Modelling the transition from school and the demand for training in the United Kingdom

This paper analyses the choices made by school leavers and the demand for training in the youth labour market. Using a large cross-section database on all school;leavers in Lancashire in 1991, we model, using a multinomial legit, their first destination six months after the end of compulsory schooling. We model six choices/outcomes: non-vocational continuing education, vocational continuing education, youth training, employment with on-the-job training, employment with general-skills training, and unemployment. Our results show that the first destination from school is affected by a range of individual, school and local labour market variables. In addition to academic ability, we report three effects that are not well known: a young person is more likely to leave school the bigger the school, the lower its academic performance, and the lower his or her expected lifetime earnings. Our results might be interpreted as evidence of a segmented youth labour market. It is also inappropriate to model the decision to stay on in continuing education as a simple binary choice.