Labour Market Integration and Institutions: An Anglo-german Comparison

Abstract

This article compares processes of labour market entry and early career stages in Britain and West Germany. It starts by looking at the characteristics of the respective institutional structures in which human capital is formed and allocated. The two national systems of formal institutions can be regarded as generating particular modes of coordination between education and the labour market, that is, the labour market integration of young people follows different rules in the two countries. A frame of reference is provided by a general model that distinguishes between a horizontal, a vertical and a temporal dimension of the process of integration into the labour market. These dimensions are further pursued in empirical terms: here, the major aims of the article are to assess the effects of formal qualifications on the quality of first jobs and to analyse the multi-dimensional stability of entry positions in early careers. In Britain, coordination is, to a larger extent, achieved by criteria of timing, in addition to the hierarchical grading of qualifications; in Germany the latter, as well as substantive occupational skills, play a major role. There have also been important historical changes in these dimensions, especially in the UK.