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Over-indebted Youth: Unemployment and Deleveraging in the Euro Zone


  • Harald Sander

    (Maastricht School of Management & Institute of Global Business & Society, Cologne University of Applied Sciences)


This paper looks at the Euro-zone crisis from the point of view of the Euro-zone youth. Young people in many Euro-zone countries are today confronted with high and persistent unemployment with potentially long-lasting “scarring effects” compromising their present and future well-being. While lower and sustainable public debts are desirable from the point of view of inter-generational justice, it is argued that this objective cannot be achieved by means of front-loaded austerity policies. With long-term negative consequences of short-term austerity it is shown that not only social consideration but also the underlying public debt dynamics in the presence of scarring and other hysteresis effects make a strong case for a gradual growth-oriented approach to deleveraging that carefully aims at balancing short- and long-term costs and benefits while protecting vulnerable young people.

Suggested Citation

  • Harald Sander, 2012. "Over-indebted Youth: Unemployment and Deleveraging in the Euro Zone," Working Papers 2013/10, Maastricht School of Management.
  • Handle: RePEc:msm:wpaper:2013/10

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    File Function: First version, 2013
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    References listed on IDEAS

    1. J. Bradford DeLong & Lawrence H. Summers, 2012. "Fiscal Policy in a Depressed Economy," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 43(1 (Spring), pages 233-297.
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    More about this item


    Youth unemployment; scarring effects; hysteresis; debt deleveraging; European Monetary Union; financial crisis;

    JEL classification:

    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • J4 - Labor and Demographic Economics - - Particular Labor Markets

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