YOUTH UNEMPLOYMENT IN EUROPE – BUSINESS CYCLES, CRISES, AND POLICY RESPONSES

Abstract

Purpose: The goal of the paper is to analyse in which countries’ youth unemployment is statistically pro or countercyclical and how crises in the last decade have affected it. What would the plausible explanations for diverging patterns within the EU and other European countries be? In what terms is the young people’s labour market across Europe imbalanced?

Methodology: The paper builds on Gontkovicova et al.’s (2015) analysis of correlations between GDP growth and youth unemployment on an annual basis by adding more indicators and considering the quarterly basis as well. The quantitative approach is enriched by qualitative insights on Southeast European countries studied within the Erasmus+ YouthCap project (CRA, 2020).

Findings: Most of the countercyclical youth unemployment trends in the last 20 years are observed in Eastern European countries (Bulgaria, Hungary, Poland and Slovenia). From Western European countries Iceland, Denmark and Portugal are countercyclical. The most resilient countries in terms of COVID-19 are North Macedonia, Serbia, Turkey and Iceland, which were able to reduce youth unemployment during the coronavirus crisis (Q3 in 2019 and 2020). Plausible policy reactions have been identified based on the concept of learning societies and the need for continuous education.

Practical implications: The paper argues why localised policy responses could be more effective than a centralised solution. However, increased coordination and standardisation of secondary and higher education could lead to increased youth labour migration.

Originality/value: The paper combines a more traditional quantitative approach to the most recent data series with the qualitative approach of identifying various micro-trends by looking at selected outlier countries.