YOUTH UNEMPLOYMENT
By the same author Introduction to Mathematical Economics The Future of the Multinational Enterprise (with Peter J. Buckley) Alternatives to the Multinational Enterprise
YOUTH UNEMPLOYMENT Mark Casson
Mark Casson 1979 Softcover reprint of the hardcover 1 st edition 1979 All rights reserved. No part of this publication may be reproduced or transmitted, in any form or by any means, without permission First published 1979 by THE MACMILLAN PRESS LTD London and Basingstoke Associated companies in Delhi Dublin Hong Kong Johannesburg Lagos Melbourne New York Singapore Tokyo British Library Cataloguing in Publication Data Casson, Mark Youth unemployment 1. Youth - Employment - Great Britain 2. Unemployed - Great Britain I. Title 331.3'4 HD6276.G7 ISBN 978-0-333-26565-9 ISBN 978-1-349-16120-1 (ebook) DOI 10.1007/978-1-349-16120-1 The paperback edition of this book is sold subject to the condition that it shall not, by way of trade or otherwise, be lent, resold, hired out, or otherwise circulated without the publisher's prior consent, in any form of binding or cover other than that in which it is published and without a similar condition including this condition being imposed on the subsequent purchaser This book is sold subject to the standard conditions of the Net Book Agreement
For Helen Hudson
Contents List of Tables and Figures Acknowledgements x xii 1 INTRODUCTION 1 l.l Scope of the study 1 1.2 Definition and measurement of youth unemployment 2 1.3 The social significance of youth unemployment 3 1.4 Summary of recent statistical evidence 5 1.5 Plan of the book 7 2 YOUTH UNEMPLOYMENT IN HISTORICAL CONTEXT 9 2.1 Introduction 9 2.2 The boy-labour problem 9 2.3 Pre-1914 social surveys 11 2.4 Youth unemployment in the Great Depression 13 2.5 Early postwar studies 18 2.6 Recent studies 24 2.7 Summary and evaluation of earlier studies 27 3 MODERN THEORIES OF UNEMPLOYMENT 30 3.1 Introduction 30 3.2 The function of the labour market 30 3.3 Imperfections in the labour market 31 3.4 Involuntary unemployment 33 3.5 Search unemployment 36 3.6 Benefit-induced unemployment 39 3.7 Queue unemployment 42 3.8 The training problem and structural unemployment 42 3.9 Seasonal and casual unemployment 43 3.10 Impjications for the incidence of unemployment 44 3.11 Discrimination 45 vii
viii Contents 4 THEORIES OF YOUTH UNEMPLOYMENT 48 4.l Introduction 48 4.2 Job-search hypothesis 48 4.3 Seasonal-unemployment hypothesis 50 4.4 Structural-unemployment hypothesis 51 4.5 Life-cycle hypothesis 52 4.6 Queue-unemployment hypothesis 53 4.7 Benefit-induced unemployment hypothesis 54 4.8 School-leaver hypothesis 55 4.9 Selective-redundancy hypothesis 58 4.10 Trend hypotheses 58 5 STATISTICAL EVIDENCE FOR WEST GERMANY, ITALY AND THE UK, 1973 AND 1975 61 5.1 Introduction 61 5.2 Duration of search 62 5.3 Transitions into and out of unemployment 66 5.4 Reasons for job loss 71 5.5 Reasons for job search 76 5.6 Methods of job search 76 5.7 Industrial distribution of the working population 83 6 INTERPRETATION OF THE EVIDENCE 88 6.1 Introduction 88 6.2 Job-search hypothesis 88 6.3 Seasonal-unemployment hypothesis 90 6.4 Life-cycle hypothesis 91 6.5 Queue hypothesis 93 6.6 Benefit-induced unemployment hypothesis 95 6.7 School-leaver hypothesis 97 6.8 Selective-redundancy hypothesis 100 6.9 Trend hypotheses 100 6.10 Conclusion 102 7 POLICY 103 7.1 Introduction 103 7.2 Job creation: stimulating the demand for labour 103 7.3 Reducing the supply of labour 108 7.4 An appraisal of countercyclical policies in the UK 110 7.5 Minimising frictional unemployment 115 7.6 Reversing the trend 117
Contents 7.7 An industrial policy for youth employment 7.8 Summary and conclusion Appendix: The EEC Labour Force Sample Survey Notes Index ix 119 120 123 125 139
List of Tables and Figures TABLES 1.1 Percentage unemployment by selected age groups, 1973 and 1975 5 2.1 Employment of men and boys in various establishments, c. 1909 10 2.2 Mobility of a sample of young workers in Birmingham, 1909-12 13 2.3 Methods of obtaining jobs, 1937 15 2.4 Reasons for leaving job, 1937 17 2.5 Distribution of occupational status according to potential influences on occupational choice 19 2.6 Distribution of predominant reasons for changing jobs, according to number of jobs held 20 2.7 Incidence of unemployment according to family background and boy's personal characteristics 22 2.8 Employers' view of essential and desirable characteristics of job applicants: a comparison of young people with other re~~ ~ 5.1 Percentage distribution of duration of search, for selected age groups, 1973 and 1975 63 5.2 Unemployment rates according to status a year previously, together with the percentage of unemployed who are firstjob seekers, by age group, 1973 and 1975 67 5.3 Percentage of job losses attributable to various causes, for selected age groups, 1973 and 1975 72 5.4 Percentage distribution of employed persons seeking another job, by reason for search, for selected age groups, 1973 and 1975 77 5.5 Percentage distribution of job-seekers by method of job search, for selected age groups, 1973 and 1975 80 x
List of Tables and Figures 5.6 Percentage distribution of employment by branch of industry, for selected age groups, 1975 84 6.1 Job satisfaction according to age, UK 1973 90 6.2 Average gross hourly earnings in selected manufacturing industries, 1973 and 1975 92 6.3 Percentage labour-force participation 99 7.1 Projected changes in the labour force: UK 1978-82 118 xi FIGURES 1.1 Youth unemployment and total unemployment in Italy, the UK and West Germany,1966-77 6 3.1 Disequilibrium in the labour market 33 3.2 Effect of benefits on unemployment 40
Acknowledgements My interest in the problem of youth unemployment began when I was invited to prepare a report on the subject for the Directorate General of Employment and Social Affairs of the Commission of the European Communities. On their initiative an approach was made to the Directorate of Social and Demographic Statistics of the Statistical Office of the European Communities for permission to use unpublished tabulations from the biennial Labour Force Sample Survey. I should like to thank the Commission for financial support in preparing the original report, and also acknowledge the help received from the Statistical Office, both in preparing the report and in producing the present work. I cannot name the individuals concerned, but nevertheless I am very grateful to them. Needless to say, neither the Commission nor the Statistical Office necessarily concurs either with the analysis and interpretation of the evidence, nor with the views on policy expressed in this book. The manuscript has benefited considerably from the comments and criticisms of Paul Cheshire, John Creedy, Geoffrey Denton, Peter Hart, Ros Ingham, David Metcalf and Richard Pankhurst. Naturally the responsibility for all errors and omissions is mine alone. Special thanks are due to Gerard Dummett, who gave up part of his summer vacation to help in the preparation of the statistical tables which appear in the text. The manuscript was typed most efficiently by Barbara Wall, Joan Horton, Margaret Lewis, Maggie Fillingham and Cynthia Fido. Once again I must thank my wife for looking after the interests of the nonspecialist reader. M. C. C. xii