The Turbulence of School to Work Transitions and the Earnings Outcomes of Young Canadians

Countries differ in the character of their school to work transitions. Germany is frequently treated as a model, across a fairly wide range of educational levels preparing young people to move easily into stable employment. The United States is not usually treated as a model. A significant proportion of its transitions involve interruptions as young people switch between educational programs and jobs. Canada’s school to work transitions are rather like those of the US. This raises these questions. i) To what degree do turbulent transitions damage subsequent earnings? ii) To the extent that turbulent transitions damage earnings, what is it about them that causes the damage? Do multiple transitions between educational programs, employments, spells of unemployment, and absences from the labour market for reasons other than education all have negative effects on earnings or do their effects vary by kind of transition and by level of last diploma - secondary or postsecondary. iii) To the extent that there is damage, with what theory are the patterns causing the damage consistent? We use Canada’s Youth in Transition Survey to address these questions. It started collecting data on a sample of the 1999 cohort of 15 year olds and followed them for the next ten years. Consequently, we have 120 observations of labour force status, including reason for not being present in the labour force as well as earnings at the end of the ten years and other variables. Our results show that the character of the turbulence does indeed influence earnings and does so differently for those who finished their education with a secondary or postsecondary diploma.