Youth outcomes in the labour markets of advanced economies: Decline, deterioration, and causes

Abstract

In recent decades, things appear to have gone wrong for young workers in advanced economies. Young people find it harder to get jobs, even in unskilled work, than did their parents and grandparents. The symptoms include extensive unemployment and inactivity. The unemployment rate of 15- to 24-year-olds has averaged more than 20 percent in France since the early 1980s. In the United Kingdom, around one in ten 16- to 25-year-olds has been inactive – that is, out of school, training, and the labour market – since the mid-1980s. Levy and Murnane (1992) documented a marked deterioration in youth outcomes in the U.S. labour market, starting as far back as the mid-1970s. Since that landmark study, the problems of youth have attracted considerable attention. Blanchflower and Freeman claim that since the 1970s youth outcomes have deteriorated in ‘virtually all OECD countries’ (2000, p. 3). These problems came as something of a surprise. The general expectation in the late 1970s was that falling population shares, rising educational attainment, and the growth of the service sector would improve the position of young workers. The failure of these expectations to come about has been attributed variously to macroeconomic stagnation, new technology, and globalisation. Macroeconomic interpretations build on the tendency for young workers to be the last to be hired and the first to be fired, which exposes them disproportionately to cyclical downturns in labour demand, and results in ‘super-cyclicality’ in youth employment and unemployment.