Potential Side Effects Caused by Youth Unemployment

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Causes of Youth Unemployment

The problem with high youth unemployment has many reasons, which can be divided into two categories, or levels; the macro level and the micro level.
The macro level contains issues that are of more international character which individual countries cannot directly affect through interventions, laws and various programmes. One such factor is globalisation which has increased the international competition over the years according to Faria et al. (2010). This is also acknowledged by Cerny (2010) who says that there are two categories of people within a state; one that gains from globalisation through the possibility of making their business transnational, and one that loses from globalisation through higher unemployment and lower wages. Munch (2010) has examined the Danish labour market and the effects of outsourcing and found that it increased the unemployment, at least in the short run. The jobs that tended to disappear were industrial jobs requiring relatively low skills; jobs which youths have a larger chance of getting.
Arena för tillväxt (2010) also discusses the issue of technological progress and the resulting effects on the Swedish society. The technological progress together with globalisation has made it possible for “new countries” to enter the world market; some examples of such countries are China and India. When many industries have been established in Asia, or relocated from developed countries, the tendency in developed countries has been a transition from reliance on industries to a heavier reliance upon services. The industrial jobs that remain in the developed countries are often more specialised and more knowledge demanding, which makes it difficult for youths to enter those firms as well.
A third factor that has been claimed to contribute to the high unemployment figures, at least in the short run, is the entrance of women in the labour force (Singell, 1984). He looks upon the case in the USA where only 28% of the women participated in the labour force in 1940 whilst that proportion had risen to above 50% in 1978. Such a structural change increases the labour force rapidly and the risk is that the demand for labour is increasing too slowly to provide jobs for them.
On the micro level there are larger variation between countries since these factors are more easily altered by governments and local councils. The first factor discussed by OECD (2008) is the content of the education. Sweden is being criticised for having an education system with too much focus on theory. Those that do attend programmes focusing on vocational training still lack important skills when they graduate, which makes it difficult for those youths to acquire a job. This is also emphasised by Arena för tillväxt (2010), which says that more focus should be put on internships and entrepreneurship.
Related to that topic is local entrepreneurial climate. When the international competition intensifies, innovations and entrepreneurship become more important than previously. Since entrepreneurship is something that is embedded in individuals it is of larger importance that effort is put on the local entrepreneurial climate in order to encourage those with good business ideas to develop them. This topic is discussed further in chapter 5.
Laws and rules also contribute to the high youth unemployment many researchers claim. According to OECD (2008), the minimum wages in Sweden, in combination with a heavy regulated labour market that makes it very difficult for firms to fire employees, aggravate for youths to get an employment. The same argument is put forward by Singell (1984) for the US labour market and by O’Higgins (1997) in a European perspective.

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Potential Side Effects Caused by Youth Unemployment

Unemployment among youths is known to have negative effects on both the society and the unemployed themselves. Some of the aspects are discussed in the following sections.

Poor Health

One common example of side effects that hit unemployed, according to many researchers, such as Hammarström (1996) and O’Higgins (1997), is the deterioration of their health. According to Rantakeisu, Starrin and Hagquist (1996), there are three types of health problems that are central in this situation. Firstly, it is common for unemployed persons to get struck by depression and other psychological problems, which can create a great amount of stress on the body. Secondly, physical problems, such as an increased blood pressure, appear as a result of the psychological stress. Lastly, unemployed persons may adopt new habits or types of behaviour that are bad for the health; such as smoking, the use of narcotics and an increased consumption of alcohol.
Some psychological problems that affect unemployed youths, according to Hammarström (1996), are anxiety, insomnia, abeyancy and impeded self confidence. The longer the spell of unemployment is, the higher is the risk of getting psychological problems. Among youths the risk of getting psychological problems is about three times higher, when being unemployed as compared to someone who is not unemployed.
What is quite dangerous about the psychological problems is that they affect the physical health as well. Hammarstöm (1996) observes several common problems among the youths she is interviewing and having contact with. Many of the physical problems the youths have are related to the stomach; such as lowered appetite, stomach pains and gastric catarrh. A problem that is also affecting the stomach is worsened eating habits. Many unemployed youths start eating junk food and, as previously mentioned, consume much alcohol. Apart from problems with the stomach this can also lead to overweight (Hammarström, 1996).

1 Introduction
1.1 Purpose & Research Questions
1.2 Method
1.2.1 Qualitative Method .
1.2.2 Quantitative Method
1.3 Limitations
1.4 Dispositio
2 Background Information & Previous Research
2.1 Definition of Youth Unemployment
2.2 The Swedish Cas
2.3 Previous Research
3 Supply & Demand on the Labour Market
3.1 According to Supply and Demand Theory
3.2 Actual Situation
3.3 Return to Equilibrium .
3.3.1 Removing the Wage Floor .
3.3.2 Increasing the Demand for Labour .
4 Youth Unemployment
4.1 Causes of Youth Unemployment
4.2 Potential Side Effects Caused by Youth Unemployment
4.2.1 Poor Health .
4.2.2 Increased Public Costs and Tax Losses
4.2.3 Criminality and Drugs
4.2.4 Negative Effects on Future Career
4.3 Suggested Cures
4.3.1 Internships and On-the-job Training
4.3.2 Collaboration between Relevant Instances
4.3.3 Entrepreneurial Climate
4.3.4 Labour Market Regulations
5 Entrepreneurial Climate
5.1 Why is an Entrepreneurial Climate Important?
5.2 A Good Entrepreneurial Climate
5.3 Ranking of Municipalities’ Entrepreneurial Climate
6 The Relationship between Unemployment & Entrepreneurship
6.1 Presentation of Model and Variables.
6.2 Descriptive Statistics
6.3 Regression Results .
7 Discussion
8 Conclusion
References