This paper is a revised and substantially expanded version of a background note that was prepared for the report on the Youth Employment Crisis: Time for Action that will be presented and deliberated at the 101st session of the International Labour Conference (1 - 14 June 2012).
The authors highlight salient empirical regularities. First, the youth unemployment rate is typically twice the adult unemployment across low, middle and high-income countries. Second, youth employment is much more sensitive to business cycles and policy-induced economic downturns than adult employment. Third, short-run demand shocks mutate into long-run 'scarring' effects manifested in reduced employment and earnings opportunities that can last decades. Young people with limited skills and from disadvantaged backgrounds are particularly vulnerable to 'scarring' effects.
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