The decline in employment and the rise of its social gradient

The project's main aim has been to identify and analyze the mechanisms behind reduced employment rates in younger age groups, including the strengthened connection between social background and employment. Since the mid-1980s, employment rates among young and middle-aged people in Norway have fallen in a way that is highly correlated with family background. While there has been a marked drop in employment among people who grew up in families at the bottom of the income distribution, employment has been stable among people who grew up in more affluent families. A central element of the project has been to combine lessons from research on social (intergenerational) mobility with lessons from research on distortions in demand for labor due to changes in technology, trade, and migration. We have also aimed to study the role of the education system. Some selected results from the project: Family background and school results: We find that family background has become increasingly important for grades and exam results in secondary school over the recent decades. In particular, we show that children who have grown up in the poorest families have fallen behind. This has happened despite a massive expansion of publically provided childcare which has shifted much of the child-rearing from the family to the community. We show that both the expansion of publically provided childcare and increased teacher resources in schools have contributed to increasing social mobility. When mobility has nevertheless weakened, a possible explanation could be that the returns to education have increased over time, and that this has motivated parents to become more involved in their children's schooling. Immigration and social mobility: We find that immigration from low-income countries to Norway has reduced intergenerational economic mobility among Norwegian-born, while immigration from high-income countries has helped to increase social mobility. Since it is immigration from low-income countries that has dominated the influx to Norway in recent decades, immigration has all in all contributed to reducing intergenerational mobility. "Overeducation": We find that there has been a recent tendency towards more "overeducation" in the Norwegian labor market, in the sense that people have more education than necessary in their occupation. The tendency to overeducation has a social gradient, in that the extent of overeducation rises with the parents' earnings rank. The connection between education and later income has become stronger over time, but this is mainly due to the fact that education has gained increasing importance for the probability of getting into work at all. Given employment, the relationship between education and income has been fairly stable. Immigrants' success in the labor market and the importance of social insurance: Immigrants from low-income countries have lower employment rates than natives, and are more dependent on income security. By analyzing a previous reforms of the income security for people with reduced work capacity, we investigate whether the financial incentives embedded in the income security affect immigrants and Norwegian-born differently. The results indicate that immigrants are on average more sensitive to the level of the benefit, i.e. that their future earnings are more strongly affected by the level of benefit than is the case for Norwegian-born. This appears to be mainly caused by the fact that immigrants have, on average, less to gain from being in work than Norwegian-born. Adult completion of upper secondary education: We find that the connection between parents' education and the children's propensity to complete upper secondary education becomes weaker as the children get older, and that at age 40 it is about 35% weaker than at age 20. We also find that more experience-based routes to upper secondary education (i.e. the adult apprenticeship and practical candidate schemes for vocational subjects) are used particularly frequently by children of parents with low education. Our evidence suggests that institutions that offer opportunities for certifying qualifications acquired at work mitigate social gradients, fostering more equal opportunities within the education system. Hypergamy: We investigate how women and men are matched in pairs (marriage and/or joint children), and discuss possible effects on the wage gap between women and men. We find a tendency for men and women in Norway to be matched so that on average he has a higher socio-economic rank than her, where socio-economic rank is based on the parents' income rank in their generation. This may mean that the man has, on average, a greater earnings potential than the woman, thus providing an incentive for his professional career to be prioritized before hers. An overview of results from this project with reference to the relevant publications can be found here: https://www.frisch.uio.no/prosjekter/?view=project&pid=1191

Prosjektet har bidratt med ny og relevant kunnskap knyttet til utviklingen av sosial (intergenerasjonell) mobilitet og økonomisk ulikhet i Norge. Spesielt har vår studie av samspillet mellom innvandring og sosial mobilitet blant norskfødte fått mye oppmerksomhet både i forskersamfunnet og i allmenheten, og gitt et bidrag til problemforståelse og politikkutvikling på dette området. Artikkelen skapte mye debatt, og ble gjenstand for et eget symposium i «Tidsskrift for samfunnsforskning». Vi tror også at våre studier av ekteskapsmønstre (hvem som gifter seg eller får barn med hvem), og betydningen dette har for barnegenerasjonen har bidratt til økt kunnskap om mekanismene bak endringer i intergenerasjonell mobilitet. Endelig anser vi at vår analyse av formuesskattens virkninger på sysselsetting i familieeide bedrifter har bidratt til en mer informert offentlig diskusjon om formuesskattens rolle og betydning i det norske skattesystemet. Også denne studien dannet utgangspunkt for mye diskusjon, både blant forskere, politikere, og andre samfunnsaktører. For deltagerne har prosjektet bidratt til økt kunnskap om intergenerasjonell mobilitet og økonomisk ulikhet og gitt opphav til nye forskningsspørsmål som analyseres i nye prosjekter. For prosjektets doktorgradsstudent har arbeidet i prosjektet vært en sentral del av kompetanseutvikling og etablering av forskningsnettverk.

The project seeks to identify and assess societal and labor market trends that can explain the recent decline in prime-age employment and the sharp increase in its social gradient. The starting point is the observation that prime-age employment rates have declined sharply since the mid-1980s in a way that is highly correlated with family background. While employment rates have dropped quite spectacularly for young adults born into the poorest families in Norway, they are more or less unchanged for those born into wealthy families. The main idea of the project is to combine insights from research on social (intergenerational) mobility with insights from research on the impacts of skill-biased changes in labor demand and supply, to improve our understanding of the causal mechanisms behind the observed changes in employment patterns. The project is empirical and will take advantage of extremely rich longitudinal administrative register data from Norway. It consists of three sub-projects. The first sub-project examines whether skill-biased changes in the demand/supply of labor generated by longitudinal and spatial variation in immigration patterns can explain the decline in prime-age employment and the rise in disability program participation in a way that fits with the steep increase in the social gradients. The second sub-project studies the role of education. It asks how the expansions of publically provided child-care and recent educational reforms have affected the social gradient in educational achievement and through that potentially also labor market performance. In this part of the project, we will also examine trends in overeducation (mismatch) in the Norwegian labor market. The third sub-project examines the behavior of employers. It focuses on how employers' efforts to invest in long-term employee relationship - e.g. in terms of offering apprenticeships and develop inclusive work environments - depend on the ease by which they can find new employees.