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The curse of graduating during a recession

What’s on offer?

Each year early career economists at IFS deliver a day of public economics talks, aimed at A-level and undergraduate students who have an interest in economics or might want to pursue a career in public policy research. As part of this year’s Festival of Social Science, we will be live streaming a selection of lectures from the series to anyone who is interested in finding out more about economics. There will be time allowed for Q&A on each topic.

What’s it about?

Finding a job after finishing college or university is difficult at the best of times. Yet for young people unfortunate enough to graduate during a recession it's an even more challenging prospect. Around the world today, millions of young people are facing this exact challenge: finding their way into employment in economies that are reeling from the effects of a global pandemic.

While the immediate prospects of young people may appear bleak, the long-term effects of graduating during a recession are just as concerning. Evidence shows that young people who finish their education in the midst of a recession earn significantly less than other young people even ten years after graduating. Thus, there are economic scars from graduating during a recession.

In this talk, we'll set out both the short-term and long-term challenges faced by young people searching for work today, and also what policymakers can do to mitigate the perils of graduating during a recession.

Who’s leading the event?

Imran Tahir, Research Economist at IFS

Open to

These webinars are primarily aimed at final year undergraduates studying economics, but should be useful to anyone interested in the subject.

The curse of graduating during a recession

Video transcript

uh good afternoon everybody uh my name is jonathan cribb i'm uh your uh host today uh chairing uh this uh session uh and lecture from that is uh uh coming to us from ifs as part of the src uh festival of social science uh today i'm i'm delighted that my colleague imran here is going to be talking on the uh the extremely topical topic of uh the curse of uh graduating uh during a uh recession uh in which he's gonna provide a a short talk and then we've got the opportunity for some questions uh so the way that we will take uh questions towards the end of this hour will be through the slido uh app that you can uh access via our website or via the youtube channel please do ask questions there or like the ones that you think are best that are asked by other people um just before we get going i want to just highlight that this is as i said one of a series of events as a part of the festival of social science and next week we have one uh that's the 22nd of november uh four to five pm online like this one and it's on the economics of higher education so uh if you're interested in that please do uh uh see us uh again there uh so without further ado i'm gonna hand over to uh imran uh now who's going to take you through his talk and i'll see you again uh for uh q a a little bit later take it away imran thank you jonathan and thank you everyone for joining this session the curse of graduating during a recession so i imagine at the moment many of you have started looking for jobs or summer internships or if you haven't started already you will be doing so in the future finding your first job is difficult at the best of times it's especially difficult as i'm sure you may be finding searching for this job during a recession but what i want to emphasize in this presentation is that it's not just the short-term difficulties of finding a job that matter graduating during a recession unfortunately has really long-term impacts on your life chances in fact 10 20 30 years after graduation you could still be negatively impacted by the fact that you graduated during a recession so that's really what i want to get across in this presentation but before we dive into that let me see let me set out some of the underlying background information that's important to us so in the uk young people are more likely to be unemployed than older workers in this chart i'm showing you the uk unemployment rate since 2000. what you can see is that during the early 2000s most of the period the unemployment rate for all adults so this is ev includes everyone between the age of 16 and 65. it hovered at around five percent the unemployment rate for young people in the yellow here was all over twice as high so at around 12 so throughout that period young people experienced higher rates of unemployment and it was particularly around the period of the global financial crisis that the youth unemployment rate really accelerated so you can see that the yellow line here really uh increases sharply compared to the green line around 2008 and 2009 after that period in 2014 2015 we saw again both the unemployment rate for young people and the working age population as a whole fall but you can see throughout this period young people were far more likely to be unemployed than older workers and this isn't just a uk phenomenon young people are far more likely to be unemployed than older workers in countries across the world so in this chart i'm showing you unemployment rates for all adults so again people between the ages of 16 and 65 in the green here and also the unemployment rates amongst young people so the yellow bars you can see that in every single country here the unemployment rate for young people is higher than that of older workers and as i alluded to earlier young people are especially impacted by recessions and what this chart shows you is the impact of the global financial crisis on unemployment rates so i'm showing you the change in unemployment rates between quarter 3 of 2007 and quarter three of 2009 and you can see that in all of these countries with the exception of germany unemployment rates for all workers increased but it's young people who saw especially large increases in their rate of unemployment and we can do a similar sort of exercise more recently trying to capture and get at the impact that the pandemic is having on the unemployment rate so i mean it's it's too early to give definitive answers as to the impact that the pandemic will have on long-term unemployment but here i show you the unemployed the change in unemployment rate between quarter four of 2019 and quarter four of 2020 so trying to get at that impact of the initial lockdown period you can see once again that in most countries unemployment increased for all workers but it was young people who saw especially high increases in their rate of unemployment so so far i've illustrated two facts to you unemployment rates among young people are higher and also recessions seem to be more damaging for the young people it seems to be recessions lead to higher increases in unemployment amongst young people but why is this so concerning what i'm going to argue to you in this presentation is that youth unemployment leads to long-term negative consequences what is sometimes called scarring i'll talk a lot more about that in this presentation and cohorts who graduate during a recession are more likely to be unemployed and so experience this long-term economic damage and in a nutshell that is the curse of graduating during a recession but don't worry i've got other things to speak about in particular what i want to cover in this presentation are these three key questions firstly why is graduating during the recession so harmful so i've already alluded to this but i'll show you the evidence that on um scarring of impacts of unemployment so unemployment spells have long-term impacts on life chances and a range of different outcomes so i'm going to show you that unemployment has these persistent outcomes on life chances the next natural question is why are the effects of unemployment so persistent why does uh change why does being unemployed in your early 20s lead to these long-term consequences to try and answer that question i'm going to discuss some of the modeling and work that economists have done to try and explain career development and earnings growth and the final question is why and how does the government intervene so there are all these negative consequences but in order to intervene we really need to set out the underlying market failures that the government can tackle and so that's what i'll do first and secondly i'll discuss this particular form of intervention called active labor market policies which are becoming a far more common tool that governments around the world are using to tackle unemployment in general but especially unemployment amongst young people so that's the plan let's start with this first question why is youth unemployment and why is graduating during a recession so harmful so recessions lead to economic scarring what that refers to is long-lasting damage to individuals economic situations and the economy more broadly even if a recession lasts a short period of time the negative economic growth and all of the fallout can lead to long-term falls in productivity which harms the economy as a whole but also it causes long-term harm to individuals life chances and it's this second element of scarring that i'm going to be focusing on today so it's not just young people who are impact who could be impacted by scarring anyone who loses their job could be impacted and will be impacted but why are young people so susceptible to long-term damages from losing their job or not being able to find a job so i think that there are three main reasons why young people are so susceptible to scarring the first of these is as we've already seen they're more likely to be unemployed and therefore more likely to face the consequences of scarring secondly young people are in the formative stages of their careers and so a shock early on can lead to really quite damaging impacts compared to someone who's more established in their career and thirdly when a young person is unemployed this this has an effect over a far longer time horizon than say a 40 year old or a 50 year old who is unemployed so youth unemployment and graduating during a recession harms future labor market prospects there's a variety of different papers and a lot of evidence showing you this what i'm going to focus on first though is the evidence on the impact that unemployment has on future earnings so in the uk de fraja and limos in a recent paper found that just an additional month of unemployment between ages 18 and 20 permanently lowers earnings by around 1.2 per year so that's what's really quite a significant impact and in a similar study in the u.s schwarzenegger show that labor market entrance experienced persistent reductions in earnings employment and wages from entering the labor market in a recession that lasts at least 10 years and it's this persistence that's really the important factor here it's not just the case that after you graduated during a recession you'll be harmed one or two maybe two years after it's the fact that these negative consequences persist for at least 10 years and the really nice thing about this paper is that they show exactly how these negative consequences manifest after one two and three and four and five up to ten years and that's exactly what i'm going to show you now so this is a figure taken from this paper by schwandt and von bachter and it's really nice way of showing the persistent impact that unemployment has on earnings and income so in particular what this figure shows is the effect of one percent increase on state unemployment rate on earnings and income so on the y-axis here we've got the effect on log earnings and income so just let me explain how we can interpret that so if we first look at the impact after one year we see that a one percent increase in the state unemployment rate is is associated with a minus 0.04 impact on annual earnings what that means is roughly speaking one percent increase in the state unemployment rate is associated with a four percent decline in your average annual earnings and also a 2.5 percent decline in annual household income so these are really quite substantial impacts just from a one percent increase in the state unemployment rate and it's also worth saying that the impact on household income here is slightly less than the impact on annual earnings because people receive benefits social assistance transfers from families which mean that the household income isn't as badly as affected as individual earnings the key thing to take away from this chart is that these impacts assist for after three five seven even nine years after this initial graduation so if you look at five years since graduation someone who's graduating in an area with one percent higher state unemployment rate has almost three percent lower earnings and one percent lower on average annual household income and even up to 10 years after they've graduated they're still earning on average less so your initial conditions really matter for your long-term outcomes and it's not just earnings and income that are affected so this is a similar plot that shows the impact of state unemployment rate on social assistance claims so benefits here what we again see is that after the first year a one percent increase in the state unemployment rate is associated with a 0.6 increase in the chance that you claim medicaid or food stamps so these are forms of benefits in the us once again we see that these impacts persist so whilst the probability of you claiming medicaid or food stamps starts to decline even nine years after graduating those who graduate in slightly worse economic times are still more likely to claim social assistance another interesting aspect is the variation between different groups of people so so far we've been looking at the average impact of graduating during a recession but you can imagine that there are different effects for different groups of people so one particular group of people we could look at is people who are less educated and less educated here is measured as people who have less than 12 years of schooling so in the uk that would refer to someone with the sixth form education below and what you can see here is that the impact of the state unemployment rate on income is quite again quite severe so one year after a graduation one percent increase in the state unemployment rate is associated with about five percent decline in your annual earnings and again that persists up until nine years but graduates so people with far more education here are 16 years of school for 16 years plus of school it's typically how long it takes to get a degree in the us so we're looking at graduates here you can see that the the impact of unemployment on them isn't as bad so in particular one year after graduating a one percent increase in the state unemployment rate is only associated with a two percent decline in their annual earnings and in fact in fact the um impact on the annual household income is negligible so you see these far smaller impacts for the more educated people which is an interesting dimension so i've shown you that there are these impacts on earnings but there are a net range for negative effects on a whole host of other outcomes now there's not enough time to cover all of the evidence on the different outcomes but here's just a list not necessarily an exhaustive list of the impact of graduating during the recession so in particular people who enter the labor market during the recession fair what fare worse in terms of higher rates of divorce and childlessness in terms of their physical health also their mental health it's it's case that they're more likely to commit a crime and in general their life chances are harmed so graduating during a recession has a whole host of negative impacts and just to summarize the answer to this first question that we set out to answer why is youth unemployment so harmful periods of viewfind employment or leaving education during a recession have these long-term negative impacts it's not only future earnings and in unemployment that's affected but many other outcomes and ultimately your life chances are really impacted by the initial conditions into which you graduate so that in itself is a really interesting finding but you may ask why does a period of unemployment in your teens or early 20s still affect you so many years later why isn't there some way of correcting the fact that you graduated during a recession and that's what we're going to turn to trying to answer now so we've seen that there are long-term negative effects of graduating during a recession but why are why do the effects of early unemployment persist and now this is a far more difficult question to try and answer because really what it requires us to get at is the underlying mechanisms that are at play so previously when you were looking at the impacts of graduating during a recession on your future earnings you only really needed to consider two periods of time so your initial period of graduation and what the initial conditions were like and the earnings in the future so two periods of time here what we're trying to answer is what happens between the point of graduation and realizing your future earnings what exactly is driving this what i'm going to focus on this in this section is the persistent impact that unemployment has on future earnings and this really requires us to answer two questions firstly what explains earnings growth in general why is it the case that some people see massive increases in their earnings after a few years in the labor market whereas others don't and secondly why does a spell of unemployment during your youth persistently harm future earnings so these are quite difficult questions to answer but fortunately we have tools as economists to try and get an answer specifically what we try to do as economists is build models so these simplified uh descriptions of reality and if you like they're basically these are trying to tell stories about what's happening in the real world ways of explaining why we see what we do and what we're trying to explain here is firstly earnings growth and how this is impacted by aspects of unemployment so what types of stories can we try and tell to explain these two things so in the economic literature there's a an awful lot of different models of stories and explanations that have been put forward two of the most prominent ones are the human capital accumulation and the sequential job search model in the next few slides what i'm going to do is i'm going to talk through each of these models in turn explain exactly what they are what they predict and how they try and explain why we see such persistent impacts of graduating during a recession so let's start with the human capital model so human capital you may come across it in your studies it's a term that economists like to use a lot but it's also a very nebulous term it means a lot of different things to different people now one definition that i i like of it is human capital is the knowledge and skills of workers which contribute to their productivity however that encompasses quite a lot of different things so in particular your human capital can include things like your intelligence your i.t skills your soft skills your levels of resilience even your charisma all of these things could constitute your human capital because essentially they could contribute to your productivity in the labor market so that's what human capital is what is the human capital story of earnings growth so we build human capital your skills and knowledge through education from our family and importantly in this case at work so there are these various different sources of um human capital accumulation but one of the key areas where you accumulate human capital is in employment workers and in particular young workers accumulate accumulate skills through learning by doing or in or in the job so you don't just go to work to earn money you also develop skills and human capital over the course of your working life you build more of this human capital which leads to you becoming more productive and this higher productivity is rewarded by higher earnings so that's why over the course of your working life your wages increase because you're becoming because you've built up human capital which makes you more productive so that's the human capital story of earnings growth how can we use it to explain the persistent impacts of recessions so i'm going to try and explain it with this diagram here we start with a recession a recession means that people are young people aren't able to find jobs and as a result there's less human capital accumulation because you can't find a job you're not able to build those skills on the job as a result of that you're less productive in the future and that in turn leads to lower earnings so it's the the effect here is coming through the recession reducing your opportunities to build human capital so that's one potential explanation another story is offered by it's called the job search story and as the name suggests the key driver to earnings growth here is job search what do i mean by that so in this story of the labor market workers receive job offers periodically and they move jobs especially early on in their careers they move from job to job in search of higher earnings and so earnings growth here is driven by job switches so young people in particular are getting higher earnings through switching jobs finding better paying jobs so how exactly does a record a recession affect this job search one impact that recession has on um job search is the fact that there are fewer vacancies and this is illustrated here by this nice chart i took from some work by colleagues at the ifs what this shows is total job vacancy postings between april and july in 2019 and 2020. so the yellow here is the 2019 line that shows you the total number of vacancy postings at each given time period and you can see that in 2019 in this period we averaged about 6 000 vacancy postings per uh per day compare however in 2020 when we started to see the economic impacts of the pandemic and lockdown vacancies declined quite drastically fact for the for the 2020 period the average number of vacancy posting is around three thousand so it almost halved why is this a problem to people searching for better jobs well essentially there are fewer jobs for people to move to and therefore fewer opportunities to move to better paying jobs and again just to show you this in a diagram here's the job search story of why unemployment during your youth in particular can harm your future earnings growth so again here we start with a recession a recession results in a worse initial wage distribution and it's also harder to find jobs to move to so your options are limited during a recession and it's in particular it's difficult to find those higher paying jobs which lead to earnings growth here and as a result you have lower earnings so just to illustrate how these the two different models um explain the the process of earnings growth and the persistence of unemployment let me show you them together so on the left hand side i'll show you the human capital story and on the right hand side the job search story and we can see how these differ so in both models and both stories we start with a recession or a period of economic turmoil in the human capital model this recession leads to less human capital accumulation as i've said because there are fewer jobs there's less opportunity to build up those skills in employment this in turn leads to lower future productivity and eventually lower earnings in contrast in the job search model we start with a recession this recession leads to a worse initial wage distribution and also it's far harder to find better jobs and higher paying jobs and again this leads to low earnings so you can see that there are these two stories as economists we can try and tell to explain the persistent effects of unemployment now both models seem to offer plausible explanations of why unemployment effects persist so one of the things we can do as economists is try and see how the predictions of these models compare to what we see in the data in order to assess how good they are at explaining the story and that's exactly what till von bachter did in 2020 he assessed how valid both the human capital model and the version of the job search model are explaining the persistent impacts of unemployment so unfortunately util um bacter found that neither model completely explained what we see in the real world so on the human capital model he found that even short-term exposure to adverse labor market conditions can lead to long-term effects so what that's saying is that even a short period of unemployment which shouldn't really affect the amount of skills you've gained too much actually does lead to persistent impacts of of declining future earnings and the human capital model fails to account for that on the job search model he used it to estimate how long it should take for earnings to recover after a recession what he found was typical estimates of recovery patterns only take three to four years that's compared to the nine or ten years that i showed you earlier so neither model completely explains what we see now as economists we haven't completely given up on trying to explain the persistent impacts of unemployment and job loss one approach that has been taken and i'm not going to go exhaustively through all of the different approaches but one approach is to try and combine both of these stories so trying to say that there's both the loss of human capital and also search of search reasons for the persistent impacts and that seems to get slightly closer to the true answer other models have also looked at slightly different reasons why there may be persistent impacts for instance skills mismatch now there are a lot of complete competing explanations at the moment and i don't think there are there's one definitive answer at the moment but what this up what i think this highlights and is quite nice is that the fact that there are still important questions that as economists we need to answer so just to summarize this first question that i was trying to ask second question i was trying to answer why are the effects of unemployment so persistent what i've argued is that it's a more challenging to answer a question to answer and as of yet there is no definitive answer i've shown you the job loss the human capital loss model and also the job search model and argued that they're probably part of the story but they don't provide a complete explanation so clearly this is an area where a lot of more a lot more research needs to be done so let me now move on to the final question that i was trying to answer why and how does the government intervene so we've seen that youth unemployment clearly has negative consequences but does this necessarily mean that the government should intervene the answer to that is no and there are a couple at least a couple of reasons so firstly when you're considering any government intervention you've also got to con consider the costs of that intervention the government doesn't have an in a limitless budget there needs to be decisions between various policies taken and labor market interventions in particular often tend to be quite costly so there could be an argument that resources may be better placed elsewhere the second argument is that government intervention could have unintended consequences so if the government doesn't operate in the correct way they could actually make the situation far worse than it is so in order to have a basis for government intervention what we really need to identify are the market failures that can be addressed by government intervention now for fortunately or unfortunately there are a range of different market failures at play here related to unemployment in general but especially unemployment amongst young people and for anyone who's taken a micro cost or a public economic class i'm sure many of these market failures you've already thought of or will be familiar to you so the first market failure that we have here are frictions in the labor market in particular information asymmetries between sorry among the employers who aren't quite sure of the skills that young people have but also in information and symmetry amongst the young people as well this may be particularly um impactful for young people because they don't have much experience to fall back on and to show that employers on their cv so that's one potential reason to intervene in the market and the next reason are negative externalities than the negative externalities of a youth unemployment the fact is that a young person who graduates during a recession and has these worse life outcomes it doesn't just affect them it affects society as a whole and i've given you two examples here of potential negative externalities so firstly young people who graduate during a recession and have lower future earnings they're able to contribute far less in terms of tax revenue that means the government has less to spend on uh public resources which harms us all secondly crimes as well are an example of a negative externality that results here there is always a victim of a crime government may also intervene on the macro economic concerns so if you've got a large proportion of your workforce unemployed unable to find a job that's not going to be very good for the economy as a whole and lastly the government may intervene to try and mitigate potential inequalities and here there are a couple of different inequalities that you can consider so firstly within cohorts i've shown you that educated people are has don't tend to be as badly affected by graduating during a recession so perhaps there's a grounds to intervene to try and reduce the inequality between the educated and the less educated population and secondly inequality between cohorts so there could be an inequality between the lucky cohorts who don't have to try to graduate during recession and the less fortunate cohorts who do so that's another reason why the government could intervene so all of these are clear market failures and reasons that the government could intervene how do governments in practice in intervening so government intervention in the labor market is always a complex matter and this is worth highlighting in particular the fact that employment is something that's influenced by a range of different factors labor market itself so government policies directly impacting labor market outcomes of course affect employment but also employment decisions are impacted by the taxation and benefits system any changes to the tax the income tax for instance or benefits changes can adversely war will impact the incentives that people have to decide whether or not they want to work and thirdly and this is particularly the case with young people education also plays a big part in the types of employment and employment opportunities that are available to young people but also education itself can sometimes be seen as almost like a substitute to starting a career so for instance if you graduate if you're about to graduate during a particularly bad economic time you may decide to delay entry into the labor market and go back to university for instance so all of these different factors and many more that i haven't listed here influence employment outcomes and as a result governments need to consider all of them in the round when making any decision so there are a range of different tools that governments could use to tackle unemployment what i'm going to focus on here is one particular tool that is coming especially it's becoming more popular in countries across the world and it's called active labor market policies now you may not be familiar with the term active labor market policies but i'll show you some examples of active labor market policies which i'm sure you have heard of so active labor market policies are government programs designed to intervene in the labor market to help an employer find work and just a bit of history about them so they were popularized in scandinavian countries during the 1990s and it was part of the scandinavian vision of their welfare state so in scandinavian countries they typically have very generous welfare states and almost act as like a counterbalance to that they need a proactive labor market policy so on one hand if you've got a particularly generous welfare system that leads to people perhaps delaying entry into employment or not searching for a job as hard as they could so to try and balance that they introduced and invested heavily in these active labor market policies so that's where it first mainly originated but active labor market policy is now becoming more common in countries across the world and indeed in the uk we've seen exactly many examples of different active labor market policies used by the government and so they were in in general there are three main types of active labor market policies and all of these have been used by the government in the wake of the pandemic so here on the left hand side of this table i'm showing you the different types of active labor market policies that there are and on the right hand side the examples of uk government using these different types of active labor market policies so starting with the first public employment services these this is government funding for organizations that try and help um be unemployed into employment so typically job centers in the wake of the pandemic we saw a large investment in what i call job entry targeted support subject the jet scheme trying to help unemployed into employment the second key area for active labor market policies are investing in training and skills development this is where this is the idea of trying to boost the human capital that people have available to them in the recent budget the uk government committed an additional 3.8 billion pounds of additional spending on skills so again it's an example of an active labor market policy that they've tried to use and we'll be trying to use and the last type of active labor market policy of these employment subsidies so in contrast to the previous two this tries and tries to reduce frictions on the part of employers so by giving employers a subsidy a payment for hiring a worker but try and make it easier for firms to hire these workers particularly during recessions one example of that is the kickstart scheme which was an employment subsidy specifically targeted at young workers so we've seen a variety of different active labor markets policies used during the pandemic and there's also a lot of interest in how we assess these different active labor market policies so first it's worth noting that the different types of active labor market policy try to address those two different causes in some way in part try to address the two different causes of persistent effects that we highlighted earlier so one of the models that we studied was the human capital accumulation model and we said that human capital loss is one of the reasons why there are such persistent impacts so the training and skills development element of the active labor market policies directly tries to target this the second model that we tried that we looked at was the job search model and public employment services another active labor market policy try and alleviate the issues that people face during their job search so whilst it's too early to evaluate the impact of the current set of active labor market policies used by the government one thing that is worth noting is that active labor market policies need to be well designed and targeted there's a long history of poorly designed active labor market policies which haven't had that much effect on the outcomes that we want to see and really the key to the success of these active labor market policies is that they boost human capital and ease the job search they directly try and mitigate and alleviate the issues that we highlighted earlier so on that note let me conclude this presentation firstly saying that young people are more likely to be unemployed and are especially high fire hit hard by recessions which is the first thing we highlighted and what i've told you the remainder of this presentation is that this matters because unemployment has long-term impacts and it's not just on an individual's career but on a whole host of other life outcomes explaining why you find employment and graduating during your recession has such persistent effects is a really important question and it's something we as economists are still trying to answer and lastly tackling youth unemployment is has become a key policy priority one of the key policies that governments are trying to use to address this are active labor market policies and what i've argued is that the success of these programs depends on whether they boost human capital and ease job search so that's the end of my presentation thank you very much for listening and i believe we'll now go back to jonathan and questions brilliant thank you uh amen yes uh terrific and uh i was interested i'm sure uh our viewers were too so i do have some questions been popping up on on the slido app uh one at the top of the list uh go to uh imam first is are certain university subjects more and i put this in quotation marks as the uh writer has cursed than others for students graduating in a recession yeah that's a really nice question and so actually colleagues at the ifs have directly try to analyze the returns to different um university degrees um and if you google ifs university returns you'll find this really nice paper but essentially what we what they've argued is that particular there are degrees in particular that are associated with especially high earnings so economics medicine and law associated with the top earnings and i so i can't speak directly to whether these um degrees would make you more resilient in the labor market but i think there would be a fair assumption to say that these high earnings degrees are in part high earnings because the young people we do them are more likely to find employment and therefore they should be a bit more recession proof if you like than other degrees but i what i would also say on this is that whilst there's a lot of variation between the earnings of different degrees a really important dimension that i've mentioned here is that actually it's people who don't have degrees that tend to fear fair worse so it's those who haven't gone to a university that really do see the worst impacts from recessions uh okay uh great the the next question uh has come up is what is the evidence that moving that the move to working from home negatively affects uh young people and this might be a little bit uh off topic of a precise topic but um do you have any thoughts and and yeah well what are your thoughts on that and and do do i don't want to force you into going too far out of your comfort zone yeah so um working from home has certainly been um quite a quite a challenge for a number of people one um element that i think you could look at is the fact that being in the office uh really is beneficial to your development as a and as an employee so having that interaction with fellow colleagues the training that you do as part of the jobs whilst you can probably do that whilst working from home it's it's far harder and in that sense because it's young people who really benefit from those training opportunities mentoring interacting with more senior staffs there is an argument that working from home could be especially detrimental to them yeah i think that's uh i think it's right and quite how um substitutable that kind of learning is uh for remote working versus in-person working i'm not sure is is fully understood but it's an important one particularly for young people um what uh that uh see what you think about this any thoughts on how these models might be used to explain the gender pay gap do you have any thought on that question that that that's a very interesting question i i think it's a bit outside of my area of expertise um yeah maybe shall i should i see i mean look i think the economists including at the ifs have been working on the gender pay gap and trying to understand it for for a long time fundamentally we actually find you know using but i'm going to take the question to mean kind of you know economic models in general can be shown to be very useful here uh in particular uh work published a couple of years ago uh that uses a kind of dynamic model of people's human capital and how much they work particularly for women implies that particularly the important human capital generating activity is often full-time work uh compared to part-time work now how does and and and the big thing is of course is that women are less likely to work full-time uh more likely to work part-time particularly in the years that their children are young now how does that kind of link to the kind of what we're talking about well it's really about how much human capital people build on the job um and so you know you would expect in general that if people who kind of graduate uh during a recession and um uh maybe they cannot only get part-time work uh rather than full-time work they just might be less likely to generate that kind of experience and those skills uh in in a kind of similar way to that it seems that some women are some women find it harder to uh in the years after their kind of first children are being born so i think there's a some form of parallel um there this one's a more of a comment i don't know if you just want to agree with it or disagree with it uh imran but on the slido app it says not sure that graduates and young people are the same categories graduates are less likely to be unemployed than young people yeah no that's a fair comment so what i would say is that within the group of young people we're covering a a whole host of different types of people so young people in the slides referred to anyone between the six ages of 16 to 24 but you can imagine that um a person who leaves university um at the age of say 21 or 22 is going to be very different to a person who's just left school at the age of 18 or 19. now that's one of the reasons why we i think one of the reasons why we see unemployment having less of a detrimental effect on graduates because they're slightly older they're more mature they may already have some labor market experience they don't have as bad effects as non-graduates who typically tend to be younger yeah um and then the last question has come up is what impact has covered held on the labor market for young people do is it different to previous recessions if you can't take that one i i can but maybe i'll leave that to you first okay yeah um so i'll try and give part of an answer but do feel free to step in and add to it so firstly i mean what i would say is that pandemic is still going on so it's difficult to give a full picture of what's uh going to happen and when you look at certainly the initial impact of the pandemic it particularly affected certain sectors that young people were disproportionately likely to work in so for instance entertainment retail and hospitality so at least in the first wave of the pandemic we saw young people being especially hard and hardly hit big hard hit because they worked in these sectors which were disproportionately likely to be affected by uh the pandemic so i mean that's my basic answer and i'm sure jonathan has a lot to add to it but before he does what i would also add is that what's different to um the economic fallout and this whole situation around the pandemic is that it's not just affected young people finding jobs it's also had a huge impact on education so schools have been shut down universities have been disrupted there's been a lot of lost learning and that's likely to have a detrimental impact on a whole cohort a whole generation of young people which whilst it won't immediately show up in labor market outcomes in the future it's very likely that we'll see these people um have a negative this will have a negative impact on the long-term trajectories of these people yeah i mean i think the only thing i would say to um kind of adds that is at the beginning of the pandemic it did look a lot lot worse for younger people much more likely to be furloughed having time out you know not not building that experience that we were talking about um as the pandemic has gone on and well not gone faded uh you know things do look a lot better for young people and a lot better relative to their older kind of compatriots at least in the uk um are you i completely i can take your point though that i think there's this kind of this big cohort of a young younger people who who are going to go who have been going through kind of significant disruption to their education albeit in the uk slightly less disrupted than in some countries where where schools were closed for for longer um you know i think probably and you know in in in 10 years time it might actually be that that kind of impact is more important than you know where the people were furloughed for a couple of months in the middle of 2020. um that's that's kind of uh one view i'd probably i'd probably agree with um i think that takes us to the end and uh imran thank you and to our our viewers thank you so much uh to imran for for uh being here today uh giving us his talk and also answering questions i'm just going to highlight again next week's event on the economics of higher education uh 22nd of november 4 to 5 p.m online on our youtube channel and available from the ifs website um but thank you very much for uh watching thank you for participating in the questions uh i'm fantastic to have you uh here hope to see you again soon thank you very much you