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The impact of the Global Financial Crisis on youth unemployment

Published online by Cambridge University Press:  01 January 2023

PN (Raja) Junankar
PN (Raja) Junankar*
Affiliation:
UNSW Australia, Australia; University of Western Sydney, Australia; IZA, Germany
*
PN (Raja) Junankar, The Industrial Relations Research Centre, Business School, UNSW Australia, Sydney, NSW 2052, Australia. Email: [email protected]
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Abstract

Australia was one of the few OECD countries to emerge from the Global Financial Crisis (GFC) without facing a recession, usually defined as negative GDP growth for two consecutive quarters. However, the (overall) unemployment rate did increase following the GFC and has still not returned to pre–GFC levels. Unemployment rates for young people went up much more dramatically and remain high. This article investigates the impact of the GFC on youth unemployment and long-term unemployment. To anticipate our results, we find that the youth unemployment rates increased significantly owing to a fall in aggregate demand, although youth wages had been falling relative to adult wages. These findings do not support the commonly heard claim that youth wages are pricing young people out of the market.

Keywords

J64J21Youth unemploymentGlobal Financial Crisisminimum wagesreplacement ratesyouth labour markets
Type
Articles
Information
The Economic and Labour Relations Review , Volume 26 , Issue 2 , June 2015 , pp. 191 - 217
Copyright
Copyright © The Author(s) 2015

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