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Cohort size and youth unemployment in Europe: a regional analysis

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  • Duncan Roth

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  • John Moffat

Abstract

Will the projected decline in the youth share of European countries' populations alleviate the currently high levels of youth unemployment in Europe? Economic theory predicts that in the absence of perfectly competitive labour markets, changes in the relative size of age groups will cause changes in age-specific unemployment rates. In light of the expected development of the youth population's size over the coming decades, this paper utilises heterogeneity in the structure of youth populations across European countries and regions to identify the effect of nationally and regionally defined age-cohort size on the probability of young individuals being unemployed. To account for the possibility that individuals self-select into areas of low unemployment, the empirical analysis employs an instrumental variables estimator to identify the causal effect of age-cohort size. The results show that individuals in larger cohorts are more likely to be unemployed and that the estimated effect is larger when analysis is conducted using less aggregated spatial units. Although the macroeconomic environment is found to be a more important determinant of unemployment probability, shrinking youth cohorts should therefore improve the current youth unemployment situation.

Suggested Citation

  • Duncan Roth & John Moffat, 2014. "Cohort size and youth unemployment in Europe: a regional analysis," ERSA conference papers ersa14p1546, European Regional Science Association.
  • Handle: RePEc:wiw:wiwrsa:ersa14p1546
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    File URL: http://www-sre.wu.ac.at/ersa/ersaconfs/ersa14/e140826aFinal01546.pdf
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    References listed on IDEAS

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    2. Alison Booth & Hiau Kee, 2009. "Birth order matters: the effect of family size and birth order on educational attainment," Journal of Population Economics, Springer;European Society for Population Economics, vol. 22(2), pages 367-397, April.
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    Cited by:

    1. John Moffat & Duncan Roth, 2016. "The Cohort Size-Wage Relationship in Europe," LABOUR, CEIS, vol. 30(4), pages 415-432, December.
    2. Garloff, Alfred & Roth, Duncan, 2016. "Regional age structure and young workers' wages," IAB Discussion Paper 201606, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    3. Urbánné Mező, Júlia & Udvari, Beáta, 2016. "Munkapiaci rugalmasság és ifjúsági foglalkoztathatóság
      [Labour-market flexibility and youth employment]
      ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(4), pages 431-460.

    More about this item

    Keywords

    Cohort size; unemployment; regional labour markets; causal effect; instrumental variables; EU-SILC;

    JEL classification:

    • J10 - Labor and Demographic Economics - - Demographic Economics - - - General
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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