Family background has long-lasting effects on labour market outcomes. A crucial period is the transition from the educational system to the labour market. It is here that inequality can get reinforced through an unsuccessful transition involving low work attachment and low pay. A bad first experience has been shown to have long-lasting effects, making this an important point for any policy intervention. While previous studies found an effect of family background on different adverse outcomes, the estimates differ strongly over time and between countries. The main empirical approaches focused on individual characteristics to explain the transmission of disadvantage. This paper studies the early career in the context of regional labour markets to explain variation. Family disadvantage is associated with lower human and social capital which may make the disadvantaged less desirable on the labour market. In tighter labour markets employers are expected to prefer more advantaged young adults. This results in a larger gap between the disadvantaged young adults and the rest in times of high unemployment. Using the German Socio-economic Panel (SOEP) study from 1984 to 2011 this paper shows that disadvantaged young adults (16-35) are more affected by the labour market context than the others. Random coefficient models are used to account for unobserved characteristics. It is shown that both the risk of being workless and the wage are more volatile to changing labour market conditions for young adults from a less advantaged background.