Youth Labor Market Prospects in Times of Economic Recession in Brazil

• Author: Arnaldo Mont’Alvao,Carlos Costa Ribeiro
• Published date: 01 March 2020
• Date: 01 March 2020
• DOI: http://doi.org/10.1177/0002716219896329

896329ANN
THE ANNALS OF THE AMERICAN ACADEMYRECESSION AND YOUTH LABOR MARKET PROSPECTS IN BRAZIL
research-article2019
The article examines young people’s labor market pros-
pects in Brazil during the most recent economic reces-
sion (2014–2017). We draw on data from the Continuous
National Household Sample Survey (PNAD Continua),
between 2012 and 2017, to estimate both average labor
market indicators over time and proportional hazard
models of unemployment and underemployment. We
find that youths’ labor market prospects declined con-
siderably over the period, and, as in many countries
Youth Labor during economic downturns, young people were more
affected than adults. The analysis shows that gender,
Market
race, and education impact the hazards of unemploy-
ment and underemployment among young Brazilians.
Kaplan-Meier curves show that differences between
Prospects in white and African Brazilian youth, as well as between
college-educated youth and high school graduates (or
Times of
less), increased between 2016 and 2017, when eco-
nomic activity was at its worst level.
Economic
Keywords: youth; labor market; economic recession;
proportional hazard models; Brazil
Recession in
Brazil
A growing body of research, especially in
developed economies, has shown that
economic downturns tend to have a dispropor-
tional effect on youths’ ability to keep or find
a job, increasing their unemployment and
underemployment levels at higher rates than
By
those observed for adult workers (Bell and
ARNALDO MONT’ALVAO
Blanchflower 2011; International Labour
and
Organization [ILO] 2015; Mont’Alvao,
CARLOS COSTA RIBEIRO
Mortimer, and Johnson 2017). Little is known,
Arnaldo Mont’Alvao is assistant director of research in
the Office of Admissions at Iowa State University. His
research interests include educational inequalities,
young people’s labor market prospects, racial discrimi-
nation, and achievement orientations.
Carlos Costa Ribeiro is a professor of sociology at the
Institute of Social and Political Studies, Rio de Janeiro
State University. His main research interests are the
determinants of inequalities of opportunity and condi-
tions across the life course and generations.
Correspondence: arnaldo@iastate.edu
DOI: 10.1177/0002716219896329
38
ANNALS, AAPSS, 688, March 2020

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RECESSION AND YOUTH LABOR MARKET PROSPECTS IN BRAZIL
39
however, about how young people fare in the labor market in developing
economies and how economic downturns affect their work trajectories
(Mont’Alvao and Johnson 2016). In this article, we examine how young people
in Brazil, one of the largest developing countries, have navigated the labor
market over the last few years, paying special attention to the effects of the
most recent economic recession between 2014 and 2017.
The Brazilian labor market experienced major improvements during the first
few years of the twenty-first century: consistent gross domestic product (GDP)
growth, declining levels of unemployment and informality, along with rising
wages, especially for the unskilled workers, leading to a decline in overall inequal-
ity (Kerstenetzky and Machado 2016; Firpo and Pieri 2018). For young workers,
between 2001 and 2012, unemployment levels declined from 14.4 percent to 10.6
percent, and underemployment levels declined from 55.5 percent to 39.9 percent,
according to data from the National Household Sample Survey (Pesquisa Nacional
por Amostra Domiciliar or PNAD).1 While these improvements created more
favorable conditions for young people to transition to the labor market, including
for those without advanced degrees, youth unemployment rates were 15 percent
in 2012, compared to 6 percent for the whole labor force.
Since the onset of the recession, the GDP contracted approximately 8 percent;
and overall unemployment rates jumped from 7 percent to historically high levels
of 14 percent in 2017 (Firpo and Pieri 2018), affecting approximately 14 million
workers. While this increasing precariousness in the labor market affected work-
ers of all ages, little attention has been paid to young people’s labor market tra-
jectories during this recessionary period. In this article, we attempt to fill this gap
by examining trends in labor market prospects for young people in Brazil during
the most recent recession. Keeping in mind that labor market trajectories are
defined by the interaction between individual characteristics and the local labor
market structure (Sorensen 1974), the next two sections of this article discuss,
respectively, how recessionary labor market conditions, and individual character-
istics, such as skills and demographics, have influenced youths’ labor market
outcomes. We then discuss the longitudinal structure of our data and how they
can contribute to a better understanding of labor market trajectories during eco-
nomic recessions.
The Impact of Recessions on Young People’s Labor
Market Outcomes
While economic recessions may affect other important indicators of the transi-
tion to adulthood, such as living arrangements, access to higher education, and
family formation (Crosnoe 2014; Mont’Alvao, Mortimer, and Johnson 2017),
most research on the consequences of economic downturns for young people has
focused on labor market outcomes.
Recessions affect labor market prospects and outcomes for all workers, but
young people are usually the hardest hit. Young workers are more vulnerable

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THE ANNALS OF THE AMERICAN ACADEMY
because they are still building their human capital and skills set and are more
likely to hold temporary jobs in vulnerable industries. Studies have shown that,
on average, their unemployment rates are three times higher than the rates for
adult workers (ILO 2015), and the disproportional effect of economic downturns
tends to widen this gap, leading to higher levels of unemployment, underemploy-
ment, informality, and idleness (or NEET; not in education, employment, or
training) for them (Bell and Blanchflower 2011).
These negative effects of recessions on young people’s socioeconomic out-
comes may last even longer than the duration of the recession itself. By increas-
ing their unemployment and underemployment spells, recessions hinder the
acquisition of work experience and, consequently, the formation of human capi-
tal, which, in turn, have long-term consequences on employment patterns and
earnings (Scarpetta, Sonnet, and Manfredi 2010). Studies in the United States,
Japan, and Canada (Genda, Kondo, and Ohta 2010; Oreopoulos, von Wachter,
and Heisz 2012), for example, found that youths who either graduated or entered
the labor market during recessions had higher unemployment rates and lower
wages 10 years later.
While recessions affect youth in all countries, differences in institutional
arrangements may moderate their effects. The most important institutional
arrangement that can moderate the effect of recessions on youth employment
prospects is the link between the educational system and the labor market. In
countries where the vocational component of education is stronger, such as in
Germany, Austria, and the Netherlands, these structured links between the edu-
cational system and the labor market tend to buffer the negative effects of reces-
sion and lead to better employment prospects than in countries where these links
are weak (Christopoulou and Ryan 2009; Green and Pensiero 2017).
Brazilian youth usually face a rough transition between school and the world
of work, especially due to the lack of institutionalized bridges between the edu-
cational system and the labor market. Their ability to find and secure jobs is
limited, leading to higher rates of unemployment and underemployment (infor-
mality) than for adult workers (Gonzalez 2009; Corseuil et al. 2014).
Inequalities in Young People’s Outcomes in
the Brazilian Labor Market
The informal sector has occupied a substantial proportion of the Brazilian and
Latin American labor forces since at least the 1960s (see Portes and Schauffler
[1993] for a discussion of competing theories on the emergence of informality in
the region), and the careers of many young workers are permanently linked to
this sector. Inequalities in educational pathways are important determinants of
these trajectories. Cardoso (2016) points out that dropping out of school is a com-
mon characteristic of many informal self-employed workers in Brazil and that
their careers can be summarized in a series of standardized steps: from school
dropout to the first precarious job, then to adjustment of occupational

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RECESSION AND YOUTH LABOR MARKET PROSPECTS IN BRAZIL
41
expectations, then to more precarious jobs, to self-employed. In turn, longer
spells of underemployment and unemployment, especially for unskilled youths,
have led to scarring effects in future wages (Cruces, Ham, and Viollaz 2012) and
hindered their labor market trajectories in the long term (Corseuil, Franca, and
Poloponsky 2016).
In general, unemployment, informality, and participation in the NEET group
(“not in education, employment, or training”) have been consistently higher for
African Brazilians, women, and low-skilled youth (Matijascic and Silva 2016;
Courseuil and Franca 2016). These inequalities have persisted, even though con-
siderable improvements...