Youth Transition: The Influence of the Local Labour Market on Expectations

High levels of unemployment among youth have lead to a heightened focus on the transition from school to post-school activity. Despite a vast literature on youth transition only a few researchers have considered the role of the local labour market. This paper begins by reviewing the relevant education and economics literature. In this New Zealand study we explore the expectations of teenagers near the end of their schooling in two very different locations: Kawerau, a small 'company town’ in the Bay of Plenty experiencing high levels of inactivity, benefit dependency and migration, and Porirua City within Wellington, a high income metropolitan centre, with a robust, diversified local labour market. After controlling for sex, age, ethnicity and academic achievement we compare the expectations which senior secondary school students hold in the two locations in terms of their future education, employment and income. In each case statistically significant differences in student aspirations are identified between the two locations. Contrary to expectations from the education literature on rural youth it is not those students in the small mill town of Kawerau who exhibit the lower expectations - paradoxically their aspirations are noticeably more positive than their metropolitan counterparts. 'Reality checks’ against friends and siblings help detect inflated expectations but do not moderate the different results. The paradox is largely resolved by the economics literature which draws on the theory' of returns to investment in further education to show how local unemployment levels raise the probability youth will choose further schooling over searching for employment. It is this additional schooling which is associated with higher expectations.