The regional impact of the crisis on young people in different EU countries

The 2007-08 financial crisis, the consequent Great Recession (2008-09), the Eurozone sovereign debt crisis (2010-14) and the ensuing austerity measures have caused a deep impact – not always immediate, in some cases delayed but enduring – on the European labour markets. The most exposed segments of the labour market to the impact of the crisis are young people. Nonetheless, there are significant differences between countries and even between regions within countries. In this chapter, we focus on developments within the European Union (EU) and we consider the Nuts-1 regional breakdown, especially focusing – in the econometric results - on the differences between male and female. Also in the case of investigations on labour markets, the regional level is particularly important not only from an empirical analysis perspective, but also from a policy standpoint; just recall the EU's cohesion objectives. However, regional (sub-national) investigations on the labour market impact of the recent crisis have been rare so far. This contribution tries to fill this gap. A second original contribution of this paper is that the analysis is based not only on the traditional indicators – youth unemployment rates (YUR) – but also on the more innovative NEET indicator. The econometric panel estimations are based on models (i) incorporating the dynamic feedbacks to capture the persistence in the dependent variables, (ii) accommodating latent heterogeneity at different levels of regional aggregation and, finally, (iii) allowing the crisis years to exert a separate impact on the dependent variable, both through the inclusion of time indicators and in interactions with the GDP growth rates. So, estimation is primarily based on GMM and bias-corrected fixed effect dynamic panel data estimators