Structural Constrains, Social Policies and Youth Unemployment

Research on youth transitions from school to labour market has rightly recognised that youth unemployment is constrained by ‘transition systems’, labour market regulations and the balance between demand and supply of educational credentials. However, little attention have been paid to the compositional effects of young people, such as the proportion of youth nurtured by low educated families and under poverty conditions, and the effects taken by social transfers in compensating for such structural constrains. This issue is relevant for EU states, like Spain, that have made a sudden transition from rural to post-industrial economies and suffer from very high rates of child poverty and low educated parents.

This work estimates the effects of such structural constrains on youth inactivity, (not in employment, not at school) and explore the effects of social transfers on it. Data are gathered from the EU/SILC and the analysis is made in two phases. First a comparison is done of five countries with different ‘transition systems’ (UK, Spain, France, Denmark and Germany) and logistic regressions  show how inequalities between nations vary when structural constrains are controlled. Then, the effects of social transfers are estimated using the complete EU/SILC sample of nations and multilevel technics. The research concludes that the national accumulated stock of human capital and the extension of child poverty both play a very important role in explaining youth inactivity. Some social transfers may alter such effects, specially among people younger than 20, but not all kind of transfers work in the same direction.  Education-related allowances are the most positive, while unemployment benefits may have negative effects.