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Making the TransitionEducation and Labor Market Entry in Central and Eastern Europe$

Irena Kogan, Clemens Noelke, and Michael Gebel

Print publication date: 2011

Print ISBN-13: 9780804775908

Published to Stanford Scholarship Online: June 2013

DOI: 10.11126/stanford/9780804775908.001.0001

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Education and Labor Market Entry in Transition

Education and Labor Market Entry in Transition

The Case of Hungary

Chapter:
(p.189) Chapter Eight Education and Labor Market Entry in Transition
Source:
Making the Transition
Author(s):

Erzsébet Bukodi

Péter Róbert

Publisher:
Stanford University Press
DOI:10.11126/stanford/9780804775908.003.0008

Abstract and Keywords

This chapter on Hungary examines the role of educational qualifications in career entry for cohorts leaving the education system after 1989 and determines whether there have been any changes in this role since regime transformation. It analyzes how educational expansion at both secondary and tertiary levels, and the growing flexibilization of the Hungarian labor market, influenced the transition from school to work for individuals who left education after 1990. It also explores whether the changes in the educational system and the labor market have affected differently the employment opportunities of school leavers with differing levels of qualification.

Keywords:   Hungary, regime transformation, educational expansion, Hungarian labor market

Introduction

There is a large deficit in analyses of labor market entry in post-socialist countries, but this general statement would not apply entirely to Hungary's case. In fact, there are a number of studies dealing with school-to-work transition, either focusing only on Hungary (Audas, Berde, and Dolton 2005; Róbert 2005; Róbert and Bukodi 2005; Bukodi 2008) or comparing Hungary to other post-socialist countries (Kogan and Unt 2005). The main contribution of this chapter to the literature is its investigation into the role of educational qualifications in career entry for cohorts leaving the education system after 1989, and its examination of whether or not there have been any changes in this role since regime transformation.

Previous research in Hungary examined the transition from school to work with the aim of revealing major changes caused by regime transformation. It is equally important, however, to examine how changes in the educational system and the labor market that occurred after the regime transformation might have affected employment chances and risks for more recent generations. In this study we analyze how educational expansion at both secondary and tertiary levels, and the growing flexibilization of the Hungarian labor market, influenced the transition from school to work for individuals who left education after 1990. Further, we investigate whether or not the changes in the educational system and the labor market have affected differently the employment opportunities of school leavers with differing levels of qualification.

(p.190) In general, research on school-to-work transitions and early career mobility (as carried out on the basis of detailed educational and work histories), and research on intergenerational mobility (as carried out chiefly within a class-structural context), tend to move apart from each other, focusing on different substantive issues and using different kinds of analytical techniques. Apart from a few exceptions (e.g., Kogan and Unt 2005), studies of labor market entry do not deal with the effects of social origin on chances of finding the first employment or on the quality of the first job. In the case of Hungary, both Blaskó and Róbert (2007) and Bukodi and Goldthorpe (2010) emphasize the growing importance of parental background for entry into the most rewarding employment positions. Thus, in this chapter, we aim to examine whether or not being well educated is sufficient to achieve high-quality jobs in the face of a rapidly changing labor market.

The Hungarian Context

The aim of this section is to describe the institutional background of the process of labor market entry in Hungary, with a focus on changes in the educational system. Since the early 1990s, the educational system has become even more segmented than it was under socialism, offering more and more programs. The main features of institutional change are (1) a decrease in the vocational specificity of secondary education that used to be a traditional aspect of the Hungarian school system; (2) destandardization of the curriculum at all levels of schooling via the abolishment of the old and uniform textbooks, replacing them with new ones, as well as giving freedom to teachers to choose their own ways of what and how to teach; (3) abolishment of the former strict limit, especially at the tertiary level, of how many students can be accepted by institutions; (4) institutional support for developing alternative educational programs of various lengths (four-, six-, and eight-year curricula) at the secondary level in order to encourage competition among schools; and (5) a strong emphasis on free choice for students regarding which school and educational program they intend to enroll in.1 All these changes to the educational system led to marked differences in students' performance, the curriculum, or in the general quality of teaching, not only between different types of institutions but also between schools of the same institutional type (Lannert, Mártonfi, and Vágó 2006).

(p.191) These changes in the educational system might have some unfavorable consequences for the career entry of more recent cohorts; for instance, the signaling function of qualifications might have deteriorated, leading to longer labor market entry or to a weakening education–occupation match. Conversely, one can argue that young people, in particular those with high levels of education, are the winners in the transition to capitalism. In fact, work experience accumulated by middle-aged or older workers devaluated a great deal after the regime transformation (Kertesi and Köllő 2002), and well-educated young workers gained a remarkable advantage over their experienced counterparts in terms of occupational level and earnings (see, for instance, Svejnar 1999; Kertesi and Köllő 2005; Campos and Joliffe 2007; OECD 2007b). There are two questions here: whether the later cohorts of highly educated school leavers could sustain their relative advantage in times of educational expansion and changing labor market conditions; and whether less-well-educated school leavers' employment opportunities have worsened. Before turning to these issues, let us give a more detailed picture of the institutional and structural context of labor market entry in the late 1990s and early 2000s.

Major Changes in the Educational System and Educational Expansion

Secondary education institutions differ in two respects in Hungary: first, whether they offer general or vocational education; second, whether or not they issue the upper secondary school leaving certificates (matriculation). Students who wish to progress to tertiary education generally choose a gymnasium at secondary level. There are currently two main types of gymnasium: the “traditional” gymnasium of four years and the “new” gymnasium of six or eight years. For those who attend the six-year or eight-year types, the former transition age of 14 from primary to secondary level has gone down to the age of 10 or 12. Though only about 10 percent of each cohort opt for these institutions, the best pupils are selected at this stage, chiefly because these six- or eight-grade gymnasia are considered by parents as the best preparation for tertiary, mainly university, education.

The vocational branch of secondary education has two main types of institution: secondary technical schools and basic vocational schools. Secondary technical schools are institutions offering four or five years of education to pupils aged 14 to 18–19. These institutions provide a mix of (p.192) general education and vocational training, with more emphasis on the vocational character. There are in fact clear differences in academic achievement levels of students attending secondary technical schools and gymnasia. According to the Program for International Student Assessment (PISA) 2003 survey, students in the latter type of education apparently perform better in reading than those enrolling in the former type of education (Bukodi and Róbert 2008). An important change that occurred at the upper secondary technical level is that more schools started offering a variety of postsecondary programs for those students who could not make it to tertiary level. This would suggest that post-secondary education might cover less able students who perform less well in upper secondary schools or those who could not progress to tertiary education for other reasons, such as lack of financial resources.

Basic vocational training schools are institutions offering one to two years of vocational education to pupils aged 14 to 17. The theoretical part is taught at school, and training is offered by either school workshops or employers. The major changes to basic vocational education took place in practical training. In contrast with the socialist era, when basic vocational schools were closely related to state firms, which provided pupils with practical training, this link between schools and employers has become very loose, and the majority of training is conducted in school-based forms. This would suggest that finding a first job might have become more difficult for recent graduates of basic vocational schools.

Although the Hungarian secondary educational system traditionally has been oriented toward vocational training rather than general education, since 1990 there has been a substantial shift away from basic vocational school programs toward upper general secondary education and secondary technical education, which now account for more than three-quarters of all secondary school students. The proportion of those having certificates from basic vocational schools decreased from about 35 percent in 1990 to around 20 percent in 2005 (Bukodi and Róbert 2008).

Turning to the tertiary level of education: As during the decades of socialism, during the period covered by this analysis, young people could enter the tertiary education via two ways. The more popular and more vocational- oriented option was college, which took three years. The other option was university, with a curriculum that lasted five to six years. In 2006, a two-cycle degree system was introduced as a part of the Bologna Process.

(p.193) Expansion at the tertiary level was even more rapid than at the secondary level. The proportion of eligible secondary school graduates who were admitted to tertiary education increased from one-third to three-quarters between 1990 and 2004 (Lannert 2005).2 Attendance increased somewhat faster in vocational-type colleges than in traditional universities, and the rate of expansion was especially high in nonregular (part-time, correspondence) forms of education (Hungarian Central Statistical Office 2004). Still, the share of the population with tertiary education is well below the Organisation for Economic Co-operation and Development (OECD) average, even for individuals aged 25–34: 20 percent versus 32 percent (OECD 2007a). As regards field of study,3 after the regime transformation, the sharp decline of manufacturing industries and the strong growth of the service sector have led to a shift from engineering and technical sciences to business, law, and social sciences. The proportion of students studying economics, social science, law, humanities, arts, and education is now higher in Hungary than the OECD average (OECD 2007a). Furthermore, earnings returns and occupational class returns to newly awarded degrees in economics/business and law increased enormously after regime transformation (Bukodi 2010).

In terms of recruitment to different forms of tertiary education, under socialism universities enrolled most of their students from gymnasia, primarily those with more advantaged social background, while students of colleges usually enrolled from secondary technical schools. This pattern of recruitment somewhat changed in the 1990s, inasmuch as the proportion of students at the tertiary level coming from secondary technical schools generally declined in both universities and colleges (Hungarian Central Statistical Office 2007). Furthermore, in some “fashionable” fields of studies, such as business studies, the distinction between universities and colleges in terms of student recruitment might have weakened. The colleges in these fields might also tend to recruit their students from those with more advantaged social backgrounds, partly because these fields are expected to provide the highest earnings returns after graduation, or partly because some of these colleges charge high tuition fees.

Despite educational expansion at both the secondary and tertiary levels, the less educated still represent a fairly large proportion of the young population. In 2007, the proportion of men aged 18–24 years without any qualification (i.e., with primary education only) was still 15 percent (p.194) (Hungarian Central Statistical Office 2008). After a decade of steadily declining percentages of youth who left school with very low educational attainment, this trend appears to have stopped in the late 1980s (Kertesi and Varga 2005). And for school leavers without any qualification, finding a job might become increasingly more difficult, chiefly due to the declining demand for unskilled workers.

Employment Regulations

It is well documented in academic literature that the strength of employment protection legislation (i.e., the extent of flexibility) influences school leavers' employment opportunities and their subsequent work histories: Overall, more labor market changes and higher rates of job mobility might reflect the weaker employment protection (Gangl 2003). For our present purposes, the most important question is whether there is any reason to expect young people with differing levels of educational qualifications to be affected differently by employment flexibility.

In general, deteriorating employment protection and weakening regulation were the main features of the Hungarian labor market at the beginning of the 1990s. Though subsequent years brought some improvement in collective bargaining and negotiations between employers and employees (Koltay and Neumann 2006), employment protection legislation still shows the lowest value for Hungary among post-socialist countries (OECD 2004). Moreover, in reality, the Hungarian labor market is even more flexible, because a large number of employers in the private sector are unwilling to follow even these weak employment regulations (Köllő and Nacsa 2005). The growing range of flexible forms of employment also increases employers' freedom to adjust their workforce to changing labor market demands. In the case of new entrants, employers can terminate even permanent job contracts easily and practically without any costs, at least in the early stage of employment. However, one study (Bukodi 2008) indicates that young people with differing educational qualifications have very different risks of working in flexible employment of various kinds. Compared to those with basic vocational training, entrants with tertiary degrees have a smaller risk and individuals with primary or academic secondary education (gymnasium) have a much higher risk of finding only fixed-term or occasional work when they enter the labor market.

(p.195) All this would suggest that the growing employment flexibility in Hungary might impact the less well educated—and generally those without any vocational training—the most, making the process of labor market entry and securing of stable employment even more difficult for them.

Hypotheses

  • (1) We expect that the importance of parental background for educational attainment would have been likely to increase, or at least not to decrease, for most recent cohorts of school leavers. Class inequalities in income have generally widened in Hungary (Kolosi and Róbert 2004; Atkinson 2008, Part III, Sec. I), which might open greater possibilities for parents with superior resources to use them to their children's educational advantage, and the new gymnasium can serve as the best means to express these possibilities. It is plausible to suppose that these institutions might have become strongly socially selective, dominated by children from advantaged social backgrounds, and relegating those of less advantaged parental backgrounds to “traditional” gymnasium or secondary education of other kinds. With regard to the tertiary level of education, we put forward two competing expectations. On the one hand, we might expect that the majority of students at the lower level (i.e., in colleges) still come from less advantaged backgrounds than students at universities. On the other hand, we might expect that, due to the growing similarities in recruitment policies, especially in some lucrative fields of studies, differences in social selectivity between the two levels of tertiary education are likely to weaken.

  • (2) Our second hypothesis is that inequalities in school-to-work transition have been strengthening in Hungary. Previous research shows that, for earlier cohorts of the socialist period and of the early transformational phase, education influenced the speed of labor market entry to a modest extent (Kogan and Unt 2005). In the second half of the 1990s, however, it generally took longer for students to find their first job, and differences in the process of career entry across levels of education had increased significantly (Bukodi 2008). For those with primary education, the probability of finding a job was very low—chiefly because the number of unskilled jobs had dropped dramatically since the early 1990s. Furthermore, the job search period became longer for those with academic secondary education (p.196) (Audas, Berde, and Dolton 2005). However, tertiary-educated individuals could find their first employment almost as quickly as their counterparts before regime transformation and in the early transformational phase, whether they were university or college graduates (Bukodi 2008).

    Our expectation is that career entry might become even longer for the primary educated of most recent cohorts, partly because there has been a further decline in the number of jobs available to them, and partly because they are the most evident victims of growing employment flexibilization. At the secondary level of education, we also expect the employment entry process to become generally longer for most-recent school leavers, even for the basic vocational and the secondary-technical educated, due to the weakening institutional link between vocational/technical secondary schools and employers.

    With regard to the tertiary educated, we again propose competing hypotheses. On the one hand, we would not expect a significant deterioration in their employment opportunities: Recent graduates can find a first job as quickly as their older counterparts. On the other hand, it is plausible to suppose that, because many good employment positions are now occupied by the graduates of the early 1990s, this might make it more difficult for most recent cohorts of the tertiary educated to enter the labor market, lengthening the transition time from education to work.

  • (3) As one of the main features of growing flexibilization of the labor market, we expect mobility rates out of the first job to be increasing, and differently so for young people with differing levels of education. Bukodi (2008) reported a significant rise in rates of occupational status mobility in the first five years of working life after the mid-1990s. Moreover, turbulence in the early career—especially downward status mobility and unemployment—appeared to be highest for the primary educated and for those with academic secondary education. We cannot see any reason for this process to have stopped after the turn of the millennium. Rather, we would expect that school leavers with primary and academic secondary education who failed to progress to a higher level of education tend to experience high rates of mobility out of first employment, partly because they lack skills, and partly because employers may regard them as members of a “reserve army,” which serves as a buffer against economic uncertainties, and offers employers the flexibility to reduce the workforce when necessary.

  • (p.197) (4) Kézdi (2008) demonstrates a gradual devaluation of vocational qualifications at the secondary level in terms of occupational earnings since the regime change. This means two things. First, the curriculum of vocational schools has become outdated, and these institutions are now less able to provide their students with up-to-date vocational skills. Second, having an academic type of education, with more generic knowledge, might indicate a greater degree of trainability of employees. It is then reasonable to expect significantly lower earnings returns to basic vocational qualifications, in particular for more recent school leavers, as compared to those with secondary, especially academic secondary, education.

    As regards the tertiary educated, there are already signs that expansion might lead to devaluation of even the most marketable certificates in the longer run. Since the early 2000s, the demand for personnel in occupations and sectors of the labor market that are most likely to be the primary choices of young university or college graduates, such as business, or managerial positions in finance and marketing, has increased at a lower rate than the number of graduates (Kertesi and Köllő 2007). This may lead to fewer appealing employment opportunities and lower earnings returns for most recent graduates in these fields of study. Because these fields of study are most often at college level, we expect a significant difference in earnings returns between college and university graduates—again, in particular for more recent cohorts.

  • (5) We expect school leavers of the most advantaged parental backgrounds to find a job more quickly than their counterparts with less advantaged backgrounds, and also to secure a more rewarding position in the labor market. In times of fierce competition for jobs, a good social background might gain more importance as a signal, as employers are likely to take into account a range of other attributes of potential employees than their formal qualifications, for which social origin can be regarded as a good proxy (such as social skills and personality characteristics). But, young people from privileged backgrounds can in fact use their parents' resources—not only financial resources but also their social network, useful connections that are available through the parents—to search selectively in the labor market, and to accept the most promising jobs only or to seek opportunities for further training, prolonging the search for the first significant job.

(p.198) Data and Variables

We use the data set of the General Survey of Youth, 2004. This survey is based on face-to-face interviews with a probability sample of the Hungarian population between ages 15 and 29 in 2004 (for details of the survey, see Bauer and Szabó 2004). A stratified, multistage area probability sample of the Hungarian population between ages 15 and 29 in 2004 was drawn. The sample drawing was based on data from the 2001 Census and on the Population Register of the Hungarian Ministry of Internal Affairs. The following four settlement types were used for sampling: (1) Budapest, county seat, town, village; (2) seven large regions in Hungary; (3) 150 statistical units; (4) 324 settlements. Individual samples were drawn based on the region, three age groups (15–19, 20–24, 25–29), and gender. The survey is random at each step of selection. In this way, two independent samples have been chosen with 4,000 cases each, and two different questionnaires were applied. The demographic questions used for the chapter are identical, so that the two samples can be merged.

The survey contains retrospective data on educational histories of respondents up to the time of interview covering the following information: type of school they attended, year they started and left each school, and whether or not they successfully completed that school. Because our main purpose is to investigate the process of transition from school to work for more recent cohorts only, we restrict the sample to those who left education after 1989. If the respondent left school, but after having a more than one-year gap in his/her educational career returned to formal education, the year when he/she first left education is recorded. We create a dummy variable distinguishing those who left education before and after 1999, and include this dummy in our statistical analyses.4 We do this because the proportion of people attending colleges, universities, and other forms of tertiary education reached an unprecedented high after 1999, and also because those who graduated after the millennium were to enter a highly flexible labor market with a growing range of insecure forms of employment. Thus, they can be regarded as having a significantly different experience of career entry from the previous cohorts.

We construct the variables of major interest to us in the following ways. Educational attainment is treated by coding data on the respondent's highest level of education when first leaving education to an eight-category (p.199)

Table 8.1 Distribution by levels of education when respondents first left school; and survivor functions of entry into first significant job for those who left school after 1999, Hungary

NOT YET IN FIRST SIGNIFICANT JOB

Distribution of educational degrees (%)

After 1 year (%)

After 2 years (%)

After 3 years (%)

Primary

17

93.3

88.7

83.2

Basic vocational

27

74.3

55.1

46.5

Secondary technical

19

86.2

71.2

57.9

Gymnasium of 4 years

17

92.4

83.7

80.4

Gymnasium of 6 or 8 years

2

89.4

85.9

72.7

Post-secondary

7

77.7

53.6

41.9

Lower tertiary

7

57.4

31.3

26.8

Higher tertiary

4

59.4

41.1

27.4

SOURCES: General Survey of Youth (2004); author calculations.

NOTE: N = 6071.

variable, as shown in Table 8.1.The table also shows the distribution of respondents by the eight levels of education we distinguish.

Another variable of main interest is the transition to first employment, which is the conditional probability that a person enters the first significant job in a particular year, assuming that she/he did not do so until that time. The first significant employment includes all jobs of at least twenty hours per week that last for at least three months. The other key dependent variable of the analyses that follow is the rate of mobility out of respondents' first jobs, distinguishing two categories of destination: mobility to another job and mobility out of employment (i.e., to unemployment or different types of inactivity). We also assess job quality at labor market entry. For this purpose, we analyze the net monthly labor earnings (in Hungarian forints, natural log) in respondents' current jobs as a dependent variable.5

In addition to these key variables, the subsequent analyses include the following covariates: whether the respondent accumulated any work experience during her/his study; parents' highest level of education (by definition, this is the father's education, but if the mother's education is higher, the variable takes the value of her education); parental social class as measured by the well-known Erikson-Goldthorpe-Portocarero (EGP) class schema (see, for example, Goldthorpe 2007);6 gender; and whether respondent is a Roma (ethnicity).

(p.200) Empirical Results

Social Selectivity of Educational Attainment

We begin our analyses by considering the association between individuals' social origins and their educational attainment, as measured by their highest level of education when they first left school. For these purposes, for the most recent cohort only, we take level of education as the dependent variable in a multinomial logistic regression analysis in which parental social class, parental education, ethnicity, and gender are the explanatory variables.

Parental social class has a systematic effect on the level of education (results not shown). It is not surprising that, the more the advantaged social class a young man or woman came from, the higher the educational level he or she attained when leaving school for the first time. What is perhaps more interesting is that, at both the secondary and tertiary levels, individuals with technical/vocational qualifications appear to have a less advantaged social class background than those with academic education. For instance, the probability of having some secondary technical qualifications when leaving education is around 40 percent for those of working-class background and only 15 percent for those of the salariat background. However, for young people who left school with academic secondary education (gymnasium), the reverse applies: The probability is highest for those of the salariat and lowest for those of working-class background. Moreover, when we repeated our analysis on the whole sample of respondents, and included in the model parental class/school-leaver cohort interaction terms, in the case of secondary technical education, the coefficient for the interaction for the unskilled-worker-class background with a dummy for those who left school after 1999 was significant (p 〈 0.05) and positive in its sign, indicating that people of the most recent cohorts with disadvantaged social-class background are much more likely than their counterparts in earlier cohorts to have some technical/vocational qualifications rather than academic education. As regards the tertiary level, the same pattern is apparent: Those with lower tertiary vocationaloriented qualifications are more likely than those with higher tertiary traditional-university degrees to come from a less advantaged class background. Likewise, the post-secondary educated are dominated by those of (p.201) routine non-manual, self-employed, and skilled-worker background. Another important point concerns young people with basic vocational education. The probability of leaving school with this type of qualification is highest for those with semiskilled and unskilled class background; moreover, our further analysis, which includes interactions between parental class and school-leaver cohorts, reveals that the negative social selection of the basic vocational educated has strengthened for the cohort that graduated after 1999.

As regards the effects of parental education, Table 8.2 displays a pattern similar to the effects of class origin. Young people with well-educated parents are more likely than those with less-well-educated parents to possess some academic type of education rather than technical/vocational qualifications, regardless of the level of education. Furthermore, when we reran our model on the whole sample including parental education/schoolleaver cohort interactions (not shown), for those with basic vocational, secondary technical, and post-secondary education, the interactions for the tertiary-educated parents with a dummy for those who left school after 1999 were significant (p 〈 0.05) and negative in their sign, indicating that, in most-recent school leaver cohorts, people of well-educated parents are less likely to have technical/vocational secondary qualifications rather than some academic education.

After controlling for parental social class and parental education, the effects of being Roma on level of education appear to be scarcely significant (not shown). The only exception is the primary educated, among whom Roma people are clearly overrepresented. As regards the gender differences, men tend to outnumber women in the case of primary, basic vocational education and post-secondary education. The reverse applies for the traditional academic education of four years, as well for lower tertiary education.

In sum, two important points emerge from the analyses of social selectivity of educational attainment. First, young people with vocational/ technical qualifications tend to have a less advantaged parental background than those with an academic education, regardless of the level of education. Second, in the case of basic vocational, secondary technical, and postsecondary education, the negative social selection has in fact strengthened for the most recent cohorts of school leavers. (p.202)

Table 8.2 Social selectivity of educational attainment (predicted probabilities), those who left school after 1999 only, Hungary

Primary (%)

Basic vocational (%)

Secondary technical (%)

Gymnasium of 4 years (%)

Gymnasium of 6 or 8 years (%)

Post-secondary (%)

Lower tertiary (%)

Higher tertiary (%)

Male

18

17

21

17

4

9

9

6

Female

15

10

20

24

5

6

13

7

Parents' highest education

    Primary

42

29

16

6

1

3

2

2

    Basic vocational

21

26

24

11

1

7

8

2

    Secondary

13

10

24

22

4

10

13

5

    Tertiary

10

2

14

33

9

5

14

14

SOURCES: General Survey of Youth (2004); author calculations.

NOTES: Predicted probabilities for individuals with specific social background characteristics (all other independent variables-that is, parental social class and ethnicity-are set to mean); derived from multinomial logistic regression.

(p.203) Transition to First Job

In this section, we describe the process of transition from education to the first job. The right part of Table 8.1 displays the Kaplan–Meier survival estimates for the time until the first job for people who left school after 1999. The table suggests that the pattern of transition into the first job varies considerably by educational levels. Three groups of school leavers can be distinguished. The first one includes people with primary or academic secondary education, who have difficulties making the transition into the labor market. The second group consists of individuals with vocational qualifications not leading to any further education and those who graduated from secondary technical schools or have some post-secondary qualifications. The school-to-work transition for this group is apparently quicker than for the members of the first group. Finally, the third group of school leavers, with the quickest entry to the labor market, is composed of tertiary-educated people.

In order to gain more insight into how education and other individual characteristics affect the timing and the probability of employment entry, a discrete-time event-history analysis is applied. The estimates are reported in Table 8.3. In accordance with the results in Table 8.1, a relatively quick transition to the first job is more likely for those with vocational/ technical education, especially at the secondary level. Those with primary and academic secondary education, especially with gymnasium of six or eight years, have the least chance of a rapid transition into the labor market, and those with tertiary education have the greatest chance of a rapid transition into the labor market. A significant cohort effect emerges, implying that the probability of a smooth employment entry is higher for people who left education prior to 2000, before the rate of educational expansion peaked and before the labor market became more flexible.

Individuals who accumulated some work experience during their studies tend to transit to jobs more quickly than those who did not do so. People of a less advantaged social background are more likely than those of a salariat background to enter the labor market before age 30, suggesting that families with higher incomes may be able to keep their children in education longer or may have financial and other kinds of resources, such as networks, to make available to their children to help them search for jobs more selectively. A negative coefficient for gender indicates that women (p.204)

Table 8.3 Time until first significant job, Hungary

TIME UNTIL FIRST SIGNIFICANT JOBa

MODEL 1

MODEL 2

MODEL 3

Coeff.

(z-stat.)

Coeff.

(z-stat.)

Coeff.

(z-stat.)

Duration of time for first job search

In the year of school leave

−1.07**

(−14.41)

−1.00**

(−12.08)

−0.57**

(−7.08)

    Up to 1 year

−1.65**

(−20.35)

−1.57**

(−17.71)

−1.14**

(−13.18)

    Up to 2 years

−1.69**

(−18.93)

−1.62**

(−16.78)

−1.19**

(−12.33)

    Up to 3 years

−1.88**

(−18.54)

−1.81**

(−16.84)

−1.38**

(−12.87)

    Up to 4 years

−2.09**

(−17.38)

−2.03**

(−16.36)

−1.60**

(−12.71)

    Up to 5 years

−2.01**

(−14.86)

−1.95**

(−14.10)

−1.52**

(−10.93)

Level of education (ref. academic secondary, 4 years)

    Primary

−0.77**

(−9.58)

−0.82**

(−8.31)

−0.88**

(−8.76)

    Basic vocational

0.84**

(12.62)

0.71**

(9.06)

0.66**

(8.02)

    Secondary technical

0.40**

(5.98)

0.45**

(5.40)

0.40**

(4.39)

    Academic secondary, 6 or 8 years

−0.34+

(−1.90)

−0.44

(−1.31)

−0.48

(−1.38)

    Post-secondary

0.71**

(7.87)

0.59**

(5.06)

0.45**

(3.65)

    Lower tertiary

1.91**

(17.95)

1.43**

(7.85)

1.34**

(6.83)

    Higher tertiary

1.87**

(13.54)

1.07**

(3.52)

0.93**

(2.82)

    Left school after 1999 (ref. before 1999)

−0.71**

(−15.40)

Education/left school after 1999 (ref. before 1999)

    Primary

−0.81**

(−6.85)

−0.83**

(−6.96)

    Basic vocational

−0.40**

(−4.52)

−0.40**

(−4.52)

    Secondary technical

−1.04**

(−11.02)

−1.05**

(−11.03)

    Academic secondary, 4 years

−0.90**

(−8.82)

−0.90**

(−8.77)

    Academic secondary, 6 or 8 years

−0.67+

(−1.71)

−0.66+

(−1.64)

    Post-secondary

−0.60**

(−4.17)

−0.59**

(−4.10)

    Lower tertiary

−0.16

(−0.82)

−0.17

(−0.85)

    Higher tertiary

0.18

(0.59)

0.19

(0.61)

    Work experience during study

1.13**

(12.78)

1.11**

(12.87)

1.11**

(12.84)

    Dropout from school

0.70**

(11.28)

0.70**

(11.21)

0.70**

(11.12)

Parental social class (ref. salariat)

    Routine non-manuals

0.31**

(4.61)

0.31**

(4.69)

    Self-employed

0.28**

(3.53)

0.28**

(3.58)

    Skilled workers

0.38**

(4.86)

0.38**

(4.80)

    Unskilled workers

0.43**

(6.55)

0.43**

(6.58)

Education/salariat background

    Primary

−0.18

(0.09)

    Basic vocational

−0.11

(0.68)

    Secondary technical

−0.41**

(3.35)

    Academic secondary, 4 years

−0.63**

(5.57)

    Academic secondary, 6 or 8 years

−0.63+

(1.92)

    Post-secondary

0.01

0.08

    Lower tertiary

−0.31+

1.81

    Higher tertiary

−0.28

1.13

Women

−0.18**

(−4.07)

−0.18**

(−4.02)

−0.17**

(−3.92)

Roma

−0.32**

(−4.34)

−0.33**

(−4.46)

−0.33**

(−4.54)

SOURCES: General Survey of Youth (2004); author calculations.

NOTES : N of person-years = 14,421; N of events = 3867; robust standard errors are applied.

(+) p 〈 .10

*p 〈 .05

(**) p 〈 .01

(a) Results from discrete-time event-history analysis.

(p.205) (p.206) tend to find their first employment less quickly than men. Likewise, the Roma transit to jobs far less rapidly than the non-Roma.

In Model 2, interactions of education and the cohort dummy are included to examine whether the effects of education are stable or changed between the 1990s and the early 2000s. As can be seen, the transition from school to work became longer at all levels of education but the tertiary level. The tertiary-educated of most-recent cohorts, regardless of whether they have university or college degrees, do not appear to have more difficulties in finding their first employment compared to their counterparts who graduated earlier. However, the huge negative coefficient for the interaction between having secondary technical qualifications with a dummy for those who left school after 1999 suggests that finding a job is especially difficult and takes a long time for recent school leavers with this type of education. Although the size of the coefficient is smaller for the basic vocational educated, it is negative in its sign, indicating that entering the labor market has been becoming more difficult for them as well—probably due to the weakening link between schools and employer organizations.

Finally, in Model 3, we incorporate a further set of interaction terms between education and social origins to reveal whether or not the negative effect of the salariat background is apparent at all levels of education. As the coefficients indicate, this effect is especially strong for the secondary educated, suggesting that individuals who left school after matriculation and who come from an advantaged social background can afford to seek opportunities for going back to school in order to attain a higher level of education without any need to take a job for financial reasons. The slightly significant negative coefficient for the interaction between having a lower tertiary degree and the salariat background also suggests that young people with this level of education, if they came from an advantaged social background, can afford to wait for the best job offers or can consider the possibility of earning other degrees or getting further training.

Transition Out of First Job

What roles do educational attainment and the characteristics of the process from school to work play in the transition rates out of the first job? Table 8.4 presents the estimates from competing risks discrete-time event-history analysis performed for predicting the probabilities of job-to-job and of job- to-non-employment mobility from the first employment. (p.207)

Table 8.4 Transition out of first job, Hungary

JOB TO JOBa

JOB TO NON-EMPLOYMENTa

MODEL 1

MODEL 2

MODEL 1

MODEL 2

Coeff.

(z-stat.)

Coeff.

(z-stat.)

Coeff.

(z-stat.)

Coeff.

(z-stat.)

Duration of time in first job

In the year of first job entry

−3.40**

−(17.65)

−3.44**

(−17.01)

−2.40**

(−18.09)

−2.42**

(−17.56)

    Up to 1 year

−2.07**

(−11.45)

−2.10**

(−10.95)

−1.28**

(−10.04)

−1.30**

(−9.84)

    Up to 2 years

−2.14**

(−11.49)

−2.18**

(−10.98)

−1.60**

(−11.82)

−1.61**

(−11.57)

    Up to 3 years

−2.54**

(−12.68)

−2.57**

(−12.28)

−2.10**

(−13.85)

−2.12**

(−13.66)

    Up to 4 years

−2.48**

(−11.54)

−2.51**

(−11.26)

−2.24**

(−13.50)

−2.26**

(−13.32)

    Up to 5 years

−2.72**

(−11.07)

−2.75**

(−10.81)

−2.32**

(−12.42)

−2.34**

(−12.32)

Education when first left school (ref. academic secondary)

    Primary

−0.31

(−1.55)

−0.33

(−1.50)

0.18

(1.47)

0.19

(1.46)

    Basic vocational

0.08

(0.52)

0.12

(0.78)

0.00

(0.05)

0.02

(0.15)

    Secondary technical

0.18

(1.17)

0.19

(1.11)

−0.17

(−1.55)

−0.13

(−1.05)

    Post-secondary

0.41

(1.44)

0.43*

(2.01)

−0.28+

(−1.90)

−0.25

(−1.43)

    Lower tertiary

0.22

(1.11)

0.49+

(1.89)

−0.94**

(−4.92)

−1.05**

(−3.55)

    Higher tertiary

−0.67*

(2.14)

−0.43

(0.71)

−0.93**

(−3.50)

−0.33

(−0.87)

First left school after 1999

0.28*

(2.44)

0.10

(1.18)

Education/left school after 1999

    Primary

0.74*

(2.00)

0.19

(0.78)

    Basic vocational

0.17

(0.78)

0.17

(1.11)

    Secondary technical

0.39+

(1.76)

−0.02

(−0.10)

    Academic secondary

0.47+

(1.86)

0.20

(0.99)

    Post-secondary

0.36

(1.21)

0.05

(0.18)

    Lower tertiary

−0.11

(−0.39)

0.30

(0.88)

    Higher tertiary

0.00

(0.01)

−0.78

(−1.59)

Working during study

0.21

(1.26)

0.21

(1.29)

0.22

(0.98)

0.22

(0.97)

Dropout from school

0.23

(1.57)

0.20

(1.33)

0.15

(1.52)

0.15

(1.47)

First job search duration

−0.03

(−0.94)

−0.03

(−0.83)

0.03+

(1.70)

0.03+

(1.65)

Parental social class (ref. salariat)

    Routine non-manuals

−0.08

(−0.54)

−0.08

(−0.57)

−0.01

(−0.05)

−0.01

(−0.10)

    Self-employed

0.07

(0.45)

0.07

(0.44)

0.01

(0.07)

0.01

(0.04)

    Skilled workers

0.05

(0.36)

0.05

(0.36)

0.07

(0.67)

0.07

(0.67)

    Unskilled workers

0.00

0.00

0.00

(0.03)

0.19+

(1.66)

0.19+

(1.65)

Women

−0.11

(−1.31)

−0.12

(−1.36)

0.09

(1.50)

0.09

(1.54)

Roma

−0.09

(−0.53)

−0.08

(−0.52)

0.32**

(3.30)

0.32**

(3.25)

SOURCES: General Survey of Youth (2004); author calculations.

NOTES : N of person-years = 11,156; N of events = 2339; robust standard errors are used.

(+) p 〈 .10

(*) p 〈 .05

(**) p 〈 .01

(a) Results from competing risks discrete-time event-history analysis.

(p.208)

(p.209) As compared to those with academic secondary education, individuals with higher education, and especially with college or university degrees, are less likely to move to unemployment or other types of inactivity from their first jobs. Furthermore, the university educated experience the lowest rate of job-to-job mobility. This all suggests a high degree of stability of first employment for university degree holders.

As can be seen from the coefficient, the rate of job-to-job mobility is higher for those who left education after 1999 than for those who graduated earlier. This implies that, after the stabilization of mobility rates in the mid-1990s, the increasing flexibilization of the Hungarian labor market has led to higher job shift rates—at least for young people. However, the higher rates of job-to-job mobility are not apparent at all levels of education. As the coefficients for interactions between education and a dummy for those who left school after 1999 suggest (Model 2), the mobility rates have increased for the primary educated and for young people with academic or secondary technical education, in other words, the ones with matriculation, only. The implication then is that for school leavers with minimum and also with secondary education, finding a job not only takes longer, but also, even if they managed to find it, their first employment appears to be unstable.

Work experience during studies does not make an appreciable difference in mobility rates. As regards the effects of duration of search for the first job, the coefficient is marginally significant and positive for the rate of non-employment. This means that the more time elapsed between school completion and labor market entry, the higher the risk of losing the first job and becoming unemployed or inactive. Social origin does not appear to exert much effect on mobility rates out of first job. Similarly, after controlling for a number of covariates, there is no difference in mobility rates between women and men. However, Roma are more likely than the non-Roma to become unemployed or inactive.

Job Quality

When investigating job quality at the early stage of the employment career, we turn to respondents' net monthly earnings in their current jobs (measured in Hungarian forints) as a dependent variable in a standard linear regression analysis, and then examine the effects of different personal characteristics, with a focus on levels of education. In this exercise, we only consider individuals who left education after 1999.

(p.210) Before reporting the results of the multivariate exercise, we examine average (log) net monthly earnings for each level of education, and also the proportion of individuals being found in different occupational classes (Table 8.5). Two major groups of individuals can be distinguished: the tertiary educated and the less than tertiary educated. Within the latter group, the primary and the basic vocational educated tend to earn least. People with secondary education, on average, earn more than those with minimum or basic vocational qualifications, but the variance in their monthly earnings is also somewhat greater. The greater variance in earnings is reflected in occupational class distribution: around 66 percent of the secondary educated can be found among either the routine non-manual or skilled workers, but a non-negligible minority belongs to the class of unskilled workers, and the proportion of the self-employed is also the highest for them. Though school leavers with post-secondary qualifications do not tend to earn much more than those with academic secondary education, the variance of their earnings appears to be somewhat less pronounced. The tertiary educated, especially people with university education, earn most, though the variance in their earnings is also one of the greatest. The vast majority of the university educated can be found in the salariat class, but supposedly this class has become increasingly diverse in character and now includes jobs with different earnings potentials.

Table 8.6 shows the estimates for the (log) net monthly earnings, and includes a number of explanatory variables. The educational qualifications have the expected effects. As compared to those who left school with academic secondary education, individuals with primary and basic vocational education have significantly lower wages and individuals with tertiary education have significantly higher earnings. Within tertiary education, however, a pronounced difference appears to emerge: university graduates apparently earn more than college graduates do. At intermediate levels—between those with secondary academic and technical as well as post- secondary education—we scarcely find any differences in earnings. It is worth investing in training, as indicated by the slightly significant positive coefficient for a dummy of whether or not the respondent attained a higher level of education since first leaving school.

Parental social class is positively related to wages. This means that individuals with less advantaged class backgrounds, especially with working-class (p.211)

Table 8.5 Average log net monthly earnings in respondents' current jobs and occupational class distribution by education, only those who left school after 1999, Hungary

LOG NET MONTHLY EARNINGS IN HUNGARIAN FORINT

OCCUPATIONAL CLASS (%)

Average

(Standard deviation)

Salariat

Routine non-manuals

Self-employed

Skilled workers

Unskilled workers

Primary

11.03

(0.28)

3

31

66

Basic vocational

11.05

(0.29)

5

3

68

24

Secondary technical

11.10

(0.40)

3

31

7

32

26

Academic secondary

11.12

(0.41)

10

42

9

24

15

Post-secondary

11.15

(0.30)

5

26

5

52

12

Lower tertiary

11.39

(0.39)

73

14

4

7

2

Higher tertiary

11.51

(0.41)

94

5

All

11.12

(0.34)

15

19

6

38

21

SOURCES: General Survey of Youth (2004); author calculations.

(p.212)

Table 8.6 Determinants of log net monthly earnings in respondents' current jobs, only those who left school after 1999, Hungary

MODEL 1a

MODEL 2a

Coeff.

(t-stat.)

Coeef.

(-sat.)

Level of education (ref. academic secondary)

    Primary

−0.10*

(−2.15)

−0.12*

(−2.60)

    Basic vocational

−0.07*

(−2.38)

−0.10*

(−2.85)

    Secondary technical

−0.02

(−0.48)

−0.03

(−0.68)

    Post-secondary

−0.01

(−0.19)

−0.01

(−0.19)

    Lower tertiary

0.31**

(6.47)

0.31**

(6.48)

    Higher tertiary

0.48**

(7.60)

0.48**

(7.60)

Higher level of education since first left school

0.18+

(1.73)

0.19+

(1.76)

Parental social class (ref. salariat)

    Routine non-manuals

−0.04

(−1.07)

    Self-employed

−0.03

(−0.76)

    Skilled workers

−0.08*

(−2.05)

    Unskilled workers

−0.09*

(−2.30)

Education/salariat background

    Primary

0.27*

(2.02)

    Basic vocational

0.02

(0.13)

    Secondary technical

0.19*

(2.03)

    Academic secondary

0.10

(1.39)

    Post-secondary

0.03

(0.24)

    Lower tertiary

−0.03

(−0.47)

    Higher tertiary

−0.06

(−0.83)

Women

−0.17**

(−6.84)

−0.17**

(6.88)

Roma

0.05

(1.03)

0.05

(1.01)

Constant

11.21**

(268.15)

11.15**

(286.00)

R2

0.24

0.24

SOURCES: General Survey of Youth (2004); author calculations.

NOTES : N = 896.

(+) p 〈 .10

(*) p 〈 .05

(**) p 〈 .01

(a) Results of the OLS regression analysis.

background, tend to have lower wages than individuals of salariat origin. This suggests that, although the levels of education are no doubt the major factor governing access to high-paying jobs, social origin also plays an important role in having higher earnings. Furthermore, for individuals with lower levels of education, especially primary and secondary technical qualifications, having a salariat background carries additional, significant rewards (Model 2). Thus, it seems that a salariat background provides additional resources for the less educated, namely, skills acquired through socialization or parent networks, which in part compensate for low educational attainment.

(p.213) Conclusions

The aim of this chapter is to investigate the school-to-work transition in Hungary for individuals who left school after the regime transformation, with a focus on the effects of education. First, we investigated the social selectivity of educational attainment when leaving school for the first time; we then analyzed the transition to the first job, and then analyzed the mobility rates out of first employment for those who succeeded in entering the labor market. Finally, we investigated the quality of job in terms of occupational earnings at the early stage of the employment career.

As expected, we found strong, and in some respects strengthening, associations between social origins and educational attainment. Our analyses indicate that, at the secondary level of education, parental background tends to play a greater role for most-recent school leaver cohorts than for earlier ones. Young people with more advantaged backgrounds are now more likely than their counterparts with less advantaged backgrounds to progress to academic education after completing primary school. In other words, the basic vocational and the secondary technical educated have become more and more negatively selected in terms of social origins. This is not surprising, as market mechanisms came to play a greater role in the economy after regime transformation: Income inequalities increased, and greater possibilities emerged for these inequalities to be reflected in the education of recent generations. In addition, greater possibilities for the expression of parental inequalities in children's education could arise through the development of secondary schools of both a more academically and socially selective kind, such as new types of gymnasia.

The results also show that people of most-recent cohorts face increasing difficulties with labor market entry, and educational attainment appears to play an ever greater role in finding the first job. In accordance with results of previous research, we found the longest career entry for the primary and the academic secondary educated. But, as our analysis reveals, school leavers with secondary technical qualifications also face a growing hindrance to entering the labor market. Moreover, employment opportunities for the basic vocational educated also appear to be worsening, although even the most recent cohorts of them find their first jobs relatively quickly. The only group of school leavers whose chances of finding the first employment has not worsened are those with tertiary education.

(p.214) In line with our third hypothesis, job-to-job mobility from first employment has been increasing, but at different rates for people with differing levels of education. First, our analysis indicates a strong stability of first employment for young people with university degrees. Second, the rates of job-to-job mobility appear to be significantly increasing for the primary educated but also for the secondary educated of both academic and technical types, suggesting that, for these groups of most-recent school leavers, it not only takes longer to enter the labor market, but also their entry positions are quite unstable.

Similar to a large number of previous studies, we find that the most important determinant of job quality at an early stage of the career is level of education. Young people with primary education appear to earn least and those with degrees appear to earn most. However, between the two levels of tertiary education, a visible difference in earnings returns emerges: university graduates of the most recent cohort appear to earn more than college graduates. This suggests that, with the relative devaluation of degrees in certain fields of study which can in most cases be obtained at the college level (e.g., business studies), college graduates' earnings returns would appear to be declining as compared to those of university graduates. Our results also show that, at intermediate educational levels, there are no substantial differences in occupational earnings. However, the basic vocational educated appear to earn significantly less than the secondary educated, indicating a devaluation of vocational qualifications for recent cohorts of school leavers—in line with Kézdi's (2008) conclusions.

The last hypothesis we proposed was that parental background would have a strong impact on individuals' career entries, even after controlling for education. Our analyses supported this prediction. School leavers of the most advantaged background appear to search longer for their first jobs, especially if they have a secondary degree. This suggests that young people with gymnasium or secondary technical diplomas who could not progress to tertiary education immediately after their matriculation can afford to seek opportunities for preparing for their future post-secondary studies without the need of securing a job. Further, school leavers of the salariat background also benefit in terms of higher earnings. There seem to be an additional earnings premium for less-well-educated individuals, namely, those with primary and secondary technical education with salariat background.

(p.215) In sum, our study provides evidence for the strengthening effects of levels of education on school-to-work transition in Hungary. The results reported here clearly emphasize the disadvantages experienced by individuals with only the minimum level of education: They have diminished chances of finding a job, and even if they manage to do so, their first employment is very unstable and represents the lowest segment of the earnings hierarchy. Our results also show that the employment opportunities of most-recent cohorts of the tertiary educated have not deteriorated much, although there are signs of a widening difference in earnings returns between university and college graduates. The most significant changes occurred at the secondary level. Recent generations of school leavers with secondary technical qualifications are not only more likely to come from a less advantaged social background, but also tend to experience relatively long career entry. In other words, a growing unpredictability of the transitions from school to work becomes apparent for them. Although educational qualifications are of great importance in labor market entry, there is no indication that the importance of class origin would be weakening. Young people of a managerial and professional background can afford to search selectively in the labor market and accept more rewarding jobs.

Notes:

(1.) Not surprisingly, experts in the 1990s agreed that educational freedom is greater in Eastern Europe than in the United States (Glenn 1995; Heyneman 1997). Hungarian experts, for instance Kertesi and Kézdi (2004), also argue that freedom in school choice is particularly large in Hungary.

(2.) In fact, student enrollment in tertiary education doubled in Hungary between 1995 and 2005 (OECD 2007b).

(3.) Unfortunately, in this study, we are unable to investigate the effects of field of study on career entry.

(4.) We are aware of the fact that, due to the survey design, we are unable to disentangle cohort and age effects in an appropriate way. This means that members of our older cohort, who left education before 1999, may form a rather selective group, somewhat underrepresenting the tertiary educated (i.e., this cohort does not include individuals who obtained degrees after age 24). However, because until recently a large proportion of the tertiary educated tended to gain their degrees before age 25, we do not think that this feature of the survey design would be very problematic.

(5.) Unfortunately, the data set does not include any information on the features of respondents' first jobs. This is why we decided to approximate to job quality at career entry with the earnings in workers' current employment.

(6.) In this case, the same rule is applied as for parental education, i.e., for the first instance, parental social class is recorded as the father's class, but if the mother's class position ranks higher in the class hierarchy, the variable takes the value of her social class.