Do Low-Skilled Youngsters get Better Jobs in Countries where Internal Labour Markets Dominate?

In this paper, we analyse to what extent the quality of the jobs of low-skilled young workers is affected by the labour market structure in various European countries. We focus on the differences between countries in which internal labour markets (ILM) are prevalent and countries in which occupational labour markets (OLM) dominate. We expect that low-skilled young workers in OLM countries have no access to skilled jobs and therefore only find employment in the secondary segment of the labour market, whereas in ILM countries low-skilled young workers have opportunities to develop their skills in firm internal labour markets when they succeed in entering these markets in times that the economy is booming. The results of our empirical analysis show that low-skilled youngsters are indeed better off in ILM countries than in OLM countries, with respect to the permanency of a job, employment in non-elementary jobs as well as participation in continuing vocational training. However, in ILM countries low-skilled young workers are more often involuntary employed in part-time jobs than in OLM countries. With respect to the likelihood of employment in elementary jobs and participation in continuing vocational training the ILM versus OLM contrast is, as expected, larger in manufacturing, where internal labour markets more frequently occur, than in the service sector.