How background sometimes matters: the interaction of disadvantage and local labour market on early career in Germany

Regardless of education, growing up in a disadvantaged household can still affect early career. How much it matters depends on the context. Using multilevel models on the German Socio-Economic Panel Study this paper shows that disadvantaged young adults are more affected by the business cycle than their similarly educated counterparts from advantaged background. When the local labour market is tight employers increase hiring standards which hits the disadvantaged more. During better times the difference by background is much smaller. As local unemployment rises, the disadvantaged are bumped down to worse jobs or unemployment, at the benefit of the more advantaged.