## The Declining Fortunes of the Young

_IMF Blog, February 27, 2020_

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**Canonical URL:** [The Declining Fortunes of the Young](https://www.imf.org/en/blogs/articles/2020/02/27/the-declining-fortunes-of-the-young)

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## Bibliographic details
- Authors: Era Dabla-Norris, Carlo Pizzinelli, Jay Rappaport
- Published: February 27, 2020

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### Trends and context
- Definition: millennials—those born between 1980 and 2000.
- Core concern: Despite being more educated than their parents, millennials may have less job stability during their working life.
- Structural shifts:
  - Since the mid-1980s, the number of well-paid middle-skill jobs in manufacturing and clerical occupations has decreased substantially in the United States and Europe.
  - Job opportunities are increasingly concentrated in relatively high-skill, high-wage jobs and low-skill, low-wage jobs.
  - The “hollowing out” of the middle classes is linked to the disappearance of routine occupations—jobs with a higher share of tasks performable through a set of easily codified rules (such as bookkeeping, clerical work, and some manufacturing jobs)—driven by technological progress and global integration.
  - Automation and artificial intelligence continue to replace workers and may also limit job creation in growing sectors.
- Recent shocks:
  - The global financial crisis and the 2007 crisis contributed to widening earnings and income gaps between generations; in Europe, incomes declined for young people after the 2007 crisis due to unemployment and have since recovered but have not grown.
  - The rise of the “gig” economy and increases in temporary contracts have further decreased job stability, particularly for the young.
- IMF staff research focus: labor force data from the United Kingdom over the period 2001–2018, with analysis by gender and education level.

### Non-college educated workers (United Kingdom, 2001–2018)
- Routine jobs:
  - Non-college-educated workers are 5 to 15 percentage points less likely to be employed in routine jobs now than they were two decades ago.
  - This decline has particularly impacted younger generations as middle-wage, middle-skill job opportunities evaporate.
- Gender dimensions:
  - Labor market opportunities for non-college educated young women appear most affected.
  - They are increasingly likely to be employed in low-skill manual-based jobs.
  - Their real wages over all occupations have fallen in the past two decades.
  - Millennial women’s wages today are more than 10 percent lower than those of women in the baby boomer generation, almost double the gap that exists for their male counterparts.

### College-educated workers (United Kingdom, 2001–2018)
- Education attainment and returns:
  - The share of college-educated workers increased from 29 percent in 2001 to 45 percent in 2018.
  - As attainment of higher education rises for younger generations, the returns to a university degree are falling.
  - An undergraduate degree still leads to a much higher likelihood of having a “good job,” but it presents less of a guarantee than it did in the past in the United Kingdom.
- Job task composition:
  - The two criteria of a “good job” are wages and the extent of abstract-thinking in a job’s tasks, which can be complementary to technology.
  - An abstract job is one that typically requires creative, problem-solving, and coordination tasks performed by professionals and managers.
  - The share of abstract jobs among the highly-educated has fallen between 2001 and 2018.
  - In recent years, both highly-educated male and female workers have become more likely to take middle-skill jobs compared to less-educated workers.
  - For recent generations, a college education does less to ensure a high-paying job in an abstract job than it did for their parents.
- Additional concern: The widening gap between the wages of the young and those of older people since the Global Financial Crisis, although narrowing more recently, remains of concern.

### Policy recommendations
- Short-term responses:
  - Create new opportunities for people displaced by automation, particularly for low-skilled workers.
  - Support research and development fields to help employ college-educated workers in areas such as science and technology.
  - Remove legal barriers to employment and allow for more flexible contracts to help more young people get jobs.
- Long-term strategies:
  - Education and skills training programs should prepare participants to meet the adjusted demands of the labor market.
  - College graduates should be literate in, and easily capable of using, technology for their chosen sector.
- Overarching focus: Policies should build skills to complement automation and reduce the impact of job displacement on workers both in the short and long run.

*The Declining Fortunes of the Young, Era Dabla-Norris, Carlo Pizzinelli, Jay Rappaport, February 27, 2020*

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## References

- [driven by technological progress and global integration.](https://blogs.imf.org/2017/04/14/the-hollowing-out-of-middle-skilled-labor-share-of-income/)
- [incomes declined for young people after the 2007 crisis](https://www.imf.org/en/Publications/Staff-Discussion-Notes/Issues/2018/01/23/Inequality-and-Poverty-across-Generations-in-the-European-Union-45137)
- [New IMF staff research](https://www.imf.org/en/Publications/WP/Issues/2019/10/11/Job-Polarization-and-the-Declining-Fortunes-of-the-Young-Evidence-from-the-United-Kingdom-48644)
- [https://www.imf.org/wp-content/uploads/2020/02/eng-feb-19-jobs-for-non-college-5.jpg](https://www.imf.org/wp-content/uploads/2020/02/eng-feb-19-jobs-for-non-college-5.jpg)
- [https://www.imf.org/wp-content/uploads/2020/02/eng-feb-19-wages-for-non-college-5.jpg](https://www.imf.org/wp-content/uploads/2020/02/eng-feb-19-wages-for-non-college-5.jpg)
- [https://www.imf.org/wp-content/uploads/2020/02/eng-feb-19-college-educated-workers-3.jpg](https://www.imf.org/wp-content/uploads/2020/02/eng-feb-19-college-educated-workers-3.jpg)

_Source: https://www.imf.org/en/blogs/articles/2020/02/27/the-declining-fortunes-of-the-young_