The aim of this chapter is to discuss some of the issues involved in assessing the evidence presented in empirical studies of the youth labour market (YLM). The main theme of this chapter is to emphasise the fragile nature of most of the evidence on YLMs. There have been numerous studies carried out in the USA and UK, and relatively few in Australia, which purport to show that youth unemployment is caused by the relatively high wages of youths relative to adults. However, most of these studies are based on poorly specified models, inadequate data, and inappropriate econometric techniques. Some of the evidence is based on anecdotes, some on text-book elementary competitive economy models (the fables of the title), and some eclectic models that attempt to take account of the very peculiar nature of the youth labour market. Section 2 discusses some general aspects of the youth labour market. Section 3 of the chapter discusses the different methods employed by economists to determine various aspects of the YLMs. Section 4 evaluates some of the existing research on the role of wages in influencing youth employment. Section 5 provides a critique of the Productivity Commission Report authored by Daly et al. (1998). Section 6 sets up a simple model of youth employment and provides estimates using data disaggregated by age, gender, and by industry. A critical question in the empirical evidence is to do with the elasticity of demand for youths with respect to wage rates. To give a preview of the main results, we find that in most cases the relative wage elasticity is statistically insignificant. Section 7 concludes the chapter with suggestions for future research.
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- The Youth Labour Market: Anecdotes, Fables and Evidence
P. N. Raja Junankar
- Palgrave Macmillan UK
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