YOUTHUNEMPLOYMENT · The Political Economy of Youth Unemployment

Periodic Report Summary 2 - YOUTHUNEMPLOYMENT (The Political Economy of Youth Unemployment)

The political, economic and social relevance of guaranteeing decent and productive employment for youth in developing and developed countries has already been recognized as one of the main issues for the new millennium (see the United Nations Millennium Declaration of 2000). Youth unemployment is one of the most arduous challenges for politics and economics as young people are considered a vulnerable category of workers since they are in a delicate phase of their working life, the first entry into labour forces, that is to say that they are involved in the school–to–work transition. Therefore, when analysing youth unemployment several factors should be considered: the institutions governing the school-to-work transition (including the quality of the education system and the integration between school and work-based training), labour-market regulation (hiring and firing rules, safety nets and industrial relations systems), but also demographic and cyclical patterns. Youth unemployment is nowadays a crucial issue in the EU policy agenda. The EU Youth Strategy recognises the relevance of increasing participation in the labour market to mitigating the effects of social exclusion amongst young people, to limiting, as much as possible, the effects of an ageing population, and to overcoming the negative economic consequences of a declining European labour force from 2010 onwards. Moreover, the structural features of the unemployment in EU and Eastern Europe have been exacerbated by the recent recession following the international financial crisis. Many young people involved in temporary work had lost their jobs due to the fact that labour market reforms have been implemented in most countries looking at flexibility side only (and not at the security side as well). An important research question is how much the increase in youth unemployment in many European countries has been caused by the Great Recession and how much by structural factors. At the first level, another puzzle is whether financial crises have something special, in the sense that they bear additional effects on unemployment further than the direct impact caused by the recession (past experiences on financial crises can shed some light on this issue). Another research question is the different impact – of recessions and financial crises – on youth unemployment rather than total unemployment (if possible further distinguishing in terms of gender). These questions have been empirically assessed in this project and the econometric methods that have been used also allowed to differentiate between short-run and long-term (permanent) effects. The project has been an opportunity to build up a network between Russian and Italian scholars dealing with youth labour market and policies. There has been a good exchange of ideas and knowledge among researchers involved that has led to a fruitful teamwork and has created a long lasting relationship among the participating institutions. This cooperation has in turn resulted in joint papers and joint research initiatives. Some papers in this project have allowed to investigate the similarities and differences of the two countries in terms of youth unemployment. For instance both in Italy and Russia there is a significant regional differentiation and there are important spatial effects (analysed by advanced spatial econometric methods). Also individual and family characteristics of the unemployed play sometimes a different role in the two countries. The research outcomes have fully achieved the scientific objectives of the project, contributing to develop the following arguments: a) The analysis of the determinants of youth unemployment; b) the review of the alternative youth labour market policies and the evaluation of the programs on youth unemployment; c) the analysis of the role of temporary contracts, and, in general, labour market flexibility on youth unemployment; d) the investigation of the role played by individual and family characteristics in determining youth unemployment; e) the empirical analysis on the impact of past financial crises on young workers; f) the assessment of the relative importance of GDP falls (recessions) and financial crisis events in causing unemployment increases; g) the study of the differentiated impact of crises and recessions on youth unemployment and on total unemployment; h) the analysis of "East versus West" Europe impact of financial crisis on youth unemployment; i) the investigation of regional differentiation and spatial effects both in Eastern and Western countries; j) the analysis of the time series properties of unemployment rate in Western and Eastern Europe; k) the analysis of the main features of youth unemployment dynamics; l) the study of interaction between unemployment and labour productivity, both for adult and young people; m) an empirical outline of the condition of young people and of the policy implications in both areas in Europe.

Data: CORDIS, © European Union