In this chapter we review the evidence from a three-country study assessing the impact of the 2008 Great Recession on young people making the step into independent adulthood, comparing experiences in the UK, in Germany, and the USA. Drawing on evidence from large scale, longitudinal studies the experiences of young people coming of age in different cultural contexts are described. The findings suggest that the Great Recession was a significant, but not principal influence on young people’s changing life course post-2008. Better to characterize it as a major economic shock that intensified the impact of pre-existing economic and social processes on young people’s lives.

Nonetheless, the recession effects presented new obstacles to entering and sustaining employment within the adult labor market. In particular the increasing precaritization of employment and marginalization of growing sections of the youth population, including graduates, is a major concern.

Introduction

The lives of young people are shaped by the economic circumstances and social contexts in which they live. In 2008 the world banking collapse, brought on by an overheated housing market in the USA and the deluge of “subprime” mortgages, produced a tidal wave of economic consequences for employment and standards of living that have rightly come to be described as the “Great Recession” (Bell and Blanchflower 2011). Although there was much variation between countries and between regions in the way these effects were experienced, a common feature was that the damage was felt especially by young people trying to find their way from education into the labor market and adult employment. The consequences were variable depending on where, when, in what circumstances, and at what age the transition was attempted. But for some young people it would signal an enhanced likelihood of a life course marred by social and occupational exclusion.

While the overall effect of the Great Recession on employment outcomes is well documented (Bell and Blanchflower 2011; Danzinger 2013; Jenkins et al. 2013), there is less attention to variation within and between countries, the diverse pathways taken by young people in navigating a changing economic context, and the ways in which they adjusted to changing circumstances and opportunities. The unique contribution of this book is to bring together evidence from different countries, drawing on comparable and mainly longitudinal data sources to investigate the impact of the Great Recession on the lives of young people and their families and to identify possible leverage for improving the situation of young people today.

The book advances the study of changing youth transitions, by examining both material and psychosocial aspects relevant to a better understanding of the consequences brought on by a sudden economic downturn and rising uncertainty among parents and their offspring on the threshold of adulthood. Key questions to be addressed include: What was the impact of the Great Recession on the education, employment, and family transitions of young people? Who are the winners and the losers emerging from the economic downturn? What was the effect on psychosocial capabilities, health, and well-being? Did these effects differ in different cultural contexts, for different subgroups in the population, and for different age groups? What policy interventions can potentially counteract deleterious effects?

This book was inspired by the path-breaking study of Glen Elder, Children of the Great Recession (1974/1999), which prompted the work on the current book in the aftermath of the 2008 Great Recession. Walter Heinz developed the idea – taken forward with Glen Elder, John Bynner, and Ingrid Schoon – of a comparative project to investigate the effects of the post-2008 banking collapse on young people and their families, using secondary analysis of comparable longitudinal data in Germany, the UK, and the USA. The focus was on transition experiences – especially regarding the impact of the recession on the transition from school to work and its consequences for other transitions and functioning, including achievement motivation, interactions with parents, partnership and family formation, as well as health and well-being. The choice of countries was motivated by their comparable labor markets coupled with contrasting cultural assumptions and institutional structures for managing youth transitions. Another important factor was the existence of comparable national household panel and other longitudinal datasets supplying the evidence base on which to found the comparative analysis.

Bringing together networks of researchers to form a consortium to undertake the work and shape the research plans was achieved by a series of workshops taking place in Germany (at the Youth Institute (DJI) in Munich and at the University of Bremen), the UK (Institute of Education, University College London), and the USA (Institute for Social Research, Ann Arbor, Michigan). At these meetings research ideas were presented, which were then further developed by the individual research teams.

From a promising beginning, we had, however, to change our ambitious plans. The original intention was for a collaborative project with a strong comparative design in mind, involving experts from the three countries, and entailing the harmonization of longitudinal data from nationwide studies of socioeconomic, social-emotional, and health outcomes. We submitted a number of proposals to funding agencies across the three countries, but financial support for the large-scale comparative cross-country study was not forthcoming. Instead we moved on with a dedicated core group, who produced reports from independently run projects around the agreed themes as played out mainly in their own national economic contexts.

Abstract

Did the 2008 economic recession speed up or slow down present trends toward a general prolongation of the transition to independent adulthood? This chapter examines trends in employment and family transitions before and after the Great Recession using evidence from the British Household Panel Survey (BHPS) and Understanding Society. Our analysis takes a dynamic approach incorporating life course effects and the changing labor market structure in terms of cohort and age effects. Moreover, we examine interlinkages between multiple transitions, and assess associations in the timing of education, employment, and family transitions using correlated survival models. The findings show that there is a fall in first birth rates post-recession, suggesting a reduced commitment to life altering transitions immediately following the global economic downturn. We also find an increasing association between leaving further education and forming a coresidential union, suggesting that women delay moving in with a partner until after they have completed their education. We also find a decreasing association between formation of a coresidential union and the incidence of first birth, i.e., in the direct aftermath of the recession couples delay the start of family formation. The findings suggest that the Great Recession is associated with an acceleration of preexisting trends toward a de-standardization (or decoupling) and delaying of transitions.

Introduction

Major economic downturns, such as the recent 2008 financial crash and subsequent Great Recession, affect lives on multiple levels, including consequences for employment, income, and education participation, as well as decisions regarding family formation. Although the recession affects all, young people between 16 and 25 years, embarking on making the transition to independent adulthood, are hit especially hard (Bell and Blanchflower 2011; Danzinger 2013; Jenkins et al. 2013). Young people are more likely to be unemployed, poor, and finding it more difficult to make ends meet than their older working age peers. There are, however, variations by country suggesting that social policies and institutional factors can buffer the blow (Aassve, Cottini and Vitali 2013; Ashton, this volume). In countries with relatively little support or social protection for young people, such as the UK, staying on with parents and delaying the step into family formation and parenthood reflect some of the strategies used by young people to cope with economic uncertainty.

What Have We Learned?

What have we learned about the changing nature of youth transitions and the effect of the Great Recession on them? In this final chapter we draw conclusions and seek further insights from the evidence presented. First we give a brief overview, taking the discussion back to the initial questions about the recession effects to which the preceding chapters were directed. Second, we discuss the evidence in the light of key themes of contemporary youth research and draw out their intersection with life course theory. We then consider the theoretical and policy insights to be gained from the evidence reported. Our discussion focuses on young people in the USA, the UK, and Germany, but also takes into account developments across a range of industrialized countries.

Overview

What was the impact of the Great Recession on young people making the transition to independent adulthood? The overall conclusion to be drawn is that the Great Recession was a significant but not principal influence on young people's changing life course post-2007. Better to characterize it as a major economic shock that intensified the impact of preexisting economic and social processes on young people's lives. Originating principally in Western countries in the period of technological transformation and de-industrialization of the late 1970s, as the contributors to the book show, these effects presented new obstacles to entering and sustaining employment within the adult labor market. There were also wider repercussions for functioning in the family and other life domains. Although the short-term effects may have been modest, they might be followed by more serious outcomes and long-term scarring effects. There could also be lagged effects (i.e., a delay between the exposure and onset of adjustment problems) and therefore continued monitoring of life chances for young people is necessary.

The recession effects varied with each successive cohort embarking on the transition to independent adulthood, i.e., they differed for different age groups, for different countries, and between different sections of the youth population. Younger cohorts, aged 15–18 when the effects of the Great Recession began to be felt, faced heightened difficulties in gaining entry to jobs or to the vocational education and training (VET) routes that previously ensured access to them.