Labour Market Regulation and Youth Unemployment in the EU-28

Abstract

The rise of youth unemployment has been one of the most serious problems which policymakers have had to deal with over the last two decades. Neoclassical economic theory suggests that the deregulation (i.e. higher flexibility) of the labour market stimulates firms to hire young people and—therefore—reduces youth unemployment. The aim of this study is to empirically test the validity of this hypothesis, analysing data on youth unemployment and labour market regulation index (LMRI) for 28 European countries in the period between 2000 and 2018. The empirical results—using two different econometric techniques (time and fixed effects that allows to take into account the presence of heterogeneity of countries in the model and pooling mean group (PMG) estimator providing results about the short and long run relationship between LMRI and youth unemployment)—do not provide evidence in support of the neoclassical hypothesis. In particular, the effect of higher flexibility of the labour market is negative and statistically significant (at 1%) only when a dummy variable for the Eastern country group is included in the model. Vice-versa, the paper shows that higher economic growth and higher investment in active labour market policy represent the key variables to reduce the youth unemployment. In conclusion, the paper raises many doubts that the introduction of flexibility measures in itself can represent a useful tool to counteract the increase of youth unemployment in Europe.

Gender-, Age- and Educational Attainment Level-Specific Output–Employment Relationship and Its Dependence on Foreign Direct Investment

“…Our results are in contrast with previous research (Kapsos 2006;Anderson and Braunstein 2013;Anderson 2016;Majid and Siegmann 2021), where higher output-employment elasticities are identified for females. However, part of the results are in line with others, who find the highest responsiveness of unemployment to economic fluctuations for youth (Hutengs and Stadtmann 2014;Blázquez-Fernández et al 2018;Ahn et al 2019;Liotti 2021;Butkus et al 2020) and for males compared to females (Dixon et al 2017).…”

“…Young people usually do not have the work experience or education that older workers have, their salary is lower, so are their dismissal costs, and they more often work on short-term contracts or prefer seasonal jobs (Dunsch 2015;Dietrich and Möller 2016;Ball et al 2017). Higher employment reaction to the economic growth of males compared with females can be explained by the low female participation rate in the labour market due to maternity leave and other domestic obligations (Lewandowska-Gwarda 2018; Ahn et al 2019) or men's work in cyclically sensitive sectors such as manufacturing and construction (Kim and Park 2019;Liotti 2021). Generally, as Hutengs and Stadtmann (2014), we can state that the ability of economic growth to generate job opportunities decreases with a person's age.…”

A bibliometric study of reference literature on youth unemployment

“…The key area of interest explored could be factors influencing youth unemployment such as duration dependence (Flek et al , 2015; Cockx and Picchio, 2013; Raaum, 2009; García-Pérez and Muñoz-Bullón, 2005), skills (Cyron and Mehrotra, 2022; Groh et al , 2016), training (Šileika, 2004; Upward, 2002), income distribution (De Fraja et al , 2021; Singh et al , 2020), labour market (Liotti, 2022; Ylistö and Husu, 2021; Ranchhod and Daniels, 2021; Bradley and Crouchley, 2020), policies (Jumpah, 2020; Focacci, 2020), wage determination (Gabriel and Schmitz, 2020; Vasilescu and Begu, 2019), minimum wage (Fialová and Mysíková, 2021; Marimpi and Koning, 2018), labour supply (Holford, 2020; McTier and McGregor, 2018), education (Cyron and Mehrotra, 2022; Juárez et al , 2022; Krahn et al , 2015; Odoardi, 2020; Pompei and Selezneva, 2021; Meyer and Mncayi, 2021) and youth entrepreneurship (Munyuki and Jonah, 2021; Justina and Emmanuel, 2020; Jumpah, 2020; Ubogu, 2020).…”

Darbo rinkos raidos tendencijų vertinimas Lietuvoje: jaunimo padėties lyginamoji analizė

“…tradiciškai dažniausiai minima profesinės kvalifikacijos ir darbo patirties stoka arba jos nebuvimas (Makštutis, Vijeikis, 2008;Okunevičiūtė Neverauskienė, 2006, Okunevičiūtė Neverauskienė, Gruževskis, 2007Okunevičiūtė Neverauskienė, Moskvina, 2008;Rosinaitė, Bernotas, 2007;O'Reilly, Eichhorst, Gábos, Hadjivassiliou, Lain, Leschke, McGuinness, Kurekova, Nazio, Ortlieb, Russell, 2015;Braziene, 2020;Abzhan, Bekzhanova, Nukesheva, Abdurakhmanov, Aitkhozhina, Bulkhairova, 2020;Kvieskienė, ivanova, trasberg, Stasytytė, celiešienė, 2021). Pastebima, kad ES šalių darbo rinkų svyravimai tampa vis labiau sinchroniški, vis labiau panašėja ir jaunimo nedarbo raidos tendencijų kryptys (Pop, Kotzamanis, Muller, McGrath, Walsh, Peters, Girejko, Dietrich, 2019;cefalo, Scandurra, Kazepov, 2020;Pocius, 2021;cefalo, Scandurra, 2021;Liotti, 2022). ES šalių jaunimo ir kitų tikslinių grupių situacijos darbo rinkoje pokyčiams ir supanašėjimui įtakos turi globalizacija, spartūs ekonomikos technologiniai pokyčiai ir valstybių tarpusavio ryšių plėtra.…”