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Youth unemployment in Europe – business cycle and institutional effects

Author

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  • Hans Dietrich

  • Joachim Möller

Abstract

In the aftermath of the Great Recession 2008/2009 European youth unemployment rose sharply from below 4.2 m in 2007 to more than 5.6 m young people under 25 unemployed in the EU28 countries in 2013. The youth unemployment rate expanded from 15.5 in 2007 to 25.5 in 2013. Beyond the consequences for individuals youth unemployment as a mass phenomenon is potentially menacing the stability of democratic societies. Hence there are good reasons to fight youth unemployment by any means. The paper analyses the specific structure and causes of youth unemployment. Although youth unemployment is also influenced by individual factors like insufficient qualification, we show that country-specific factors - institutions, traditions and characteristic structures - are of high importance in explaining the huge disparities between European countries. Using panel data estimates with specific country and time fixed effects we show that especially the Mediterranean countries responded to the economic downturn in a specific way. However, the high correlation of changes in the youth and adult unemployment rates across countries points to the fact that not only structural factors but also business cycle effects are important for explaining the sharp increase in the youth unemployment rate in Europe. The rise in joblessness is in fact closely related to macroeconomic slackness. Therefore, we argue that a two-handed approach combining institutional improvements with growth stimulating measures is needed to overcome the problem. Copyright Springer-Verlag Berlin Heidelberg 2016

Suggested Citation

  • Hans Dietrich & Joachim Möller, 2016. "Youth unemployment in Europe – business cycle and institutional effects," International Economics and Economic Policy, Springer, vol. 13(1), pages 5-25, January.
    • Handle: RePEc:kap:iecepo:v:13:y:2016:i:1:p:5-25
    DOI: 10.1007/s10368-015-0331-1
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    Cited by:

    1. Reinhard A. Weisser, 2026. "Run, graduate, run: Internationally mobile students’ reactions to changing political landscapes in Europe," Public Choice, Springer, vol. 206(3), pages 455-487, March.
    2. repec:iab:iabjlr:v:52:i:1:p:art.3 is not listed on IDEAS
    3. Johann Bacher & Christina Koblbauer & Heinz Leitgöb & Dennis Tamesberger, 2017. "Small differences matter: how regional distinctions in educational and labour market policy account for heterogeneity in NEET rates," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 51(1), pages 1-20, December.
    4. Axelrad, Hila & Malul, Miki & Luski, Israel, 2018. "Unemployment among younger and older individuals : does conventional data about unemployment tell us the whole story?," Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 52, pages 1-003.
    5. Liu, Zhen & Ngo, Thanh Quang & Saydaliev, Hayot Berk & He, Huiyuan & Ali, Sajid, 2022. "How do trade openness, public expenditure and institutional performance affect unemployment in OIC countries? Evidence from the DCCE approach," Economic Systems, Elsevier, vol. 46(4).
    6. Axelrad, Hila & Malul, Miki & Luski, Israel, 2018. "Unemployment among younger and older individuals : does conventional data about unemployment tell us the whole story?," Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 52(1), pages .3(1-12).
    7. repec:iab:iabjlr:v:52:p:art.03 is not listed on IDEAS
    8. Weisser, Reinhard A., 2021. "Run, graduate, run: Internationally mobile students' reactions to changing political landscapes in Europe," GLO Discussion Paper Series 872, Global Labor Organization (GLO).
    9. Martin Boďa & David Cole & Mária Murray Svidroňová & Jolana Gubalová, 2022. "Prevailing narratives versus reality of a small and medium town decline in a CEE country," Operational Research, Springer, vol. 22(3), pages 3113-3145, July.
    10. Hila Axelrad & Miki Malul & Israel Luski, 2018. "Unemployment among younger and older individuals: does conventional data about unemployment tell us the whole story?," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 52(1), pages 1-12, December.
    11. Xuecheng Fan & Zeshui Xu & Marinko Skare & Xinxin Wang, 2025. "The impact of COVID-19 on unemployment dynamics: a panel analysis of youth and gender-specific unemployment in European countries," International Entrepreneurship and Management Journal, Springer, vol. 21(1), pages 1-24, December.
    12. Joan Miquel Verd & Oriol Barranco & Mireia Bolíbar, 2019. "Youth unemployment and employment trajectories in Spain during the Great Recession: what are the determinants?," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 53(1), pages 1-20, December.

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