The Causes of the ‘Youth Employment Problem’:

Abstract

Abstract In all OECD countries, young workers are the demographic category which has suffered most in the labour market over the past decades, either in terms of high unemployment, low wages or reduced participation. In 1990 in Europe, the unemployment rate of workers aged 25 and less reached 31.5 per cent in Italy, 19.3 per cent in France, 32.3 per cent in Spain, 6.1 per cent in Sweden (in 1991), and 6.4 per cent in Germany (in 1989), whereas the rates of unemployment of workers aged 26 and older was, respectively, in these countries, 7.0, 7.8, 12.2, 2.0, and 6.9 per cent. Between 1963 and 1987 in the US, the relative wage of the male workers with 1-10 years of potential experience declined by 70 per cent with respect to the 26-35 years of experience, controlling for education and other characteristics (Juhn et al., 1993). In the UK, young male workers withdrew massively from the labour force. This evidence points out the fact that the youth problem in the labour market is two-fold, both in terms of low employment and in terms of low wages. Hereafter, by the denomination ‘youth employment problem’, I will refer to both aspects, which, combined, imply a downward trend to labour income of the young labour market participants.