Youth unemployment and active labor market policies in Europe

Abstract

Since the economic crisis in 2008, European youth unemployment rates have been persistently high at around 20% on average. The majority of European countries spends significant resources each year on active labor market programs (ALMP) with the aim of improving the integration prospects of struggling youths. Among the most common programs used are training courses, job search assistance and monitoring, subsidized employment, and public work programs. For policy makers, it is of upmost importance to know which of these programs work and which are able to achieve the intended goals -may it be the integration into the first labor market or further education. Based on a detailed assessment of the particularities of the youth labor market situation, we discuss the pros and cons of different ALMP types. We then provide a comprehensive survey of the recent evidence on the effectiveness of these ALMP for youth in Europe, highlighting factors that seem to promote or impede their effectiveness in practice. Overall, the findings with respect to employment outcomes are only partly promising. While job search assistance (with and without monitoring) results in overwhelmingly positive effects, we find more mixed effects for training and wage subsidies, whereas the effects for public work programs are clearly negative. The evidence on the impact of ALMP on furthering education participation as well as employment quality is scarce, requiring additional research and allowing only limited conclusions so far. JEL codes: J13, J68, J64

NEET Youth in the Aftermath of the Crisis

“…Caliendo et al (2004) show that, at the beginning of the 2000s, two years after the start of public-employment programmes, programme participants had a significantly higher probability of being registered as unemployed at the labour office than matched non-participants. Caliendo et al (2011) confirm this finding specifically for youth: public sector job-creation schemes are found to be harmful (with a negative effect) for the employment prospects of participants in the short-to medium-run and ineffective in the long-run.…”

“…These trainings are limited to one year, and potentially also include basic education to catch up on the lower-secondary schooling degree. While this programme proves to be successful in terms of employment outcomes, its impact is still limited among the most disadvantaged students (Caliendo et al, 2011).…”

Coaching Disadvantaged Young People: Evidence from Firm Level Data

“…Some of these programmes have been evaluated scientifically; see for example Caliendo et al (2011) and Fries et al (2014).…”

Can public works programs reduce youth crime? Evidence from Papua New Guinea’s Urban Youth Employment Project

“…1 Recent reviews of ALMPs include Card et al (2015), Brown and Koettl (2015), and Caliendo and Schmidl (2016).…”