The Role of Social Welfare Benefits for Young People’s Transitions from School to Work

For every young adult, the transition from school to work (STWT) is of outmost importance. Success or failure at this career stage affects young people’s life perspectives and labour market outcomes in later life. While smooth standard transitions into apprenticeship or into employment guarantee financial security, youth’s labour market entries are often characterised by ruptures, detours or delays. Social welfare benefits aim at compensating these problematic episodes by protecting people from poverty. This study contributes to the current research by linking STWTs and financial independence trajectories via dual-channel sequence analysis. For the example of Germany with its well-developed social welfare system, we ask if young people require social welfare benefits temporarily or permanently during their STWTs. How do STWTs and financial independence trajectories of young people go along?

Using dual-channel sequence analysis, we examine young people’s STWTs and their trajectories into financial independence simultaneously. Our data consists of administrative data from the career guidance of the German Federal Employment Agency and of integrated employment biographies (IEB) of the Institute for Employment Research (IAB) for young school leavers over a period of 6.5 years after compulsory school. As a result, we detect a variety of STWT patterns like smooth standard transitions, delayed transitions, detours and directionless patterns combined with various trajectories of financial (in)dependence. Our results support the hypotheses that standard transitions go along with financial security and that young people permanently end up as welfare recipients after directionless STWTs. Both results hold true for young people from welfare recipient households as well as from wealthier households. Between the two extremes, social welfare benefits only play a minor role for young people in Germany. We do not find typical transitions into employment that are systematically linked to (temporary) welfare benefits during detours or delays – at least not of relevant frequency.