Discussion paper
DP19351 Young, Educated, Unemployed
In a number of European countries, unemployment rates for young college graduates are higher than for young high school graduates. This presents a challenge for canonical models of unemployment that suggest that unemployment should decrease with education. I offer a framework based on a search and matching model with productivity differences and the possibility of mismatch where relative efficiencies are estimated using the wage data and the structure of the model. My counterfactual analysis shows that the productivity channel is crucial in explaining relative unemployment rates whereas labor market frictions are crucial in estimating relative efficiencies.
£0.00
