Unequal labour market entry during COVID-19 in Finland: Stratification by type of degree and social origin

Students who graduated in the early months of the COVID-19 pandemic faced worsened conditions for labour market entry. Moreover, it is likely that the pandemic exacerbated existing inequalities in labour market entry between graduates. Using detailed Finnish administrative data and event study models, we estimate the effects of graduating during the pandemic on monthly employment statuses and earnings for a treatment group that graduated during COVID-19 compared with a control group that graduated exactly one year earlier. We differentiate between graduates of vocational education, universities of applied sciences and universities, as well as between having parents with a lower and higher educational degree. We find that the effects of the pandemic on employment and earnings were greater for graduates with a vocational degree than for those with a degree from a university (of applied sciences) but find little difference by social origin. By exploring the role of unemployment and student benefit take-up, we find that the negative employment effects of the pandemic on vocational graduates can be partly explained by a “discouraged worker effect”, in the form of graduates continuing or re-entering education. Jobless university graduates with highly educated parents were possibly holding out longer for better jobs using unemployment benefits.