Social mobility in the time of Covid
Covid-19 has had a profound impact on the economic prospects of young people. This briefing note, which forms part of the Economy 2030 Inquiry, documents the unequal impact of economic shocks on the young and assesses what these mean for social mobility.
Labour market conditions at the onset of one’s career have persistent effects over the course of the life cycle. Those entering the labour market in recessions have lower earnings than similar cohorts graduating in more prosperous times, and those who lose their jobs early in their career face wage penalties that persist until middle-age.
This note documents how the adverse labour market shock caused by Covid-19 has disproportionately hit the young and, in many cases, hit those from the least-affluent backgrounds the most. These changes are compounded by declines in general psychiatric health among the young. In addition, school-age children and teens from the least affluent backgrounds are also more likely to have seen a parent lose employment since March 2020.
The findings highlight the need for policies that are targeted towards the young and particularly towards policies that encourage social mobility and prevent the strengthening of the already strong link between ones’ economic origin and destination.
- The under-25s have borne the brunt of the economic fallout from Covid-19. Of those employed just before the pandemic began, 16 per cent reported being out of work at the start of this year (January 2021).
- From April 2020 to March 2021, those aged 25 and under who grew up in the least-affluent households (the bottom quintile of the household income distribution) were over twice as likely to have transitioned out of work when compared with those growing up in the top 80 per cent. The percentage of under 25s from the least affluent backgrounds that report being financially secure has declined from 65 per cent to 54 per cent since the onset of the pandemic. This contrasts with an increase in financial security among those from more affluent backgrounds.
- Across a number of measurements of psychological distress, Covid-19 seems to have worsened outcomes for the young more than it has for older cohorts.
- Job losses among parents have fallen heavily on those with the least resources to begin with. 18 per cent of parents from the bottom quintile of the income distribution experienced job loss between April 2020 and March 2021. This is just under double the rate of loss among parents in the upper 80 per cent of the same distribution. This is likely to strengthen the link between family background and educational attainment in the coming years, thereby weakening social mobility.
For all research queries about this report, please contact Andrew Eyles. For press queries, please contact the Resolution Foundation press office.
Centre for Economic Performance, LSE