Going Behind the High Rates of NEETs in Italy and Spain: The Role of Early School Leavers

Abstract

This paper aims to analyse the determinants of the dynamics of those not in employment, education, or training (NEET) during 2007–2017, focusing primarily on the role played by early school leavers (ESLs). The analysis covers Italy and Spain, because they show the highest levels of NEETs and ESLs in the EU, respectively. The dynamics and causes of NEET status in these two countries are revealed to be similar only in appearance. After the analysis of the theoretical framework for the relationship between NEETs and ESLs, we investigate the NEET composition in terms of inactive and unemployed individuals, and empirically study the relationship between ESLs and NEETs both in terms of the interdependence and dependence of NEETs and ESLs. Furthermore, we study the contemporaneous relationship between NEET and ESL rates in Italy and Spain in terms of correlation. Finally, to understand how ESL status can lead to NEET status, we investigate the dynamic relationship between NEET and ESL rates based on simple regression models of NEET rates on lagged rates of ESLs, as well as on a time-varying correlation model. Results reveal, among other things, that Italy shows a greater ESL influence on NEET rates, especially for men. The main conclusion concerns the need to invest more in education and to adopt measures able to keep more young people in education for a prolonged period. Therefore, particularly in Italy, policymakers should pay more attention to the education system, including aspects linked to the labour market.