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Recessions leave young adults £1,000 worse off every year, IFS study claims

Research by the IFS suggests young adults are left worse off by recessions for several years afterwards. Picture: Lynne Cameron/PA

Research by the IFS suggests young adults are left worse off by recessions for several years afterwards. Picture: Lynne Cameron/PA

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Recessions have a lasting impact on the employment and pay of young adults, new research suggests.

Wages are “significantly” affected for years after a recession, even if the economy returns to normal, according to the Institute for Fiscal Studies.

Its study found the average negative impact on the pre-tax earnings of young adults five years after leaving education is around £1,100 a year.

Jonathan Cribb, a senior research economist at the IFS, said: “The direct negative impact of entering the labour market in a recession is to significantly depress pay and employment for the next few years – even if the economy as a whole returns to normal.

“The tax and benefit system provides some protection against this, and a big potential safety net that many young adults have is their parents.

“But for those not living with their parents, the persistent negative effects on pay and employment of starting out in a recession do translate into lower net household incomes and lower spending for several years afterwards.”

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