I would like to begin this book on youth unemployment in Europe and America with a personal story. I emigrated from India to the US in the early 1980s as a young bride, barely out of my teens, with an undergraduate degree in economics; I also had developed skills in shorthand and typing. Within weeks of coming to America, I was able to find employment as a project secretary in a major research university, a place where I subsequently rose to the level of full professor. While I no doubt worked hard earning an undergraduate degree in business, a graduate degree in statistics and a doctoral degree in demography and public affairs along the way – and all while raising a family, I credit a good bit of my upward career mobility to an opportunity structure that gave primacy to merit. I do not have a proper counterfactual of course, but I do firmly believe that my career progression would not have followed the same path had I remained in India – and I say this with the utmost respect and love for my birth country. Despite the risk of sounding cliché-ish, I have indeed come to see America as a ‘land of opportunity’ and have personally experienced the results of what Alexis de Tocqueville labeled ‘America’s self-interest rightly understood’.
Another characteristic that is quintessentially American, risk-taking, has also seeped into my psychological makeup and has manifested itself in the many decisions I have made for myself and my family. One professional example of this free-wheeling entrepreneurial spirit is my founding with my longtime colleague and mentor, Michael J. Camasso, of a successful STEM education program called Nurture thru Nature (NtN), designed to benefit disadvantaged students.
Labor market economics is about the effectiveness of the market in allocating people’s own time and abilities. The job of the labor market is matching supply and demand. In an ideal economy, supply of labor continuously rearranges itself to meet the demand for labor, moving from one set of skills to another and from one region to another to clear the global labor market. Demand for labor, too, may move across countries and across sectors to search for cheap and appropriate labor. This global process should be driven by prices, in that the price system brings supply where demand is abundant and, similarly, demand where supply is abundant. There may be situations, however, where the price system fails to deliver that outcome, at least in the short and medium run, and results in unemployment of labor and underutilization of capital. In this case institutional mechanisms may step in to make up for the failings of the market system, driving demand and supply towards each other. This is not an unimportant or easy task; what is at stake are the lives of individuals and firms. Policy makers and legislators, therefore, may need to intervene and devise the best institutional setting to prevent people from remaining unemployed and firms from remaining unstaffed. Quite clearly, the question hinges on the degree of confidence in the price system. The higher the confidence, the weaker the action required; the lower the confidence, the stronger the action required to compensate for the failings of that system.
In this chapter, we examine the nature and extent of this market failure in one segment of the Italian labor market, that of youth.
In order to understand youth unemployment in Spain, it is necessary to acknowledge that (a) it has been a persistent phenomenon in the last three decades; (b) the recent economic and financial crisis has hit youth harder than any other group; and (c) chronic youth unemployment is quite uneven across regions in Spain, with Andalucía reporting unemployment rates almost double that of Basque country and more than triple that of the EU-28 in 2018.
Youth unemployment problems in Spain are associated fundamentally with economic growth rates, human capital development and active labor market policies. In this chapter, we focus more on the human capital factors that either promote or depress youth unemployment and on the Spanish labor market policy efforts that have targeted youth. To be sure, Spain does not traditionally have specific policies or legislation that pertain only to youth, but any efforts aimed at the educational system as a whole, and other active labor market policies that relate to this segment of the population, can be considered under the ‘catch-all’ umbrella of youth-oriented policies.
In what follows, we review the nature and magnitude of youth unemployment in Spain and the regional variations. We explore the causes for these high rates, and discuss the Spanish government’s efforts in boosting both the educational and labor market opportunities for youth, and whether these efforts have borne fruit. We also consider the German apprenticeship model and the American entrepreneurship model as potential ways out of high rates of youth unemployment for Spain.
Its main purpose seems to have been to select and train for the most important jobs in the country. The criteria of selection have predominantly been the talent for abstraction, the ability to simplify complex problems while leaving room for their complexities, and an overall knowledge of French history, philosophy and culture … One of the mainsprings of this system has been to let the best of each generation remain as long as possible in general education. The vocational training of this elite should therefore begin very late. It could then take place in special institutions, such as Les Grandes Écoles or on-the-job: for example, public administration in the Foreign Service. (OECD, 1984: 57–8)
Hence, the idea of apprenticeship or technical, vocational training at an early age was viewed as an obstacle to social status and upward mobility. Moreover, as the report goes on to state, manual training has been regarded as second-class training, of less value than intellectual training (OECD, 1984: 93). Examples of poor quality vocational training sites follow, complete with poignant descriptions of inadequate tools, broken equipment, meager supplies, and the scant workplace knowledge of instructors.
It is difficult to imagine that a society which inspired advancements in science, mathematics, philosophy, and architecture, and which formed the bedrock of ancient western civilization, can find itself in such dire economic straits. One thing that has not changed from the ancient to modern times, however, is Greece’s often difficult relationship with the rest of Europe. Starting with its independence from the Ottoman Empire in 1832, Greece has been romanticized by European elites in art and literature (Shelley, Goethe, Byron) and along the way, the seeds of historical mistrust between Greece and the rest of Europe were also sown, seeds that have since blossomed and flourished to this day (Zarkadakis, 2011).
The debt crisis that began in earnest in 2008, and the EU bailout that followed with austerity conditions attached, didn’t help improve this troubled relationship. In the largest such economic bailout of a bankrupt country in history, Greece received a €320 billion loan from European authorities and private investors, and according to the European Commission, only 13% of the loan has been repaid as of last year (European Commission, 2019). The economic crisis plunged the country into a deep recession with the economy shrinking 25%, unemployment rising to 25%, and youth unemployment exceeding 50%. Greece had a labor force participation rate of 51.6% in 2019, the lowest of any EU country (Eurostat, 2019). With nearly half the working population not on the labor force, how has the country emerged from the economic crisis? Amadeo (2019) summarizes the Greek recovery as follows: Despite austerity measures, many aspects of Greece’s economy are still problematic.
Youth unemployment rose in Portugal from the early 2000s and reached a peak of 38.1% in 2014. Due to the severity of this problem, the past two decades saw the implementation of several public programmes to tackle the rise of youth unemployment. This chapter takes stock of these initiatives and explores the Portuguese strategy to address this phenomenon. This work is part of a book that puts forward two alternatives to address youth unemployment – the German vocational and the American entrepreneurial models – and discusses whether Portugal followed a strategy similar to either of the two alternatives. The research questions that guide the chapter are therefore: what was the approach taken by Portugal to tackle the rise of youth unemployment between 2000 and 2017? Did either the German vocational or the American entrepreneurial model serve as an inspiration for the policies addressing this phenomenon in Portugal throughout this period?
Three hypotheses are developed in this chapter. The first is based on the argument that Southern European countries lack institutional complementarities to fully implement the German vocational model or the American entrepreneurial model. Thus, we hypothesize that the state played a key role to address youth unemployment by putting in place programs to fight youth unemployment, programs that did not involve other actors and did not mean implementing a new coherent model based on the German or the American model. The second consists of hypothesizing that the transition to a knowledge-based economy was a concern of Portuguese governments. Promoting entrepreneurship and developing policies focused on graduates was seen as important.
Youth unemployment is a major source of concern in Europe. There are two reasons why the levels of youth unemployment continue to be high in certain European Union (EU) member states. First, young people have greater difficulties in finding a job than adults. In many instances, young people’s skills and competences are critically assessed, and young job-seekers have to compete with adults who are already part of the labor market. Second, in recent years, European firms have reported skills mismatches among young job-seekers, making it difficult for them to hire adequately skilled staff. Therefore, youth unemployment can be regarded as a consequence of poor vocational education and training (VET) policies that result in inadequate skills, skills shortages and skills mismatches (Majumdar, 2017). If they lack the necessary skills, youths and adults alike will be confronted with difficulties in finding decent work and they are less likely to become entrepreneurs, even though entrepreneurship stimulates innovation and economic growth.
Scholars have identified such deficiencies in the VET systems of some EU member states, whereas others they regard as role models. The German VET system has been heralded as particularly successful for integrating young people into the labor market (Shore and Tosun, 2019a, 2019b). The main characteristic of this ‘dual system’ is its structure, as the skill formation takes place over a training period of two to three-and-a-half years through the regulated cooperation of vocational schools, on the one hand, and companies, on the other. Trainees in this system spend part of the week at the vocational school and the other part at the company, where they are involved in regular working activities.
Introduction Often celebrated as the ‘richest country in the world’, the US generates wealth through various means, the most prominent engine of this economic growth being innovation. From condensed milk to suspension bridges, Americans have been active inventors in either filling a niche or addressing a need. Many world rankings on entrepreneurial capacity, inclination, and behavior put Americans in the forefront, and there is little debate that Americans ‘play for keeps’, with high propensity for risk and even higher expectations of rewards.
Automation and computerization in the labor market have the increased potential for displacing many of today’s youth from traditional jobs. The American response to this has been one of energizing youth to engage in small business start-ups and other entrepreneurial activities. While entrepreneurship is considered as an eminently reasonable pathway to solving the youth unemployment problem in the US, given its deep-seated, cultural proclivity for taking risks, can this approach work in other cultures/countries where risk taking is not so readily built into their culture?
This chapter will describe the work ethos of Americans, how this ethos manifests itself in the demand and supply sides of the labor market, and the extent to which the US has pursued an ‘entrepreneurship as a solution to youth unemployment’ model. We also explore the feasibility of exporting this model to the Mediterranean countries that exhibit substantial problems with youth employment.
Legendary works by Adam Smith and Alexis de Tocqueville speak quite eloquently to American economic and political individualism.
Many books, journal articles and opinion pieces have been written about the youth unemployment issue, and it is certain that a great many more will be written in the future. Economists and other social scientists have done an adequate job in pointing out the causes and consequences of the problem, and they have often helped politicians, governmental officials and the business community with the design of policies and programs that try to address it. Yet as we have seen throughout these chapters, knowledge and data do not appear to be compelling enough reasons to motivate the implementation of actions that could dramatically reduce the youth unemployment rates in Southern Mediterranean countries. This, of course, begs the question of why the apparent disconnect, if the proposed interventions do not require a complete reorientation of a nation’s basic cultural values? Five hypotheses are offered, recognizing that they are not entirely mutually exclusive.
There are two policies, that is, minimum wages and government-subsidized, public sector jobs and job training, that not only fail to reduce unemployment but actually may contribute to its increase. Economic theory suggests that if you raise the price of any commodity, including labor, the demand will decrease. A recent high-profile experiment conducted in Seattle, Washington, provided an example of what usually occurs when the minimum wage is raised in a local labor market (Jardim et al, 2017). In 2015 the city raised its minimum wage from $9.47 an hour to $11.00. In 2016 the wage was raised again to $13.00.
Much of the literature that addresses youth unemployment has been framed within an economic paradigm and much less attention has been focused on the role played by country-specific value orientations in structuring economic activity.
Drawing on extensive fieldwork research and the work of experts in Europe and the United States, this book provides a culturally nuanced analysis of key issues relating to youth unemployment.
Examining the causes and consequences of youth unemployment, it explores ways forward to promote economic self-sufficiency. This pioneering work offers invaluable tailored policy solutions to tackle one of today’s most important socioeconomic issues.
