Youth Labour-Market Performance, Institutions and Vet Systems: A Cross-Country Analysis

Youth are a vulnerable category of workers, since they are in a delicate phase of their working life, the first entry in the labour market. Young graduates and early school leavers are involved in the school–to–work transition process, whose duration considerably varies across countries. In this paper we explore the impact of labour-market and educational institutions on youth labour-market performance across OECD countries for the 1985–2012 period. We extend to 2012 the CEP–OECD dataset and match it with series about youth population, schooling and the vocational education and training participation rates from OECD and World Bank. We estimate a dynamic panel model, building upon Bassanini and Duval, “Employment Patterns in OECD Countries: Reassessing the Role of Policies and Institutions? OECD Social, Employment and Migration Working Papers n. 35, Paris, 2006, including unemployment rate in the analysis, articulating the analysis upon various age groups (15–24, 20–24) and distinguishing between male and female workers. The tax wedge, changes in union density, the minimum wage, educational attainment and the level of economic activity stand out as the key determinants of youth employability (minimum wage has not however the sign most often expected in the literature). VET programmes participation also matter, although only in the short-run. There are also some interesting differences across age and gender groups. In particular, labour-market institutions seem to have a stronger impact for women.