Labour Market Performance and School Careers of Low Educated Graduates

It is well-known that those with lower levels of education and school drop-outs are less successful in the labour market. The aim of this paper is to shed light on the determinants to continue in education to at least the minimum level defined by the Lisbon Treaty 2000, the so-called starting qualification. We focus especially on the impact of the regional labour market situation and possible spill-over effects due to the presence of higher educated. In addition to that we analyze the differences in successfully finding a job between those who do and those who do not have obtained a starting qualification. We find that regional factors have a significant impact on the decision to (not) continue education and on the chance to get a job. The most striking result we found is that a prosperous regional labor market situation stimulates individuals to accept a job and dropout of school before they reach the level of the start-qualification. They seem to prefer the short term goal of earning money above an investment in schooling of which the benefits will occur in the future. We find evidence for positive spillovers between higher and lower educated, but no evidence for negative crowding out effects. Nevertheless, personal aspects and school/education satisfaction are found to be at least as relevant in school continuation decisions and labour market outcomes of low educated school-leavers.