The effects of level of education on mobility between employment and unemployment in the Netherlands

It is a known fact that less well-educated people have higher unemployment rates than better educated people. A possible explanation of this finding is job competition: employers prefer higher over lower educated workers for jobs that were previously occupied by lower-educated employees. As a consequence, the lowest educated become unemployed. In this article we investigate the relationship between education and unemployment in a dynamic way. The question is to what extent unemployment entry and exit rates vary with educational level. In order to answer this question we used Dutch panel data with information on the shifts in labour-market position of more than 10,000 respondents in the period 1980-94. Our first finding shows that the least well-educated employees have a higher risk of becoming unemployed than better educated workers. This effect of education differs by current aggregate unemployment rate and sex. Secondly, we conclude that unemployed individuals with qualifications have higher probabilities of regaining employment than the unemployed without qualifications. This effect varies by current aggregate unemployment rate, sex, and unemployment duration.