Youth Employment in Europe: Do Institutions and Social Capital Explain Better Than Mainstream Economics?

By Contini, Bruno | The European Journal of Comparative Economics, July 1, 2012 | Go to article overview

Youth Employment in Europe: Do Institutions and Social Capital Explain Better Than Mainstream Economics?


Contini, Bruno, The European Journal of Comparative Economics


Abstract

Why did employment growth - high in the last decade- take place at the expense of young workers mainly, but not only. in the countries of Southern Europe? Youth unemployment is now exceeding 30%, after decades hovering around 20% and over, despite a variety of factors, common to most EU countries, that would be expected to reduce its evolution: population ageing and the demographic decline, low labor cost of young workers, flexibility of working arrangements, higher educational attainment, low unionization of young workers, early retirement practices of workers 50+. But neither seems to provide a convincing explanation for countries of Southern Europe. Historically based institutions and political tradition, cultural values, social capital - factors that go beyond the standard explanation of economic theory - provide a more satisfying interpretation.

JEL classification: J0, J6, J23, F01, F16

Keywords: EU labor market institutions & LM performance

Introduction

Why did employment growth - high in the last decade- take place at the expense of young workers in the countries of Southern Europe? This is the question addressed in this paper. Youth unemployment has approached or exceeded 20% despite a variety of factors, common to most EU countries. According to neo-classical economics all such factors would be expected to exert a positive impact on the work opportunities of young people: population ageing and the demographic decline, low labor cost of young workers, flexibility of working arrangements, higher educational attainment, low unionization of young workers, early retirement practices of workers 50+. But neither seems to provide a convincing explanation for countries of Southern Europe. Historically based institutions and political tradition, cultural values, social capital - factors that go beyond the standard explanation of economic theory - provide a more satisfying interpretation. My paper develops this interpretation. In this sense, it may be viewed as a new contribution to a problem that economists have mainly addressed with case studies of specific countries, neglecting the influence of G. Esping-Andersen's categorization of three "worlds" of welfare capitalism since the early Nineties,1 and the general intuitions that it provided.

Youth unemployment in Italy, Spain, Portugal, Greece and France has hovered around and above 20% (well before the 2008 crisis), with employmentpopulation ratios below 40% against 50% and over in the countries of Northern Europe (and Austria). In principle, long term GNP growth should be an important driving factor, but the empirical evidence is weak: growth has been high also in member states of Southern Europe (Spain and Greece) where youth employment has been lagging, while it has been modest in some Scandinavian countries where it fared much better.

Workforce ageing has been a common feature all over the EU: had natural replacement of the retiring cohorts taken place evenly in the EU, the impact on youth employment should have been roughly the same everywhere. But it did not: in first place retirement age has a wide cross-country variability. Secondly, youth employment and old age employment appear to be complementary rather than substitutes in several countries, here again especially of Northern Europe.

A closely related argument is the demographic decline after the baby boom of the Sixties. The decline hit Southern Europe where youth employment suffered the most, more than the rest of the continent. This is yet another surprising fact, as there is no reason to expect that, in addition to the direct impact on the size of labor supply, the demographic decline should decrease youth participation. To the contrary, if aggregate demand, skills and productivity were constant, a larger proportion of the fewer young people remained, would be called at work.

My exploration rests on simple associations between macro indicators of labor market performance, demography and institutional characteristics: I display the results of linear bivariate regressions as purely descriptive representations which carry no causal interpretation.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Youth Employment in Europe: Do Institutions and Social Capital Explain Better Than Mainstream Economics?
Settings

Settings

Typeface
Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.