The paper addresses the driving forces behind recent changes in labour market outcomes among market entrants in Europe. Based on data for 12 European countries from the 1988-97 European Community Labour Force Surveys, the empirical analyses estimate panel data models to assess the effects of cyclical changes in aggregate economic conditions, changing youth cohort sizes, increasing educational expansion and structural changes in labour demand on market entrants' unemployment risks and occupational allocation. In general, it is found that unemployment risks have closely followed the evolution of aggregate economic conditions with only slight impact from demographic factors. Changes in occupational allocation, in turn, are more dependent on the relative evolution of educational expansion and occupational upgrading trends. In addition, these trends have not affected all school leavers evenly: the lowest qualified are most heavily affected by cyclical changes in economic conditions, while leavers from tertiary level education have been more strongly affected by recent trends of changing occupational attainment. More troublesome, however, is that continuing occupational upgrading is established to contribute to increasing labour market difficulties in particular among the lowest qualified leavers.
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