Youth labour markets in Spain: Education, training, and crowding-out

Abstract

The stylised facts describing the poor performance of the youth labour market in Spain over the last two decades, entailing high unemployment rates for both higher and lower educated workers, over-education and low intensity of on-the-job training, are explained through a simple matching model where higher educated workers crowd-out lower educated ones from their traditional entry jobs. In this model, a combination of rigid labour market institutions and an increase in the relative supply of higher educated workers harms the training prospects of lower educated workers.