Youth Unemployment And Active Labor Market Policies In Europe

This paper from Marco Caliendo and Ricarda Schmidl of the University of Potsdam and the University of Mannheim reviews the effectiveness of active labor market programs (ALMPs) in supporting young job seekers in Europe. Due to high levels of youth unemployment since the 2008 economic crisis, ALMPs have represented an important policy instrument for European countries to support young job seekers.

Since youth are at higher risk of becoming unemployed due to insecure and transient work patterns, policy makers having been willing to allocate significant resources to ALMPs. This includes the use of ALMPs in areas such as supporting school-to-work transition, preventing long-term unemployment or reducing the risk of exit from the labour market.

Despite their widespread use, ALMPs have not been evaluated in a systematic way to date. The authors aim to fill this gap by comparing the effectiveness of ALMPs from 24 European countries in relation to their impact on young job seekers’ employment outcomes. Where possible the impact on improving education participation and quality of employment is also assessed.

The study focuses on the most common ALMPs in use by European countries: training courses, job search assistance and monitoring, subsidized employment and public works programs.

Through their cross-country comparison the authors provide a summary of the effectiveness of ALMPs:

  • The elements of ALMP programs that are most effective in tackling youth unemployment problems are job search assistance and subsidized employment;
  • Most studies only make an assessment of the effectiveness of ALMPs from the point of view of gaining employment and do not include additional outcomes such as take up of higher formal education or job quality;
  • A review of studies on the effectiveness of ALMPs for adults shows that this type of evaluation may not be transferable to the youth labor market which has unique characteristics.

The results for labor market training programs are mixed with insignificant or negative effects for most programs, as less than 50% of the programs see positive effects. However job search assistance with and without monitoring is one approach that is resulting in significantly positive effects.

Recommendations

The authors provide a series of recommendations for policy and practice, including:

  • The development of schemes specifically for youth with low skills, motivation and socially disadvantaged backgrounds;
  • More emphasis on policy that encourages youth to be securely attached to the labor market.

The authors note that there is a need for further research on the impact of the effectiveness of ALMPs in relation to education and job quality, as this will provide a better understanding of the long-term effects of ALMPs. They suggest that investment in ALMPs could be balanced against tackling barriers earlier in a young person’s life, e.g. by investing in early education.

This study is targeted at practitioners, employers and policy makers who wish to learn more about the effectiveness of supporting young job seekers through active labour market approaches.