What prolongs the duration of NEET status for youth? Evidence from Japanese panel data
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What prolongs the duration of NEET status for youth? Evidence from Japanese panel data Yoshiyuki Tanaka1 Received: 10 October 2019 / Accepted: 1 July 2020 © Japan Economic Policy Association (JEPA) 2020
Abstract This paper examines the determinants of transition to the labor force status for nonlabor force youth, known as NEET (not in employment, education, or training). We use panel data of Japanese youth who experience the NEET status to estimate the competing risk model from transition out of the status. The results show that although many NEETs exit the status within a year, there exists a negative duration dependence of joblessness. We also find that higher educational qualifications and job experience improve the transition from NEET, the impact of which varies with gender with respect to educational background. For men, graduation from university or a graduate school promotes the transition from NEET, but for women, graduation from a professional school and junior college also promotes the transition. Considering the difference between regular and non-regular employment, women tend to engage in work as non-regular employees, while men tend to be unwilling to work in non-regular employment. The hurdle for employment might be relatively higher among men, because their reservation values for work may be higher relative to women. Keywords Labor force participation · Joblessness · Youth employment · NEET JEL Classification J21 · J64
Introduction Following the “Great Recession,” which lasted from December 2007 to June 2009, youth unemployment rates rapidly increased in Western countries. Among the Organization for Economic Cooperation and Development (OECD) countries, the average unemployment rate for youth aged 15–24 years in the fourth quarter of 2014 was 2.7% higher than the pre-recession level. In this scenario, the rise in the number * Yoshiyuki Tanaka y‑[email protected]‑u.ac.jp 1
Faculty of Human Studies, Tenri University, 1050 Somanouchi, Tenri, Nara 632‑8510, Japan
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International Journal of Economic Policy Studies
of young people who are “not in education, employment, or training” (NEET) has emerged as a serious problem worldwide [1]. A NEET is defined as a young person who is not working or learning, and includes job seekers. The OECD [2] reports that the number of NEETs grew substantially from the first quarter of 2007 to the first quarter of 2011. In the Euro area, particularly in Ireland and Spain, the NEET ratio exceeded 4% during the period. After 2011, the OECD [1] reported that many countries did not recover to pre-recession employment levels. Furthermore, the impact of the recession has been especially severe for youth compared to adults. The OECD [1] similarly shows that more than half of NEET youth are in the non-labor force, and the increase in the number of NEETs aged 20–24 years and 25–29 years has been remarkable. This has resulted in immobilization and discouragement of NEET youth. Despite the problem of youth unemployment, the literature on NEETs remai
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