Does the Great Recession Deliver the Whole Story? Structural Shifts in Youth Unemployment Patterns in the 2000s from a European Perspective

2008 the financial crisis caused a global recession, indicated by a sharp downturn of GDP growth and the labor markets subsequently. GDP growth dwarfed in late 2008 and turned negative in 2009 (-4.3% in EC). European youth unemployment rate rose sharply from 2007 (15%) to 2009 and continued to increase in 2012 (23%). This goes in line with empirical findings from early 2000s which confirm, youth unemployment figures respond more sensitive to business cycle conditions than adult unemployment rates (OECD 2006).

Exploiting European Labor Force Survey (LFS) data for 27 European countries from 2001 to 2012 the paper identifies a substantial shift in European youth unemployment patters in general and with respect to group specific characteristics of young people in detail. According to LFS data that shift could be observed for the whole decade; however with some severe country specific variations. The great recession amplified that process country specific.

The analysis identifies specific mechanism how individuals managed to avoid the entry into unemployment or to reduce the duration of unemployment experience. Country fixed effects panel models are applied to analyze the turn of unemployment at the macro level with respect to economic, demographic, and social dimensions. To combine macro and micro level multi-level techniques are employed to analyze individual’s unemployment risk under control of individual, regional, and country effects.

The results show the risk of unemployment is connected to both individual and group specific resources. In a final section the paper discusses possible implications for the policy process.