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This paper identifies broad patterns, or pathways, in labour market and education activities associated with different life stages.

Key points:

  • This paper uses longitudinal information from the calendar in the Household, Income and Labour Dynamics in Australia (HILDA) Survey to track monthly education and labour market activities from 2000 to 2010 for about 6500 working age individuals. The techniques of optimal matching and cluster analysis (OMCA) are used to identify and group individuals with similar patterns of activities into 'pathways'.
  • Much of the wider literature considers transitions from one activity to another (such as study to employment, or employment to retirement). OMCA applied to calendar style data for other countries shows that there can be multiple transitions (such as reversals or repeated activities, like returning to the labour force or churning in and out of employment) and different pathways can arise with key life events (such as leaving education, family formation or retirement).
  • Seventeen pathways are identified. Although each pathway contains some variation between the sequences of activities, distinct patterns can be observed.
    • For youths aged 15–24 in 2001, five pathways are identified: three associated with increasing education levels and transitions to work; one associated with churning in and out of work; and one dominated by young women withdrawing from the labour force to raise children.
    • Activity sequences for young adults aged 25–39 are grouped into four pathways: two involving work (one with increasing education); and two involving prolonged periods outside the labour force associated with raising children (with one pathway showing subsequent return to work).
    • Mature adults aged 40–54 in 2001 follow one of four pathways: one dominated by work; two dominated by women spending time outside the labour force raising children (with one return to work pathway); and one pathway associated with early retirement.
    • For seniors aged 55–64, four pathways are identified: one dominated by work; and three associated with retirement or transitions to retirement.
  • Successful and unsuccessful outcomes in the labour market can be related to the pathways that individuals follow. The analysis in this paper can be a valuable input to identifying relationships between pathways and outcomes, and the individual characteristics that are associated with specific pathways. That analysis could then inform strategies to reduce the risk of unsuccessful labour market outcomes, such as prolonged unemployment.
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