A successful school-to-work system would equip all young people with high levels of academic and occupational knowledge and skill, and would enable them to find employment that uses their capacities. By this definition, the OECD (Organisation for Economic Co-operation and Development) countries with the most successful systems in recent years have been Germany, Switzerland, Austria, and Japan. In these countries, students score relatively well on international tests in academic subjects (OECD, 1995a) and unemployment rates among 15- to 24-year-olds are relatively low (OECD, 1995b).
In each country with a successful school-to-work system, employers take major responsibility for training. German, Swiss, and Austrian employers hire and train apprentices in the well-known dual system. Japanese employers maintain long-lasting relations with schools, and provide extensive in-company training to newly hired graduates. Students in all these countries have a clear incentive to perform well in their academic studies because they are more likely to get good jobs if they earn good grades in school (Rosenbaum & Kariya, 1991; Soskice, 1994). The successful systems, especially those in Europe, also depend on widely recognized systems of skill standards and certification.
Public authorities in countries with less successful systems have been trying to emulate successful countries by involving employers more closely in the education and training of young people. The 1994 School-to-Work Opportunities Act in the United States was intended to stimulate the introduction of work-based learning on a large scale in American high schools. The Goals 2000: Educate America Act created a National Skill Standards Board to develop and oversee a system of voluntary industry-based skill standards. Similar initiatives have recently been taken or are currently under way in Australia, Britain, Denmark, France, Korea[3], Spain, Sweden, and elsewhere. These measures, described in a later section, have been prompted mainly by the hope that stronger employer involvement, closer ties between schools and the workplace, and more effective systems of skill standards and certification can improve the performance of young people in school and work.
Generally, the youth unemployment rate varies with the rate of unemployment among adults. Figures 1-4 in the appendices display unemployment rates in OECD countries for 1979, 1983, 1990, and 1993.[4] Unemployment rates for adults between the ages of 25 and 54 are plotted on the horizontal axis, and rates for youth between the ages of 15 and 25 are measured on the vertical axis. For most countries, unemployment rates for both age groups were higher in 1983 and 1993 than in 1979 and 1990. In each year, countries with higher unemployment among adults tended also to have higher unemployment among young people. The straight line in each figure is the ordinary least squares regression line showing the average relationship between youth and adult unemployment rates. Most countries lie fairly close to the line, indicating that the adult unemployment rate is usually a good predictor of the youth unemployment rate. The simple correlation between youth and adult unemployment ranges from 0.53 in 1979 to 0.82 in 1993. This means that whatever set of conditions and policies cause a country to have relatively low or high adult unemployment also tend to cause youth unemployment to be relatively low or high, compared to other countries.
Using youth unemployment as a criterion, the U.S. school-to-work transition system is not the worst in the industrialized world, as has sometimes been alleged. That distinction should instead be given to the Mediterranean countries: Italy, Spain, Greece, and to a lesser extent France. Unemployment rates in the United States tend to be near the average for OECD countries, or slightly below it. The U.S. data in Figures 1-4 lie very close to the regression lines, indicating that youth unemployment tends to be almost exactly what would be predicted on the basis of adult unemployment.
Other comparative data (OECD, 1996) indicate that in recent years the U.S. school-to-work system actually appeared to be relatively effective. Long-term unemployment among 15- to 19-year-old males in 1994 was lower in the U.S. than in any other OECD country for which data is available. For 15- to 19-year-old females, only Sweden had a lower rate than the U.S. (Table 4.4). Similarly, among a set of 21 OECD countries, the U.S. employment-to-population ratio for 20- to 24-year olds was also near the top: 74.6% for males and 64.5% for females (Table 4.2). In particular, this compared favorably with Germany where the employment rate was 67.7% and 65.7% for males and females, respectively. These figures reflect the robustness of the U.S. economy in 1994 compared to other industrialized countries.
It is important to note some of the limitations of the unemployment rate as a measure of labor market success. The unemployment rate is the number of individuals who do not have paid work and are actively seeking it, divided by the number in the active labor force, which comprises the employed plus the unemployed. "Discouraged workers," who are not employed but not actively seeking work, are not counted in the active labor force. Neither are incarcerated individuals--a relatively large group in the United States--nor secondary school graduates who failed university entrance examinations and are studying to take them again--a relatively large group in Japan, France, and the United Kingdom. The employment-to-population ratio, which includes the entire population in the denominator, makes no attempt to separate job seekers from nonseekers, but this is not necessarily a more valid measure. Furthermore, none of the employment or unemployment rates says anything about the quality of jobs that people hold.
Notwithstanding these limitations, Figures 1-4 indicate the success of Germany and Japan in keeping youth unemployment low, both in absolute terms and relative to adult unemployment. The one available data point for Switzerland, in 1993, also shows a low absolute and relative rate of youth unemployment. In these countries, employer involvement in setting standards and maintaining incentives in the education and training system ensures a flow of new employees who can achieve high levels of quality and efficiency at work. This helps firms expand their market share and create more jobs, as long as workers' compensation does not rise so fast that it precludes profits for investors.
[3] The situation in Korea, which was invited in 1996 to join the OECD, differs from the others. The Korean system has been successful on the criteria of high academic performance and low unemployment. However, in recent years, some university graduates have not been able to find immediate employment--an unprecedented problem in Korea--and this has caused concern that too many students are choosing secondary school programs that lead to university instead of work. In an attempt to increase the attractiveness of vocational education, the Korean government has been promoting a "2 + 1" program under which students in vocational and technical high schools spend their entire third year at the workplace.
[4] The data is from OECD, 1995b, Statistical Annex Table B.