Youth on the Margins: Heterogeneous State Dependence in NEET

A vulnerable status during the passage to adulthood is linked to a higher risk of adverseoutcomes later in life. This study provides a longitudinal perspective on young people’s labormarket integration by analyzing the dynamics of being Not in Employment, Education, orTraining (NEET). We focus on entry in and persistence of being NEET over time, namely statedependence, using correlated dynamic random-effects logit models to study the effect of thepast on the current NEET status. We analyze full-population individual-level data fromFinland, with follow-up from age 19 to 29 between 2001 and 2020. Findings suggest clear statedependence: being NEET in the previous year is associated with a 10-percentage-point increasein the probability of being NEET in the current year. State dependence is moderately elevatedfor men and those with lower parental education, and considerably elevated for individuals offoreign origin or with a history of mental health issues or child protection services. OlderNEETs are more prone to state dependence than younger ones, and state dependence wasstronger in 2011–2020 than in 2001–2010. Our results suggest diverging mechanisms drivingaccumulation of (dis)advantages during the labor market entry and highlight the need forpreventive policies.