Youth Unemployment: Déjà Vu? - Index of - IZA

year olds, which for simplicity is set to 100. In some countries twenty five year olds are
the largest group while for others, the maximum occurs at a different age. We find that
a) In some Western countries the number of twenty year olds is greater than the number
of twenty five year olds. Examples are the UK, Sweden, the Netherlands, Italy and
Denmark that have very high youth unemployment rates.
b) Significant exceptions to this finding are evident in Eastern Europe (Armenia, Belarus,
Estonia, Georgia, Latvia, Lithuania, Moldova, Romania, Russia and the Ukraine) that
have declining birth rates and hence aging populations.
c) The size of the youth cohort will quickly collapse, especially in Eastern Europe.
Over the next five years, based on the current number of fifteen year olds, there will be a
rapid decline in the number of twenty year olds. Progressively shrinking cohorts will
have even more dramatic effects on the number of entrants to the labour market in ten
and fifteen years time. The decline is relatively small in the US compared with other
countries, in part because of its relatively high rate of immigration. Immigrants tend to
be young. In ten years time in the Euro area the number of twenty year olds will have
dropped by twelve percent. In ten years, the size of the youth cohort is going to be
smaller in all European countries except Denmark, Luxembourg and Norway.
In summary, the recession has reversed recent reductions in youth unemployment in the
developed world. Like other groups on the margins of the labour market, the young tend
to experience particularly high rates of unemployment during recessions. The current
experience fits this pattern. However, the youth cohort is diminishing in size in most
countries, suggesting that, in the future, excess supply of younger workers is less likely to
be problematic.
3. Two Case studies - the United States and the United Kingdom
In this section, we investigate past and current labour market experience for younger
people using two large scale, micro-datasets workers in two countries - the United States
and the United Kingdom.
a) The youth labor market in the United States.
A great deal of what is known about the youth labor market comes from a series of
research volumes published by the National Bureau of Economic Research. These
volumes were based primarily, but not exclusively on research done in the United States
(Freeman and Wise, 1982; Blanchflower and Freeman, 2000). 10 It is certainly a case of
10 Freeman, R. B. and D. A. Wise, (editors), The Youth Labor Market Problem: Its Nature, Causes, and
Consequences, University of Chicago Press and NBER. R.B. Freeman and H. J. Holzer, ' The Black Youth
Employment Crisis', University of Chicago Press and NBER, 1986 D.G. Blanchflower and R.B. Freeman
(editors), Youth Employment and Joblessness in Advanced Countries, University of Chicago Press and
NBER, 2000
6