Climbing the jobs ladder slower: Young people in a weak labour market

The 2008 Global Financial Crisis (GFC) and the end of the mining boom ushered in a downturn in the Australian labour market. Even though past downturns were marked by high unemployment, the unemployment rate post-GFC recovered quickly and remained low until the COVID-19 crisis in 2020. Instead, the weak labour market post-2008 was reflected in slow wage rate growth and in job seekers finding part-time work or work in less attractive firms or occupations (PC 2020). This suggests more attention should be devoted to the types of jobs available over this period.

We use an occupational score (developed by the ANU) as one measure of the type of employment, alongside other data available in HILDA. Controlling for education, we found that occupational scores declined between 2001 and 2018. Likewise, we show the cohort that graduated between 2013 and 2015 obtained work in lower-scored occupations than earlier cohorts.

This decline in average occupational score hides significant heterogeneity in outcomes. Some young workers found jobs in very high-scored occupations while others were ‘unlucky’, finding jobs in occupations with scores well below what one would have predicted in earlier years. To examine this heterogeneity we calculate Markov transitions on a matched sample of graduates, and look at transitions across the quartiles of the occupational score distribution. The likelihood of transitioning to better outcomes is low, and worsened between 2008 and 2018, suggesting that poor initial outcomes can have long-term effects on one’s occupation.

About our speaker

Bryn Lampe works in the Research and Modelling team at the Productivity Commission, where he has been for the past year and a half. Before his job at the Commission, he worked as a research assistant and tutor while completing his PhD in Economics at the University of Melbourne. His interests include public policy and applied microeconomic research in international trade and labour markets

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