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Working paper

The 2008 Global Financial Crisis and the end of the mining boom marked a downturn in the Australian labour market. While past downturns were marked by high unemployment, the unemployment rate recovered quickly and remained low until the COVID-19 crisis in 2020.

Instead, the weak labour market post-2008 was reflected in slow wage rate growth and in job seekers finding part-time work or work in less attractive occupations.

These two trends were particularly noticeable for people aged 15-34 (young people). Workers aged 20-34 experienced nearly zero growth in real wage rates from 2008 to 2018, and workers aged 15-24 experienced a large decline in full-time work and an increase in part-time work.

This paper investigates labour market scarring that might have occurred over the period 2008 to 2018 — specifically whether young people entering the labour market during and following the GFC had a harder transition into employment than those entering earlier, and whether that experience could have longer term impacts on the labour market outcomes for this cohort.

The authors show that from 2008 to 2018, young people had more difficulty getting jobs in the occupations they aspired to. And if they started in a less attractive occupation, it was even harder than before 2008 to climb the occupation ladder. This suggests that poor initial opportunities could have serious long-term consequences.

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