Measuring Transition from School to Work in the EU : Role of the Data Source

The transition of young people from school to the labour market is a key issue for policy makers and one of the priorities for the European Union within the Europe 2020 flagship initiative "Youth on the move". The newly adopted ET2020 Benchmark on Graduates’ Employability contributes to this endeavor by estimating the employment rate after leaving education. It is computed using the HATYEAR variable (i.e. year when completed the highest educational degree) collected annually by the core Labour Force Survey (LFS) of Eurostat. In this paper, we make use of the variable STOPDAT (i.e. date when leaving school for the last time) collected in the LFS 2009 ad hoc module, on the entry of young people into the labour market, to test the validity of the HATYEAR variable as an efficient proxy of the starting date of the transition process. We find that the new ET2020 Benchmark indicator suffers from a systematic (rather than random) underestimation bias caused by the HATYEAR proxy. Moreover, we observe a significantly higher correlation between the Benchmark and its assumed European counterfactual indicators than between the re-defined indicator using the STOPDAT variable. Hence, our analysis confirms the new Benchmark indicator as a valid proxy of the transition process between school and work and as a strong tool for policy making.