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Nobel Winner address youth unemployment
22nd November 2012
Youth unemployment is higher than adult unemployment even in normal economic times. But in recessions, especially in countries with rigid labour markets, young people typically stay unemployed for too long. In these circumstances, urgent policy action is needed to avoid long-term unemployment, which destroys talent and creates social problems.
Delivering the Royal Economic Society (RES) annual public lecture today,
Thursday 22 November 2012, Professor Chris Pissarides will outline key elements
of an active labour market policy for youth. This could include extending
education places, through universities and colleges offering more applied and
shorter courses; providing specially designed training; subsidising
self-employment or recruitment of unemployed youths by companies; and teaching
young people how to look for and learn about jobs.
The Nobel laureate and London School of Economics professor will look at the
contrasting experiences of youth and adult unemployment in the OECD countries
during the latest recession. Germany, for example, is the most successful of
the major countries in its ratio of youth to adult unemployment: it has a very
elaborate subsidised apprentice system for youths. Italy and Greece are the
worst: both countries have rigid labour markets with a lot of job protection
for adults and low levels of job turnover.
Building on the ‘search and matching’ approach to unemployment that he
pioneered, Professor Pissarides will explain why youth unemployment is almost
always higher than adult unemployment – and what that means for policy:
‘A good labour market is one in which young people are given the chance to go
“job shopping” until they discover what they are good at. Just as they are not
expected to marry their first boyfriend or girlfriend, they should not be
expected to take their first job and stick with it forever.
‘Job shopping explains why youth unemployment is more than adult unemployment
in normal times. The best kind of market that provides this experience is a
flexible market with a lot of job turnover. In this market, employers are able
to take advantage of new job opportunities and create many jobs for youths to
try out.
‘But in rigid labour markets or in recessions, young workers stay unemployed
for too long. That is when we need active labour market policies.’
Geoff Riley
Geoff Riley FRSA has been teaching Economics for over thirty years. He has over twenty years experience as Head of Economics at leading schools. He writes extensively and is a contributor and presenter on CPD conferences in the UK and overseas.