Youth earnings and labour market volatility in Europe

Abstract

The authors provide new evidence on youth earnings and labour market volatility, including flows into and out of employment, across Europe during the Great Recession. EU-SILC data for the period 2004–13 reveal large disparities in volatility levels and trends across European countries. As expected, the Great Recession increased youth labour market volatility, offsetting the trends observed over the previous years of economic prosperity. A variance decomposition exercise points to greater exposure to worker turnover in southern Europe. Fixed effects regression on labour market institutions relates higher unemployment benefits and more stringent employment protection legislation to lower earnings and labour market volatility.