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What drives youth unemployment in Europe?

Iva Tomić orcid.org/0000-0002-4706-7881 ; Ekonomski institut, Zagreb

Abstract

This article explores the main determinants of youth unemployment rates in Europe in the period 2002‐2014, by estimating panel data models on a unique dataset for 28 EU member countries. Taking into account heterogeneity among EU countries, models are also estimated on two different subsamples: high and low youth unemployment rate. The results suggest that for better understanding of the determinants of youth unemployment in Europe it is not only relevant to focus on traditional macroeconomic variables, but it is also important to consider different structural and institutional factors. Hence, main empirical results suggest that youth unemployment in the EU is more pronounced in countries with poor GDP growth, low share of construction and high public debt. Low share of temporary employment and high perceived corruption also matter. Less mobility due to homeownership, high remittances from abroad, low work intensity of other household members or less possibilities for young people to live outside parental homes are also meaningful, at least for EU countries with comparatively high youth unemployment rates. These results could be of high importance, especially when determining and evaluating different measures taken in order to mitigate (high) youth unemployment rates in Europe.

Keywords

labour market; youth unemployment; panel data models; recession; Europe

Hrčak ID:

152600

URI

https://hrcak.srce.hr/152600

Publication date:

28.1.2016.

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