Januar 2015

IZA Policy Paper No. 95: Youth Unemployment in India: From a European and Transitional Labour Market Point of View

This essay first sketches some descriptive material, setting the stage and demonstrating the highly differentiated statistical landscape of various measures for youth unemployment in Europe compared to India and in particular to Germany. Second, it provides a simple but powerful model for the main causes of youth unemployment from which general policy strategies can be derived and illustrated by good practice examples from Europe, in particular Germany. Third, because a large part of the problem is structural, requiring long-term solutions, possible immediate measures to mitigate the severe long-term scar effects for the unemployed youth are briefly reviewed. Large differences of unemployment performance among European countries reveal, for instance, the importance of automatic stabilisers like unemployment insurance in order to counteract the tendency of market economies to put most of the burden of adjustment in times of recession on youth. The fourth and main part, however, is devoted to possible lessons for India from Europe, in particular from countries with low youth unemployment like Austria, Denmark, Germany and the Netherlands. The theoretical framework for these lessons is taken from the concept of Transitional Labour Markets (TLM) which emphasises dual learning systems as an institutional device both for fair intergenerational risk sharing as well as for smooth transitions from school to work.