Employment situation and family background in Europe during the crisis: we are not all equal

Silvia Avram, University of Essex
Olga Cantó, University of Alcalá and Equalitas network

This article studies the relevance of social background in finding quality employment at two key moments: before and during the economic crisis. In countries such as Spain, Italy or Poland, belonging to a family with a good social position is important for finding good employment, independently of the training received. The results indicate that family background mainly affects the quality of employment, independently of the education level reached.

1. Introduction

Does our place on the social ladder when adolescents determine our employment opportunities when we are adults? Could this relationship have changed during the economic recession? The answers to these questions are fraught with subtleties, and in Europe they are difficult to study owing to a lack of comparable statistical information between countries that reflects the family situation of members of the adult population during their youth.

Exceptionally, in 2005 and 2011, the European Survey on Income and Living Conditions (EUSILC), the main source of information on the economic and social situation of European families, included additional questions in a module on the intergenerational transmission of poverty. Specifically, it included questions on the social situation of the parents and families of interviewees when the latter were aged around 14 years, which has enabled us to answer our question for five European countries: the United Kingdom, Spain, Italy, Poland and the Netherlands. Individuals aged between 25 and 55 years were interviewed and we know what the educational level of the parents was, their occupation if they were employed, the demographic structure of the household at the time and also whether the family was experiencing a period of economic difficulties or was comfortably off.

Our study offers new evidence on the role of social background in employment opportunities, improving some key aspects. The first is that we evaluate social backgrounds in a broader way than is usual. We consider, as underlined by the work of Björklund and Jäntti (2012), and Erola et al. (2016), that the potential of parents to transmit social advantage to their offspring is related with a set of variables broader than occupation or educational level. For this reason, we construct a more comprehensive social background indicator that includes, in addition to the occupation and educational level of the parents, other characteristics of the household related with the number of dependent minors, the family structure and the family’s financial situation when the individual was an adolescent.  

Family background is no more of a determining factor for employment opportunities among young workers (25-35) than it is for those among older workers (45-55).

Secondly, we investigate what role the economic cycle (expansions against recessions) plays in the transmission of social advantage. The objective is to discover whether what parents from better social backgrounds transmit to their children also enables them to tackle better the economic setbacks in a generalised crisis. If so, there should be no differences in the opportunities reached by individuals of different ages and the same social background. If, rather than the transmission of characteristics it is the protection by parents through their social relations or economic resources, we should observe differences in the role of social background among individuals of different ages, and the youngest would be the main beneficiaries of parental protection.

Finally, the study analyses various European countries where few empirical analyses have been carried out on the intergenerational transmission of opportunities.

2. Does social background determine the probability of being employed?

An important number of economic and sociological studies have confirmed the transmission of social advantage through the generations in different societies (Bowles and Gintis, 2002; Björklund and Jäntti, 2009, Ermisch et al. 2012). The results of a host of studies undertaken in English-speaking and Scandinavian countries indicate that enjoying a good family background increases the possibilities of achieving a good educational level and also of achieving a better employment situation, regardless of the level of education or training reached.

For this study, we selected five countries of the European Union (EU) as representatives of the different Welfare State models that prevail in the continent (Anglo-Saxon, Mediterranean, Continental and Eastern Europe). Also taking into account certain restrictions related with the availability and quality of data in the survey that did not allow the effective comparison of all countries in the EU, we analysed two countries from Southern Europe (Italy and Spain), one from Eastern Europe (Poland), one Anglo-Saxon (the United Kingdom) and another continental (the Netherlands).

We defined family background through a statistical method that allowed us to construct an individual indicator of family background that jointly considers various characteristics: educational level of the parents (father or mother, whoever has the highest one), occupation, number of dependent minors, single-parent families and family financial situation during adolescence. We calculated the distance to the average indicator by five-year generational groups and we divided the population from each country into five groups according to their family background and whether they are close to or distant from the average. Thus, the first group includes those with a family background furthest below the average and the fifth group those family backgrounds furthest above the average.

The total effect of social background on employment opportunities works through the obtaining of better educational levels (indirect effect) as well as through direct impact (linked to the transmission of cognitive, thinking and intellectual skills as well as non-cognitive, social and cultural skills and attitude) which promotes the transmission of social benefit from parents to children and the capacity of parents to protect or give advantages to their children through their social relations and economic resources.

If we estimate each individual’s probability of being employed according to their current socioeconomic characteristics (including educational level attained and social background), we obtain the results that we represent in graphs 1 and 2. During the period analysed, the possibilities for employment of men and women declined considerably, both in Spain and in Italy, due to the economic recession (the blue line is always above the red line) and, in contrast, these opportunities increased in Poland, which experienced a cycle of strong growth. Thus, for example, in the case of Spain the probability of a man being employed if he had a low family background fell from 90 to 78%; in Italy, it dropped somewhat less: from 93 to 89%; whereas in Poland the probability of being employed for an individual of any group grew by around 5% (from 79 to 84% for the first group). As we can appreciate, the red and blue curves are practically parallel in most countries, which indicates that differences in employment probabilities are very similar for all the groups. 

 

If, as social background improves (as we move from group 1 to group 5), the probability of employment increases, we have a rising straight line. This indicates that the better the social background, the greater the probability of being employed. If, in contrast, the probability of employment does not increase as background improves, the line will be flat, which will indicate that the direct effect of social background is negligible.

A clearly seen in graphs 1 and 2, where we do not include the indirect effect of social background on employment through education, the probabilities of finding employment are not very different by social background.

We observe that there are two important exceptions to the previous general result: the first is the case of Spanish men with a lower-level family background who appear to be more jeopardised by the recession than those with a better social background (the distance between the blue curve and the red curve for group 1 is greater than that of any other group, graph 1). The probability of being employed among men with a worse family background fell from 90% to 78%; while for those with a better family background, it only fell from 90% to 82% (group 4) and from 89% to 80% (group 5).

The second exception are Polish women who come from families with a low social status, who barely managed to improve their employment opportunities during a period of strong growth in their country, unlike women with a better family background (the blue and red curves overlap each other in graphs 1 and 2; the red curve is above the blue in groups with a better social background, graph 2). Specifically, women with a worse social background did not experience changes in their employment probability, whereas those with a better social background increased their probability of being employed from 76 to 79%.

3. Does social background determine salary level and employment instability?

Not only is it important to identify what role is played by social background in the possibility of accessing employment, but also to assess whether the employment accessed by individuals with different social backgrounds varies in quality. To evaluate quality of employment we have used two key variables: salary level and contract stability (temporary versus permanent). The results indicate that, in Spain, Italy and the United Kingdom alike, and in contrast with the situation in Poland and the Netherlands, the quality of jobs accessed by individuals with a lower social background is poorer than that of jobs accessed by individuals with a higher social background. In other words, in general terms, social background does not influence the probability of having a job, but does influence the quality of it.

In Spain and Italy having a better family background increases employment opportunities more than in other European countries, for example the Netherlands and the United Kingdom, in terms both of finding work and of its quality (salary and degree of temporariness).

To confirm the above, firstly we estimated the average wage per hour by groups of family background and educational level, taking into account other key socioeconomic characteristics such as age, region, etc.

In graphs 3 and 4 we represent the results separately for men and women. Again, the slope of the curves obtained indicates the relationship between quality of employment in terms of salary and family background: the steeper the slope of each curve, the greater the salary advantage of individuals with a better family background. 

We observe in all countries that individuals with a lower social background achieve jobs with a significantly lower wage/hour than those with a better social background. In any case, the increase in average salary as family background improves is significantly greater in Spain, Italy and the United Kingdom than in the Netherlands or Poland. The Netherlands constitute an exception to this tendency, above all in terms of men’s salaries; with regard to women’s salaries, social background has some effect, which could be related with the segregation between male and female part-time work that exists in the country.

The effect of social background on salary is manifest even when we take educational level into account. The hourly wage of individuals with the same educational level differs according to their family background, especially at medium and high educational levels. Therefore, even when the educational level remains the same, we observe important differences in the average salary among individuals with a different social background.

As reflected by graphs 3 and 4, all these differences are somewhat more pronounced in Italy and Spain. With the same educational level, men and women born in households with a high social background (group 5) have higher salaries. In Poland, in contrast, the effect of social background is manifested mainly in education and is not directly relevant for either men or women. In this country, the curve for men and women with a higher educational level is significantly above the curves for medium and low educational levels, but its slope is almost flat. Salary differences between individuals of high and low social background (extreme groups) in Spain, Italy and Poland move between 15 and 30%, depending on the country and the year analysed. The impact of the economic cycle is negligible.

The second element of employment quality that we consider is contract stability (permanent against temporary). For this, we estimate the probability that an individual has a temporary contract versus a permanent one taking into account their socioeconomic characteristics. In graphs 5 and 6 we represent the estimated probability of having a temporary contract in the two years analysed, separately for men and women. Again, the slope of the curves indicates the relationship between quality of employment and family background. The greater the slope of each curve, the greater the difference in the probability of having a temporary job among individuals of different social backgrounds. 

In Spain, Italy and Poland, the probability of being in temporary employment is higher among men and women of lower social background than among those of medium or high social background, therefore family background is also a relevant variable for avoiding the most unstable and insecure jobs in these three countries. 

Although social background does not directly influence the probability of having a job, it does do so indirectly through educational opportunities and has a direct influence on the quality of the employment obtained.

It is the steepness of the curves that informs us about the relationship between probability of temporary work and social background. Although the curve for Italy has little negative slope, it is significant statistically. While it is true that the curve for the United Kingdom is similar to a certain extent, it is not significant, probably because there are far fewer individuals with a temporary contract. 

Our results show that in Spain having a higher social background is particularly relevant for avoiding the most insecure, worst-paid jobs and with the worst associated benefits. Spanish workers with a low social background have a significantly higher probability (10 percentage points higher) of finding themselves in temporary jobs than those of medium and high social background. This effect is clearly observed in the case of men and women alike. In Poland, social background is also relevant for determining the possibility of having an unstable job, although its impact is somewhat lower than the impact it has in Spain. 

For now, the crisis does not appear to have caused changes in resistance to employment difficulties among individuals with different family backgrounds.

Likewise in the case of salaries, we confirm that, in general, the economic cycle is not relevant in any of the countries. A small change is only detected among Spanish men of low social background who, from the start of the recession, have fewer possibilities of being in temporary employment than before the crisis. This result seems to be linked to the significant destruction of temporary work that took place in Spain between 2008 and 2011.

Finally, it is important to highlight that in none of the countries analysed do we find differences by age in terms of the impact of social background on the probabilities of finding employment or on employment quality.

4. Conclusions

Our results indicate that family background affects the probability of employment in some countries and the quality of jobs in all of them, although not with the same intensity. These effects are produced independently of the educational level of individuals.

In Spain and Italy, differences in quality of employment due to social background are greater than in other countries. In other words, if we have two people with the same education level, but who are descendants of families with different positions on the social scale, in both countries the person belonging to the family better positioned socially will have more possibilities of finding a good job. In Spain, our results indicate that a high social background is particularly relevant for avoiding more insecure and worse paid jobs.

Finally, the impact of family background on employment opportunities does not seem to have changed during the recession, nor does it appear to be different for individuals of different ages.

5. References

Björklund, A., y M. Jäntti (2012): «How important is family background for labor-economic outcomes?», Labour Economics, 19(4).

Björklund, A., y M. Jäntti (2009): «Intergenerational mobility and the role of family background», en W. Salverda, B. Nolan y T. Smeeding (eds.): Oxford Handbook of Economic Inequality, Oxford: Oxford University Press.

Bowles, S., y H. Gintis (2002): «The inheritance of inequality», Journal of Economic Perspectives, 16(3).

Ermisch, J., M. Jäntti, T. Smeeding y J.A. Wilson (2012): «Advantage in comparative perspective», en J. Ermisch, M. Jäntti y T. Smeeding (eds.): From parents to children: the intergenerational transmission of advantage, Nueva York: Russell Sage Foundation.

Erola, J., S. Jalonen y H. Lehti (2016): «Parental education, class and income over early life course and children’s achievement», Research on Social Stratification and Mobility, 44.

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Authors

Silvia Avram, University of Essex
Olga Cantó, University of Alcalá and Equalitas network

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Thematics

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