Young people in high income countries have been particularly severely affected by the recent recession and the period of ‘austerity’ which has followed it. The analysis seeks to evaluate the potential that expansionary fiscal policy can have – and under which conditions – to ameliorate, and restrictive fiscal policy to worsen, conditions in youth labour markets. Through a panel econometric model applied to European countries, the analysis finds that a fully countercyclical fiscal policy is an instrument well-suited to ameliorating youth unemployment. Governments should increase expenditure and reduce taxation during recessions, whilst doing the opposite when the economy is expanding; expansionary fiscal policy during a downturn is most effective if preceded by a relatively conservative fiscal policy in nonrecessionary circumstances.
Fiscal policy and the youth labour market
o'higgins, Shane Niall
2016-01-01
Abstract
Young people in high income countries have been particularly severely affected by the recent recession and the period of ‘austerity’ which has followed it. The analysis seeks to evaluate the potential that expansionary fiscal policy can have – and under which conditions – to ameliorate, and restrictive fiscal policy to worsen, conditions in youth labour markets. Through a panel econometric model applied to European countries, the analysis finds that a fully countercyclical fiscal policy is an instrument well-suited to ameliorating youth unemployment. Governments should increase expenditure and reduce taxation during recessions, whilst doing the opposite when the economy is expanding; expansionary fiscal policy during a downturn is most effective if preceded by a relatively conservative fiscal policy in nonrecessionary circumstances.I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.
