The Effects of Level of Education on Mobility between Employment and Unemployment

in the Netherlands
Author(s): Maarten H. J. Wolbers
Source: European Sociological Review, Vol. 16, No. 2 (Jun., 2000), pp. 185-200
Published by: Oxford University Press
Stable URL: http://www.jstor.org/stable/522676
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European Sociological Review, Vol. 16 No. 2, 185-200 185

The Effects of Level of Education on Mobility

between Employment and Unemployment
in the Netherlands

Maarten H. J. Wolbers

It is a known fact that less well-educated people have higher unemployment rates than better edu-
cated people. A possible explanation of this finding is job competition: employers prefer higher over
lower educated workers for jobs that were previously occupied by lower-educated employees. As a
consequence, the lowest educated become unemployed. In this article we investigate the relation-
ship between education and unemployment in a dynamic way. The question is to what extent
unemployment entry and exit rates vary with educational level. In order to answer this question we
used Dutch panel data with information on the shifts in labour-market position of more than 10,000
respondents in the period 1980-94. Our first finding shows that the least well-educated employees
have a higher risk of becoming unemployed than better educated workers. This effect of education
differs by current aggregate unemployment rate and sex. Secondly, we conclude that unemployed
individuals with qualifications have higher probabilities of regaining employment than the unem-
ployed without qualifications. This effect varies by current aggregate unemployment rate, sex, and
unemployment duration.

Introduction society. There are considerable differences in the

chances of unemployment for individuals with dif-
Since the 1970s unemployment in most industria- ferent educational qualifications. Table 1 shows that
lized societies has been subject to great changes in the Netherlands the problem of unemployment is
(see for instance OECD, 1991). These are caused by greatest among the lower educated. The unemploy-
economic fluctuations. Each economic recession ment rate for persons with no more than primary
causes rapidly increasing unemployment rates, education, but also for those with PVE, LGSE, or
HGSE/PUE
while recovery of the economy causes the figures to is considerably higher than for the
slowly decrease again. The worst stage was inbetter
the educated (for an explanation of abbreviations,
beginning of the 1980s, when in a number ofseeEur-
Table 1). In addition, the relationship between
opean countries more than 10 per cent of the
education and unemployment is stronger when
workforce was registered with the various labour
there is an ample supply of labour on the labour
exchanges as unemployed. In addition, the market.
high If we compare the odds of unemployment
unemployment figures in that period were charac-
versus employment for the lowest educated (primary
terized by a new phenomenon: long-term
education) to the odds of unemployment versus
unemployment. Many more people than before employment
ran for the highest educated (univer-
the risk of being unemployed for a long timesity)-
(i.e. i.e. if we calculate an odds ratio - then it
more than one year). appears that this odds ratio was the greatest in
1985,
The likelihood of (long-term) unemployment is the year when unemployment reached a
unequally divided among the various groupspeak.'in

? Oxford University Press 2000

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186 MAARTEN H. J.WOLBERS

Table 1. Unemployment rates classified by levelofeducation, 1975-1993 (%)

1975 1985 1990 1992 1993

Primary education (PE) 7.1 26.1 14.0 13.3 15.6

Lower general secondary education (LGSE) 5.3 18.3 10.8 10.2 10.3

Preparatory vocational education (PVE) 4.2 14.2 6.8 6.6 8.4

Higher general secondary education (HGSE)/

Preparatory university education (PUE) 5.7 18.0 12.2 9.4 12.2

Intermediate vocational education (IVE) 3.6 7.3 4.3 4.4 5.2

Higher vocational education (HVE) 2.7 6.8 4.8 4.9 5.1

University education (UE) 2.0 6.7 5.9 5.4 6.1

Total 5.1 13.0 8.5 6.5 7.5

Source: SCP (1994), Table 8.8, p. 341.

Unemployment atpercentages are

different stages of the business cycle. only
Unemploy-
snapshots and provide
ment was very highlittle
in 1983, when insight
12 per cent of the
Dutch workforce Nickell,
market itself (Layard, was registered as unemployed.
and J
There may have Since
been then, unemployment
great steadily decreased to
changes
individuals without
just over 5the
per cent inunemployme
1992. In 1994, however, the
changed at all. For
number example,
of unemployed rose again:a to high
around 8 peran
ployment rate among the
cent. Since then the situation lower edu
has improved greatly
accompanied by anda the
high
current rate level
of unemploymentof in theindiv
Nether-
between employment and
lands stands below unemploy
4 per cent. This is the lowest
this group. In other words,
percentage for anand
more than two decades unem
is much
consists on the one hand of individuals who are lower than the figures in most other European coun-
tries.
becoming unemployed, and on the other hand of indi-
viduals who are remaining unemployed (Ultee,
Secondly, long-term unemployment is a relatively
Dessens, and Jansen, 1988). large problem in the Netherlands (OECD, 1993: ch.
To gain more insight into the dynamic nature of
3). Anyone who loses their job in the Netherlands
unemployment, we investigate in this article thethe risk of being unemployed for a long time.
runs
impact of the level of education on mobility The explanation for the fact that so many Dutch
between employment and unemployment inindividuals the suffer long-term unemployment lies in
Netherlands. We ask ourselves to what extent the the strong employment security legislation. Those
less educated become unemployed more quickly
in employment protect their labour-market position
and remain unemployed longer than individuals
via collective negotiations that are conducted to a
with a higher level of education, and to what extent
large extent on behalf of those with jobs, pursuing
this relationship between education and unemploy-wage maximization at the expense of job expansion
ment is stronger during a period of recession in for
the the unemployed. By studying unemployment
labour market. To answer these questions, Dutch entry and exit rates for a country such as the Nether-
panel data on (shifts in) the labour-market positions
lands, we can gain more insight into the factors
of more than 10,000 respondents in the period
behind long-term unemployment and how it is
1980-94 will be studied.
concentrated among certain educational groups.
There are at least two reasons why the Netherlands
provides an interesting context for the analysis of
this issue. First, in the Netherlands, compared to
Theoretical Background
other European countries, unemployment rates
have varied a lot since the 1980s (OECD, 1996).
One of the causes of high unemployment among the
This gives us a good opportunity to study the effects
lower educated that is often referred to, is crowding
of education on unemployment entry and exit out rates
(Teulings and Koopmanschap, 1989). According

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 EFFECTS OF EDUCATION ON EMPLOYMENTUNEMPLOYMENT MOBILITY 187

to the job competition model (Thurow, 1975), the duals with experience are more attractive than those
labour market can be represented as consisting of without. This means that employers will less readily
two rows. One row contains the jobs, classified fire employees in whom they have made a large
according to job level, the other row contains indi- investment, and who have a lot of knowledge and
viduals, classified according to the qualifications experience. Conversely, employers are very keen on
that they have acquired. Job-seekers try to find the employing job-seekers with a great deal of labour-
most attractive jobs, while employers prefer tomarket experience, because the latter require hardly
employ the highest educated. As a result, the best any training.
jobs go to the higher educated, while the lower edu- Secondly, the duration of unemployment serves
cated - because of their less favourable position in as an indicator that provides information to employers
the job queue - are forced to accept less attractivewith regard to the labour biography of job-seekers.
jobs. In this concept, education is referred to as posi- Although the chances of regaining employment first
tional (Boudon, 1974; Hirsch, 1977; see alsoWolbers, increase, the duration of unemployment has a nega-
De Graaf, and Ultee, 1997). In a labour market char-tive effect on exit chances if it lasts several months
acterized by an ample supply of labour, the job queue (Sprengers, 1992). Both employers and employees
will be longer and the higher educated who nocontribute to this negative duration effect: employers
longer have access to the best jobs, will try to find a are less interested in recruiting long-term unem-
job further down the queue. Highly educated ployed individuals, and the unemployed lose faith
employees will then suddenly find themselves com- in finding a job when they have been looking for
peting with less-well-educated employees, who one for some time.

originally had these jobs. This competition often The third aspect relating to someone's labour bio-
ends in success for the higher educated. After all, graphy is his or her job level. In general, higher
they have superior qualifications. The effect of thispositions offer greater job security than lower ones,
process of crowding out is that the individuals at a number of conditions (period of notice, severance
the lower end of the job queue have the greatest pay, seniority principles, etc.) are fixed more firmly
chance of unemployment. in the law and/or collective labour agreements, and
The job competition model can be applied to the adjustment costs are higher (Lindbeck and
both the entry and the exit stages of unemployment. Snower, 1988). This means that individuals with a
The lower educated occupy a lower position in the higher position will be fired less easily than those
job queue than the higher educated and are therefore with a lower position. During the transition from
the first to be dismissed. Moreover, employers look- unemployment to employment, on the other hand,
ing for suitable candidates for vacancies will first there are no advantages for job-seekers who were
select job-seekers at the front of the queue. As long previously employed in higher positions. All cur-
as there are more job-seekers than jobs, the last in the rent employees ('insiders') may defend themselves
queue - with the lowest qualifications - will notagainst job-seekers ('outsiders'), even if they are in
be considered. lower positions.
In addition to education, other criteria of selec-Besides these economic factors more sociological
tion play a role in the chance of unemployment.variables
An are important too. First, differences in the
important selection criterion concerns an indivi- labour-market position between men and women
dual's labour-market biography. We can distinguishare sociologically relevant. Women in general have
between three aspects of a labour biography. The less favourable prospects in the labour market than
first important aspect is the amount of labour- men, because they often combine their professional
market experience. Labour-market experience is careers with domestic tasks and bringing up chil-
considered as a way of accumulating human capital dren (Blossfeld and Hakim, 1997). One of the areas
during a professional career (Becker, 1964; Mincer,
in which this is reflected is unemployment: in most
1974). Whereas education reflects learning capaci-European countries (Britain is one exception) the
ties, labour-market experience indicates the levelunemployment
of figure for women is much higher
training. Employers aim to keep the training coststhan
of that for men. We therefore expect that women
their personnel as low as possible, and hence indivi-
will become unemployed more easily and have

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188 MAARTEN H. J.WOLBERS

greater difficulty finding work again than men. In Apart from individual characteristics, structural
addition, we may predict that the effect of education developments also affect mobility in the labour
on unemployment is greater for women than it is for market. An obvious structural factor is the aggregate
men. level of unemployment (Vissers, 1987).When unem-
Secondly, social background is a sociological
ployment is high, there is less voluntary mobility than
in more favourable economic circumstances. The
factor affecting someone's labour-market position.
economic
It is a known fact that individuals originating from explanation for this is that there are few
alternative
higher social classes more often have high class posi- jobs during a recession, which renders
the costs of finding one high. A more psychological
tions than people from lower social classes (Erikson
and Goldthorpe, 1992). Apart from direct inheri-
explanation is that individuals look for security dur-
ing aand
tance of occupations (as in the case of farmers period of recession and do not want to run the
small retailers), parents from the higher social
risk of losing established rights by changing jobs.
classes provide their offspring with resources Theto
amount offorced mobility, however, increases
when unemployment develops unfavourably. Figure
gain access to these higher social classes (Collins,
1971).With respect to unemployment, a similar1 shows
strat- that in the Netherlands there is a strong
egy can be envisaged. People from higher socialrelationship between the inflow into unem-
positive
strata use their resources as protection ployment
against and the unemployment level of the
workforce
unemployment. Support for this hypothesis was as a whole (the correlation is 0.82). In par-
found by Batenburg, Smeenk, and Ulteeticular,
(1995),the least productive employees, who are at
who concluded that the chance of unemployment
the end of the job queue, will be fired first: those
with
not only depends on the individual's social the lowest qualifications. Our hypothesis is
class
position before unemployment, but also therefore
on the that the impact of the educational level
father's social class position. on the chances of becoming unemployed is greater

300

250

200

150

100

1980 1985 1990 1994

Year

Unemployment -- - Inflow ... Outflow

Figure 1. Indexed unemploymentlevel, inflow andoutflowfrom unemployment, 1980-
Sources; CBS (1994), column 56, p. 49; OSA Labour Supply Panel 1985-1994,

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 EFFECTS OF EDUCATION ON EMPLOYMENTUNEMPLOYMENT MOBILITY 189

in times of high unemployment. Figure 1 also shows approximately 2,100 households were asked about
that there is no relationship between the outflow their labour-market biography since 1980. Members
from unemployment and the aggregated unemploy- of the household who were between 16 and 64 years
ment rate in the Netherlands (the correlation is 0.01). of age at the time of the survey, and who were not
Apparently, job-seekers do not benefit from grow- following a full-time course study or drafted for
ing employment and many of them run the risk of military service, were eligible for participation in
remaining (long-term) unemployed. This will be the study. In the autumn of 1986, the survey was
the case, in particular, for those with little education, repeated with the household and participating
because of their relative lack of competitiveness in respondents selected in 1985 constituting the popu-
the labour market. lation bases. If panel members of the original sample
Not only the present opportunity structure, butwere no longer available, their places were taken by
also structural circumstances from the past play a new respondents and/or households who corre-
role in the chance of unemployment. A comparativesponded as closely as possible to the original
study of five European countries (Britain, Denmark, participants in such characteristics as age, sex, family
France, Italy, and the Netherlands) has shown thatsize, and geographical region. The changes in the
cohorts who enter the labour market during an eco-labour-market positions of the original respondents
nomic recession, suffer permanent disadvantage between the spring of 1985 and the autumn of 1986
with respect to later chances of unemployment com-were recorded; for the new respondents, this con-
pared to school-leavers who enter the labour marketcerned their labour biography from 1980. Since
in more favourable circumstances (DeVreyer, Layte,then, the survey has been repeated every two years,
Wolbers, and Hussain, forthcoming). These perma-with the emphasis being on changes in the labour-
nent effects of labour-market entry in times of highmarket position during each previous period of two
aggregate unemployment are strongest in France years. For this article, we were able to use the data
and Italy, probably resulting from the rather weakobtained in surveys conducted in 1985, 1986, 1988,
linkage between the education and training system1990, 1992, and 1994. This produces a combined
on the one hand and the labour market on the other dataset of a total of 10,514 respondents who were
hand in these countries (Hannan, Raffe, and Smyth, questioned at least once and at most six times.2
1997). But also in the Netherlands, where education
and employment are more closely linked, cohorts
that enter the labour market during a recession Variables
seem to have a greater chance of being unemployed
at a later stage in their occupational career. The last In this article about the dynamic relationship
hypothesis of this article is therefore that individuals between level of education and unemployment we
who enter the labour market during a time of high study two transitions: the transition from employ-
unemployment, become unemployed more quickly ment to unemployment, and the transition from
and remain unemployed longer than individuals unemployment to employment. For the measure-
who make the transition from education to the ment of unemployment we use the official
labour market during an economic recovery. definition by the Centraal Bureau voor de Statistiek
(CBS - Statistics Netherlands), dating from 1991.
According to this definition, unemployed persons
Research Design are those who have no work, or who have work for

Data between 1 and 11 hours per week, who wish to work

at least 12 hours per week, are available for such
The data used in the present article werework,
derivedand are searching for suitable employment.
from the Labour Supply Panel of the Organisatie
We restrict ourselves here to those who are working
voor Strategisch Arbeidsmarktonderzoek. as paidThe
employees. This means that in the transition
OSA Labour Supply Panel has existed sincefrom the
employment to unemployment, we will only
spring of 1985, when more than 4,000 respondents
look at paid employees; for the transition from
from a representative Dutch sample population of
unemployment to employment, we will only look

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190 MAARTEN H. J.WOLBERS

at unemployed individuals who are looking for jobs
as paid employees.
The level of education of respondents is deter-
mined on the basis of the Standaard Onderwijs
Indeling (SOI - Standard Education Classifica-
tion) by the CBS (CBS, 1987). We distinguish the
following categories:
employees have been given a job level. Th
seven job levels:
- level 1 consists of unskilled occupation
very simple work and simple instru
requiring no or little insight and no c
tion);
- level 2 consists of semi-skilled and skilled occu-

1. primary education (PE);
2. lower level secondary education (PVE/LGSE);
3. higher level secondary education (IVE/HGSE/
PUE);
4. higher education, first stage (HVE); and
5. higher education, second stage (UE).
Another important independent variable in the
analysis is the level of the job that is held by the
respondent. We have chosen to use the job level
classification by Huijgen and colleagues (Huijgen,
Riesewijk, and Conen, 1983: 161-162). The level of
a job reflects the required qualifications of the
occupation concerned. On the basis of a number of
characteristics of the content of the job (learning
time, independent initiative, and the training
regarded as necessary in order to function properly),
all occupations that are performed by paid
pations (with simple work and few complex
instructions, requiring some insight and consul-
tation);
- levels 3 and 4 are skilled occupations (with
slightly to fairly complex work, requiring
insight, consultation, and theoretical know-
ledge; level 4, compared to level 3, requires not
only more specific professional training, but also
considerably more practical experience);
- levels 5, 6, and 7 are specialized to highly specia-
lized occupations (where the nature of the work
varies from complex with considerable theoreti-
cal knowledge to university level).
The level of the job occurs twice in the analysis: as
the level of the present job (at the transition from
employment to unemployment), and as the level of
the job before the period of unemployment (at the

0.6

0.5

0.4
0

E
o

E 0.3
Q
C
3

5.
0
0

0.1

0 5 10 15 20 25 30 35 40 45 49
No. of years of labour marke

Figure 2. Observedprobabilities of becoming unemploye

Source: OSA Labour Supply Panel 1985-1994,

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 EFFECTS OF EDUCATION ON EMPLOYMENTUNEMPLOYMENT MOBILITY 191

transition from unemployment to employment). Tothen decrease (see Figure 3). After a number of years,
determine the job level before the period of unem-the chances of finding a job again are very small. The
ployment, we added a separate category for the self- specific pattern of the duration effect demands a
employed and for individuals whose job level was special treatment of this variable in the analysis (see
unknown. Blossfeld and Rohwer, 1995).We model the duration
As both the respondents' educational level andof unemployment on the basis of two variables. The
effect of the second variable (log(84 - duration of
their labour-market position are affected by social
background, we have included in the analysis the unemployment)) indicates how great the increase is
at the beginning of the period of unemployment,
job level of the father at the time when the respon-
dent was 12 years old.3 For fathers who were not in
whereas the effect of the first variable (log(duration
of unemployment- 1)) shows the level of the subse-
paid employment at the time of the survey, and for
fathers whose job level was unknown, we have added
quent decrease. If both effects are equally great, the
a separate category. turning point is located exactly in the middle of the
Differences between men and women are deter-selected range of the duration of unemployment (1-
mined on the basis of the sex variable, where men
84 months). The effect of the second variable, how-
constituted the reference category. ever, will be much greater than that of the first,
In the case of the labour-market experience vari-
because the chances of finding a job again reach a
able, we take the number of years that a person has
maximum after only a few months.
Structural circumstances in the labour market can
worked. Because of the curvilinear relationship
be determined on the basis of so-called cohort and
between this variable and the labour-market posi-
tion (see Figure 2), working experience is included
period effects (Blossfeld, 1986). First, we use the year
in the analysis in both a linear and a quadratic form.
of entry into the labour market to determine cohort
As expected, the chances of finding a job during
developments. Then we investigate to what extent
the first few months after dismissal first increase,the
butdifferences found between the labour-market

0)
E
o

.,
0

2
a-
CL

6 12 18 24 30 36 42 48 54 60 66 72 78 84
No. of months of unemployment

Figure 3. Observedprobabilities offinding ajob classified by duration of une

Source: OSA Labour Supply Panel 1985-1994, author's calculatio

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192 MAARTEN H. J.WOLBERS

cohorts can be explained by developments in ditional probability of an event occurring at time t,

unemployment at the time of entry into the labour
market. These developments are indicated by regis-
tered unemployment figures (CBS, 1979, 1994). To
represent the cohort effect, each respondent is
given a value for this property, which indicates the
registered unemployment rate for the year when he
or she entered the labour market. The period effect
stands for the current unemployment level. For the
period effect, each respondent receives a new value
given that this event has not occurred prior to time t:
h(t) = P(T = til T ti)
The discrete-time event-history model can be speci-
fied by means of a logistic regression analysis, in
which the log-odds of h(t) is a function of a number
of covariates, possibly time-dependent:
log ( 1 h(t) = ai + Z k bkXkt

for each year, reflecting the registered unemploy-

ment rate for that specific year. This model differs from a conventional logistic
regression model with respect to the structure of
the data to be analysed. In a conventional logistic
Method regression analysis (i.e. estimated in cross-sectional
data) one observation for each respondent is used.
In order to adequately investigate mobility between the discrete-time logistic model uses one
However,
employment and unemployment, a dynamic observation per time-unit per respondent. The data
matrix to be analysed here is a so-called 'person-
approach is very useful: event history analysis
month-file',
(Allison, 1984; Yamaguchi, 1991). Within event- containing as many records as there
were
history analysis, a distinction can be made between'person-months'.
discrete-time and continuous-time models. In this At the time of the transition from employment to
unemployment, the dependent variable is the condi-
article we will use discrete-time models to study
transitions between states of employment and tional probability that someone has of becoming
unemployment.4 Three considerations were relevant unemployed within a particular month, assuming
that this person has worked until that time. At the
for this decision (see also Yamaguchi, 1991: 15-17).
time
First, the event of interest in this study - losing a of the transition from unemployment to
employment, the opposite applies. The dependent
job or finding a job - occurs only at discrete time
points. In the Netherlands, people are normally variable in this model is the conditional probability
of someone finding a job in a particular month,
fired at the end of the month, and people typically
given the fact that this person was looking for work
start in a new job at the beginning of the month.
Secondly, the discrete-time models that will until
be that time. The covariates in the analysis were
measured time-dependently or time-independently.
used in this article are a reasonable approximation
The scores for the variables education level, dura-
of continuous-time models. Since dates in the data-
set are all measured in months, the time interval is tion of unemployment, labour-market experience,
small relative to average durations. This implies that and current unemployment rate may vary with
the conditional probability of experiencing thetime. The variables year of entry, sex, father's job
event is very small and that discrete-time models level, current job level, job level before unemploy-
approximate continuous-time models closely. ment, and unemployment rate at the time of entry
Thirdly, discrete-time models are easy to handle. into the labour market were included in the analysis
They can be applied to the data using computer pro-as time-independent characteristics.
grams that are available from standard statistical
packages. In addition, discrete-time models allow
covariates to be time-dependent. Time-dependent Results
covariates are variables that can vary not only
From Employment to Unemployment
between respondents, but also for the same respon-
dent over time.
Table 2 shows which factors affect the probability of a
In a discrete-time event history analysis, hazardtransition from employment to unemployment. The
rates are modelled. A hazard rate h(t) reflects the con-estimated parameters represent the change in the

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 EFFECTS OF EDUCATION ON EMPLOYMENTUNEMPLOYMENT MOBILITY 193

Table 2. Effects of level of education on the transitionfrom employmentto unemployment, 1980-1994

Model 1 2 3 4

Educational levela
- 0.0955 - 0.0663 - 0.0695 - 1.3626*
PVE/LGSE
IVE/HGSE/PUE - 0.5040** - 0.4286** - 0.4453** - 0.5886
HVE -0.8280** - 0.6600** - 0.6944** - 0.7892
UE - 0.4545 - 0.1942 - 0.2673 -0.4348

Labour-market experience - 0.0646** - 0.0636** - 0.0519** - 0.0508**

Labour-market experience squared 0.0008* 0.0007* 0.0006 0.0005

Year of entry (1930=0) 0.0069 0.0069 0.0082 0.0075

Sex -0.0701 - 0.0748 -0.0483 -0.3241

Job level fatherb

Job level 2 0.0235 0.0368 0.0446 0.0335

Job level 3 -0.0222 0.0067 0.0082 0.0102

Job level 4 - 0.3792* - 0.3445 - 0.3326 -0.3442

Job level 5 0.0261 0.0630 0.0637 0.0488

Job level 6 - 0.0534 0.0019 - 0.0055 -0.0265

Job level 7 0.1178 0.1941 0.2028 0.1873

Job level unknown or not in paid employment 0.0179 0.0481 0.0342 0.0104

Current job levelb

Job level 2 - 0.0912 -0.0965 -0.1053

Job level 3 - 0.3472* - 0.3519* - 0.3764*

Job level 4 -0.2422 -0.2382 -0.2765

Job level 5 - 0.2860 -0.2950 -0.3112

Job level 6 - 0.3503 - 0.3231 -0.3453

Job level 7 - 0.7325* - 0.7329* - 0.7402*

Current unemployment rate 0.1231** 0.0754

Unemployment rate at time of entry 0.0353* 0.0355*

Interaction with current unemployment rate

PVE/LGSE 0.1713*

IVE/HGSE/PUE - 0.0061
HVE -0.0260
UE 0.0180
Interaction with sex

PVE/LGSE -0.0230

IVE/HGSE/PUE 0.5005
HVE 0.7094*
UE 0.0673

Intercept - 5.4556** - 5.3165** - 6.5503** - 6.0421**

Model chi2 169.8000** 179.5210** 207.4330** 231.1250**
df 15 21 23 31
Number of transitions 574 574 574 574
Number of subepisodes 3 309,696 309,696 309,696 309,696

aPE is the reference category.

bJob level 1 is the reference category.
*=p < 0.05; **=p < 0.01.
Source: OSA Labour Supply Panel 1985-1994; author's calculations.

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194 MAARTEN H. J.WOLBERS

log-odds of the conditional probability of experien- unemployed is not a linear, but a curvilinear one.
cing an event, caused by a one-unit increase in the Each additional year of labour-market experience
associated covariate. Due to the small time-unit of offers less additional protection against un-
one month all hazards analysed are very low. For employment. After 40 years of labour-market
such low hazards the hazard rate (h(t)) and the odds experience - i.e. more or less at the end of one's
occupational career - the chance of unemployment
of the hazard rate (h(t)/1 -h (t)) have nearly the same
is the least (0.0646/2*0.0008=40.375). This is sum-
value. Therefore, the effects of covariates on the odds
of hazards will be interpreted as effects on hazards.marized in Figure 4.
Model 1 shows that employees with an HVEIn model 2 we investigate whether employees
diploma have the smallest chance of becoming with high-level jobs have a smaller probability of
unemployed, followed by individuals with a back- becoming unemployed than employees with low-
ground in higher secondary education (IVE/ level jobs. This proves to be the case, although the
HGSE/PUE). Individuals without qualifications relationship between the present job and the chance
have the greatest chance of unemployment, as have of unemployment is not entirely linear. In particular
academics and individuals with an PVE/LGSE
those individuals who work at job levels 3 and 7 have
diploma. Evidently, links between education levels
a smaller chance of losing their jobs. Another con-
clusion that can be drawn from model 2 is that the
and unemployment entry rates are not entirely lin-
ear, as predicted by Thurow's job competition effect of level of education hardly diminishes if one
model. It also appears that people with a great deal
takes the present job into account. Of two employees
of work experience have a smaller chance of who have jobs at the same job level, the one with the
becoming unemployed than those who have little highest educational level - with the exception of
experience. The negative correlation between
university education - has the smallest risk of
work experience and the chance of becoming becoming unemployed.

0.6 -

0.5 -x

c
0.4
E
0
o

E 0.3

o
0.2
??
0i ''''

....
..
.?...
??
Q.
IL ?

............
......
?, ??
?? ??????
..
0.1 - ..

?.?...?C??..,.
s,

"u .
I I I I I I I I I I I ! I I I I I I I I I I I I I I I I I I i I I I I I t I I I I I I I I I I I
0 5 10 15 20 25 30 35 40 45 49
No. of years of labour market

PE ........... PVE/LGSE IVE/HGSE/PUE

---- HVE UE

Figure 4. Averagepredictedprobabilities of becoming unemployed classifiedaccording to the number of jears of labour market
educational level

Source: OSA Labour Supply Panel 1985-1994, author's calculations

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 EFFECTS OF EDUCATION ON EMPLOYMENTUNEMPLOYMENT MOBILITY 195

Next, we will look at the influence of structural between the various levels of education. Only for
labour-market circumstances on the likelihood of university graduates, the probability of regaining
unemployment (model 3). As Figure 1 showed,
employment is slightly smaller, and it does not differ
significantly from those who only have primary
there is a positive relationship between the current
education. The variables for the duration of unem-
aggregate unemployment rate and the inflow into
unemployment. Again, the unemployment level ployment show that the probability of finding a job
appears to have a considerable influence on the
first increases rapidly (1.3127) and then decreases
chance of becoming unemployed. If unemployment slowly (0.1077). The turning point5 is reached quite
soon: after about seven months, the probability of
rises by 1 per cent, the chance of becoming unem-
finding a job is greatest ((84*0.1077+1*1.3127)/
ployed in the following month increases by about
(0.1077+1.3127)=7.2934). The effects of labour-
13 per cent (e0-1231=1.1310). In addition, the aggregate
market experience show that the chances of finding
rate of unemployment at the time of entry into the
labour market has an impact on one's later chancesa of
job decrease up to more than 18 years of experience
becoming unemployed. Although the effect(0.0450/2*0.0012
of = 18.75), after which the likelihood
of finding work slowly increases again. Further-
unemployment at the time of entry is considerably
more, individuals from more recent labour-market
smaller than that of current unemployment, indivi-
duals who entered the labour market under adverse cohorts have better chances of regaining employ-
ment than older cohorts, irrespective of their
circumstances suffer a permanent disadvantage dur-
ing their further careers. limited work experience (0.0255). To what extent
Lastly, we investigated whether the influencethis
of cohort effect reflects structural labour-market
work experience, sex, and trends in unemployment circumstances will become clear soon (in model 3).
levels differ from one level of education to another.
Lastly, model 1 indicates that it is more difficult for
Model 4 only describes the terms of the statisticalwomen to find a job again than it is for men (-0.6198).
interactions of level of education with the current Individuals who worked in high-level jobs -
rate of unemployment and sex, because the other before they became unemployed - do not find a
new job more quickly than those who worked in
interaction terms were not significant. Interestingly,
we see that the effect of unemployment foundlow-level
in jobs (model 2). There is only a significant
model 3 is greatest for individuals with a PVE/
difference for the category of respondents for whom
LGSE education. Compared to the other levels information
of regarding the level of their latest job
education, the impact of the current rate of unem-
was not available or who used to be self-employed.
ployment on the probability of losing one's job Theis latter group has greater difficulty finding a job.
more than twice as great for persons with a PVE/ Model 2 also shows that, again, the education effect
LGSE diploma. At the same time, the conclusion hardly decreases if we take into account the level of
drawn above that men and women have an equal the most recently held job.
chance of becoming unemployed, must be adapted We can see in model 3 that, on average, structural
slightly: this is not true for those who have an labour-market
HVE circumstances play no role across the
diploma. Female HVE graduates have twice as much sample as a whole with respect to the chances of find-
risk of becoming unemployed as their male counter-
ing a job. This result is in accordance with Figure 1,
parts (e07094=2.0328). because it was already shown there that there is no
correlation between leaving the state of unemploy-
ment and the current aggregate unemployment rate.
From Unemployment to Employment
The cohort effect that was found in model 1 clearly
Table 3 shows which factors are decisive for the tran-
suggests a different type of development in the
sition from unemployment to employment. Again, labour market. Possibly, the modernization of the
we express the results found in terms of effects on market (including flexibilization) leads to
labour
hazards. Model 1 indicates that individuals with a higher unemployment exit rates.
diploma have better chances of finding work again If we classify according to level of education,
than those who failed to obtain any qualificationhowever, there is an effect of the current rate of
after primary school. There are few differences unemployment on the probability of finding a new

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196 MAARTEN H. J.WOLBERS

Table 3. Effects of level of educatin on the transitionfrom un

Model 1 2 3 4

Educational levela

PVE/LGSE 0.3228* 0.2832* 0.2900* --0.1401

IVE/HGSE/PUE 0.3309* 0.2876* 0.2989* - 0.4395
HVE 0.3559* 0.3440 0.3537 - 1.3349
UE 0.2460 0.2279 0.2369 -0.2799
log (Duration of unemployment - 1) 0.1077** 0.1143** 0.1155** 0.1573**
log (84 - Duration of unemployment) 1.3127** 1.1727** 1.1800** 0.3422
Labour-market experience - 0.0450** - 0.0609** - 0.0627** - 0.0595**
Labour-market experience squared 0.0012** 0.0015** 0.0014** 0.0014**
Year of entry (1930 = 0) 0.0255** 0.0246** 0.0195* 0.0203*
Sex - 0.6198** - 0.5920** - 0.6203** - 0.8306**

Job level fatherb

Job level 2 -0.2272 - 0.2415 -0.2421 - 0.2329
Job level 3 - 0.0213 - 0.0386 - 0.0328 - 0.0746
Job level 4 - 0.0055 0.0063 - 0.0071 0.0308
Job level 5 0.1074 0.0977 0.1062 0.1079
Job level 6 0.0903 0.1338 0.1354 0.0645
Job level 7 0.2734 0.2724 0.2680 0.2382
Job level unknown or not in paid employment - 0.0850 - 0.0890 - 0.0833 - 0.1017
Job level before unemploymentb
Job level 2 0.0338 0.0354 0.0030
Job level 3 0.2786 0.2954 0.2832
Job level 4 0.1848 0.1891 0.0932
Job level 5 0.2019 0.1979 0.1863
Job level 6 -0.0308 - 0.0481 0.0437
Job level 7 0.3093 0.2983 0.2487
Job level unknown or not in paid employment -0.4784* - 0.4878* - 0.5235*
Current unemployment rate -0.0384 -0.1727**
Unemployment rate at time of entry 0.0103 0.0088
Interaction with current unemployment rate
PVE/LGSE 0.1437
IVE/HGSE/PUE 0.1529*
HVE 0.2689**
UE 0.1172
Interaction with sex

PVE/LGSE - 0.0508
IVE/HGSE/PUE 0.3027
HVE 0.5312
UE 1.1743**
Interaction wi
PVE/LGSE - 0.0342**
IVE/HGSE/PUE - 0.0262**
HVE - 0.0285**
UE - 0.0410*
Intercept - 10.1035** - 9.1794** -8.7110** -4.3269**
Model chi2 231.8830** 278.3890** 280.5770** 326.1520**
df 17 24 26 38
Number of transitions 537 537 537 537
Number of subepisodes 21,581 21,581 21,581 21,581
aPE is the reference category.
bjob level 1 is the reference category.
*=p < 0.05; **=p < 0.01.
Source: OSA Labour Supply Panel 1985-1994; author's calculations.

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 EFFECTS OF EDUCATION ON EMPLOYMENTUNEMPLOYMENT MOBILITY 197

job (model 4). In particular, among the unemployed illustrates this finding. This figure shows that the
with only primary education, the chances of finding initial increase in the likelihood of finding a new
work greatly decrease when unemployment rises: for job is greater if the educational level is higher.
each 1 per cent that unemployment increases, the After several months of unemployment, the
probability of finding a job drops by almost 16 per chances of individuals with only primary-level edu-
cent (e-0?1727=0.8414). A similar conclusion can be cation finding work again in the following month
drawn for PVE/LGSE and UE. Individuals with a are slightly more than 2 per cent, whereas for those
diploma at the level of IVE/HGSE/PUE and with a secondary-school diploma (PVE/LGSE and
HVE, on the other hand, do not experience any IVE/HGSE/PUE) or graduates of higher voca-
negative effects of the current rate of unemploy- tional education (HVE), they are more than 4 per
ment. Another outcome of model 4 is the fact that cent, and for university graduates about 6 per cent.
the difference found previously between the sexes The later decrease in the chances of finding
work - in particular after a period of unemploy-
applies largely to the lowest educational levels. In
ment of two years - is equal for all types of
particular, women with an education at a low level
have difficulty in finding a new job. Female UEeducation, with the exception of primary educa-
graduates, on the other hand, are popular in thetion. The fall in the probability of finding work
for individuals with only primary education (PE)
labour market: their chances of regaining employ-
ment are even greater than those for men is much smaller, while after about three-and-a-half
(- 0.8306+1.1743=0.3437). years of unemployment, the monthly chances of
The most interesting result found in model 4 is finding a job for job-seekers without a diploma are
the fact that the duration effect observed varies even slightly greater than for job-seekers with a
between the different educational levels. Figure
diploma.
5

6--\

>-
5
.,.

E
0
0 4
E
E
3

Q.0
0

2
a.
Q

6 12 18 24 30 36 42 48 54 60 66 72 78 84

No. of months of unemployment

PE ............. PVE/LGSE --...-- IVE/HGSE/PUE

-HVE UE

Figure 5. Averagepredictedprobabilities offindingajob classified according to duration of unemploymentande

Source: OSA Labour Supply Panel 1985-1994, author's calculations

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198 MAARTEN H. J.WOLBERS

PUE or HVE do not suffer from an economic reces-

Conclusions and Discussion
In the Netherlands, as in other industrialized coun-
tries, unemployment among individuals with a
lower level of education is considerably higher than
among those with higher educational qualifications.
This may be the result of crowding out in the labour
market. The higher educated take the jobs that used
sion. The impact of sex also varies between levels of
education. In general, for women the likelihood of
finding a job is smaller than for men, but female uni-
versity graduates find jobs more quickly than their
male counterparts. Lastly, the role of the duration
of unemployment differs for the various levels of
education. The increase of the chances of work at

to be done by the lower educated, pushing the least the beginning of a period of unemployment is
qualified out of the labour market. In this article we greater if the educational level is higher. The later
have analysed the relationship between education decrease is similar for all types of education, with
and unemployment from a dynamic perspective. the exception of primary education.
We have looked at the extent to which the level of Overall, the results in this article support the job
education affects mobility between employment competition model. The lower educated are the first
and unemployment in the Dutch labour market. toTo
be fired and stand at the back of the job queue
when there are vacancies to be filled. Nevertheless,
do so, we have made use of panel data on the labour-
market situation of a representative group of indivi-
there are signs that the sorting and signalling func-
duals in the period 1980-94. tion of education, as assumed by the job competition
model, does not in itself determine the entire rela-
First, it appears that in the Netherlands education
offers protection against dismissal. In general, tionship
the between education and unemployment.
less educated have a greater chance of losing their
For example, we found in this article that university
jobs than the better educated. However, the link graduates face a greater risk of unemployment than
between education and unemployment entry rates
vocationally educated graduates, although in theory
is not entirely linear. University graduates have, the
for former should occupy the best positions in the
example, a higher probability of becoming unem-job queue. It seems that, in addition to a hypothesis
ployed than individuals with higher vocational on educational levels, we also need a hypothesis on
education. In addition, the positive effect of the
types of education (see also Arum and Shavit, 1995).
The latter would state that individuals with an edu-
current aggregate unemployment rate on the prob-
ability of becoming unemployed is greatercation
for which is more oriented towards the labour
individuals with a PVE/LGSE diploma than market
for (i.e. people with occupationally specific or
those with different qualifications. It also appears
vocational education) have a lower probability of
that women with an HVE diploma have a greater becoming unemployed than those with a more gen-
chance of becoming unemployed than men eral whoeducation. Especially in the German-speaking
have completed a course of study in higher voca-
countries (Austria, Germany, and Switzerland)
tional education.
where the combination of on-the-job-training with
Secondly, we conclude that in the Netherlandsinstruction in public vocational schools (the 'dual
individuals with any type of diploma have a greater
system') predominates, the distinction between aca-
chance of finding a new job than those who leftdemic and vocational education seems to be very
valuable. In these countries, vocational education
school at the level of primary education. Between
people with secondary and tertiary education there
prepares students with skills. Moreover, employers
are hardly any differences in unemployment exit
know which skills are taught in the apprenticeship
rates. Furthermore, developments in the business
programmes and can rely on vocational qualifica-
cycle influence the probability of finding a tions.
job As a result, vocational education can reduce
between one education level and another. Thethe risk of unemployment, in contrast to academic
unemployed with no more than primary education
programmes.
or a PVE/LGSE or UE diploma have greater diffi-
The fact that educational qualifications play a pro-
culty in finding a job when the level of tective role in the case of unemployment suggests
unemployment increases, while the chances that
of educational policy measures should be taken
those with a diploma at the level of IVE/HGSE/
with respect to individuals at the lower end of the

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 EFFECTS OF EDUCATION ON EMPLOYMENTUNEMPLOYMENT MOBILITY 199

labour market. The question, however, is whether ment or disability. The question is whether the use of

additional training for the lower educated is suffi-
cient for them to find or keep a job. At the level of
the individual it may be useful to have more educa-
tion - their relative position in the job queue
improves - but for society as a whole, this only
leads to credential inflation and to crowding out in
the labour market (Boudon, 1974). After all, addi-
tional training for the lowest educated increases the
risk of unemployment for the slightly better edu-
cated. It would be more useful to create jobs at the
upper end of the labour market in order to cater for
such a restricted model as a replacement for a multi-
state model is appropriate, especially since transitions
between employment and unemployment might be
dependent on other labour-market transitions.
According to Begg and Gray (1984) this is in general
the case. They conclude that estimating separate
regressions for each transition relative to a simulta-
neous estimation of multiple transitions is highly
efficient. Substantial losses of efficiency of parameter
estimates occur only when the probability of the base-
line category of the dependent variable is low, which is
clearly not the case in the present analysis.

the greater supply of higher-educated individuals. 5. The top of the curve can be calculated by taking the
derivative of the duration of unemployment and
setting it at zero: duration of unemployment=
(84*I1 + 1*f2)/(fl + f2).
Notes

1. The ratio of the odds of unemployment versus

employment for persons with primary education and Acknowledgements
for those with a university education was 4.92 in 1985
((26.1/73.9) / (6.7/93.3)). In 1975, the odds ratio was 3.74; A Dutch version of this article was previously published in
in 1990, 2.37; in 1992, 2.69 and in 1993, 2.85. Mens en Maatschappi, 73 (1998), pp. 176-194. The author
2. For more detailed information on the OSA Labour wishes to thank the OSA (for granting permission to use
therepre-
Supply Panel (the justification of the fieldwork, Labour Supply Panel), Ruud Luijkx (for his help in
making the data analysable), Paul de Graaf, Wout Ultee,
sentativeness, panel mortality rate and substitution,
Emer Smyth,
and the structure of the dataset), we refer readers to and the anonymous reviewers of the ESR
(for
the appendices of the annual trend report on the their comments and suggestions on earlier versions
supply of labour (see for instance OSA, 1995).of this article).
3. It is actually the job level of the head of the family, but
in most cases this turned out to be the father.

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