Not by education alone: How young adults' employment status is determined by employment environments and family backgrounds

This paper quantitatively investigates the connections between the growing number of young adults in Japan who are out of the workforce-not in school, working, or seeking work-and their employment environments and family backgrounds by drawing upon six years of data from sampling studies that were conducted from 2000 to 2006. A multinomial probit model is used to generate estimates of the possible impacts of changes in local job markets and varying family characteristics on the likelihood of young adults being unemployed (not working but seeking work) or out of the workforce altogether. The paper presents the most detailed testing to date of hypotheses concerning the factors that lead young adults to leave the labor force. I find that apart from the respondents' educational backgrounds, their parents' employment status when the respondents were adolescents and past household income are significant determinants of young adults' employment outcomes. Leaving the workforce is particularly correlated with previously having a high standard of living and not attaining the same level of education as one's same sex parent.