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Polarization, immigration, education: What's behind the dramatic decline in youth employment?

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  • Christopher L. Smith
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    Abstract

    Since the beginning of the recent recession, the employment-population ratio for high-school age youth (16-17 years old) has fallen by nearly a third, to its lowest level ever. However, this recession has exacerbated a longer-run downward trend that actually began in the 1990s and accelerated in the early 2000s. There is little research regarding why teen employment has fallen. Some earlier work emphasized labor supply explanations related to schooling and education, such as an increased emphasis on college preparation (Aaronson, Park, and Sullivan 2006), while others have argued that adult immigrants have crowded out teens, at least in part because adult immigrants and native teens tend to be employed in similar occupations (Sum, Garrington, and Khatiwada 2006, Camarota and Jensenius 2010, Smith 2012). This paper presents updated trends in teen employment and participation across multiple demographic characteristics, and argues that, in addition to immigration, occupational polarization in the U.S. adult labor market has resulted in increased competition for jobs that teens traditionally hold. Testing various supply and demand explanations for the decline since the mid-1980s, I find that demand factors can explain at least half of the decline unexplained by the business cycle, and that supply factors can explain much of the remaining decline.

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    Bibliographic Info

    Paper provided by Board of Governors of the Federal Reserve System (U.S.) in its series Finance and Economics Discussion Series with number 2011-41.

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    Date of creation: 2011
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    Handle: RePEc:fip:fedgfe:2011-41

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    Related research

    Keywords: Youth - Employment ; Labor market - United States ; Emigration and immigration - United States;

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    1. Valerie Ramey & Garey Ramey, 2009. "The Rug Rat Race," 2009 Meeting Papers 431, Society for Economic Dynamics.
    2. Autor, David & Dorn, David, 2012. "The Growth of Low Skill Service Jobs and the Polarization of the U.S. Labor Market," IZA Discussion Papers 7068, Institute for the Study of Labor (IZA).
    3. Timothy J. Bartik, 1991. "Who Benefits from State and Local Economic Development Policies?," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number wbsle.
    4. Thomas A. Mroz & Timothy H. Savage, 2006. "The Long-Term Effects of Youth Unemployment," Journal of Human Resources, University of Wisconsin Press, vol. 41(2).
    5. Charlene Kalenkoski & Sabrina Pabilonia, 2010. "Parental transfers, student achievement, and the labor supply of college students," Journal of Population Economics, Springer, vol. 23(2), pages 469-496, March.
    6. Thomas S. Dee & Brian A. Jacob, 2006. "Do High School Exit Exams Influence Educational Attainment or Labor Market Performance?," NBER Working Papers 12199, National Bureau of Economic Research, Inc.
    7. Stephanie Aaronson & Bruce Fallick & Andrew Figura & Jonathan Pingle & William Wascher, 2006. "The Recent Decline in the Labor Force Participation Rate and Its Implications for Potential Labor Supply," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 37(1), pages 69-154.
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