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The unequal scarring effects of a recession on young people's life chances

Author

Listed:
  • Jake Anders

    (UCL Centre for Education Policy and Equalising Opportunities, University College London)

  • Lindsey Macmillan

    (UCL Centre for Education Policy and Equalising Opportunities, University College London)

Abstract

Large parts of the economy were suspended from late March - June 2020 due to the COVID-19 pandemic. The UK economy shrank by 20% in April 2020 as a result (ONS, 2020a). Given a 2% decline in GDP in the first three months of 2020, a severe recession is inevitable. NIESR's main-case scenario is a 7% economic contraction across 2020 (Lenoel & Young, 2020). The UK Government has sought to buffer the economic effects of this crisis through support such as the Coronavirus Job Retention Scheme (CJRS), allowing employers to place employees on "furlough". However, such schemes are designed to support those already in work, plus likely effects of the increase in employer contributions in August, suggests young people face an extremely challenging job market. Job vacancies were estimated to be 637,000 in February-April 2020; this is a fall of 170,000 compared to the previous 3-month period, which is the largest fall since comparable records began (ONS, 2020b). Henehan (2020) estimates that an additional 640,000 18-24-year-olds could find themselves unemployed this year alone. This note summarises the evidence on the effects of youth unemployment on later outcomes, of father's unemployment on child outcomes, and the unequal effects of recessions on life chances. It then highlights what the literature suggests about how policymakers could buffer some of these negative consequences, and why this may save money in the long run.

Suggested Citation

  • Jake Anders & Lindsey Macmillan, 2020. "The unequal scarring effects of a recession on young people's life chances," CEPEO Briefing Note Series 6, UCL Centre for Education Policy and Equalising Opportunities, revised Jun 2020.
    • Handle: RePEc:ucl:cepeob:6
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    References listed on IDEAS

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    RePEc Biblio mentions

    As found on the RePEc Biblio, the curated bibliography for Economics:
    1. > Economics of Welfare > Health Economics > Economics of Pandemics > Specific pandemics > Covid-19 > Long-term consequences

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    Cited by:

    1. Gill Wyness, 2020. "Is higher education still worth the cost?," CEPEO Briefing Note Series 9, UCL Centre for Education Policy and Equalising Opportunities, revised Nov 2020.
    2. Jake Anders & Lindsey Macmillan & Patrick Sturgis & Gill Wyness, 2021. "Inequalities in young peoples' educational experiences and wellbeing during the Covid-19 pandemic," CEPEO Working Paper Series 21-08, UCL Centre for Education Policy and Equalising Opportunities, revised Jul 2021.

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    More about this item

    Keywords

    Scarring; Recession; Unemployment effects; Wage losses; COVID-19.;
    All these keywords.

    JEL classification:

    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy

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