Youth unemployment in old Europe: the polar cases of France and Germany
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ORIGINAL ARTICLE
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Youth unemployment in old Europe: the polar cases of France and Germany Pierre Cahuc1, Stéphane Carcillo2, Ulf Rinne3,5* and Klaus F Zimmermann4 * Correspondence: [email protected] 3 IZA, Bonn, Germany 5 Institute for the Study of Labor (IZA), Schaumburg-Lippe-Str. 5-9, 53113 Bonn, Germany Full list of author information is available at the end of the article
Abstract: France and Germany are two polar cases in the European debate about rising youth unemployment. Similar to what can be observed in Southern European countries, a “lost generation” may arise in France. In stark contrast, youth unemployment has been on continuous decline in Germany for many years, hardly affected by the Great Recession. This paper analyzes the diametrically opposed developments in the two countries to derive policy lessons. As the fundamental differences in youth unemployment primarily result from structural differences in labor policy and in the (vocational) education system, short-term oriented policies do not address the core of the problems. Ultimately, the youth unemployment disease in France and in other European countries has to be cured with structural reforms. JEL codes: J24; J38; J68 Keywords: Labor policy; Labor market institutions; Great recession; Youth unemployment; Minimum wages; Demographic trends; Vocational education and training; Employment protection
1. Introduction The Great Recession broadly affected labor markets around the world, but individuals in vulnerable positions were strongly hit—including the young generation. Although entry into the labor market already posed major challenges before the crisis, the Great Recession has intensified cross-country differences. Among others, Bell and Blanchflower (2010, 2011a, 2011b) analyze this new rise in youth unemployment after the crisis with a particular focus on the United Kingdom and the United States. In fact, while in some countries youth unemployment was hardly affected during these times of trouble, it dramatically increased elsewhere and reached new record highs. This demonstrates the crucial role that institutional settings and public policies can play in influencing school-to-work transitions. France and Germany are two extreme cases in Europe. Whereas Germany has hardly been affected by rising youth unemployment, France is one of the European countries in which a “lost generation” of young individuals who enter the labor market under the current adverse economic conditions could become a tragic reality. How to effectively tackle the youth unemployment problem has therefore become a major concern and policy issue in Europe—not only because of its immediate negative impacts, but also because early adulthood unemployment creates long-lasting scars affecting labor market outcomes much later in life (Schmillen and Umkehrer, 2013). © 2013 Cahuc et al.; licensee Springer. This is an open access article distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/2.0), which permits unres
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