Youth unemployment leaves life-long scars
Being young and unemployed is not all about having less money in your pocket. Young unemployed people will feel the negative consequences on income, job opportunities and wellbeing for the rest of their lives.
For young people trying to move from education to employment during the height of the financial crisis, the recent world economic recession has left scars that could take a lifetime to heal, if they ever heal completely. So say Dr. Dawit Shawel Abebe and Dr. Christer Hyggen, youth researchers at Norwegian Social Research, a research institute at HiOA.
Together with researchers from the UK and Poland they have used longitudinal survey data to investigate the dynamics of scarring effects of youth unemployment. The research is part of the Horizon 2020-funded Negotiate project.
“It is important to understand scarring because it gives us insight into policy and programs aiming at reducing unemployment and improving young people's ability to cope with and escape unemployment”, says Hyggen.
The lost generation
“The European Union and international journals are referring to the 18 to 24 year-olds who grew up at the height of the ‘Great Depression’ from 2007 to 2009 as the ‘new lost generation’ ”, Hyggen explains. Hyggen draws parallels to World War 1, when the young generation damaged by war became the lost generation as they struggled to overcome their experiences in the trenches.
“Today's lost generation, now coming up to their thirties, have also been scarred and may never get a foothold in the labour market even when times improve. The marks of the recent so-called ‘Great Depression’ have damaged both their possibilities and abilities to grow up and enter the adult world”.
Traditionally, research on scarring has focused on future job prospects and the effect on income later in life. This study, however, takes a broader approach.
“There have been studies that have examined scarring longitudinally, but unlike other studies defining the labour market status by a single measurement, our study examined the effects of scarring by repeated measurements. Our study is also unique in that it investigates how individual and family characteristics causally moderate labor market participation during the transition to adulthood”, explains Abebe. Subsequently, the study was able to conclude that unemployment seems to cut deeper and leave more visible scars on some more than on others.
These findings suggest that levels of education, parental education and psychological well-being may moderate the effects of an early unemployment episode on long-term labour market outcomes. The study also reveals that females and persons with lower education have a greater risk of unemployment and wage scarring than males. Countries in Europe may also face slightly different challenges. A major outcome of the research will be to develop of a set of comparative hypotheses about the magnitude and persistence of scarring effects.
Stigmatised by employees?
One of the reasons scarring effects may be so harmful is that scarring is visible to potential employers. Stigmatization, or scarring, of unemployed youths seems particularly prevalent during periods of economic growth. In times of economic crisis individuals with a history of early unemployment experience less stigma.
To investigate this the Negotiate project is constructing a vignette experiment. In the experiment 20,000 vignettes representing young job applicants with different education, job and unemployment experiences have been evaluated by recruiters for advertised jobs in four European countries.
“This will help us understand how employers think and how they negotiate risk when hiring young people in Europe and in different national contexts. It will be instrumental in developing policies that include demand-side, not only supply-side considerations. In other words, it will help us develop policies that take into account the context of employers, not only focusing on shortcomings among the young generation,” says Hyggen.
Abebe, D.S., Bussi, M., Buttler, D., Hyggen, C., Imdorf, C., Micho, P., O’Reilly, J., Shi, L.P. (2016). Explaining consequences of employment insecurity: The dynamics of scarring in the United Kingdom, Poland and Norway (NEGOTIATE working paper no. 6.2). www.negotiate-research.eu
Youth unemployment in Europe
The EU youth unemployment rate is more than double the overall unemployment rate. More than 7 million people in the 15-24 age group are neither in employment nor in education or training.
After the financial crisis hit Europe in 2007-2008 youth unemployment rates rose, and have only recently decreased to pre-financial crisis levels. In the spring of 2015, youth unemployment in Greece and Spain finally dropped to under 50 percent.
Source: EU Commission and Eurostat