- Email: [email protected]
Symposium: Youth labour market and the “Great Recession”
Accepted Manuscript Title: Youth Labour Market and the “Great Recession” Author: Marcello Signorelli Misbah Tanveer Choudhry PII: DOI: Reference:
S0939-3625(14)00099-5 http://dx.doi.org/doi:10.1016/j.ecosys.2014.06.005 ECOSYS 496
To appear in:
Economic Systems
Received date: Accepted date:
19-6-2014 25-6-2014
Please cite this article as: Signorelli, M., Choudhry, M.T.,Youth Labour Market and the “Great Recession”, Economic Systems (2014), http://dx.doi.org/10.1016/j.ecosys.2014.06.005 This is a PDF file of an unedited manuscript that has been accepted for publication. As a service to our customers we are providing this early version of the manuscript. The manuscript will undergo copyediting, typesetting, and review of the resulting proof before it is published in its final form. Please note that during the production process errors may be discovered which could affect the content, and all legal disclaimers that apply to the journal pertain.
ABSTRACT Youth Labour Market and the “Great Recession” Marcello Signorelli (University of Perugia) and Misbah Tanveer Choudhry (Lahore University of Management Sciences)
Ac ce p
te
d
M
an
us
cr
ip t
The financial crisis of 2007-08, followed by the “Great Recession” and the additional sovereign debt crisis in some peripheral countries of the Eurozone, resulted in huge and persistent effects on European youth labour markets. Theoretical and empirical investigations on this topic are still scarce compared with the importance of the topic and the consequent economic, social and policy implications. This paper consist of a very short introduction to a symposium that contributes to filling that gap. A multifaceted picture emerges with major policy implications for the three levels of government (European, national and regional/local) in order to reduce youth unemployment and the NEET phenomenon.
Page 1 of 5
Symposium: Youth Labour Market and the “Great Recession”
a
Lahore University of Management Sciences
cr
b
University of Perugia
ip t
Marcello Signorellia and Misbah Tanveer Choudhryb
Keywords: Youth labour market; Great Recession
us
The financial crisis of 2007-08, followed by the global Great Recession and the
an
additional sovereign debt crisis in some peripheral countries of the Eurozone, resulted in huge and persistent effects on several European labour markets. The impact was specifically felt on a
M
larger scale by young people (defined as those labour market participants belonging to the 15 to 24 year old age class). This is evidenced by the fact that youth unemployment rates in some
d
European countries exceeded 40 percent, not to mention the huge increase in NEETs (young
te
people “not in employment, education or training”). Theoretical and empirical investigations on
Ac ce p
this topic are growing in number (e.g. Bruno et al., 2014; Choudhry et al., 2012; Signorelli et al., 2012). However, they are still scarce compared with the importance of the topic and the consequent economic, social and policy implications. Clearly apparent in some of the existing research studies is the need to adopt a comparative empirical framework (e.g. Brada and Signorelli, 2012), a sub-national perspective (e.g. Marelli et al., 2012), and a wider policyoriented approach (e.g. Marelli and Signorelli, 2014). This symposium contributes to filling the gap with four empirical papers addressing: (i) the joint impact of labour policies and the Great Recession on total and youth unemployment in enlarged Europe, (ii) the changes in women’s labour supply in Spain, especially for young women, in order to adapt to the crisis, (iii) the determinants of regional youth unemployment in
Page 2 of 5
both Russia and Italy, and (iv) labour market transitions from youth unemployment and NEETs to employment in Ireland before and after the crisis. Spain, Italy and Ireland have been hard hit by the Great Recession and the Eurozone difficulties, with huge and persistent consequences on
ip t
the youth labour market.
The first paper uses macro data from 30 European countries with a time-varying and
cr
country-specific crisis variable which enables the authors to determine the complex joint impact
us
of economic crisis and labour policies on labour market performances. The second paper focuses on two age brackets (20 to 29 and 30 to 39) and uses micro data from two years (2007 and 2012)
an
in order to investigate the changes in the labour supply propensities of women living in a couple. The third paper uses regional macro data, divides both the countries concerned into North and
M
South regions, and analyses the determinants of the youth unemployment rate with a spatial
d
approach. The last paper uses a longitudinal dataset and studies the effects of the recession on
te
young and prime-aged labour market transitions. A multifaceted picture emerges with major policy implications for the three levels of
Ac ce p
government: European, national and regional/local. For instance, the first paper concludes that passive labour market policies, ideally targeted at reducing the effects of crises by guaranteeing unemployment benefits, prove detrimental in times of crisis if they are generous beyond a certain limit; it also proposes that specific types of active labour market policies, such as rehabilitation and training incentives, should be preferred in times of crisis. The second paper empirically validates certain added-worker effects: the female youth labour supply follows a countercyclical pattern in response to shocks in the partner’s earnings. The study also highlights the effect of the presence of young children and the consequent policy implications. The third paper advocates regional/local labour market policies able to generate spatial spillover effects in addition to the
Page 3 of 5
traditional development macro-policies. The last paper supports the implementation of the EU Youth Guarantee programme and especially emphasises the need to improve the educational system and to devise new policies targeted at NEETs.
ip t
In some European countries the Great Recession was followed by a stagnation at high risk of creating a “lost generation” (in terms of youth unemployment and NEETs) or a “lost
cr
quarter of century” (in terms of GDP growth), as stated by Stiglitz (2014). There is consequently
us
an urgent need to detect and implement appropriate macro, micro and institutional policies at different levels of government especially aimed at reducing youth unemployment and the NEET
Ac ce p
te
d
M
an
phenomenon.
Page 4 of 5
References Choudhry, M.T., Marelli, E., Signorelli, M., 2012. Youth unemployment and the impact of financial crises, International Journal of Manpower, 1.
ip t
Brada, J.C., Signorelli, M., 2012. Comparing labor market performance: some stylized facts and key findings, Comparative Economic Studies, 2.
cr
Bruno, G., Choudhry, M.T., Marelli, E., Signorelli, M., 2014., Youth unemployment: key
us
determinants and the impact of crises, in: Malo, M.A., Sciulli, D., (Eds.) Disadvantaged workers: empirical evidence and labour policies, Springer.
an
Marelli, E., Signorelli, M., 2014. The Eurozone crisis, the defective policy response and the need for institutional innovation, in: Eisenberg, T., Ramello, G. B., (Eds.), Research handbook
M
in comparative law and economics, Edward Elgar, London.
d
Marelli, E., Patuelli, R., Signorelli, M., 2012. Regional unemployment in the EU before and after
te
the global crisis, Post-Communist Economies, 2. Signorelli, M., Choudhry, M.T., Marelli, E., 2012. The impact of financial crises on the female
Ac ce p
labour, European Journal of Development Research, 3. Stiglitz, J., 2014. The future of Eurozone, LUISS Lecture, May 6, Rome, mimeo.
Page 5 of 5
S0939-3625(14)00099-5 http://dx.doi.org/doi:10.1016/j.ecosys.2014.06.005 ECOSYS 496
To appear in:
Economic Systems
Received date: Accepted date:
19-6-2014 25-6-2014
Please cite this article as: Signorelli, M., Choudhry, M.T.,Youth Labour Market and the “Great Recession”, Economic Systems (2014), http://dx.doi.org/10.1016/j.ecosys.2014.06.005 This is a PDF file of an unedited manuscript that has been accepted for publication. As a service to our customers we are providing this early version of the manuscript. The manuscript will undergo copyediting, typesetting, and review of the resulting proof before it is published in its final form. Please note that during the production process errors may be discovered which could affect the content, and all legal disclaimers that apply to the journal pertain.
ABSTRACT Youth Labour Market and the “Great Recession” Marcello Signorelli (University of Perugia) and Misbah Tanveer Choudhry (Lahore University of Management Sciences)
Ac ce p
te
d
M
an
us
cr
ip t
The financial crisis of 2007-08, followed by the “Great Recession” and the additional sovereign debt crisis in some peripheral countries of the Eurozone, resulted in huge and persistent effects on European youth labour markets. Theoretical and empirical investigations on this topic are still scarce compared with the importance of the topic and the consequent economic, social and policy implications. This paper consist of a very short introduction to a symposium that contributes to filling that gap. A multifaceted picture emerges with major policy implications for the three levels of government (European, national and regional/local) in order to reduce youth unemployment and the NEET phenomenon.
Page 1 of 5
Symposium: Youth Labour Market and the “Great Recession”
a
Lahore University of Management Sciences
cr
b
University of Perugia
ip t
Marcello Signorellia and Misbah Tanveer Choudhryb
Keywords: Youth labour market; Great Recession
us
The financial crisis of 2007-08, followed by the global Great Recession and the
an
additional sovereign debt crisis in some peripheral countries of the Eurozone, resulted in huge and persistent effects on several European labour markets. The impact was specifically felt on a
M
larger scale by young people (defined as those labour market participants belonging to the 15 to 24 year old age class). This is evidenced by the fact that youth unemployment rates in some
d
European countries exceeded 40 percent, not to mention the huge increase in NEETs (young
te
people “not in employment, education or training”). Theoretical and empirical investigations on
Ac ce p
this topic are growing in number (e.g. Bruno et al., 2014; Choudhry et al., 2012; Signorelli et al., 2012). However, they are still scarce compared with the importance of the topic and the consequent economic, social and policy implications. Clearly apparent in some of the existing research studies is the need to adopt a comparative empirical framework (e.g. Brada and Signorelli, 2012), a sub-national perspective (e.g. Marelli et al., 2012), and a wider policyoriented approach (e.g. Marelli and Signorelli, 2014). This symposium contributes to filling the gap with four empirical papers addressing: (i) the joint impact of labour policies and the Great Recession on total and youth unemployment in enlarged Europe, (ii) the changes in women’s labour supply in Spain, especially for young women, in order to adapt to the crisis, (iii) the determinants of regional youth unemployment in
Page 2 of 5
both Russia and Italy, and (iv) labour market transitions from youth unemployment and NEETs to employment in Ireland before and after the crisis. Spain, Italy and Ireland have been hard hit by the Great Recession and the Eurozone difficulties, with huge and persistent consequences on
ip t
the youth labour market.
The first paper uses macro data from 30 European countries with a time-varying and
cr
country-specific crisis variable which enables the authors to determine the complex joint impact
us
of economic crisis and labour policies on labour market performances. The second paper focuses on two age brackets (20 to 29 and 30 to 39) and uses micro data from two years (2007 and 2012)
an
in order to investigate the changes in the labour supply propensities of women living in a couple. The third paper uses regional macro data, divides both the countries concerned into North and
M
South regions, and analyses the determinants of the youth unemployment rate with a spatial
d
approach. The last paper uses a longitudinal dataset and studies the effects of the recession on
te
young and prime-aged labour market transitions. A multifaceted picture emerges with major policy implications for the three levels of
Ac ce p
government: European, national and regional/local. For instance, the first paper concludes that passive labour market policies, ideally targeted at reducing the effects of crises by guaranteeing unemployment benefits, prove detrimental in times of crisis if they are generous beyond a certain limit; it also proposes that specific types of active labour market policies, such as rehabilitation and training incentives, should be preferred in times of crisis. The second paper empirically validates certain added-worker effects: the female youth labour supply follows a countercyclical pattern in response to shocks in the partner’s earnings. The study also highlights the effect of the presence of young children and the consequent policy implications. The third paper advocates regional/local labour market policies able to generate spatial spillover effects in addition to the
Page 3 of 5
traditional development macro-policies. The last paper supports the implementation of the EU Youth Guarantee programme and especially emphasises the need to improve the educational system and to devise new policies targeted at NEETs.
ip t
In some European countries the Great Recession was followed by a stagnation at high risk of creating a “lost generation” (in terms of youth unemployment and NEETs) or a “lost
cr
quarter of century” (in terms of GDP growth), as stated by Stiglitz (2014). There is consequently
us
an urgent need to detect and implement appropriate macro, micro and institutional policies at different levels of government especially aimed at reducing youth unemployment and the NEET
Ac ce p
te
d
M
an
phenomenon.
Page 4 of 5
References Choudhry, M.T., Marelli, E., Signorelli, M., 2012. Youth unemployment and the impact of financial crises, International Journal of Manpower, 1.
ip t
Brada, J.C., Signorelli, M., 2012. Comparing labor market performance: some stylized facts and key findings, Comparative Economic Studies, 2.
cr
Bruno, G., Choudhry, M.T., Marelli, E., Signorelli, M., 2014., Youth unemployment: key
us
determinants and the impact of crises, in: Malo, M.A., Sciulli, D., (Eds.) Disadvantaged workers: empirical evidence and labour policies, Springer.
an
Marelli, E., Signorelli, M., 2014. The Eurozone crisis, the defective policy response and the need for institutional innovation, in: Eisenberg, T., Ramello, G. B., (Eds.), Research handbook
M
in comparative law and economics, Edward Elgar, London.
d
Marelli, E., Patuelli, R., Signorelli, M., 2012. Regional unemployment in the EU before and after
te
the global crisis, Post-Communist Economies, 2. Signorelli, M., Choudhry, M.T., Marelli, E., 2012. The impact of financial crises on the female
Ac ce p
labour, European Journal of Development Research, 3. Stiglitz, J., 2014. The future of Eurozone, LUISS Lecture, May 6, Rome, mimeo.
Page 5 of 5