This paper uses Habermas' theory of the state and his idea of legitimation crisis to critically evaluate recent reforms in New Zealand designed to engage young people (16-24 years of age) in paid employment and/or education and training. The paper identifies three broad strategies adopted by the state to reclaim the disengaged and hence, resolve the crisis of legitimation. These are motivational, punishing and bridging. Motivational strategies are designed to reclaim the disengaged by encouraging young people to adopt dispositions favourable to economic conditions of the time. If successful, young people will work hard to build their human capital in ways conducive to the needs of the economy. Punishing (or work-first) strategies are designed to reduce welfare dependence by making benefits harder to gain in the first instance and reducing entitlement where beneficiaries do not undertake mandated activities (such as looking for work). Finally, bridging strategies attempt to create links between job-seekers and recruiting employers. The paper argues that while these strategies will deliver short-term gains (for the state), the fact that they tighten the connection between the current labour market and education, means that over the longer term, crisis tendencies will remain.

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The present paper raises questions about the use of the concept of reputation in sociological studies of the relationship between higher education and the labour market. Sociologists of education have yet to subject the concept of reputation to sustained critique and evaluation. This situation is unsatisfactory because a number of critical scholars claim that graduates earn a premium as a consequence of attending an elite institution for no reason other than the institution has such a reputation. However, research generally does not provide unequivocal support for such an effect and neither is the source of this effect clearly theorised or identified. One result of this lack of clarity is confusion over what is driving the formation of reputation. This paper advances field theory as a way of developing a sociology of reputation.

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