Youth unemployment and abuse of statistics

Recent reports have highlighted the plight of young people in Greece and Spain, where youth unemployment is over 50%. 



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Or not. According to Jacob Funk Kirkegaard, writing in VOX, these figures aren't right. Oh dear no, not at all. In fact youth unemployment in Greece and Spain is not much worse than in the US, and when you look at the Eurozone as a whole, the US is actually worse. So it's not Greece and Spain that have problems with youth unemployment, is it? It's the good ol' US of A.

How has Kirkegaard achieved this remarkable redefinition?

Firstly, he has changed the definition of "unemployed" to mean only those who are unemployed and not in education or training - so-called "NEETs":



(click here for larger version)

Exclusion of young people in education or training makes a considerable difference to the figures, doesn't it? The question is whether it is a justified exclusion. As Kirkegaard notes, Stephen Hill of the FT first suggested that using NEET figures gave a better picture of European youth unemployment, but others have since expressed concern that these figures, too, do not give a true picture. In particular, the emphasis on skills development in measures to address youth unemployment fail to deal with structural problems in the labour market that can make the transition from education to work extremely difficult and mean that young people remain in education, training or various forms of unsuitable or unpaid work for far too long. These are all disguised forms of unemployment.

The proportion of young people staying on in education is currently at an all-time high, having risen steadily throughout the 2000s. Over the EU as a whole, more than 60% of young people stay on in some form of education after the end of compulsory schooling, though this does vary across the countries in the EU: a far smaller proportion stay on in Germany and the UK than in Scandinavian countries, for example. So if you exclude these people from the figures you end up with a much lower  number of unemployed. But these days the majority of undergraduates work their way through college, so excluding undergraduates from the figures does not accurately reflect the numbers of young people actually seeking work. Anecdotally, too, there is some indication that young people are staying on into postgraduate education because jobs opportunities are so poor, and because debasing of bachelor's degrees forces people to do masters degrees and PhDs in order to have a career.

Excluding from the figures young people who are not in tertiary education but in some form of "training" is far more contentious. Historically, governments have used training programmes as a way of removing young people from embarrassing unemployment statistics. The value of these training programmes has not always been clearly established, and it is all too common for young people to end their training no more employable than they were at the start. Some young people simply move from one training programme to another, interspersed with short periods of actual unemployment. If training programmes do not provide realistic opportunity for employment, they are no more than a means of massaging the figures.

Even the definition of "unemployment" does not reflect the reality of young people's experience of the jobs market. Many graduates take work that is not commensurate with their training or education level, thus depriving those with lower educational attainment of work that is suitable for them. Others are on short-term and/or part-time contracts. Still others go into forms of "work", such as volunteering or unpaid internships, that are not paid employment but do remove them from the statistics. Youth unemployment statistics are, frankly, unbelieveable.

Kirkegaard's focus on NEETs amounts to a statistical sleight of hand which I don't think reflects the true position, though it does expose some interesting cultural effects. But to be fair, he has done the same to the US figures as well, so at his massaging of statistics is at least consistent.  However, NEET figures still show that workforce participation by young people is actually higher in the US than it is in Southern Europe: interestingly, by far the highest figure for NEETS in the OECD is for Turkey, which I suspect is to do with cultural factors making it difficult for young women to work.

So having failed to make his point by replacing unemployment statistics for all young people with figures for NEETs only, Kirkegaard does another conjuring trick. Instead of looking at figures for individual European countries, he aggregates them as the Eurozone (E17) and European Union (E27). And lo and behold, both are lower than NEETs figures for the US. This is hardly a surprise. After all, the E17 figures include about half the countries coming in lower than the US on the NEETs chart, including the mighty Germany whose unemployment figures alone are sufficient to overwhelm Spain and Greece, simply because it is so much larger than either of them. And Kirkegaard points out that the Eurozone's unemployment figures are lower than both the US and the wider EU - so there isn't really a problem, is there?

To be fair to Kirkegaard, the EU itself says something similar. As I have noted before, the EU's own statistics show youth unemployment in the wider EU (E27) as slightly higher than youth unemployment in the Eurozone (E17). I lambasted them in that post for failing to take any notice of distributional problems across the Eurozone: the reason why the Eurozone's figures were lower was because of the distortionary effect of Germany's low youth unemployment rate. But the EU's solution to the problem is simple. There is free movement of people in the EU, after all. All young people in Greece and Spain really need to do is up sticks and move to Germany, and the problem is solved, innit? I'm not entirely sure how Germany would feel about this, mind. They may have a low youth unemployment rate, but it's not zero.....

But both the EU and Kirkegaard are abusing statistics for political purposes. In the case of the EU, it is to give the impression that Eurozone youth unemployment is not really a problem. And in Kirkegaard's case, it is to give the impression that US youth unemployment IS a problem. Now, I have a lot more time for Kirkegaard in this respect than I do for the EU. The EU's statistical abuse is blatantly intended to disguise the severe inequalities between different states particularly in the Eurozone. Kirkegaard isn't trying to disguise anything - he's trying to draw attention to a genuine problem in the US. US youth unemployment definitely is an issue, and it definitely should feature on the agendas of both presidential candidates - which it doesn't at the moment. But Kirkegaard should not have to bring this to US politicians' attention by manipulating European figures to make the US look worse. The US figures speak for themselves.



Comments

  1. Thank you for this. I've seen this meme circulating for a couple of months now and it makes me really angry, precisely because it is a statistical sleight of hand promoted by someone (in this case Kirkegaard) who claims to be correcting the statistics abuse of others.

    ReplyDelete
  2. Please forget about the rates. They are worth nothing. Spain for example does have almost the same number of unemployed young people (< 25 years) compared to the times before the EURO. The unemployment rate did rise because many older people lost their job - the number of those in work shrunk. Assuming unemployed people drop out of the statistics after 6 months (Spain) you can think - more than 4 million of people > 24 years lot their job since the end of 2008.

    If you think of Germany with millions of people in jobs subsidized by the state (1 EURO Jobs and 400 EUR jobs).

    The fundamental problem in this case is simply, ...

    Look at the population - Whole Europe

    Starting with the 1950 the number of people (15-64) started to grow from 370mio and will continue to grow to 500mio in 2015-17, afterwards the number starts to decline to 370mio back in 2050 and 280 in 2100.

    The age of people 64+ started from 50mio in the 1950 is growing steadily to 200Mio in 2060 (peak) and will drop to 180mio in 2100.

    In ceteris paribus of course.

    The situation would not be a problem if all would be employed. It's getting more and more troublesome from 2020 on. After 2050 it's over more or less.

    The US in comparison show a steady growth of both. The population 65+ as well as the 15 to 64.

    (15-64)(1950-2100)(100Mio - 260Mio)
    (65+)(1950-2100)(10Mio-110Mio)
    function little steeper in both cases (the number of those who could work starts to rise earlier).

    This is why the U.S. are better off if you look at the age structure. Because in Europe the number of those who could work (15-64) start to decline and the number will decline over a period of 35 years before the number of the 65+.

    In ceteris paribus not considering technological change, rethink growth in term of growth outside quantity ..., viewing things from the perspective of resource economy.

    ReplyDelete
  3. Hi Frances

    Excellent post!

    I'm not sure if you might already be aware of it or not, but I blogged this time last year about a similar youth unemployment data "conjuring trick" that might arguably have affected reporting of UK youth unemployment data.

    Here's the post: http://www.xperthr.co.uk/blogs/employment-intelligence/2011/10/youth-unemployment-approaches.html

    Essentially, it involved the alternative measure of youth unemployment.

    This measures the youth unemployment rate "excluding people in full-time education."

    The alternative measure was introduced by ONS in Spring 2011 in response to pressure from Secretary of State for Work and Pensions Iain Duncan Smith. IDS was very critical of what he described as a tendency to focus on the "misleading" internationally-accepted measure of youth unemployment (which was at that point rapidly escalating toward the "million milestone," which it ultimately passed late in 2011).

    The CIPD claimed that Iain Duncan Smith's demand for a rethink on the reporting of youth unemployment represented an "echoing" of the CIPD's own thinking on youth unemployment (You can read much more about this in my post, linked to above).

    ONS continues to report to the alternative measure of youth unemployment in the monthly Labour Market Statistics report to this day, although it now seems to get little attention or coverage.

    ReplyDelete
    Replies
    1. Given the high levels of debt that students are taking on, it seems unacceptable to me to exclude from the unemployment figures those who are looking for part-time work to ease their debt burdens. But more than that, I think excluding full-time students from unemployment figures offers Government a way of manipulating the figures by forcing young people into fruitless and unproductive "training schemes" that don't make them any more employable and simply remove them from the statistics. We have seen this before with the YTS scheme in the UK.

      We are changing definitions to justify this practice, too. The EU defines "early school leavers" as 17-24 year olds who have not continued in education. Not so long ago an "early school leaver" was someone who dropped out of school before the age of 17. The aim seems to be to delay the entry of young people to the workforce and force the middle-aged to continue supporting their children well into their 20s. All this to avoid doing anything constructive about the real issue causing youth unemployment - the awful state of developed world economies.

      Delete
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