Youth Unemployment in the OECD: Demographic Shifts, Labour Market Institutions, and Macroeconomic Shocks

62 Pages Posted: 14 May 2003

See all articles by Juan F. Jimeno

Juan F. Jimeno

Banco de España - Research Department; Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics

Diego Rodriguez-Palenzuela

European Central Bank (ECB)

Date Written: June 2002

Abstract

We use a panel of OECD countries to gauge the relevance of the relative size of the youth population, labour market institutions and macroeconomic shocks at explaining observed relative youth unemployment rates. We find that the fluctuations of the youth population size caused by the baby boom of the 1950s and 1960s and the subsequent decline of fertility in many European countries are positively associated with fluctuations in relative youth unemployment rates. We also find that some labour market institutions contribute to increase youth unemployment, and that the adjustement to macroeconomic shocks has affected relatively more to young workers than to adult workers. To motivate the effects of institution on the relative unemployment rate of young workers, we lay out a simple theoretical model that builds on the imperfect substitutability of workers of different ages, and on the non-allocative role of (age specific) wages.

Keywords: Youth unemployment, labour supply, labour market institutions

JEL Classification: J64

Suggested Citation

Jimeno, Juan F. and Rodriguez-Palenzuela, Diego, Youth Unemployment in the OECD: Demographic Shifts, Labour Market Institutions, and Macroeconomic Shocks (June 2002). ECB Working Paper No. 155. Available at SSRN: https://ssrn.com/abstract=357960

Juan F. Jimeno

Banco de España - Research Department ( email )

Alcala 48
28014 Madrid
Spain

Centre for Economic Policy Research (CEPR)

London
United Kingdom

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Diego Rodriguez-Palenzuela (Contact Author)

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany
(49) 69-1344-6480 (Phone)
(49) 69-1344-6575 (Fax) (Fax)

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