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Youth unemployment and policy in Sweden

Youth unemployment and policy in Sweden. ”The Nordic Welfare Model : What’s in it for Latvia ?” Oskar Nordström Skans IFAU and Uppsala Center for Labor Studies. Youth unemployment is high in Sweden. But relatively few long-term unemployed. Further facts.

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Youth unemployment and policy in Sweden

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  1. Youthunemployment and policy in Sweden ”The Nordic WelfareModel: What’s in it for Latvia?” Oskar Nordström Skans IFAU and Uppsala Center for Labor Studies

  2. Youthunemployment is high in Sweden

  3. Butrelativelyfewlong-termunemployed

  4. Furtherfacts • 1) Long-term unemployment is confined to a subset of the young (OECD, 2008): • Poor formal education (dropouts/badgrades) • Immigrant youths (in particularifarriving late) • 2) School-to-worktransitionchriticalphase: • Inactivity and inflowintounemploymentpeak at age 19 • Suggest inefficienttransitions from high school to work. • 3) High fraction of youths on temporarycontracts

  5. Policy tools 1: Benefits • Unemploymentinsurancebenefits • Require a continous work history  few are entitled • Program participationbenefits • At par with study grants (i.e. low), after 3 months. • Meanstested social assistance • Ifothermeans are exhausted, stronglyreducesincentives to accept low intensive jobs.

  6. Policy tools 2: Programs and subsidies • ”Mandatory” programs after 3 months of registeredunemployment • Jobsearchassistance, employment subsidies, practice programs, and labor market training… • Evidence suggest that youthsbenefit from the mix, at least in the shortrun. • Generous grants for continuedschoolingamong high school drop-outs • Lowerpay-rolltaxeswhenhiringyoungworkers

  7. Possibleexplanations for the pattern: • Dual employmentprotection • Rigid for permanent employment • Flexible for temporaryjobs. • High minimunmwages • Set throughcollectiveagreements • Education • ”Academicstyle” vocational high schools • Slow transitionsintohighereducation

  8. Tentative conclusions I:The formal education system is key • Pooreducationmayindicateotherindividual problems unrelated to education • Butevaluations suggest that raisedthresholds in the education system havecontributed to slowertransition to work among the lowskilledyoung • In addition, moreresources in primaryschoolsleads to betterlabor market outcomes

  9. Tentative conclusions II:Contacts with employers is key • Evaluations of labor market programs and jobsearchassistance, as well as directevidence on jobsearch and employmentpatterns, suggest that a key element for a succesfultransition to work is a directcontact with an employer. • Suggest that programs and educationshouldseekdirectinvolvement of employers to ease the transition.

  10. Somereferences • Björklund et al (2010) IFAU Rapport 2010:13 (www.ifau.se) • Långtidsutredningen 2011, SOU 2011:11 • Variousappendices (1, 2, 6 and 11) [in SOU 2010:88; 2010:93; 2011:2] • OECD (2008) Country Survey Sweden, OECD, Paris. • Fredriksson, Öckert and Oosterbeck (2012) IFAU Workingpaper, 2012:5 (www.ifau.se)

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