What accounts for changes in the chances of being NEET in the UK?

The number of young people who are not in employment, education and training – NEET, as this group has become widely known as – is a key indicator on the state of youth labour markets and opportunities for young people more generally. The persistence and, in the years following the global financial crisis, growth of this group of young people is a major concern for policy makers in Europe for both its short term and long term consequences. However, it is a diverse group as people can be NEET for many reasons, and so understanding the importance of these reasons is crucial for targeting policy responses. This paper looks at data on young people between the age of 16 and 29 in the UK, tracks how the incidence or chance of being NEET has changed over the period between 1985 and 2015, and highlights which characteristics are associated with a higher chance of being NEET and how the importance of these drivers has changed over time. We show that the overall NEET rate has fallen considerably since the 1980s, but has remained largely the same since 2000. Over the past thirty years, the reduction in young people leaving school with few or no qualifications, fewer young people having children and improvements in the chances for young women to work alongside childcare responsibilities have all put a downward pressure on NEET rates, although penalties for women with childcare are still large. Since 2000, an increase in the incidence of mental ill health has acted in the opposite way, while a slower rate of improved educational attainment and some scarring from the 2008-9 recession has also contributed to the persistence of NEETs. We argue that the current policy focus on skills and work incentives for reducing the number of NEETs in the UK misses two key obstacles – mental ill health and child care. Policies to either tackle increasing mental ill health rates or facilitate (where possible and desirable) some form of labour market participation specific to sufferers of mental ill health could be expected to have some large effects on their own. Moreover, the government could also look to reduce childcare costs and facilitate flexible working for those who want to balance care with work. That said, we find no relationship between the availability of part-time work in a region and NEET rates, so the solution here is unlikely to be as simple as creating more jobs – of any type and quality – which offer a smaller number of hours.