Conditional Risks, Contextual Rewards: Spatial inequality and job search time at labour market entry

While there is a strong educational gradient to the risk of experiencing long periods of unemployment and insecurity at the beginning of the career, recent evidence suggests local labour market circumstances can moderate the degree of risk associated with low educational achievement. We test the wider applicability of this finding by exploring the effect of spatial variation in labour demand on initial job search time in the contrasting institutional settings of Germany and the United Kingdom. Survival analysis of Understanding Society and Socio-Economic Panel data 1998–2015 shows this form of spatial inequality moderates the size of the job search time penalty associated with low educational attainment (and the size of the returns associated with higher attainment) in a similar way in both countries. Young people in places of high labour demand in Germany and the UK obtain employment with relative ease irrespective of the qualifications they hold. However, educational attainment assumes greater consequence as local labour demand declines. On average, low qualified young people in places of weak demand experience 2-3 month longer periods of labour market lockout and 8-10 month longer periods of labour market insecurity than peers located in places of strong demand, and considerably longer periods of lockout and insecurity than their better qualified peers in the same weak labour markets. These findings draw attention to the contextual nature of the risks associated with low educational attainment and the rewards to higher levels of attainment, at least in terms of job search time.