Using a representative survey of young persons having left full-time education in France in 1998 and interviewed in 2001 and 2005, the purpose of this paper is to examine the process of their integration into normal employment (a stable job with a standard employment contract) and the extent to which job matches are inefficient in the sense that the pay in a job is below an individual’s potential earnings. The latter are determined principally by diploma level and educational specialisation, although other forms of training and labour market experience are relevant.
A stochastic earnings frontier approach is used in order to examine workers’ ability to capture their full potential earnings in labour markets where there is inefficient job matching (due to the lack of information, discrimination, over-education or the process of integration).
The results suggest that young workers manage to obtain on average about 82 per cent of their potential earnings three years after leaving full-time education and earnings inefficiency had disappeared four years later. The results are robust to the treatment of selectivity arising from the exclusion of the unemployed in the estimation of the frontier.
The stochastic earnings frontier is a useful and appropriate tool for modelling the process of labour market integration of certain groups (young persons, migrants and the long-term unemployed) where over-education due to inefficient initial job matches occurs. Over time this situation tends to be rectified as job mobility leads to improved matching and less inefficiency.
Earlier versions of this paper were presented at the Applied Microeconomics Seminar, University of California, Irvine; the Institute for Advanced Labour Studies, University of Amsterdam; the European Workshop on Efficiency and Productivity Analysis (EWEPA), Helsinki, June 2015, and the Banque de France-Aix-Marseille School of Economics Conference on Labour Markets, Paris, December 2015. The authors are grateful to participants for helpful comments.
Bazen, S. and Maman Waziri, K. (2019), "The integration of young workers into the labour market in France", International Journal of Manpower, Vol. 41 No. 1, pp. 17-36. https://doi.org/10.1108/IJM-07-2018-0204Download as .RIS
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