Unemployment in early career in the UK: a trap or a stepping stone?

Summary

In this article, I analyse the consequences of unemployment on the re-entry occupational status and subsequent occupational status growth of different educational groups in the first years of employment in the UK. I argue that phases of unemployment mean different things for different educational groups. The sequential nature of job offers causes job searchers either to accept a job offer immediately or to wait for the next offer. Higher aspirations and higher levels of savings mean that high-educated people are more likely to wait until they are offered a job that improves their occupational position. In the case of low-educated workers, however, waiting for a better job offer might not be the best strategy, because they might never get one; in addition, the low level of unemployment benefits from previous salaries, the regime of sanctions linked to the right to receive unemployment benefits and low household incomes push them into employment. I use growth curve models and parameterize in one model both the pre-unemployment and the post-unemployment phases. Based on British Household Panel Survey (BHPS) data, the results confirm my argumentation: high-educated people gain status while low-educated entrants lose status upon re-entering the labour market after unemployment.