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

Jake Anders and Lindsey Macmillan ()

No 6, CEPEO Briefing Note Series from UCL Centre for Education Policy and Equalising Opportunities

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.

Keywords: Scarring; Recession; Unemployment effects; Wage losses; COVID-19. (search for similar items in EconPapers)
JEL-codes: J30 J60 J62 J68 (search for similar items in EconPapers)
Pages: 3 pages
Date: 2020-06, Revised 2020-06
New Economics Papers: this item is included in nep-mac
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