Economic costs of youth unemployment in Latvia

Abstract

In foreign studies Latvia is positioned as a 'depressive' region in the year 2030, which will have an insufficient population of young people. Thus, Latvia as a country with a business-friendly environment will not be able to be competitive relative to other European countries and the flow of investment will be at risk, as well as passed on other, more competitive and better developed regions in demographic terms (Grinevica et al., 2016). It is one of the main reasons to deal with the youth unemployment problem and to realize the actuality and consequences. Also, one of the EU's priorities of development is to reduce youth unemployment. National labour force surveys (Hoffman, 2011) show that since 2008 the youth unemployment rate has risen in all the EU countries (Hjuza & Borbejs-Pece, 2012). The current economic instability in the context of youth's prospects and opportunities in the labour market is uncertain (Balan, 2014). Youth unemployment has also a negative effect on economic growth and productivity. The aim of the paper is to identify the importance of unemployed youths and draw the society's attention to the consequences. The paper presents a brief analysis of importance of unemployment costs as well as the calculation of an economic loss from youth unemployment in Latvia. The result was calculated using Okun's Law concept.