School-to-work transition, early career outcomes and income dynamics across cohorts in Italy. Does education pay?

Purpose: The work compares across cohorts and different levels of education the early-stage evolution of several labour market outcomes, with the aim of studying whether and to what extent education matters for the level, growth and stability of earnings. Design/methodology/approach: By using a rich longitudinal dataset developed from merging survey and administrative data, this article describes the evolution of the early career – five years following the education completion – in Italy comparing differently educated workers born between 1970 and 1984. Findings: The authors find evidence of an "education premium” during the first five years after education completion in terms of faster school-to-work transition, higher employability and higher earnings; moreover, education is associated with positive, faster and more volatile earnings growth, while for those experiencing a downward trend education does not appear to play any role. However, no clear-cut changes across cohorts in the association between the various outcomes and the level of education emerge, thus signalling that no continuous rise of skill premia in the first phase of the working career across cohorts characterises the Italian economy. Originality/value: The main originality consists in investigating the early career stage by cohort and by the level of education with a focus on many multi-year individual outcomes. Besides investigating the evolution of aggregate outcomes for differently educated individuals born in different cohorts, the authors also focus on individual earnings dynamics along the five years after the education completion.