Non-standard employment and underemployment at labor market entry and their impact on later wage trajectories

Abstract

Using data from the Australian Household, Income, and Labour Dynamics in Australia (HILDA) Survey (2001–2020), we examine how combined patterns of non-standard employment and underemployment in the early career shape later wage trajectories, paying careful attention to gender differences on a representative sample of Australian young men (N = 470) and women (N = 497). By combining multichannel sequence analysis and random effects panel models, we make three central findings. First, we identify seven distinct early employment trajectories, with the “standard” career, characterized by stable, full-time permanent jobs in the first 5 years post-education, being the most prevalent. Second, we find that combined patterns of non-standard employment and underemployment during early careers are associated with significant wage penalties. However, these wage penalties diminish within 10 years. Third, enduring and widening wage disparities are found only among youth primarily unemployed or inactive early in their careers. These penalties are particularly pronounced among men, underscoring the influence of the “ideal” worker norm. Overall, integrating underemployed jobseekers into the workforce and addressing gender-based biases should be a priority for policymakers to ensure equal opportunities and fair treatment for all workers in the labor market.