Labor market exclusion of persons missing an upper secondary degree: does it pay off for the state to fill the gap?

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Thesis

Reference

Labor market exclusion of persons missing an upper secondary degree: does it pay off for the state to fill the gap?

FRITSCHI, Tobias

Abstract

The analysis of longitudinal register data from the social security system shows the great importance of a diploma on upper secondary level as a resilience factor against labor market exclusion. The potential contribution of case management in vocational education and training CM VET towards increasing the upper secondary degree completion rate is estimated to be 2.5%. Around 5% of the population complete a professional degree for adults when they are over the age of 30. The fiscal cost-benefit ratio of such a degree lies lower, at 1 to 1.2, than that of CM VET, at 1 to 2.0. This confirms the efficiency of earlier investments in education, but it also shows that investments in the vocational education of adults still pay off for the State.

FRITSCHI, Tobias. Labor market exclusion of persons missing an upper secondary degree: does it pay off for the state to fill the gap? . Thèse de doctorat : Univ. Genève, 2018, no. SdS 92

URN : urn:nbn:ch:unige-1072231

DOI : 10.13097/archive-ouverte/unige:107223

Available at:

http://archive-ouverte.unige.ch/unige:107223

Disclaimer: layout of this document may differ from the published version.

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Labor market exclusion of persons missing an upper secondary degree: Does it pay off for the state to fill

the gap?

Tobias Fritschi

Codirection de thèse:

Prof. Yves Flückiger et

Prof. Ben Jann

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secondary degree: Does it pay off for the state to fill the gap?

THÈSE

présentée à la Faculté des sciences de la société de l’Université de Genève

par

Tobias Fritschi

sous la direction de

Prof. Yves Flückiger et Prof. Ben Jann

pour l’obtention du grade de

Docteur ès sciences de la société mention socioéconomie

Membres du jury de thèse:

Prof. Dr. Michel Oris, University of Geneva (President) Prof. Dr. Yves Flückiger, University of Geneva

Prof. Dr. Ben Jann, University of Berne

Prof. Dr. José Ramirez, Haute école de gestion de Genève Thèse no 92

Genève, 13 Mai 2018

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TACUTTÊ DÊ5 SCIENCË5 DE tA SOCIÉTÉ

Bêrnafd DEBARBIEUX.

Doyen

IMPRIMATUR

Je

soussigiré, Professeur Bernard DEBARBIEUX, Doyen

de la

Faculté

des

Sciences

de

^la Société, confirme que

Monsieur Tobias

FRITSCHI a obtenu l'imprimatur pour s.î thèse N"92 soutenue le 31

mai 2018.ll

obtient le grade de docteur ès Sciences

de

la Société, mention

socioécononrie.

Prof. Bernard

DEBARBIEUX Doyen

Genève, le 5

juillet 2018lja

'Un¡ Mail - 40 bd du Pont-d'Arve - CH:l211Genève 4 T,é1. 022 379 81 ¹1 - http://www. unioe.ch/sciences-societe/

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Résumé

Se trouver exclut du marché du travail constitue un risque majeur dans toute société fondée sur la division du travail. En même temps, ce risque d’exclusion est logiquement supporté de manière inégalitaire en fonction de la structure sociale. Une évaluation des données administratives de la sécurité sociale sur une période de cinq ans montre que le statut sur le marché du travail des personnes qui ont touché une première fois des prestations sociales se stabilise largement au bout de trois ans. Si la majeure partie d’entre elles est à nouveau entièrement salariée (61,0 %), une bonne partie se trouve intégrée en marge du marché du travail et ne perçoit ainsi de leur activité lucrative qu’un revenu annuel inférieur à la limite individuelle du minimum d’existence (26,4 %). Une part non négligeable (9,5%) s’est retirée du marché du travail sans percevoir aucune prestation de sécurité sociale. Les circonstances précises qui ont présidé à ces cas sont inconnues, mais c’est souvent le conjoint qui subvient aux moyens de subsistance ou alors la personne concernée a quitté la Suisse. Les personnes les plus radicalement exclues du marché du travail sont des individus qui vivent de l’aide sociale (2,0%) ou d’une rente d’invalidité (1,2%) et qui ne sont plus à même de reprendre une activité lucrative.

Une analyse de régression logistique multinomiale des facteurs d’influence socio- culturels met en évidence des effets importants tout au long des critères de stratification verticaux, effets qui suggèrent une étroite corrélation entre statut socio-économique et risque d’exclusion. Les études attestent l’existence d’effets cumulatifs dans la mesure où les personnes dépourvues de diplôme de formation sont plus souvent concernées aussi bien par l’admission dans le système de sécurité sociale et la perception de prestations sociales que par l’exclusion du marché du travail à long terme. Cette interdépendance se vérifie en particulier pour ce qui est du recours à l’aide sociale. Le lien entre statut socio-économique et risque d’exclusion ne peut toutefois être constaté pour toutes les formes d’exclusion du marché du travail. Les effets sur la probabilité d’un retrait du marché du travail sans perception de prestations matérielles du système de sécurité sociale peuvent s’expliquer aussi bien par des critères liés à la personne que par des critères liés au parcours de vie. L’âge de 45 ans et plus, en particulier, peut être pointé comme l’un des facteurs de risque principaux, alors que le groupe d’âge jusqu’à 25 ans est exposé à un risque inférieur à la moyenne. Il s’agit là toutefois de considérer que la probabilité de devoir recourir une fois à des prestations sociales est beaucoup plus élevée pour les jeunes adultes et que cette probabilité baisse de manière significative à mesure que les personnes avancent dans l’âge d’excercer une activité lucrative.

Les analyses de parcours dans le système de sécurité sociale prouvent l’importance majeure d’un diplôme de formation post-obligatoire comme facteur de résilience dans des processus d’exclusion et comme condition de décharge du système de sécurité sociale. C’est pourquoi la présente thèse soumet à une analyse plus approfondie deux initiatives étatiques qui ont pour objectif de contribuer à augmenter le taux de certification du degré secondaire II (au minimum) en Suisse. A cet égard, la Conférence des directeurs cantonaux de l’instruction publique a déjà défini en 2006 une valeur cible de 95%. L’Office fédéral de la statistique (OFS) a calculé pour l’année 2015 un taux de réussite de

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91% parmi les jeunes de 25 ans ayant fréquenté au moins partiellement l’école obligatoire en Suisse. En tenant compte également des personnes qui sont arrivées en Suisse après l’école obligatoire, ce taux de réussite tombe alors autour de 88%. Ce constat prouve la nécessité impérative d’agir au niveau socio- politique, notamment aussi parce que si l’on se réfère à l’index de développement humain (HDI) les valeurs dans le domaine de la formation par rapport au revenu et à la santé sont plus basses en Suisse.

Durant les années 2008 à 2012, presque tous les cantons suisses ont introduit le Case Management Formation Professionnelle CMFP. Ce système a pour objectif de soutenir les adolescents et les jeunes adultes éprouvant des difficultés dans le passage de l’école obligatoire à une formation post-obligatoire. Diverses mesures coordonnées entre elles doivent ainsi amener le jeune à entreprendre une formation – le plus souvent professionnelle – et à la terminer.

En comparant l’évolution du taux de certification du degré secondaire II dans deux groupes de cantons dont l’un a introduit le CMFP rapidement et l’autre plus tard, on constate une nette différence. Les cantons qui ont introduit ce système déjà avant le printemps 2009 connaissent une progression du taux de certification auprès des jeunes de 25 à 29 ans de 3% entre 2010 et 2015. En revanche, cette progression n’est que de 2% environ dans les autres cantons. Une régression multivariée permet de confirmer l’influence significative de l’introduction précoce du CMFP sur l’évolution du taux de certification, même en tenant compte des différences cantonales économiques et structurelles. Par une analyse de scénarios, on estime à 2,5% la contribution potentielle du CMFP à l’augmentation du taux de certification du degré secondaire II en Suisse.

La population cible du CMFP a été définie en fonction de trois facteurs de risque susceptibles de favoriser une disposition pour une problématique multiple : immigration tardive, rupture de formation au degré secondaire II et absence de diplôme de formation post-obligatoire des parents. Comme le montre clairement le microrecensement formation de base et formation continue de 2011 (MRF2011), le facteur de risque le plus fréquent dans la tranche d’âge de 25 à 34 ans est l’« immigration tardive » (arrivée en Suisse après la moitié de la scolarité obligatoire, soit entre 10 et 24 ans) avec 19%. Le facteur de risque « parents sans formation post-obligatoire » se situe à 16,6%, un taux qui marque toutefois une forte baisse par rapport aux tranches d’âge plus élevées. Parmi les personnes de 25 à 34 ans, 8,9% ont vécu une rupture de formation. Dès qu’une personne est concernée par deux de ces trois facteurs, nous parlons d’une disposition pour une problématique multiple. Selon les estimations de l’Office fédéral de la formation professionnelle, quelque 8,8% des élèves par classe d’âge entrent dans la population cible du CMFP ; on peut reproduire cette proportion pour la classe d’âge des 25 à 34 ans par application des facteurs de risque décrits avec le MRF2011. Avec un taux de 54%, ces personnes présentent un risque nettement plus élevé d’absence de formation au degré secondaire II par rapport à la moyenne de 12,8% dans la tranche 25 à 64 ans.

Le bénéfice net que retire l’Etat du fait qu’un jeune obtienne un diplôme au degré secondaire II dans le cadre du CMFP représente un montant de 38’461 francs.

Ce montant correspond à la différence entre, d’une part, la somme des futures recettes fiscales et cotisations sociales plus élevées que versera l’individu

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concerné ainsi que les coûts épargnés sur le système de sécurité sociale (93’436 francs) et, d’autre part, les dépenses de l’Etat pour une formation professionnelle (54’975 francs). On estime que 28% des cas traités dans le cadre du CMFP atteignent une formation certifiée au degré secondaire II qui aurait été impossible sans cela. Si on compare les coûts moyens par cas de 5’500 francs avec la part correspondante du bénéfice net, il résulte une rapport coût-bénéfice de 1 pour 2 sur le plan fiscal. Pour l’Etat, le CMFP apparaît donc comme un investissement qui en vaut la peine. A condition toutefois de considérer que les coûts sont générés au niveau cantonal alors que la majeure partie des bénéfices revient au système de sécurité sociale au niveau fédéral: en vertu du principe de l’équivalence fiscale, un cofinancement du CMFP par les assurances sociales serait en conséquence justifié.

La nouvelle loi fédérale sur la formation professionnelle, entrée en vigueur en 2004, a renforcé l’importance du diplôme professionnel pour les adultes en Suisse. C’est ainsi la première fois que la procédure de validation des acquis de l’expérience (VAE) est introduite comme «autre procédure de qualification». Dans ce cadre, une personne peut, sans faire d’apprentissage, obtenir un certificat fédéral de capacité (CFC) uniquement sur la base d’attestations établies par elle- même ou par des tiers des expériences acquises sur le plan professionnel et moyennant, au besoin, un complément de formation. En 2012, déjà 4,9% des personnes âgées entre 30 et 64 ans en Suisse n’avaient obtenu un diplôme de degré secondaire II comme premier (et dernier) diplôme de formation qu’à l’âge de 30 ans ou plus tard. En dépit du nombre de participants et de diplômes en forte hausse dans la formation professionnelle initiale pour adulte, la procédure VAE reste le choix d’une minorité car elle nécessite dans de nombreuses branches une bonne maîtrise de la langue parlée et écrite, n’amène en soi que peu de nouvelles compétences et laisse souvent les apprenants livrés à eux-mêmes. Elle a ainsi représenté en 2015 10% des diplômes professionnels délivrés à des adultes ; et en tenant compte de l’admission directe à l’examen de diplôme – la deuxième filière de formation sans contrat d’apprentissage –, les procédures destinées aux adultes sont à l’origine de la moitié des diplômes professionnels délivrés à des adultes. Dans la mesure où la part des personnes sans formation de degré secondaire II a fortement baissé au sein des tranches d’âges plus jeunes (25-29 ans: 10,7%; 50-54 ans: 15,7%), il faut admettre que cette voie, en tout cas pour la formation initiale, perdra de son intérêt. Mais bon nombre des diplômes professionnels obtenus par des adultes constituent une deuxième formation.

On estime en Suisse à 336’000 environ le nombre potentiel des personnes disposant d’une expérience suffisante au niveau professionnel ou en matière de formation pour entreprendre un diplôme professionnel pour adulte. Ce chiffre correspond à un peu plus de la moitié des personnes de 25 ans ou plus sans formation en âge d’exercer une activité lucrative, étant entendu que les personnes de 55 ans et plus ne sont pas comptées dans ce potentiel, quelle que soit leur expérience. Le groupe de personnes sans formation de degré secondaire II avec potentiel pour un diplôme professionnel pour adulte a servi de groupe de référence pour déterminer la rentabilité de l’investissement lié à un tel diplôme.

Les personnes qui ont obtenu un diplôme professionnel à l’âge adulte gagne en moyenne 10% de plus que les personnes qui ont ce potentiel mais n’ont pas suivi

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cette voie. Cet écart est toutefois dû en partie aussi à d’autres facteurs tels que le sexe, l’origine étrangère ou la branche en question.

Le bilan fiscal coûts-bénéfices consiste à mettre en relation les coûts investis par les pouvoirs publics dans la formation professionnelle initiale avec les recettes fiscales sous forme de rentrées fiscales supplémentaires et de contributions ou d’allégements en faveur du système de sécurité sociale. En moyenne sur les trois filières de formation considérées (apprentissage raccourci, admission directe à l’examen de diplôme et validation des acquis de l’expérience), le rapport coûts- bénéfices au niveau fiscal d’un diplôme professionnel pour adulte est de 1 pour 1,2. Exprimé sous la forme de rendement fiscal de la formation, la rentabilité de cet investissement pour l’Etat est de 2,6%. Cette valeur est inférieure au rendement fiscal moyen de la formation au degré secondaire II, lequel se monte pour les hommes à 7,2% et pour les femmes à 3,2% (OCDE, année 2012). Cette différence s’explique d’une part par la période plus courte pendant laquelle les personnes peuvent profiter de leur niveau de formation plus élevé ; d’autre part, la probabilité que les personnes ayant obtenu un diplôme professionnel à l’âge adulte fassent plus tard des pas de carrière est aussi moindre. Il ressort des entretiens avec les personnes concernées qu’elles profitent aussi d’un plus grand prestige au niveau professionnel, peuvent acquérir des activités impliquant plus de responsabilité et jouissent d’une sécurité accrue en cas de changement d’emploi.

Les analyses de la thèse permettent de confirmer l’hypothèse de l’efficacité des investissements précoces dans l’éducation. Le retour sur investissement au niveau fiscal des diplômes professionnels acquis à l’âge adulte est moindre que pour des diplômes comparables acquis par des personnes avant l’âge de 25 ans.

Le CMFP, introduit pour favoriser ces derniers, présente également un rapport coûts-bénéfices fiscal plus intéressant que les formations professionnelles qui n’ont été entreprises qu’après l’âge de 25 ans. Nonobstant ce constat, ces investissements étatiques dans la formation s’avèrent quand même rentables.

Le relèvement du capital humain et la certification des compétences cognitives et non-cognitives offrent à la société une possibilité pour relever les futurs défis en lien avec le changement structurel qui se profile sur le marché du travail.

L’examen à long terme de la rentabilité des investissements dans l’éducation pour différents niveaux de formation, parcours de formation et groupes cible peut s’avérer utile pour superviser l’interrelation entre système éducatif et marché du travail. Les données de registres dans le domaine de la sécurité sociale et du système de formation sont à ce titre des sources d’informations importantes de plus en plus utilisées à des fins de recherche. Les analyses permettent de tirer des conclusions en termes de politique sociale et de politique de formation propres à optimiser les offres étatiques et leur financement.

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Remerciements

Je remercie

- ma famille pour m’avoir soutenu dans mon travail,

- Oliver Hümbelin, Pascale Zürcher, Luzius von Gunten et Sanna Frischknecht, sans qui les trois articles de ma thèse n’avaient pas été possible,

- Robert Fluder pour m’avoir encouragé pour cette sorte de travail dès que je le connais, et pour m’avoir donné la liberté de poursuivre mes intérêts dans la recherche

- Ben Jann pour les moments de travail les plus intenses, usants et précises,

- Thomas Meyer pour m’avoir donné l’idée de la rentabilité fiscale de la formation secondaire II en premier,

- Yves Flückiger pour m’avoir donné cette occasion exceptionnelle et pour ses commentaires indulgents,

- Michel Oris pour sa façon patiente, humoristique et tout à fait claire de communiquer,

- José Ramirez pour sa spontanéité et fraîcheur dans ses conseils.

- Matthias Kuert et Bruno Weber pour les discussions et le développement d’idées pertinentes pour la politique,

- Emanuel von Erlach pour les moments musicales entre les discussions infatigables sur la bonne méthode de mesurer le taux de certification du degré secondaire II,

- Dorian Kessler pour les avis méthodologiques,

- le monde de Berlin et du Wissenschaftszentrum Berlin pour m’avoir si bien accueilli,

- Martin Wild et Daniel Iseli pour le soutien dans la planification de mon sabbatique,

- Thomas Oesch pour le remplacement dans les cours,

- Bina Knöpfli, Stephanie Spahni et Yann Bochsler pour avoir voyagé avec moi,

- Delphine Fagot et Pauline Adamopoulos pour les diners après les doctoriales,

- au programme LIVES pour avoir donné ce cadre dans lequel j’ai pu développer la thèse et échanger des idées,

- Matthias Gehrig et Philipp Keller pour les pensées philosophiques sur la liberté et le bénéfice personnel et sur le plan économique,

- le bureau BASS pour tout ce que j’ai pu apprendre, en spécial Stefan Spycher pour sa confiance en moi,

- Bernhard Sollberger et Attila Güleryüz pour leur intérêt à mon travail, - la piscine Weyermannshaus et l’Aare pour être là.

Merci à tout le monde, j’ai passé un excellent temps avec vous. J’espère que les idées dans cette thèse nous réunissent encore et que nous pourrions poursuivre des intérêts communs aussi dans le futur.

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Chapitre 1. Introduction

Lacking an education has been established in social scientific discourse as well as in political debates as a central risk factor for negative social outcomes (OECD 2016a, 189ff). Insufficient education or training has also been shown to be a major factor for long-term unemployment in Switzerland (BFS 2015, Fluder et al. 2017).

Educational indicators are used to measure and compare the living standard in different countries, as, e.g., the average per capita number of years of education is used in the Human Development Index (HDI, Anand & Sen 1994). According to the capability approach, education, together with other factors, serves to enable people to lead a self-determined life in society (Sen 1999, Caritas 2014). In empirical applications of the capability approach in recent reports on poverty (Arndt et al. 2006, Kanton Aargau 2012) educational level is viewed as a conversion factor for opening opportunities in the labor market and societal life.

Heckman et al. (2017) look at non-market outcomes of education such as psychological health, prison terms, trust and voter participation, as well as independence from state support. They have thereby shown that the positive effects of education are most strongly pronounced at lower levels of education.

Educational attainment is roughly measured by three levels of education that build on one another and correspond to the International Standard Classification of Education (ISCED, UNESCO 2012). In Switzerland, lower secondary thereby corresponds to the completion of compulsory schooling (ISCED 2), upper secondary to apprenticeship and general post-obligatory degrees (ISCED 3)¹ and tertiary to university degrees as well as advanced professional training (ISCED 5).

A certificate is awarded with the completion of an educational degree that corresponds to a certain job profile in the labor market. The present work investigates an upper secondary degree as a resilience factor against exclusion from the labor market and poverty.

An (partial) exclusion from the labor market is regarded as including not only unemployment, but also an occupation with an income that doesn’t cover the basic costs of living or dependence on benefits from the social security system. The social security system encompasses mandatory and voluntarily-financed social security systems (BFS 2016), while we limit our inquiry to systems with a relation to the labor market. These are unemployment insurance (UI), invalidity insurance (II) and social assistance (SA). We define a categorical exclusion variable inspired by the capability approach (Sen 1999) for different states of exclusion from the labor market that differ by the degree of capability restriction.

Sample surveys are often less suitable for closer investigation into the different forms of exclusion from the labor market, as it is difficult to accurately map marginal population groups due to the number of cases and the inability to contact them. Panel surveys are even more strongly affected by both problematics than cross-sectional surveys. Since the study by Fluder et al. (2009), it is possible in the case of Switzerland to carry out longitudinal analyses for the aforementioned social security systems with linked register data. These have been additionally

1 The OECD further codifies a level ISCED 4 for second degrees on the upper secondary level that Switzerland does not codify.

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supplemented in several studies with the entries from individual old age and survivors insurance accounts (OASI), which contain information about periods of earned income (Fluder et al. 2017, Fritschi et al. 2013). The dissertation’s first article (chapter 2) uses this data to investigate the following research question, among others:

To what degree can differing processes of labor market exclusion be explained by classical dynamics of cumulative dis/advantages accruing from achieved societal position?

Societal position is here represented by a person’s educational attainment and income (DiPrete & Eirich, 2006). Other hypotheses used to explain labor market exclusion are ascribed characteristics (Tilly, 1999) or risks in the life course (Beck, 1992). The connections described between completion of an upper secondary degree and the potential states of exclusion from the labor market serve to define the problematic addressed in the two following articles of the dissertation. I thereby clarify the degree to which an upper secondary degree can prevent exclusion from the labor market and the associated costs to the social security system.

In recent years, public authorities have strategically employed social and educational policy to meet challenges such as the lack of skilled labor, structural (technological) changes in the labor market and integration of (long term) unemployed into the labor market. Of note, for instance, is the Skilled Workers Initiative launched by the federal council in 2011. Its goal was to make better use of the domestic skilled workforce’s potential, with four points of particular emphasis: qualification, 50+, compatibility of family and career and refugees. The Federal Social Insurance Office’s National Programme to prevent and combat poverty (2014 to 2018) included two areas of activity aimed at educational measures and labor market integration, respectively. One side deals with improving the equal opportunity and access to education for socially disadvantaged children, adolescents and adults, the other with social and occupational integration (EDI 2013). Lastly of note is the new law on continuing education and training as well as the pilot projects for continuing education grants (Schwerdt et al. 2011).

The second and third articles of my dissertation (chapters 3 and 4) investigate two political programmes supporting the completion of upper secondary degrees. Both programmes have been more strongly implemented over roughly the last 10 years, and thus provide sufficient data for an empirical impact assessment. Each targets a different age group. The Case Management in Vocational Education and Training (CM VET) is geared towards improving the transition from compulsory schooling to upper secondary education and accordingly addresses itself to adolescents and young adults between the ages of 14 and 25. Professional degrees for adults, on the other hand, address the completion of apprenticeships by adults 25 and older. My second research question in both articles is therefore:

Have case management in vocational education and training and professional degrees for adults been successful in increasing the rate of upper secondary educational attainment in Switzerland?

This question concerns the effectiveness of governmental action. As the introduction of CM VET was sequential in different cantons between 2008 and

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2012, temporal differences in the augmentation of cantonal upper secondary rates (after a few years have elapsed) can show evidence of the effectiveness of CM VET, as in a natural experiment. Cantonal data on the educational attainment of the population according to age group were first made available in January 2017 and extend back to the year 2010. The federal government pledged start-up funding from 2008 to 2015 to support the introduction of CM VET to ameliorate the transition between school and professional education in the cantons. The frequently multi-year support the program provides, however, entails that a period of time needs to elapse between the introduction of CM VET and degree completion of the participating adolescents and young adults. It will be a few more years before the full effect of CM VET in Switzerland comes to fruition, but partial effects are already evident in the data.

In 2015, Switzerland achieved an educational attainment rate among 25- to 29- year-olds of 88.4% (Federal Statistic Office FSO Structure Survey, see also chapter 3.5). This estimation includes all residents in Switzerland with a stay of more than 12 months. This means that migrants that have not attended obligatory school in Switzerland are also accounted for; this group shows a lower attainment rate on level ISCED 3 than persons who have attended obligatory school in Switzerland (Stutz et al. 2016). Looking only at persons who attended obligatory school in Switzerland, BFS (2018) reports an attainment rate for 25-year-olds of 90.9% for the year 2015. The aim stated in the year 2006 by the Swiss conference of cantonal ministers to reach an upper secondary attainment rate of 95% (EDK 2011) has thus not been reached yet. To get there, roughly 6.6% of adult residents in Switzerland above the age of 30 would still have to complete a first degree on the upper secondary level.

New government initiatives to improve employment opportunities therefore focus on adult professional qualification (SBFI 2014). In Switzerland, efforts to strengthen professional education for adults goes back to the law on professional education that went into effect in 2004, which offered adults more opportunities to reach a vocational degree by means of validation procedures. Still, it was only beginning in 2010 that the implementation of the corresponding article of regulation intensified, with the goal, among others, of fighting poverty (EDI 2013).

Other countries like France and Sweden had already, for example, implemented procedures for validating educational achievement earlier (Maurer et al. 2016, 127ff, Fritschi et al. 2012). In dealing with the integration of adult immigrants, new instruments for assessing labor market potential, easy-access language courses and pre-vocational training for refugees have been adopted in Switzerland (Schweizerische Eidgenossenschaft 2018). The development of adult vocational degree completion can be analyzed using the Swiss Labor Force Survey SLFS, which inquires about five completed degrees per person, of which the most recent one is also dated.

Public spending by social administrations in Switzerland and in Western countries more generally, is increasingly orienting itself towards the social investment strategy paradigm, as described by Olk (2008) and Bonvin & Dahmen (2016). This change had already begun in the 1990s through redefining the aims of public administrations based on evidence about their outcomes, and this has become a fundamental paradigm of today’s public management. Consequentially, a lot of enthusiasm has grown around public educational investments, as they are likely

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to have a large return for the state in the form of future tax income and public expenditure savings. Especially high rates of return on such social investments are expected from early investments, mainly in preschool programmes for disadvantaged children (Schweinhart 2004, Heckman 2006).

According to the theory of the «technology of skill formation» developed by Cunha et al. (2006, 710), the hypothesis «skills beget skills» (i.e. that skills acquired earlier increase the skills that can be acquired later) entails that early investments in human capital are more profitable than late investments. Pfeiffer & Reuss (2007), however, have shown that cognitive and non-cognitive skills conform to different patterns of growth and decline. Whereas the former already decline slightly from the age of 20 and strongly from the age of 60, non-cognitive skills (personal and social skills) continue to increase until nearly the age of 60. The sum of the two skill sets thus reaches its highest level at the age of 55. Programs that invest in adults’ non-cognitive skills are therefore certainly capable of efficiency.

Today’s labor market challenges and political objectives surrounding the completion rate of upper secondary degrees call into question the cost-benefit ratio not only for individuals (Sheldon 1992) and companies (Wolter & Schweri 2002), but also for the state (Weber 2003). Given the scarcity of public funds, the state must evaluate which investments can be expected to generate the largest returns, or, as the case may be, any positive returns at all. The third question I therefore examine is:

Which of the two investigated government investments in education seems the most viable in terms of its fiscal cost-benefit ratio?

This question concerns the efficiency of government action. In this regard, general economic literature on cost-benefit analysis (Prest & Turvey, 1965) as well as literature on the economics of education (Psacharopoulos & Woodhall, 1985) introduce two relevant distinctions:

- Direct effects measure a (non-)consumption of resources and indirect effects measure an extension or reduction of productivity²

- Intertemporal analysis matters, as the benefits from educational investments accrue later on in the life course of the individuals. This involves the application of discount rates.

Some authors emphasize the understanding of cost-benefit analysis as an analysis of resource redistribution (Brent 1996), which leads to the definition of stakeholder groups as a basic structure for any kind of social cost-benefit analysis.

The kind of cost-benefit analysis conducted to show fiscal returns can be described as fiscal cost-benefit analysis, as it compares costs incurred by the state to benefits for the state. A fiscal cost-benefit analysis is in this respect the part of a social cost-benefit analysis that is concerned with the state as a stakeholder. The fiscal balance of upper secondary degrees considers the saved government expenditures as well as increased revenue in the form of social security contributions and higher income taxes (OECD 2016b).

2 Additionally, intangible effects mean changes in non-monetizable aspects like feelings or quality of life, as is the case for some non-market effects (Heckman et al. 2017).

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This analysis may be differentiated for state levels. As shown for Germany in Fritschi & Oesch (2008) and Fritschi & Jann (2009), this raises the issue of adherence to the principle of fiscal equivalence, i.e. whether the government actor that benefits from a measure should also correspondingly contribute to its financing. In literature on the economics of education, a distinction of cost-benefit- analyses is usually made between social and private cost-benefit analysis (Hough 1993, Psacharopoulos 2004). De la Fuente & Jimeno (2008) examine private and fiscal returns on educational investments, while Weber (2003) distinguishes between private, fiscal and social returns to education. For a review of methodological variations in the measurement of returns on educational investments see section 5.3. According to Psacharopoulos (1987), returns to education are calculated as an internal discount factor, which equates the value of future benefits and the value of actual investments.

A first step in investigating the cost-benefit ratio of educational measures is to determine the effectiveness of the measures. We have gathered these results from responses to the second research question. In a second step, the costs and benefits of a (effective) measure must be determined. The costs are taken from cantonal statements on educational finances, insofar as they have been published (SKBF 2014), while specific statements on programme expenditures had to be obtained through conversations with experts. Questions about the windfall effect, i.e. effects that would have occurred even without the programme, have likewise been assessed by experts in order to verify the quantitative data analyses. The investigations in article 2 (chapter 3) therefore follow a mixed methods approach.

The analyses on the benefits of educational measures relied on OECD statements (2016a) as well as calculations using SLFS, especially the module on social security. A mixed method approach was also used in article 3 (chapter 4), where the gains in earnings from the upper secondary certificate that were estimated from representative population data are verified in interviews with 10 absolvents of adult vocational degrees. These interviews also provide information about the exact time and effort necessary to complete an adult upper secondary degree, data needed for the cost calculations that are lacking in the existing literature.

Overall, the first aim of this thesis is to identify the magnitude of the influence of upper secondary degrees on labor market outcomes involving benefits from the system of social security in Switzerland (chapter 2). In a second step, we investigate whether case management in vocational training for young adults, installed in the Swiss cantons after 2008, had an effect on the upper secondary attainment rate, and whether the corresponding public investments paid off for the state (chapter 3). In a third step, we calculate the same measures of effectiveness and efficiency for adult vocational training for those above the age of 25 (chapter 4). Finally, we discuss the results of labor market exclusion on persons lacking an upper secondary degree and the possibilities that the state has to prevent labor market exclusion by fostering vocational training among youths and adults (chapter 5). We compare the fiscal cost-benefit ratios to values for upper secondary degrees for Switzerland and OECD. The discussion could produce relevant information for policy makers on how to design, assign and finance educational investments in the future.

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Chapitre 2. Pathways into and out of the labor market after claiming social benefits – cumulative disadvantage or life course risk?

Oliver Hümbelin, Bern University of Applied Sciences, E-Mail:

[email protected]

Tobias Fritschi, Bern University of Applied Sciences, E-Mail:

[email protected] Abstract

On the basis of Swiss register data, we conduct a cohort analysis over four years to study paths individuals take back into or out of the labor market after claiming benefits. To gain insight into this dynamic from a perspective of social stratification and life course theory, we analyze marginal effects from multinomial logistic regression models. Our study reveals that even in a wealthy country like Switzerland not everyone is able to get back into the labor market and earn a self- sustaining income. Reintegration is strongly influenced by previously attained status, as measured by income and education. Controlling for income and education, some differences related to gender and citizenship remain. The strongest driver of pathways out of the labor market after claiming benefits, however, relates to life course characteristics.

Key words: labor market reintegration; social security; life course; stratification;

achieved status; ascribed status

2.1 Introduction

Many sociologists understand central risks in modern life like becoming poor or excluded from society as a part of the mechanisms of social stratification.

Classical sociologists emphasize the role of social classes and social background (Grusky, 2014; Wright, 2005), or they study disadvantage in terms of discrimination related to ascribed characteristics like race or gender (Tilly, 1999).

From a dynamic perspective, the situations of those facing deprivations might even get worse over time, as argued by the influential theory of cumulative disadvantage (DiPrete & Eirich, 2006), supporting the conclusion that having a low position in society is a rather persistent state, or at least hard to overcome.

Standing in opposition to this view is a strand of literature rooted in individualization theory (Beck, 1992) that highlights the importance of studying poverty as a life course phenomena. Within this framework critical events along the life course like losing a job or family dissolution play a crucial role in explaining the pathways into poverty (Vandecasteele, 2011). Sociologists in the 90s even assumed that the class model became obsolete as a result of societal and economic change (Beck, 1992; Leisering & Leibfried, 1999) and that the life course perspective should take its place as a leading theoretical framework for inequality and poverty research (Mayer, 1991). More recent work, however, indicates that classical stratification theory and life course analysis actually complement each other (Bäckman & Bergmark, 2011; Kauppinen et al., 2014;

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Pintelon, Cantillon, Bosch, & Whelan, 2013; Vandecasteele, 2010, 2011; Whelan

& Maître, 2008). Furthermore, several authors showed that welfare regimes play a crucial role by moderating to what degree the dynamics of social stratification unfold after a critical life event (Gangl, 2006; Kohler et al., 2012; Layte & Whelan, 2003; Vandecasteele, 2015; Whelan & Maître, 2008). This has opened a roadmap for empirical research to follow that understands poverty as an interplay of social stratification, life course events and welfare regimes.

One key element of welfare regimes are the social security schemes set up to financially protect citizens against key social risks of modern life. At the same time, claiming social benefits refers to a vulnerable episode with a critical event like losing a job. For some, receiving benefits marks only a brief episode before they quickly find new employment, but others fail to find a way back into the labor market and end up either in poverty or dependent on social benefits. As employment is not only a way to earn a living but also a source of identity and self-esteem, access the labor market can be seen as a crucial component of any analysis of inequality in modern societies (Kronauer, 2007). It can also be argued that not being able to reenter the labor market is a critical state posing an increased risk of exclusion from society. In line with the French sociologist Castel (2011), it can be further added that precarious employment likewise has the potential to lead to a dynamic of exclusion. Considering this, reintegration into the labor market must be looked at in detail.

The main purpose of this paper is to shed light on the paths that can be taken after claiming benefits and to investigate why some individuals manage to exit social benefits successfully while others do not. On the basis of these considerations we define 5 states that may occur after claiming benefits. They all refer to the 12 months of the 4th year after first benefit receipt:

0. Full reintegration in the labor market that allows an individual to earn a living

1. Reintegration on the “margins” of the labor market with an income below the poverty line

2. Retreat from the labor market without claiming benefits 3. Dependency on social assistance

4. Dependency on an invalidity pension

These five states are ranked according to their remoteness to labor market integration and form an ordinal outcome variable for an analysis of paths taken after claiming social benefits. Speaking with Sen (1999), poverty is defined as a lack of capabilities. If we constrain capabilities to freedom of self-fulfillment in the labor market and respect limitations of agency as well as material resources (Bonvin, 2017), the 5 states listed above show increasing limitations of capabilities: from no limitations (state 0), to material limitations (state 1), to constraints on labor market access (state 2), to dependency on welfare benefits and exposure to administrative constraints (state 3), and finally to health limitations that make labor market access look less probable even in the future (state 4). The 5 states are ordered for their empirical distance to the labor market, which was measured with a transition-matrix (Scherer & Brüderl 2010).

Transitions between a state of exclusion and full integration in consecutive

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quarters that occur less often are considered as more distant from the labor market.

Often studied outcomes of poverty research are long-term unemployment (Arulampalam, Booth, & Taylor, 2000; Gangl, 2006), income (Bane & Ellwood, 1986; Kohler et al., 2012; Vandecasteele, 2010, 2011; Whelan

& Maître, 2008), or, alternatively, dependency on social assistance (Bäckman &

Bergmark, 2011; Kauppinen et al., 2014). Acknowledging that poverty is a complex phenomenon with many facets, our work complements these analyses by focusing on capability limitations with respect to labor market participation as outlined above. By using this detailed outcome, we can provide comprehensive insights on dynamics of inequality that occurred after people experienced an event that forced them to claim social benefits.

The issues outlined thus far are the basis for the following two research questions we study two research questions:

1. After claiming social benefits, how many individuals who were formerly participating in the labor market succeed in returning to a form of employment that allows them to make a living, how many are pushed into precarious employment and how many end up in persistent states outside of the labor market?

2. Can differences between the paths taken be better explained with classical dynamics of cumulative (dis)advantage related to an achieved position in society or ascribed characteristics, or must critical pathways outside of the labor market or into precarious employment be understood as a life course risk?

To study our research questions empirically, we use linked social security register data from Switzerland that allows us to analyze the trajectories into and out of the labor market and to identify episodes with and without payments from the social security system over a period of six years. Based on that data we define a cohort of individuals that was at one point participating in the labor market for at least a full year without claiming benefits (12 months with work income) at all and then experienced an event (like unemployment or family rearrangement) that pushed them to claim social benefits for the first time.³

While there are some studies, mostly in northern European countries, that focus on entry and exits from social assistance that take advantage of register data (Bäckman & Bergmark, 2011; Kauppinen et al., 2014), studies based on register data are still rare. One advantage of working with administrative data is that – observing every individual in Switzerland in that specific situation – it provides better coverage of marginalized groups than surveys do

3 In detail, we exclude persons who received a benefit from UI, SA or II in the year 2005 and persons who received a benefit from UI or II in the year 2004. For the year 2004, data on benefits from SA are not available. A benefit from the system of social security can have occurred before the periods observed, which means some of the observed beneficiaries are re-entrants into benefit receipt. Restricting former benefit receipts more rigorously would lead to an age distribution skewed towards younger age cohorts.

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(Vandecasteele & Debels, 2004; Watson, 2003), which is especially helpful for studying the critical paths that lead out of the labor market.

The paper is structured as follows. In section 2.2 we outline the theoretical framework by formulating three hypotheses why the different pathways taken after claiming benefits can be explained with social stratification and life course theory. We then describe the Swiss social security system with respect to the data we use (section 2.3.1). Next, we classify the observed paths that unfold over a period of four years after benefits have been claimed (section 2.3.2). Finally, we fit multinomial logistic regressions models to estimate relative marginal effects (see section 2.4.1) of social stratification and life course characteristics in order to discuss how these variables affect the different paths taken after claiming benefits (see section 2.5).

2.2 Cumulative disadvantage or life course risk?

In this section, we lay out how classical stratification and life course theory might add to our understanding of why some individuals are more successful in the aftermath of claiming benefits and others end up outside of the labor market and/or dependent on social benefits.⁴

A classical element of social stratification theory is the concept of achieved status that can be acquired based on educational attainment, a profession or income. This view is closely related to the gradational model of class analysis that describes society in terms of different “rungs on a ladder”

(Wright, 2005: 183). Names for societal position or status, such as upper, middle or lower class are usually indexed by income. In the view of gradational class analysis, an achieved position in society not only mirrors distributional locations, but also reflects different life chances, and thus class becomes a relational concept or a determinant for success or failure in life (Wright, 2005). While gradational models temporarily disappeared from the day-to-day practice of inequality research (Hauser & Warren, 1997) (see also below), these thoughts are in line with the well-established theory of cumulative (dis)advantage (DiPrete

& Eirich, 2006). Cumulative (dis)advantage in its strict form is often described as the Matthew-effect popularized by Merton (1973), i.e. as a general mechanism occurring in social processes over time that makes an unfavorable position become an obstacle to further achievement and an advantageous starting point a determinant for later success. In this vein Weeden & Grusky (2012), for example, showed that the gradational model of inequality applies to many areas.

It therefore seems probable that the gradational class model and cumulative (dis)- advantage applies to our field of investigation too.

H1 – Following the theory of cumulative (dis)-advantage we expect that individuals with a high-status index by income and education are more likely to stop claiming benefits and reenter the labor market than individuals with a low status. Inversely, we assume that individuals with a low status have a

4 Gabriel (2015) investigated old-age inequalities with a similar framework of lifecourse characteristics and social stratification. The outcomes in old-age focus on material poverty and health.

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higher risk of ending up in precarious employment, outside of the labor market or dependent on social benefits.

The second, rather traditional, view on inequality relates to ascribed characteristics that are either given at birth or involuntarily acquired later in life, such as gender, race or citizenship. Following Tilly (1999), inequality is merely an outcome of societal categories crafted by institutions and social interactions to strategically secure advantages for some groups while keeping others in a disadvantaged position. Relevant categories encompass ascribed characteristics like gender, race or immigrant status. These reflections on group differences are also in line with the second form of cumulative (dis)advantage described by DiPrete & Eirich (2006:273). The latter call their approach the Blau-Duncan approach of cumulative advantage because Blau and Duncan were among the first to highlight the cumulative disadvantage African American males suffered from relative to white males, as well as to show that ascribed characteristics are a major source of inequality because they are potentially based on discrimination.

For our empirical analysis, we draw from this literature in two ways. First, we consider gender to still be a crucial determinant of life chances and risks due to socially defined role models. In Switzerland, as in many other modern societies, women are still disadvantaged on the labor market compared to men (Stier &

Yaish, 2014). Second, while the debate in Switzerland is less focused on race than in the US, there are, as in other European countries, societal tensions related to citizenship and migration. The hypothesis related to this line of literature is as follows:

H2 – For individuals with the same educational attainment and income prior to receiving social benefits, we expect it is more likely that the episode with benefit claiming will more strongly push women (vs. men) and migrants (vs.

natives) away from the labor market.

The third and last theoretical perspective is related to a perspective that challenges the classical view on inequality by seeing the risk of becoming poor as a phenomenon that can potentially be experienced by every member of society. According to the individualization theory developed by Beck (1992), the structure of life risks was fundamentally changed by the economic transformation to a postindustrial labor market, which also led to the re-shaping of social institutions like marriage. This transformation can be characterized as a rise in less stable forms of employment with flexible employment contracts, job mobility, regular experiences of unemployment and less economic security (Blossfeld, Mills, & Bernardi, 2006) together with an increase in new social risks like divorces and family rearrangements (Bonoli, 2007). Job loss and divorce no longer constitute risks that are restricted to members of the lower class, thus making every member of society vulnerable to them. Differences in life courses also finally lead to different risks of poverty in old age (Oris, Gabriel, Ritschard, &

Kliegel, 2017). Correspondingly, the risk of social exclusion has become less dependent on the individual’s position in the social structure. Ulrich Beck (1992) saw this as a sign of a weakening of the hierarchical model of stratification. “Old”

vertical inequality is supplemented by new horizontal inequalities “beyond classes and stratum” (Beck, 1986:121). Hauser & Warren (1997) later noticed that the gradational (or hierarchical) models have, without much fanfare, largely disappeared from the day-to-day practice of inequality research. These ideas

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were accompanied by empirical studies that gave attention to poverty mobility over the life course and events associated with entering and exiting poverty (Bane

& Ellwood, 1986; Heady et al. 1994; Leisering & Leibfried, 1999). They found more mobility than expected and that the importance of crucial events such as unemployment or divorce was high. But does this mean that traditional determinants of stratification have lost their importance? Recently authors, such as Layte & Whelan (2003) and Vandecasteele (2010, 2011, 2015), have instead consolidated the theories of traditional social stratification and individualization theory with respect to the focus on critical life events. They have concluded that traditional stratification factors and risky life events both contribute to shaping modern individuals’ exposure to risk. Pintelon et al. (2013) were furthermore able to show that traditional stratification cleavages already affect the occurrence of risky life events such as unemployment, ill-health, living in a jobless household, single parenthood and low-paid employment. Finally, there are authors who have enriched the perspective by additionally discussing the role that social stratification determinants and critical life events play with respect to socioeconomic systems and welfare regimes (see Layte & Whelan, 2003, Whelan

& Maître, 2008 or Vandecasteele, 2015 for studies covering EU countries or Kohler et al., 2012).

We relate life course theory in three ways to our empirical work. First, while recent studies have pointed out that life course and social stratification theory complement more than supplement each other, following the strict form of individualization theory it can be hypothesized that the risk of following a pathway out of the labor market after claiming benefits is not influenced by the characteristics of an achieved position. This is an antithesis to H1 postulated above. Second, we draw from the life course perspective by relating the chances of reintegration and the risk of following a path out of the labor market to age as a key index on how critical episodes are coped with during different life stages (Whelan & Maître, 2008). Young age encompasses the transition from the educational system to the labor market, the development of an occupational position, leaving the parental home and forming a family. While these steps are challenging, young age is generally seen as a flexible period where individuals adapt more easily to new situations. With increased age, coping with critical events can become harder. This is especially true if such events are accompanied by health issues. Third, divorcing or losing a partner is one of the new social risks that are studied as part of life course theory as a potential factor of poverty (Bonoli, 2007). This state first refers to a lack of a supportive partner that might help to overcome the vulnerable episode behind the need for social benefits. Additionally, for divorcees, there can be material obligations that singles do not face, which therefore further increase the challenge of overcoming a critical episode. In contrast, singles and especially elderly divorced persons show worse health than married persons (House et al. 1988, Knöpfli et al. 2016). In line with these thoughts, we formulate a third hypothesis.

H3 –According to life course theory, the risk of experiencing a state outside of the labor market occurs regardless of the formerly achieved position in society and is shaped more strongly by the life course index by age and by marital/partner status.

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2.3 Data and methods

2.3.1 Swiss social security register data and definition of the study cohort To study paths into and out of the labor market after benefits have been claimed, we rely on social security register data from Switzerland that has been gleaned from schemes to protect against the risks posed to working life. In Switzerland these risks are covered through three main schemes (Champion, 2011): The primary mode of offsetting the risks faced by the unemployed is federal unemployment insurance (UI), where entitlements are dependent upon previous work records and the duration is restricted on the basis of age and contribution periods. Invalidity insurance (II) provides financial resources for those who are not able to work for health-related reasons. And social assistance (SA) acts as the last safety net for those who are not covered by any other form of social insurance. Unemployed individuals who have exhausted their entitlement to unemployment insurance can turn to social assistance, which only provides for basic needs. However, social assistance also covers those still employed whose income falls below the threshold needed to meet their basic needs. They are often called the “working poor”. Building on the work of Fluder et al. (2009) we use the payment records from these three systems for the years 2005 to 2010 (SAIIUI⁵). We additionally use data on the account records of mandatory contributions from old age and survivor´s insurance for the years 2000 to 2010 (OASI-individual accounts). Using this information allows us to determine whether individuals receiving benefits participate in the labor market before, during and after they receive benefits.

To be able to study the dynamics after benefits have been claimed over time, we define a cohort composed of individuals who have been continually employed in the year 2005, but have been compelled to claim social benefits due to personal and economic circumstances (job loss, family rearrangement) for the first time in 2006,⁶ and who do so only from the schemes that cover labor market risks for healthy people (unemployment insurance or social assistance). We don’t consider benefits from invalidity insurance as a starting point of our analysis, because the receipt of invalidity insurance is typically preceded with the receipt of other benefits we cannot observe completely. We do, however, consider if formerly healthy claimants end up being dependent on an invalidity pension.

Finally, people who reach the age of retirement or go retire earlier during the period of observation are, likewise, by definition, excluded. As a result, the population here investigated consists of 63,575 individuals between the ages of 18 and 60, most whom have come into the system via unemployment insurance (58,040). Far less people come in contact with the social security system through social assistance (4,622), or through both schemes simultaneously (913). The

5 The sequence of acronyms SAIIUI refers to the combination of social assistance (SA), invalidity insurance (II) and unemployment insurance (UI).

6 We exclude from our analysis those who received one or more social benefits in 2005, as well as those who received UI benefits or II payments in 2004.This ensures that we are dealing with “first time entries” and not with people with repeated claims after short breaks.

Labor market exclusion of persons missing an upper secondary degree: does it pay off for the state to fill the gap?

Thesis

Reference

Labor market exclusion of persons missing an upper secondary degree: does it pay off for the state to fill the gap?

FRITSCHI, Tobias

FRITSCHI, Tobias. Labor market exclusion of persons missing an upper secondary degree: does it pay off for the state to fill the gap? . Thèse de doctorat : Univ. Genève, 2018, no. SdS 92

URN : urn:nbn:ch:unige-1072231

DOI : 10.13097/archive-ouverte/unige:107223

Labor market exclusion of persons missing an upper secondary degree: Does it pay off for the state to fill

the gap?

Tobias Fritschi

Codirection de thèse:

Prof. Yves Flückiger et

Prof. Ben Jann

secondary degree: Does it pay off for the state to fill the gap?

THÈSE

présentée à la Faculté des sciences de la société de l’Université de Genève

par

Tobias Fritschi

sous la direction de

Prof. Yves Flückiger et Prof. Ben Jann

pour l’obtention du grade de

Docteur ès sciences de la société mention socioéconomie

Membres du jury de thèse:

Prof. Dr. Michel Oris, University of Geneva (President) Prof. Dr. Yves Flückiger, University of Geneva

Prof. Dr. Ben Jann, University of Berne

Prof. Dr. José Ramirez, Haute école de gestion de Genève Thèse no 92

Genève, 13 Mai 2018

IMPRIMATUR

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Monsieur Tobias

mai 2018.ll

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socioécononrie.

Prof. Bernard

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Table of Contents

Résumé

Remerciements

Chapitre 1. Introduction

Chapitre 2. Pathways into and out of the labor market after claiming social benefits – cumulative disadvantage or life course risk?

2.1 Introduction

2.2 Cumulative disadvantage or life course risk?

2.3 Data and methods