Arbetsrapport, Institutet för Framtidsstudier - Institute for Futures Studies
Has the youth labour market deteriorated in recent decades? Evidence from developed countries
Abstract: There is nowadays a widespread sense that things have gone
badly wrong for young workers in advanced economies, and that the
difficulty is caused by a fall in their appeal to employers.
tempting to attribute the problem to a trend in labour demand that favours
older, more experienced workers over younger, less experienced ones. The
same line of interpretation has been widely favoured for the other major
dimension of employee skill: educational attainment. The contemporary fall
in the pay of less educated workers, as compared to more educated ones, in
the US and the UK in particular, has been widely attributed to the spread
of information technology and globalisation, both of which are taken to
raise the productivity of more educated workers relative to less educated
ones. An influential account of developments in the US claims that
‘relative demand shifts favouring more skilled workers are … essential to
understanding longer-run changes in the US wage structure’ (Katz and Autor
1999: 1513). The same factors might had similar effects in the experience
dimension of skill, thereby impairing labour market prospects for young
The validity of these propositions has however been contested.
Doubts have been raised concerning the existence of skill-bias in technical
change (Card and DiNardo 2002). Some commentaries deny the existence of an
underlying trend unfavourable to youth (OECD 2002: 20-29).
investigates the evidence concerning trends in youth relative pay and
employment in developed economies since the mid-1970s, focusing on
structural change on the demand-side of the labour market. It improves on
previous research by including more countries, and by controlling for
macroeconomic fluctuations, which affect youth employment particularly
keenly. It then considers the growth of educational participation, as a
further, supply-side, influence that complicates the interpretation of
changes in youth outcomes.
Keywords: young workers; labour market; (follow links to similar papers)
JEL-Codes: J10; J13; (follow links to similar papers)
25 pages, May 2007
ISSN: 165-120X; ISBN: 978-91-85619-04-7
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