Graduating in Austerity: Do Welfare Cuts Affect the Career Path of University Students?

紧缩政策通常是在财政刺激期之后出台的。例如，据估计，在2019冠状病毒病大流行期间，英国政府的借款约占GDP的17%，是二战以来的最高借款率。在疫情发生后，政府实施或考虑了各种措施，以限制公共支出和转移支付。虽然紧缩措施本质上通常是暂时的，但它们可能无意中对大学毕业生的劳动力市场前景产生持久影响。这是因为进入大学时的劳动力市场状况会对大学生的职业生涯产生持续的影响（Kahn, 2010； Oreopoulos等人，2012；Altonji等人，2016；Schwandt和VonWachter， 2019）。为了了解福利削减对毕业生职业道路的影响，我们建议研究英国政府出台的《2012年福利改革法案》。削减的程度差别很大，受影响最严重的地方当局的损失大约是受影响最小的地方当局的四倍（Beatty和Fothergill， 2013）。改革显示出强劲的负财政乘数，导致生产（Fetzer, 2019）和就业（Adelino和Goldman， 2022）大幅减少，这表明受影响严重地区的求职者面临着充满挑战的劳动力市场条件。此外，较弱的安全网可能会增加首次求职者应对冲击的脆弱性，因为他们中的许多人在职业生涯的早期没有足够的资源来平稳消费。为了检验福利削减是否对年轻人从大学到劳动力的过渡产生不利影响，我们首先研究了对他们就业可能性和初始收入的影响。其次，我们考察了这些对劳动力市场进入的不利影响是否在收入概况和工作质量方面对他们的职业生涯产生了持续的影响。第三，为了理解潜在的机制和异质性，我们探讨了不同学科、性别、种族、父母教育和社会经济背景的毕业生在劳动力市场结果上的差异。这项研究可以让我们进一步了解哪些毕业生更容易受到福利削减的影响。研究紧缩政策对毕业生影响的一个实证挑战是，调查数据只能提供碎片化的信息，因此不可能全面了解不同教育背景的大学毕业生如何向劳动力市场过渡。纵向教育成果（LEO）项目提供的相关管理数据填补了这一空白。此外，各地支出削减规模的差异使我们能够比较福利削减幅度较大的地区的大学毕业生与受影响较小的地区的大学毕业生，控制地区之间存在的差异和长期劳动力市场趋势。总的来说，这项研究的结果将更好地理解毕业生如何应对紧缩政策引发的劳动力市场冲击。2012年至2015年间，150万学生获得了他们的第一个学位（数据来源：HESA）。我们的研究结果将揭示劳动力市场疲软和社会保障体系薄弱是否会对他们的职业生涯产生持久影响。理解这一点很重要，因为它可能影响整个群体的福祉，并对群体内部和群体之间的不平等产生影响。研究结果还可能有助于设计保护最弱势群体的紧缩政策。

Austerity policies often follow a period of fiscal stimulus. For example, the UK government's borrowing is estimated to have reached approximately 17% of the GDP during the COVID-19 pandemic, marking the highest rate of borrowing since World War II. In the aftermath of the pandemic, the government has implemented or considered various measures to curb public spending and transfers. While austerity measures are typically temporary in nature, they can unintentionally yield lasting effects on the labour market prospects of university graduates. This is because the conditions in the labour market at the time of entry can exert a persistent influence over the careers of university students (Kahn, 2010; Oreopoulos et al., 2012; Altonji et al., 2016; Schwandt and VonWachter, 2019).To understand how welfare cut affects the career path of graduates, we propose to study the introduction of the Welfare Reform Act 2012 by the British government. The extent of the cut varied substantially with the worst-hit local authorities losing around four times as much as the least-affected local authorities (Beatty and Fothergill, 2013). The reform exhibited a strong negative fiscal multiplier with a sizeable reduction in production (Fetzer, 2019) and employment (Adelino and Goldman, 2022), suggesting that job seekers in severely affected areas faced challenging labour market conditions. Moreover, a weaker safety net could increase the first-time job seekers' vulnerability to cope with the shocks since early in their careers many of them do not have enough resources to smooth consumption.To examine whether welfare cuts had detrimental effects on the transition of young adults from university to the workforce, we first study the effects on their likelihood of getting employed and initial earnings. Second, we examine whether these adverse effects on labour market entry had a persistent influence on their careers in terms of earning profiles and job quality. Third, to understand the underlying mechanism and heterogeneity, we explore the differential labour market outcomes for graduates majoring in different disciplines of study and by gender, ethnicity, parental education, and socioeconomic background. This exercise will provide us with additional insights into which segments of graduates are more susceptible to the impact of welfare cuts.An empirical challenge to studying the effect of austerity on graduates is that survey data can only give fragmented information making it impossible to get a complete picture of how university graduates from different educational backgrounds transition to the labour market. The linked administrative data available through the Longitudinal Education Outcomes (LEO) programme fills up this gap. Also, the variation in the size of expenditure cut across localities allows us to compare university graduates in localities that experienced deeper welfare cuts with those from less-affected areas controlling for any pre-existing differences across localities and long-term labour market trends.Overall, the findings of this study will provide a better understanding of how graduates cope with labour market shocks induced by austerity policies. Between 2012 and 2015, 1.5 million students obtained their first degree (Source: HESA). Our results will shed light on whether a weaker labour market combined with a weaker safety net had a lasting impact on their careers. This is important to understand as it could affect the well-being of an entire cohort and have implications for within- and across-cohort inequality. The findings could also be useful in designing austerity policies shielding the most vulnerable.