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Youth unemployment produces multiple scarring effects

McQuaid, Ronald, (2017), “Youth unemployment produces multiple scarring effects”, EUROPP, 18 February

There are lots of problems with analysing the causes and effects of such long-term scarring and the reasons for it appear inter-connected. For instance wellbeing and mental health may affect subsequent income and chances of getting and keeping a job, but are themselves influenced by unemployment. Some broad overlapping reasons for scarring include: (1) employer responses, (2) the person’s human capital, (3) their expectations, (4) job search and (5) the influence of external factors in the economy and society.

First, employers may consider periods of unemployment on someone’s CV to be a negative signal, for example signalling perceived low productivity, hence increasing the likelihood of a person not being hired or being offered only a lower level job.

Second, unemployment at the start of their career may lead to having lower skills or to a general loss of confidence by the individual. Cognitive skills (for example, learning skills and the ability to process information) are likely to affect the productivity and adaptability of a worker and hence their likely pay or ability to get a suitable job later in life. Indeed, having no or few qualifications is usually a predictor of unemployment. Non-cognitive skills (for example, a person’s dependability, self-discipline, inter-personal skills, communication, adaptability, consistency, persistence and self-confidence) are also important.

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