Youth unemployment across Europe

by on February 1, 2012 at 1:56 am in Current Affairs, Data Source, Uncategorized | Permalink

Here is more, hat tip goes to Greg Ip.

Addendum: Do read the excellent comment by Peter Whiteford, for instance:

The unemployment ratio – that is, the number of unemployed people over the population rather than the labor force is arguably a more consistent indicator across countries.

Have a look at http://epp.eurostat.ec.europa.eu/statistics_explained/index.php?title=File:Youth_unemployment_rates,_2008-2011Q3,_%28%25%29.png&filetimestamp=20120127135533

This shows that while in Greece for example, the unemployment rate for youth was around 46% the unemployment ratio was around 10% – nearly half of those in the labour force were unemployed, but only a little over 20% of all the people in the age group were in the labour force.

Andreas Moser February 1, 2012 at 2:43 am

I can’t get rid of the suspicion that a whole lot of youngsters are in some form of shadow employment or freelancing or something similar.

8 February 1, 2012 at 2:58 am

Prostitution in Spain. Beautiful young women, who could previously find employment where looks are valued, are walking the streets of the suburbs.

Farmer February 1, 2012 at 4:56 am

This is regrettably so

Tummler February 1, 2012 at 11:55 am

I don’t believe this for a second. Why don’t you tell us exactly which streets these young beauties are supposedly plying their trade, when they will be there, their rates, and if possible some pictures.

Bender Bending Rodriguez February 1, 2012 at 3:03 pm

+1

wanderingtaoist February 1, 2012 at 3:20 am

In Spain especially the culprit is the real estate bubble. Many youngsters quit school to work a profitable job in building only to find themselves both without job and without access to education when the bubble burst. The high schools are full as the overall employment is high and the students are therefore hanging on to education, making it even more difficult to finish the started education path. If you look at high school dropout rates in Spain in the past few years the numbers support this theory.

wanderingtaoist February 1, 2012 at 3:21 am

By employment I meant unemployment, sorry.

RZ0 February 1, 2012 at 4:53 am

Worldwide, kids all got spoiled and lazy at the same time.

rjs February 1, 2012 at 5:57 am

yeah they were getting industrious for a few years between 05 & 07, then they suddenly slacked off en masse…

hard to understand kids these days…

Frank February 1, 2012 at 10:41 am

Rise above, CBBB.

CBBB February 1, 2012 at 2:33 pm

I see my comment was deleted. Perhaps it was uncivil but I also believe it is HIGHLY uncivil to tar young people by calling them spoiled and lazy.

GiT February 1, 2012 at 4:07 pm

Sarcasm, you might be missing it.

CBBB February 1, 2012 at 7:39 pm

No he wasn’t being sarcastic I know the attitude of certain factions around here

mrpinto February 1, 2012 at 8:45 pm

I think the “at the same time” is the give away. It’s kind of implausible that youth around the world would coordinate in that way. RZ0 is saying that the “spoiled and lazy” argument doesn’t work out for that reason.

Now, that’s on a grand scale. It’s certainly possible that SOME youths are spoiled and lazy, but I’m not the sort to name names.

CBBB February 1, 2012 at 11:16 pm

Of course it’s implausible, to say the least – but after all this IS marginal revolution – it’s not as if something being implausible ever stopped people around here believing it

mgoodfel February 1, 2012 at 5:52 am

I don’t understand how countries with such lousy demographics (too few kids) can also have such high youth unemployment! Corrected for demographics, is the situation is even worse than it looks?

Peter Whiteford February 1, 2012 at 6:50 am

Unemployment for European youth is a serious problem, but it is not as large as indicated by the unemployment rate. The unemployment rate is calculated as a per cent of those looking for work plus those who have jobs, which combine to form the participation rate.

But the participation rate for young people varies enormously andin much of Europe is a lot lower than in English-speaking countries. For example, before the recession the participation rate for people under 25 was as low as 20% in Southern Europe and Belgium but as high as 60% in the UK.

The unemployment ratio – that is, the number of unemployed people over the population rather than the labor force is arguably a more consistent indicator across countries.

Have a look at http://epp.eurostat.ec.europa.eu/statistics_explained/index.php?title=File:Youth_unemployment_rates,_2008-2011Q3,_%28%25%29.png&filetimestamp=20120127135533

This shows that while in Greece for example, the unemployment rate for youth was around 46% the unemployment ratio was around 10% – nearly half of those in the labour force were unemployed, but only a little over 20% of all the people in the age group were in the labour force.

. In contrast, in the UK the unemployment rate at 22% appears a lot lower than Greece, but in fact 11.6% of all young people in the UK are looking for work, which is actually a higher share of the youth population than in Greece.

Even so, it is a bit more complicated even than this. The main reason why young people in Europe have such low participation rates is that they are mostly in education, with a lot of countries effectively providing free university education. In contrast, in English-speaking countries tertiary education costs money, but you have a lot of young people who work part-time and study simultaneously.

It is possible that participation in education has an element of disguised unemployment – young people in Southern Europe are studying because they feel they are not very likely to get a job. However, you can’t tell this from either the unemployment rate or the unemployment ratio – you would need to ask additional questions.

Overall, however, the problems of European youth are probably not as severe as suggested by these unemployment rates.

8 February 1, 2012 at 8:32 am

I can see how the youth are not as severely affected, but this information makes the European situation sound far worse.

Peter Whiteford February 3, 2012 at 6:20 am

Not necessarily , although it is certainly tue that the employment to population ratio for young people in Europe is and has for a long time been much lower than in the USA.

Europe has for a long time had much lower employment among young people than the USA or the UK for example but they have high rates of educational participation. So the question is whether young people in Europe stay in education longer because they want to or because they think there is no chance of finding a job?

You simply can’t answer this question from the standard statistics, both because labour force surveys – which are fairly similar across countries – don’t ask the questions that could be used to answer this question – and because institutional differences make it a difficult question to answer.

Now my view – and I lived in France for 8 years – is that European labour markets are much more rigid than “Anglo-saxon” labour markets. However, before 2008 the employment to population ratio for people aged 25 to 54 years was almost exactly the same for many European countries and the USA. So this is a strange sort of rigidity.

Rahul February 1, 2012 at 7:38 am

Is the graph a smoothed series? There doesn’t seem to be a vacation-cyclicity of youth unemployment. The corresponding American data has yearly spikes each summer.

Arthur February 1, 2012 at 9:16 am

Un/(Un+emp)=Urate
Un=Urate*(Un+Emp)
Un=Unrate*Un+Urate*Emp
Un-Unrate*Un=Unrate*Emp
(Un-Unrate*Un)/Unrate=Emp

Un/Pop=Uratio
Un=Uratio*Pop

Emp=(Uratio*Pop-Urate*Uratio*Pop)/Urate

Given pop value is constant and is 100:

Emp spain 2008 = 35,9
Emp spain 2009 = 28,1
Emp spain 2010 = 25,0

Emp Portugal 2008 = 26,9
Emp Portugal 2009 = 24,0
Emp Portugal 2010 = 21,4

Emp Greece 2008 = 23,6
Emp Greece 2009 = 23,0
Emp Greece 2010 = 20,4

Emp Eu-27 2008 = 36,8
Emp Eu-27 2009 = 34,6
Emp Eu-27 2010 = 33,7

Emp Euro-area 2008 = 36,2
Emp Euro-area 2009 = 34,4
Emp Euro-area 2010 = 32,9

Sorry if i got something wrong somewhere

The Other Jim February 1, 2012 at 9:40 am

I fully understand that youth unemployment in Europe is a massive and understated problem, and that it is an inevitable result of the welfare state mentality…. by why on Earth do these graphs include 16-17 year olds? It dilutes the usefulness of the graphs almost completely.

KLO February 1, 2012 at 9:51 am

Once upon a time, a large number of 16 and 17 year-olds worked. Because of economic and immigration policies, this has become a distant memory to some and completely forgotten to the rest.

Arthur February 1, 2012 at 10:10 am

Latvia and Estonia have a spain like story on Youth Employment

KLO February 1, 2012 at 10:22 am

Being very close to the situation in Latvia, I have seen this firsthand. It isn’t so much that people lost their jobs — there was some of that, of course — but that the job market just froze up entirely, seemingly overnight. No one was hiring and no employees were leaving their jobs or being promoted to new positions within firms. It has become darn near impossible for new entrants in the job market to get jobs, no matter their age. The recovery has not much improved the situation, as lots of employers used reduced hours rather than layoffs to adjust production to fit falling demand. Now those same employers are adding capacity by increasing the hours of existing employees rather than by adding new employees. It is very depressing.

CBBB February 1, 2012 at 10:41 am

Oh my I thought Lativa was the big poster child for all that was right in the world according to Tyler Cowen – well who would have thought?

derek February 1, 2012 at 8:06 pm

Since nobody on either extreme of the spectrum has a magic wand, I’d suggest waiting a few years before judging. Canada took from ’83 to ’94 for all levels of government to reform, and probably around ’98 or so things started looking really good. The Euro was 2002 and the severe negatives took short of a decade to manifest themselves. I’d suggest that it would take at least that long for any fixes to have effect.

ChacoKevy February 1, 2012 at 10:27 am

It’s interesting stuff. Mike Konczal made some interesting parallels last year between youth unemployment in the US and that of Egypt while not-so tacitly making the comparison between Occupy movements and Arab Spring. Seems the better question is who has normal youth employment rates?
http://rortybomb.wordpress.com/2011/11/14/youth-unemployment-in-united-states-in-line-with-arab-spring-countries/

8 February 1, 2012 at 10:31 am

Do all the Spanish people I meet in China looking for jobs count as unemployed in Spain or not?

CBBB February 1, 2012 at 10:40 am

Almost certainly not – if they’re in China it’s very unlikely they’ll be included in surveys back in Spain

Chicagorilla February 1, 2012 at 10:50 am

Is it possible we see a similar uprising in these hardest hit Euro countries as was seen in the Arab Spring? Uprisings are usually led and participated in by those who have less to lose. I can only assume this large demographic is frustrated in their current lot and future.

There have been mass protest in Greece, but they have not led any significant changes. These countries are indirectly being controlled by the Euro Zone (e.g. Germany). Will we see the youth of these nations attempt to forge a new path for their future and effectively tell Germany this is “their country”?

Michael February 1, 2012 at 11:07 am

I’m a bit confused. Young people tend to have the option to seek more education. If a lot of the uptick (at least beyond the uptick in broader unemployment) is explained by more participation in universities, is it so clear that this is a bad thing?

Anyhow, interesting stuff. In the US (I am less familiar with other countries) we also have spending on entitlement programs for the elderly, even wealthy elderly, as more or less the biggest fiscal drain. Of course, those entitlements are the perpetual third rail of American politics. The biggest problem there has seemed to be the lack of coordination and lower voter turnout among young folks. That can change in a hurry though.

I am fascinated to see if the debate ever shifts to old v.s. young.

Short Theta February 1, 2012 at 12:18 pm

What is the correlation between minimum wage and youth unemployment? I know it is highly correlated in the US, but not sure about the rest of the world.

spencer February 1, 2012 at 5:10 pm

Since 1950 the correlation between the US teen unemployment rate and the minimum wage is 0.4.

Over the same period the correlation between the teen and the adult unemployment rate is 0.9.

Essentially the teen unemployment rate equals 3.8 times the adult unemployment rate..

If you regress the teen unemployment rate against the adult unemployment rate and the minimum wage the minimum wage accounts for less than 5% of teen unemployment while the adult unemployment rate accounts for over 95% of the teen unemployment rate.

Dave February 1, 2012 at 10:12 pm

Why don’t a lot of young Portuguese move to Brazil-and Spanish youth to the rest of Latin America?

Ricardo February 2, 2012 at 1:00 am

Portuguese are moving to Angola and Brazil. See this Marginalrevolution post quoting Felix Salmon:

“One reason: for skilled workers, a job in Angola pays a lot more than a similar job in Portugal: for a civil engineer, we’re talking four times as much, according to one Portuguese entrepreneur in Luanda. And there’s similar demand for skilled workers in fast-growing Brazil, too.”

Don’t know about Spanish immigration to Argentina or Chile.

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