanford University Press.
Lindbeck, A., & Snower, D. J. (1989). The insider-outsider theory of employment and
unemployment. Cambridge, MA: MIT Press.
Luijkx, R., & Wolbers, M. (2009). The effect of non-employment in early work-life
on subsequent employment chances of individuals in The Netherlands. European
Sociological Review, 25(6), 647–660. doi:10.1093/esr/jcp002
McGinnity, F., Mertens, A., & Gundert, S. (2005). A bad start? Fixed-term contracts
and the transition from education to work in West Germany. European Sociological
Review, 21(4), 359–374. doi:10.1093/esr/jci025
Mroz, T. A., & Savage, T. H. (2006). The long-term effects of youth unemployment.
Journal of Human Resources, 41(2), 259–293. doi:10.3368/jhr.XLI.2.259
Neumark, D., & Wascher, W. (2004). Minimum wages, labor market institutions, and
youth employment: A cross-national analysis. Industrial and Labor Relations Review,
57(2), 223–248.
Noelke, C. (2011). The consequences of employment protection legislation for the
youth labour market. MZES Working paper No. 144, Mannheim: MZES.

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Noelke, C., Gebel, M., & Kogan, I. (2012). Uniform inequalities: Institutional differentiation and the transition from higher education to work in post-socialist Central and Eastern Europe. European Sociological Review, 28(6), 704–716. doi:10.1093/
esr/jcs008
Scherer, S. (2004). Stepping-stones or traps? The consequences of labour market entry
positions on future careers in West Germany, Great Britain and Italy. Work, Employment and Society, 18(2), 369–394. doi:10.1177/09500172004042774
Shavit, Y., & Müller, W. (1998). From school to work. A comparative study of educational
qualifications and occupational destinations. Oxford, UK: Clarendon Press.
Sicherman, N. (1991). “Overeducation” in the labor market. Journal of Labor Economics, 9(2), 101–122.
Solga, H. (2002). Stigmatization by negative selection. Explaining less-educated people’s decreasing employment opportunities. European Sociological Review, 18(2),
159–178. doi:10.1093/esr/18.2.159
Sørensen, A. B., & Kalleberg, A. L. (1981). An outline of a theory of matching persons to jobs. In I. Berg (Ed.), Sociological perspectives on labor markets (Vol. 49–74, pp.
49–74). New York, NY: Academic Press.
Spence, M. A. (1973). Job market signaling. Quarterly Journal of Economics, 87(3),
355–374. doi:10.2307/1882010
Steijn, B., Need, A., & Gesthuizen, M. (2006). Well begun, half done? Long-term
effects of labour market entry in the Netherlands, 1950–2000. Work, Employment
and Society, 20(3), 453–472. doi:10.1177/0950017006066996
Verhaest, D., & Van der Velden, R. (2012). Cross-country differences in graduate
overeducation. European Sociological Review Online first.. doi:10.1093/esr/jcs044
Verick, S. (2009). Who is hit hardest during a financial crisis? The vulnerability of
young men and women to unemployment in an economic downturn. IZA Discussion Paper No. 4359, Bonn: IZA.
Wolbers, M. (2003). Job mismatches and their labour-market effects among
school-leavers in Europe. European Sociological Review, 19(3), 249–266. doi:10.1093/
esr/19.3.249
Wolbers, M. (2007). Patterns of labour market entry. A comparative perspective
on school-to-work transitions in 11 European countries. Acta Sociologica, 50(3),
189–210. doi:10.1177/0001699307080924

FURTHER READING
Blossfeld, H.-P., Buchholz, S., Bukodi, E., & Kurz, K. (2008). Young workers, globalization, and the labor market. Cheltenham, England: Edward Elgar.
Gebel, M. (2010). Early career consequences of temporary employment in Germany and the United Kingdom. Work, Employment and Society, 24(4), 641–660.
doi:10.1177/0950017010380645
Kogan, I., Noelke, C., & Gebel, M. (2011). Making the transition: Education and labor
market entry in Central- and Eastern Europe. Stanford, CA: Stanford University
Press.

Labor Market Instability, Labor Market Entry, and Early Career Development

15

Scherer, S. (2004). Stepping-stones or traps? The consequences of labour market entry
positions on future careers in West Germany, Great Britain and Italy. Work, Employment and Society, 18(2), 369–394.
Verhaest, D., & Van der Velden, R. (2012). Cross-country differences in graduate
overeducation. European Sociological Review Online first. doi:10.1093/esr/jcs044
Wolbers, M. (2007). Patterns of labour market entry. A comparative perspective
on school-to-work transitions in 11 European countries. Acta Sociologica, 50(3),
189–210. doi:10.1177/0001699307080924

MICHAEL GEBEL SHORT BIOGRAPHY
Michael Gebel is Full Professor of Sociology, especially Methods of
Empirical Social Research at the University of Bamberg in Germany. His
main research interests include the sociology of education, labor markets,
and the family, the transition to adulthood, especially the dynamics of
school-to-work transition, and international comparative social research. He
has been involved in several international research projects on youth labor
markets in Western and Eastern Europe and the Muslim Middle East. In
this field of youth labor market research, he has been engaged as an expert
for EU institutions such as the European Training Foundation (ETF) and
Eurofound. He has published the monograph “Transitions to adulthood in
Middle Eastern and North Africa: Young women’s rising?” (2014, Palgrave
MacMillan) in coauthorship with Stefanie Heyne and he coedited the books
“Making the transition: Education and labor market entry in Central and
Eastern Europe” (2011, Stanford University Press) and “Europe enlarged: a
handbook of education, labor and welfare regimes in Central and Eastern
Europe.” (2008, The Policy Press). He is also the author of a number of articles
in international academic journals such as Social Forces, Work, Employment &
Society, European Sociological Review, and European Societies, among others.
Personal webpage: https://sites.google.com/site/profdrmichaelgebel/
Curriculum vitae: https://sites.google.com/site/profdrmichaelgebel/
curriculum-vitae
RELATED ESSAYS
Rent, Rent-Seeking, and Social Inequality (Sociology), Beth Red Bird and
David B. Grusky
Globalization: Consequences for Work and Employment in Advanced
Capitalist Societies (Sociology), Tony Elger
State of the Art in Competition Research (Psychology), Márta Fülöp and
Gábor Orosz
The Future of Employment, Wages, and Technological Change (Economics),
Michael J. Handel

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EMERGING TRENDS IN THE SOCIAL AND BEHAVIORAL SCIENCES

The Reorganization of Work (Sociology), Charles Heckscher
Technology Diffusion (Economics), Adam B. Jaffe
Maternal and Paternal Employment across the Life Course (Sociology),
Michaela Kreyenfeld
Transformation of the Employment Relationship (Sociology), Arne L. Kalleberg and Peter V. Marsden
How Do Labor Market Networks Work? (Sociology), Brian Rubineau and
Roberto M. Fernandez
Sociology of Entrepreneurship (Sociology), Martin Ruef
Impact of Limited Education on Employment Prospects in Advanced
Economies (Sociology), Heike Solga
US Union and Workers’ Movements, Past and Future (Sociology), Daniel
Schneider and Judith Stepan-Norris
Transnational Work Careers (Sociology), Roland Verwiebe



Labor Market Instability, Labor
Market Entry, and Early Career
Development
MICHAEL GEBEL

Abstract
Many young people experience episodes of unemployment and precarious
employment such as insecure temporary jobs and skill-inadequate jobs during their
school-to-work transition period. This essay summarizes key theoretical ideas and
main previous empirical findings on the determinants and career consequences of
having such a nonoptimal start into the working life. Then, this essay highlights
cutting-edge research that has advanced our knowledge by providing more detailed
insights into the individual-level career dynamics as well as the macro-level
institutional and structural determinants of cross-country differences. This article
concludes with a discussion of five key issues for future research. First, there is
need for a better understanding of the institutional and structural influences on
the career consequences of having a nonoptimal labor market entry. Second, the
experiences during the economic crisis of 2008/2009 and its aftermath ask for a
better understanding of why some countries performed better than other countries
in protecting youths from that severe crisis. Third, a more detailed analysis of
different forms of nonemployment and precarious employment is required in order
to account for the strong variation of labor market experiences of youths. Fourth, to
fully assess not only the risks but also the chances of taking up temporary jobs and
skill-inadequate jobs at labor market entry, we have to complement the standard
“upward comparison” to regular employment with a “downward comparison” to
the alternative of nonemployment. Finally, this entry calls for an interdisciplinary
and integrative approach analysing not only the work career consequences of bad
labor market starts but also the social, economic, psychological, health, and familial
consequences.

INTRODUCTION
The transition from education to work is a central stage in the individual
life course. It is strongly interrelated to other processes of the transition to
adulthood such as leaving parental home, gaining economic independence,

Emerging Trends in the Social and Behavioral Sciences. Edited by Robert Scott and Stephen Kosslyn.
© 2015 John Wiley & Sons, Inc. ISBN 978-1-118-90077-2.

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EMERGING TRENDS IN THE SOCIAL AND BEHAVIORAL SCIENCES

and the family formation. Finding a stable, adequate job is often seen as a
central precondition to make successful transitions on the way to become
an adult. However, young people often face difficulties in finding a stable,
adequate job and they experience periods of unemployment and precarious
employment (such as temporary jobs or skill-inadequate jobs) at the start of
their working career. Against this background, questions arise why this is the
case and what it means for the future life of young men and women. More
specifically, why do young people more often face unemployment and precarious employment? With regard to social inequality, which subgroups of
youths are most at risk of having to accept such low-quality jobs? And what
are the consequences of these nonoptimal labor market entries for the career?
Do initial periods of unemployment and precarious employment damage an
entrant’s career opportunities in the long run? Or, are these only transitory
effects in the individual life course?
To answer these questions, this entry summarizes central theoretical
ideas and main empirical findings from the existing literature, particularly
from the fields of sociology and economics. Moreover, this entry highlights
cutting-edge research that has recently advanced our knowledge in two
important aspects. First, recent research has addressed the consequences
of a nonoptimal start with a specific focus on the career dynamics and the
issue of causality. Second, recent research has tried to explain the strong
country differences in the probability of having a nonoptimal career start
and its consequences. In order to explain the country variation, the role of
institutional and structural country differences has been emphasized.
Despite the promising cutting-edge research, however, research on the
topic of nonoptimal career starts and their consequences is not yet completed
and many aspects remain puzzling. Specifically, there is need for innovative
research designs, new data, as well as broader and interdisciplinary perspectives on the research topic. Therefore, this entry concludes with a discussion
of five key issues for future research.
FOUNDATIONAL RESEARCH
Previous research has shown that young people particularly face higher
risks of labor market exclusion in terms of unemployment but they are also
most at risk of needing to accept precarious work, such as temporary jobs
and skill-inadequate employment. But why are labor market entrants most
affected by risks of unemployment, temporary jobs, and skill-inadequate
employment? And what are the consequences of such nonoptimal labor
market entries for the career?

Labor Market Instability, Labor Market Entry, and Early Career Development

3

DETERMINANTS OF NONOPTIMAL LABOR MARKET ENTRIES
From a theoretical perspective, it is usually argued that young job applicants
are at high risk of unemployment and precarious jobs because, being
outsiders, they lack experience, seniority, and networks in contrast to the
more experienced workers, who represent the insiders (Lindbeck & Snower,
1989). Strong insider–outsider cleavages go hand in hand with labor market
segmentation, that is, the division of the workforce into (mainly older) insiders with good jobs located in the primary labor market segment and (mainly
younger) outsiders with precarious jobs located in the secondary labor
market segment (Doeringer & Piore, 1971). Employers—with the support of
insiders—have incentives to form such a buffer stock of precarious jobs and
pool of unemployed workers, making it possible to respond to short-term
market volatilities without having to dismiss any of the core workers.
Furthermore, youths’ problems of finding a (good) job are explained by
information problems that arise in the two-sided matching process of young
job applicants and employers (Sørensen & Kalleberg, 1981). Employers have
difficulty assessing the expected productivity and trainability of applicants
fresh out of school, while labor market entrants themselves are still learning about what kind of work they want and fit to. These information problems delay the process of matching young people to jobs and, hence, the
school-to-work transition is a prolonged period characterized by unemployment, temporary employment, and skill-inadequate jobs.
Employers try to overcome uncertainty in the hiring process by relying
on unalterable attributes—so-called “indices”—(such as ethnicity) and
alterable characteristics—so-called “signals”—(such as education) in order
to assess the unknown productivity and trainability of young applicants
(Spence, 1973). Thus, particularly those young people who have the “right”
signals and indices are more attractive for employers and in a better position. However, this implies that the risks of unemployment, temporary
employment, and skill-inadequate employment are unequally distributed
between different subgroups of young people. A large body of research has
shown that especially youths with low levels of education and immigration
background are disadvantaged in the job search process and may even
experience statistical discrimination and stigmatization based on their
group membership (e.g., Kalter & Kogan, 2006; Solga, 2002). Besides the
level of education, vocational education and training is a valuable signal in
the race for good labor market positions among young job seekers (Shavit &
Müller, 1998). However, if the education system does not offer clear signals,
many young workers end up in skill-inadequate employment (Wolbers,
2003). Specifically, the problem of overqualification arises if young workers

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EMERGING TRENDS IN THE SOCIAL AND BEHAVIORAL SCIENCES

attended higher levels of education than the level of education that is
actually required to perform the job tasks.
CAREER CONSEQUENCES OF NONOPTIMAL LABOR MARKET ENTRIES
In consideration of the fact that many young people experience unemployment and precarious employment, and, because the school-to-work transition is a central stage in the individual life course, the question arises how an
initial period of nonemployment and precarious employment affect the work
careers. Do nonoptimal starts damage an entrant’s future career opportunities? Or, are these only transitory effects?
Looking at the literature, it is often argued that experiencing unemployment at the beginning of the working life lowers future employment
chances and wages in the long run. These so-called scar effects are related
to the depreciation or loss of skills and work experience as well as the loss
of social networks that occur during the period of unemployment. It is
argued that these scars may last for the entire working career because initial
unemployment induces a stigmatizing signal in future hiring decisions
and, thus, recurrent spells of unemployment. An opposing view is that
initial disadvantages diminish when unemployed youths find their way to
employment and get access to training and networks. In this respect, frequent job moves and recurrent periods of unemployment in the early career
are seen as necessary and unproblematic steps in the process of finding the
right job. Which view is the right one? Empirical findings suggest that there
is some catching-up process but unemployment still damage youths’ careers
in the long run (Gregg & Tominey, 2005; Mroz & Savage, 2006). Particularly,
unemployed youths with low levels of education experience such adverse
long-term career effects (Burgess, Propper, Rees, & Shearer, 2003).
With regard to the career consequences of a start in precarious employment, such as temporary jobs and skill-inadequate jobs, there are also two
opposing scenarios (Gebel, 2010; Scherer, 2004). According to the entrapment
hypothesis, precarious jobs are located in the secondary labor market offering only limited chances of skill acquisition, which hinders upward mobility.
Furthermore, a worker who begins his or her professional life in a precarious
job might be viewed as a bad hire by future employers, inducing a stigmatizing signal. In contrast, the integration hypothesis assumes that precarious entry
jobs only induce transitory disadvantages, that is, youths who had a failed
start can easily catch up. For example, according to the screening argument,
employers convert temporary entry jobs into permanent jobs if the young
employee fulfils the employer’s expectations. Thus, in this regard, temporary
jobs can be seen as “entry ports” or “stepping stones” into insider positions.
Similarly, with respect to skill-inadequate employment, Sicherman’s (1991)

Labor Market Instability, Labor Market Entry, and Early Career Development

5

career theory claims that starting the career as an overqualified worker is
associated with better promotion chances across firm-internal career ladders
into skill-adequate positions. Thus, overqualification is just a temporary phenomenon occurring at the beginning of the working career and it does not
induce any long-term damage to the future career. It may even represent the
fastest track toward skill-adequate work, offering important work experience
and avoiding unemployment scars if the alternative is continued unemployment. This is in line with the idea that “job shopping” is necessary at the
beginning of the career in order to find the right job.
Is the entrapment hypothesis or the integration hypothesis empirically
supported? With regard to temporary employment at labor market entry,
empirical studies are rather mixed when analyzing the early career consequences. Results vary across countries. For example, Barbieri and Scherer
(2009) show for Italy that entering the labor market via temporary jobs has
strong and long-lasting negative career consequences in terms of lower
employment chances and lower chances to end up in stable employment. In
contrast, McGinnity, Mertens, and Gundert (2005) find for Germany that the
unemployment rates of those who started with a temporary job are higher
in the short run but tend to converge with those of permanent-contract
workers after five years. Similarly, Gebel (2010) shows that British and
German youths who start their working life in temporary jobs suffer from
initial wage penalties and risks of temporary employment cycles, but that
those differences compared to entrants with permanent contracts diminish
during the early career. The integration scenario works most effectively in
the United Kingdom. In terms of subgroup differences of young persons,
previous research has shown that the integration hypothesis is confirmed
for the youths with high levels of education, whereas the segmentation
perspective applies more often to the youths with low levels of education
(Gebel, 2010). With regard to overqualification, empirical studies are more in
line with the entrapment hypothesis (Baert, Cockx, & Verhaest, 2012; Scherer,
2004). There is some degree of catching up but initial disadvantages are not
fully compensated for during the early career (Scherer, 2004). Moreover,
there is again evidence that the results vary across countries.
CUTTING-EDGE RESEARCH
CAUSAL ANALYSES AND LONGITUDINAL DATA
Recent empirical studies emphasized that it is important to address the
methodological problem of causality when analysing the career consequences of early spells of unemployment and precarious employment
based on nonexperimental data. When analyzing the career consequences

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EMERGING TRENDS IN THE SOCIAL AND BEHAVIORAL SCIENCES

of nonoptimal starts into the working life, nonrandom selection into unemployment and precarious employment has to be taken into account. As
outlined, initial labor market positions are the result of a two-sided choice
process, that is, spells of initial unemployment and precarious employment are not randomly assigned to the young persons. These two-sided
selection processes induce compositional differences in terms of employee
and employer characteristics. Thus, it is an open question whether career
differences between successful and unsuccessful labor market entrants
are really causal or just the result of different workers’ and employer
characteristics. For example, lower educated and less motivated youths
might be overrepresented among young unemployed people and young
people in precarious employment. If we find career disadvantages for these
groups, the estimated effects may partly reflect preexisting educational or
motivational differences and are therefore not causal. Hence, to understand
the career effects of nonoptimal labor market entries, one has to account for
such selectivity-induced compositional differences. If these differences are
adequately statistically controlled for, the remaining effect can be causally
attributable to the nonoptimal start. The bulk of empirical research answers
the question of causality with standard regression techniques producing
biased results if selectivity is not consciously and adequately accounted for.
However, recent empirical studies applied methods of modern causal analysis such as propensity-score matching (e.g., Gebel, 2010), the timing of events
approach (e.g., Baert et al., 2012) or random effects models (Baranowska,
Gebel, & Kotowska, 2011) in order to address the problem of causality in a
more convincing way.
Moreover, recent empirical studies on the school-to-work transition and
the career consequences of nonoptimal labor market entries highlighted
the importance of taking a more detailed dynamic career perspective (e.g.,
Brzinsky-Fay, 2007; Gebel, 2010; McGinnity et al., 2005). In this respect, longitudinal data, either in the form of individual level panel or retrospective life
history data, are necessary to get a full picture of the career dynamics taking
place after labor market entry. Moreover, these recent studies have shown
that a long-term individual-level dynamic analysis based on longitudinal
data is necessary in order to assess whether nonoptimal labor market entries
cause only transitory effects or long-term negative career effects (e.g., Barbieri & Scherer, 2009; Luijkx & Wolbers, 2009; Steijn, Need, & Gesthuizen, 2006).
THE IMPACT OF INSTITUTIONAL AND STRUCTURAL FACTORS
A second cutting-edge topic in recent research is the explanation of the strong
cross-country variation in the incidence of youth unemployment and precarious employment. The role of various structural and institutional conditions

Labor Market Instability, Labor Market Entry, and Early Career Development

7

has been highlighted. From a policy perspective, it is particularly important
to learn about the best design of institutions in order to guarantee youths’
employability.
With regard to structural factors, unfavourable economic conditions tighten
the competition among graduates and hinder a successful labor market integration of young people, especially for youths with low levels of education
(Gangl, 2002; Verhaest & Van der Velden, 2012; Wolbers, 2007). In contrast,
stronger competition due to demographic pressures, as measured by youth
cohort size, does not seem to be an important explanatory factor for youth
labor market problems (Gangl, 2002). The structural trend of education expansion has been especially made responsible for the phenomenon of overqualification among labor market entrants (Verhaest & Van der Velden, 2012). It
is argued that educational expansion induced a “credential inflation,” which
led to displacement processes from the top, leaving higher educated to take
up low-skilled job that were previously occupied by less qualified workers.
However, it has been shown that these crowding-out processes have been
partly offset by an upgrading of the occupational structure due to technological change (Gangl, 2002). Another structural factor that has been highlighted in recent research is globalization (e.g., Blossfeld, Buchholz, Bukodi, &
Kurz, 2008). However, the quantitative empirical evidence on the impact of
globalization is still scarce and rather ambiguous. All in all, although these
recent studies emphasize the role of structural factors, quantitative empirical
research on the impact of structural factors is still rather scarce.
With regard to institutional factors, previous research has developed a
variety of country-level typologies to explain cross-country variation in
youth labor market outcomes. However, recent research challenged these
ideas of country typologies arguing that it is important to differentiate
between single institutional dimensions. Particularly, from a policy perspective, it seems important to understand which specific institutions support
or hinder youth labor market integration. In contrast, country typologies
just leave the researcher with a bunch of potential explanations such that no
clear policy recommendations can be given.
Previous research has particularly highlighted the role of education and
training institutions. It is argued that in contrast to education programs teaching general skills, vocational-specific education facilitate school-to-work
transition if employers are involved such as in the form of firm-based
vocational training (Shavit & Müller, 1998). A classic example is the “dual
system” practiced in Germany and other Central European countries, which
combines school-based education with workplace-based training. Participating in firm-based training creates a screening opportunity for employers.
Moreover, in this on-the-job training process, individuals obtain specific,
portable, and up-to-date skills that are aligned with employers’ needs. While

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EMERGING TRENDS IN THE SOCIAL AND BEHAVIORAL SCIENCES

previous empirical studies confirmed the strong benefits of dual-system
education (Breen, 2005; Shavit & Müller, 1998; Wolbers, 2003, 2007), most
recent findings cast doubts. For example, Kogan, Noelke, and Gebel (2011)
find equal benefits of dual-system and school-based vocational education
in Central and Eastern Europe. Moreover, recent research has shifted the
focus from secondary education toward higher education institutions in
view of the expansion and differentiation of higher education. For example,
Noelke, Gebel, and Kogan (2012) reveal the importance of the vertical
differentiation of higher education system, in terms of different degree
levels (post-secondary vocational degrees vs Bachelor degrees vs Master
degrees), and the vertical differentiation of higher education, in terms of
the occupational specificity of different field of studies, for patterns of the
transition from higher education to work.
Furthermore, rigid labor market institutions have been identified as the main
factors causing this strong cross-country variation in youth labor market
outcomes. For example, minimum wages may induce wage floors and hamper
youth labor market integration chances (Neumark & Wascher, 2004). Strong
unions, mainly representing the interests of labor market insiders by pushing
for higher wages and employment protection for older workers, can also be
to the disadvantage of youths’ employment chances (Baranowska & Gebel,
2010). In addition, rigid employment protection legislation (EPL) has been
blamed for youths’ integration problems in previous empirical studies (e.g.,
Breen, 2005). While strict EPL reduces hiring and firing rates, it has been
argued that employers particularly refrain from hiring young workers in an
environment of high firing costs. Against this background, many European
countries reacted with the deregulation of employment protection. The
most common form of EPL deregulation was the partial deregulation of
temporary work contracts while keeping the protection of regular contracts
at high levels. However, in the recent empirical literature, doubts on the
effectiveness of the EPL reforms—in terms of the effectiveness of reducing
youth unemployment—occurred (Noelke, 2011). Moreover, recent empirical
findings show that the partial deregulation of temporary contracts just
aggravated social inequalities in terms of an increasing spread of temporary
jobs among youths but it did not succeed in reducing youth nonemployment
risks (Gebel & Giesecke, 2012). These recent studies on EPL have also made
an important methodological contribution. While previous studies suffered
from potentially biased results as they relied on comparing countries with
different levels of EPL, recent studies looked at the effects of various reforms
of EPL in each country (Gebel & Giesecke, 2012).
Finally, youths’ employability is shaped by the welfare state in terms of the
national design of active and passive labor market policy. While young school

Labor Market Instability, Labor Market Entry, and Early Career Development

9

leavers rarely have the working experience that grants eligibility for financial support from the state, diverse measures of active labor market policy
(ALMP), such as help with job search, further training or subsidized work,
have been implemented across countries in order to facilitate youth labor
market integration. However, a recent meta-analysis of ALMP evaluation
studies shows that youth programs are significantly less likely to be effective
(Kluve, 2010).
KEY ISSUES FOR FUTURE RESEARCH
Although previous research produced important insights, and although
recent research has brought innovative research designs and addressed
highly topical new issues, there are still many underexplored topics of
research. In the following, I highlight five main topics of an agenda of future
research.
INSTITUTIONAL AND STRUCTURAL DETERMINANTS OF SUBSEQUENT CAREER CHANCES
As described, recent empirical studies have challenged conventional wisdom on the institutional determinants of a successful integration of young
people into their first job. We still do not know much about the institutional
and structural determinants of subsequent career chances. The very few
comparative studies that look at the career consequences of nonoptimal
labor market starts have revealed strong country differences (Gebel, 2010;
Scherer, 2004; Verhaest & Van der Velden, 2012). What we still lack is robust
quantitative evidence on which institutional and structural explain country
differences. Are the subsequent career chances determined by macroeconomic conditions, or can policy makers influence the career chances via
policy reforms? We have to know how to best design the institutional
environment of the education and training system, labor market regulation
and the welfare state in order to mitigate the any negative career effects of
bad starts into the labor market. For example, do rigid labor markets, due
to strong unionization and strict employment protection of regular jobs,
reduce young people’s chances to make up for any initial disadvantages? In
this respect, there are some first hints that youth have the best chances to get
out of precarious jobs in flexible labor markets, whereas mobility barriers
are stronger in rigid labor markets (Gangl 2003; Gebel, 2010; Scherer, 2004).
Another question is whether the effects of institutions may differ with
regard to labor market entry chances and career chances, producing potential
trade-offs. For example, vocational-specific education systems may reduce
the incidence of unemployment and precarious employment at labor market
entry but, at the same time, they may aggravate the negative consequences

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EMERGING TRENDS IN THE SOCIAL AND BEHAVIORAL SCIENCES

of nonoptimal career starts by deepening labor market segmentation. Specifically, the additional segmentation of the labor market across occupations
may make it difficult for young workers trained in one specific occupation
to profit from better jobs in another occupational segment.
To identify the institutional and structural determinants of subsequent
career chances, we need new comparative longitudinal data that allow us
to track the career of youth in an individual-level dynamic perspective.
The few suitable large-scale national panel surveys such as the German
Socioeconomic Panel (SOEP), British Household Panel Survey (BHPS), or
the US-American Panel Study on Income Dynamics (PSID) are too few
in number in order to allow for a quantitative cross-country comparison.
Higher degrees of data comparability as well as the larger number of
countries are necessary for a more rigorous analysis of country differences.
Existing comparative panel data such as the European Union Statistics on
Income and Living Conditions (EU-SILC) do not offer sufficient number of
observations and information about the careers of young persons. Furthermore, the individual-level panel component is lacking in some countries
and the panel component of following individuals up to 4 years is too short
in order to evaluate the long-term consequences of nonoptimal starts.
YOUTH LABOR MARKETS IN THE GREAT RECESSION
The economic crisis of 2008/2009 and its aftermath have been seen as a prime
example that young people represent the most disadvantaged age group in
the labor market (Bell & Blanchflower, 2011; Verick, 2009). Against this background, concerns have been raised that this crisis has produced a “lost generation” of young people. It is not only expected that youth experience more
often spells of unemployment and precarious employment during that crisis
but also that youths have suffered more in terms of scarring than in previous
times. Having a “lost generation” would also have detrimental effects for the
social integration of our societies. Thus, future research needs to keep track
of the youth generation that experienced the crisis of 2008/2009.
Another important issue is to explain country differences in the reaction
of youth labor markets to the crisis of 2008/2009. Some countries in Southern and Eastern Europe have suffered from disastrous effects of that crisis,
while youth employment chances even improved in other countries such as
Germany. Why did some countries perform better in that crisis than other
countries do? Which policy reforms help to mitigate the effects of the crisis?
Future research needs to address these policy-relevant questions by analyzing how economic shocks and institutions/policies interact in their effects on
youth labor market chances. In order to better disclose the effects of interactions between economic shocks and institutions/policies, trend studies that

Labor Market Instability, Labor Market Entry, and Early Career Development

11

compare the impact of the crisis of 2008/2009 with the impact of previous
economic downturns might be very powerful.
DIFFERENT FORMS OF NONEMPLOYMENT AND PRECARIOUS EMPLOYMENT
Previous research mainly focused on youth unemployment when analyzing
youth risk of not having a job. However, this youth unemployment indicator misses important cases. For example, in reaction to scarce employment
opportunities, youths may give up the job search and become discouraged,
inactive workers. Moreover, parenthood represents an alternative role model
particularly for young women when employment opportunities are rare. Or,
young people may avoid competition for scarce jobs by extending their studies or returning to the education system. Thus, in addition to the standard
unemployment indicator, a broader nonemployment definition such as the
NEET indicator (young people “not in employment, education nor training”)
is necessary to fully capture the problem of missing employment opportunities for young people (e.g., Eurofound, 2012).
Similarly, it is important to differentiate between different forms of precarious employment. While previous studies already distinguished different
forms of precarious work such as temporary jobs and skill-inadequate
employment, there is still a strong heterogeneity within these subgroups
and some forms of precarious work such as informal jobs have been
rather neglected in research. Finally, all measures need to take the time
dimension into account. It should be a difference whether you suffer from
nonemployment or precarious work just for one month or for several years.
UPWARD AND DOWNWARD COMPARISONS
When analyzing the career consequences of a nonoptimal labor market entry,
previous studies made an “upward” comparison of young people who were
unemployed or in precarious employment to young people in good jobs. Not
surprisingly, most studies found disadvantages for those with nonoptimal
starts. While young job seekers generally prefer good jobs that guarantee
secure, skill-adequate employment, these jobs are scarce. Thus, many young
job seekers just face the choice of either accepting a precarious job or remaining unemployed. If the job seeker only receives a bad job offer, he or she
has to decide whether to accept the offer or to continue the search. Hence,
we need to know whether precarious jobs are still better than remaining
unemployment. More specifically, is precarious work a “stepping-stone” for
the unemployed youths? Thus, the “upward comparison” has to be complemented by a “downward comparison” of precarious work to unemployment.
From a theoretical perspective, it remains unclear whether on-the-job search

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EMERGING TRENDS IN THE SOCIAL AND BEHAVIORAL SCIENCES

in precarious jobs or off-the-job search in unemployment is more effective to
reach the ultimate goal of finding a good job. Hence, future research should
address this important question.
MULTIDIMENSIONAL OUTCOMES
The literature discussed in this entry focused on the labor market career
consequences of nonoptimal starts into the working life. However, there is
no reason to limit research to the labor market domain. In order to get a full
picture of the consequences, it is important to understand all dimensions
of social consequences. Career insecurities may translate into economic
marginalization (i.e., sharp drops in living standards and increased poverty
risks), social exclusion (i.e., social isolation) as well as lower psychological
well-being and health problems. Furthermore, failure and problems in the
transition from education to work may delay other transitions to adulthood
such as family formation. While there are already studies on single aspects,
we still miss a comprehensive picture on the interrelationships between
different consequences. Future research could piece the puzzle together.
An interdisciplinary approach is required as the suggested topics cover the
fields of sociology, economics, psychology, health, and social policy.
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189–210. doi:10.1177/0001699307080924

FURTHER READING
Blossfeld, H.-P., Buchholz, S., Bukodi, E., & Kurz, K. (2008). Young workers, globalization, and the labor market. Cheltenham, England: Edward Elgar.
Gebel, M. (2010). Early career consequences of temporary employment in Germany and the United Kingdom. Work, Employment and Society, 24(4), 641–660.
doi:10.1177/0950017010380645
Kogan, I., Noelke, C., & Gebel, M. (2011). Making the transition: Education and labor
market entry in Central- and Eastern Europe. Stanford, CA: Stanford University
Press.

Labor Market Instability, Labor Market Entry, and Early Career Development

15

Scherer, S. (2004). Stepping-stones or traps? The consequences of labour market entry
positions on future careers in West Germany, Great Britain and Italy. Work, Employment and Society, 18(2), 369–394.
Verhaest, D., & Van der Velden, R. (2012). Cross-country differences in graduate
overeducation. European Sociological Review Online first. doi:10.1093/esr/jcs044
Wolbers, M. (2007). Patterns of labour market entry. A comparative perspective
on school-to-work transitions in 11 European countries. Acta Sociologica, 50(3),
189–210. doi:10.1177/0001699307080924

MICHAEL GEBEL SHORT BIOGRAPHY
Michael Gebel is Full Professor of Sociology, especially Methods of
Empirical Social Research at the University of Bamberg in Germany. His
main research interests include the sociology of education, labor markets,
and the family, the transition to adulthood, especially the dynamics of
school-to-work transition, and international comparative social research. He
has been involved in several international research projects on youth labor
markets in Western and Eastern Europe and the Muslim Middle East. In
this field of youth labor market research, he has been engaged as an expert
for EU institutions such as the European Training Foundation (ETF) and
Eurofound. He has published the monograph “Transitions to adulthood in
Middle Eastern and North Africa: Young women’s rising?” (2014, Palgrave
MacMillan) in coauthorship with Stefanie Heyne and he coedited the books
“Making the transition: Education and labor market entry in Central and
Eastern Europe” (2011, Stanford University Press) and “Europe enlarged: a
handbook of education, labor and welfare regimes in Central and Eastern
Europe.” (2008, The Policy Press). He is also the author of a number of articles
in international academic journals such as Social Forces, Work, Employment &
Society, European Sociological Review, and European Societies, among others.
Personal webpage: https://sites.google.com/site/profdrmichaelgebel/
Curriculum vitae: https://sites.google.com/site/profdrmichaelgebel/
curriculum-vitae
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