European Sociological Review

VOLUME 21

NUMBER 2

APRIL 2005

125134

125

DOI:10.1093/esr/jci008, available online at www.esr.oupjournals.org

Explaining Cross-national
Variation in Youth
Unemployment
Market and Institutional Factors
Richard Breen
There is wide variation in youth unemployment among OECD countries. This paper seeks to
explain some of this variation on the basis of institutional and economic differences
between countries. Economic differences are captured by the rate of adult unemployment,
which proxies for the overall state of the labour market. Two institutional factors play a
central part: the educational systems role in signalling the suitability of a job seeker for a
particular job, and the degree to which employers are prevented from dismissing workers.
I show that, as might be expected, relative to the level of adult unemployment, youth
unemployment is high in regulated labour markets in which employers are restricted in
their freedom to dismiss unsuitable workers. Conversely, it tends to be low in liberal labour
markets and also in countries in which the educational system sends very clear signals
about job seekers abilities and skills. This latter can offset the tendency for higher youth
unemployment in regulated labour markets. These arguments are supported by the results
of regression analyses using data from 27 OECD countries from the late 1990s.

Introduction
Unemployment rates of young people aged 1524 vary
considerably among countries of the OECD [Blanchflower and Freeman (2000) provide a comprehensive
review of cross-national differences and trends]. In
1998, for example, they ranged from 34 per cent in
Italy and Spain, 30 per cent in Greece, and 25 per cent
in France to between seven and eight per cent in Austria,
Denmark and Japan and six per cent in Switzerland. To
an extent, such variation will reflect the state of the
economy in different countries. But this is far from
being the whole story because the ratio of youth to
adult unemployment rates also varies widely, suggesting

that economic conditions affect young peoples unemployment rates in different ways in different countries.
This paper focuses on two institutional features that go
some way to accounting for this: they are the degree of
labour market regulation, and the extent to which the
educational system sends clear signals to employers
about the qualities of job seekers. Previous authors
have suggested that both these factors may be linked to
how well young people fare in the labour market
(recent examples include Gangl, 2002 and OECD,
1999). Here I develop a model of the relationship
between youth unemployment and these institutional
features and I test it using OECD data from the late
1990s.

The Author 2005. Published by Oxford University Press. All rights reserved.
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Labour Market Regulation

There are wide differences between countries in the regulation of their labour market. In recent years many
authors have suggested that Europes higher unemployment rate, when compared with the USA, is due to its
more regulated labour markets (for example, Siebert,
1997). However, the effects of such regulation are
unlikely to be quite so clear cut (Nickel, 1997). For
example, the aspect of regulation relevant to this paper is
limitations on employers dismissing of workers, and, as
Bertola (1990) notes, this will have contradictory effects
on the level of unemployment. On the one hand, more
of this type of regulation reduces unemployment by
making it difficult for employers to fire workers: on the
other, the fact that this option is denied to them will
make employers less ready to hire job-seekers. As EspingAndersen (2001) notes, labour market regulation is
likely to have its clearest effects on the distribution, rather
than the level, of unemployment.
The OECD index Overall strictness of protection
against dismissals (published in the June 1999 Employment Outlook) shows wide variation between, on the one
hand, continental European countries, such as Germany,
France, Spain and Italy, and also Sweden, Norway and
Finland, in all of which worker protection is high, and, on
the other, the Anglo-Saxon or liberal countries the
UK, USA, Ireland, Canada, Australia and New Zealand
where it is low. But there are also differences within continental Europe: worker protection in Denmark and
Switzerland is at a level more characteristic of liberal countries; furthermore, in Japan, Korea and Turkey, worker
protection is around the same level as found in Germany.

Educational Signals
Education systems differ greatly in the way in which they
try to match their outputs with the demands of the
labour market. A good deal of research by sociologists
over the past decade (Maurice et al., 1986; Allmendinger,
1989; Hannan et al., 1996; Mller and Shavit, 1998,
among others) suggests that there are two issues which
are salient for how young people fare once they leave
education: first, the degree to which educational systems
inculcate specific, rather than general, skills and, secondly, the extent to which there are direct links between
the educational system and employers. A greater emphasis
on specific skills and a closer link between schools and
employers lead to an easier transition from education to
the labour market because they send a very clear signal

to employers about the potential productivity of a given

job seeker in the job that the employer wants to fill.
In fact, these two aspects are less distinct than they
might appear to be. Educational systems that teach specific skills also tend to be embedded in institutional relationships that ensure a close link between job seekers and
employers, and, in turn, such arrangements can only
exist given the correct institutional arrangements among
employers and a particular distribution of forms of production (see, for example, Estevez-Abe et al., 2001). One
measure of the extent to which schools impart specific
rather than general skills would seem to be the proportion of those pupils in upper second-level education who
are in vocational education or who are following vocational tracks. Unfortunately, although this indicator is
readily available (from OECDs Education at a Glance, for
example), the nature of vocational education differs
greatly from country to country. In some cases, vocational schools are simply a way of providing education
for low ability pupils and have a limited success in teaching occupationally useful skills: Italy, which has a large
percentage of second-level pupils in vocational schools, is
a case in point, and France is another. In other countries
(such as Sweden) the vocational system seeks to impart
transferable vocational skills under broad headings . . .
whilst avoiding specialization (Mller and Shavit, 1998:
5). Those countries in which vocational education is truly
specific are thus a limited subset of those in which a high
proportion of pupils are in vocational schools. And these
are also the countries in which there is a clear institutional link between vocational training and employers:
employers are involved in determining what is taught
and training involves extended periods of time on an
employers premises. The German-speaking countries
are, of course, the best examples.

Regulation and Signals

The relationship between labour market regulation and
the signalling function of the educational system can be
summarised in the simple cross-tabulation of Figure 1.
This shows the possible combinations of labour market regulation (in this case, the difficulty associated with
dismissing employees) and educational signalling (how
clearly employers can determine, ex-ante, the suitability
of a job seeker for the job they are offering) as simple
dichotomies. Empirically, one combination, low regulation and high signalling labelled B in Figure 1 does
not exist (although countries like Denmark and Switzerland
approximate it to some degree). The other types, shown

CROSS-NATIONAL VARIATION IN YOUTH UNEMPLOYMENT

Labour Market regulation

High

Low

High

Low

127

Educational signalling

Figure 1 Regulation and signalling

in the other cells of Figure 1, are the countries, such as

Germany, Austria and the Netherlands, in which both
regulation and signalling are high (A), those (like Italy,
Spain and France) in which regulation is high but
signalling is weak (C) and those in which regulation and
signalling are low (D: for example, the USA, UK and
Ireland). High regulation reduces employers willingness
to hire new workers because of the difficulty of dismissing them should the need arise. And, given that the
youth labour market is characterised by a high proportion of people seeking a first job, the deregulated labour
markets of the USA and the UK, for example, should,
ceteris paribus, show lower levels of youth unemployment. But strong signals from the educational system
help to reduce the likelihood that employers will want
the option to dismiss workers because they can be confident that the job seeker they are hiring is the right person for the job. Thus, high signalling will offset the
negative impact of high regulation. As a consequence,
youth unemployment should be highest in those countries characterised by cell C of Figure 1 and lower in
those that fall into cells A and D.
In determining the observed rate of youth unemployment, these institutional factors will interact with economic, or market, factors. Most importantly, youth
unemployment will be higher when adult unemployment
is high, since both will respond to the general state of the
labour market. Therefore, our analysis of the impact of
the two institutional factors must be conditioned on the
prevailing level of adult unemployment. One way of
doing this is to ask what effect these factors will have on
the level of youth unemployment relative to that of adults.

A Model
Assume a labour market in which individuals participate
for J periods. Periods j = 1 to j* comprise youth while

j* to J comprise adulthood. In period 1 all individuals

begin as first job seekers, having just left the educational
system. We assume that workers only leave a job
through dismissal or retirement. The one period, time
invariant transition probabilities between the states E
(employed), U (unemployed having had a job) and F
(unemployed and seeking a first job) are shown in
Figure 2.
Q is the probability of an employed person losing her
job, while G is the probability of a jobless person acquiring one. I distinguish Gu (the probability of an unemployed person getting a job) from Gf (the probability for
a first job seeker). I further assume (for ease of exposition) that all cohorts entering the labour market are, and
remain, the same size.
The parameter Gt (where t stands for type; t = u or f) is
determined as follows. An employer hires a worker if
mtA + (1 mt)[(1 b)B + bC] > N,

for t = u, f

(1)

where mt is the ex-ante subjective probability that the

job seeker will prove to be suitable for the job and b is
the probability that the employer will not be able to dismiss the worker. A is the utility attached to hiring a job
seeker whose skills are suitable for the job, B is the utility
associated with hiring an unsuitable worker and being
able to dismiss him or her, C is the utility of hiring an
unsuitable worker who cannot be dismissed, and N is
the utility of not hiring. Thus the left hand side of equation
(1) is the expected utility of hiring a worker. We assume
A > max (B, N) and min (B, N) > C.
We can write Gt(m,b) to indicate that G is a function
of m and b, with G/m > 0. Q, on the other hand, is a
function of b but not of m, because whether or not an
employer wants to dismiss a worker depends not on the
employers ex-ante assessment of the workers suitability, m, but on his or her observed suitability. We have

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Period: j+1

Employed

Unemployed

First job seeker

Employed

1-Q

Unemployed

Gu

1-Gu

First job seeker

Gf

(1-Gf)

Figure 2 Transition probabilities

G/b < 0: high levels of employment protection make

employers less willing to hire. According to Bertola
(1990), the effect of this on the equilibrium level of
unemployment is offset by the reduction in employers
capacity to dismiss workers (Q/b < 0). But smaller values of Q and G lead to longer durations in both the
employed and unemployed states which means a slower
transition from first job seeking to a job, and a greater
concentration of unemployment among those who have
never worked than would be found were both Q and G
larger.
The equilibrium unemployment rate in the first-order
Markov process shown in Figure 2 is given by Q/(Q + Gu).
Since labour market regulation reduces Q and G then
there is no reason to suppose that this equilibrium is
sensitive to the extent of such regulation. However, the
speed at which this equilibrium is reached depends on
how quickly (1 Gf)j converges to its limit of zero as j
gets bigger. This depends on the absolute magnitude of

Gf because the expected duration of first job search is

given by 1/Gf. Where Gf is low (as it is when b is large),
convergence will be slower than in a labour market in
which Gf is high (which may be due to m being large
and/or b being small). This means that a given age
cohort will be slower to reach its equilibrium. Thus a
higher ratio of youth to adult unemployment will occur
in regulated labour markets because of the slower
absorption of first job seekers.
We see some limited evidence for these arguments
in Table 1. This compares two-year transition rates
between full-time education, unemployment or not in
the labour force, and employment, among young people
aged 1629 in Italy and Germany. Both countries are
characterised by high employment protection, but educational signalling is high in Germany and low in Italy.
What is striking is the location of the similarities (underlined figures in the Table 1) and differences (in italic) in
these tables. On the one hand, the outflow from a job in

Table 1 Transition probabilities between labour market states, Italy and Germany, 19931995

Status in 1993

Status in 1995
Education

Unemployed/NIL

Job

Italy
Education
Unemployed or not in labour force
Job

0.69
0.04
0.01

0.22
0.70
0.08

0.09
0.26
0.91

Germany
Education
Unemployed or not in labour force
Job

0.62
0.18
0.07

0.09
0.42
0.06

0.29
0.40
0.87

Source: Soro-Bonmati, 2000: 48, ECHP data.

CROSS-NATIONAL VARIATION IN YOUTH UNEMPLOYMENT

1993 is almost identical in the two countries, with a very

high rate of persistence in employment (the biggest, but
still rather slight, difference is the higher proportion of
German young people who leave a job to return to the
educational system). But this is exactly what we should
expect, given that the two countries have the same level
of employment protection. The major differences occur
in the inflow to jobs. In Germany the rates of transition
from both education and unemployed or not in the
labour force are, at 29 and 40 per cent, much higher than
the figures for Italy (nine and 26 per cent). This is again
consistent with the argument made here namely that,
in the latter, employment protection makes employers
reluctant to hire job seekers while, in Germany, where
employment protection is equally stringent, this effect is
overcome by the strong signals sent by the educational
credentials that job seekers possess.

Data
The data used to test this model come from the OECD.
Unemployment rates for men and women aged 1524
(youth) and 2554 (adult) for all OECD countries for
the years 1995 through 1999 are taken from the Statistical Annex of various issues of Employment Outlook. The
extent of employment protection is measured by the
OECDs scale called Overall strictness of protection
against dismissals (regular employment) published in
Employment Outlook, June 1999. This scale varies
between zero and six (with higher values denoting
higher levels of worker protection against dismissal).
Table 2 shows that the mean is 2.17 and the standard
deviation 0.86. The USA has the lowest value (0.2) while
Portugal scores highest with 4.7. In fact, the Portuguese
figure is a very marked outlier: the next highest scoring
country is Korea with a value of 3.2 which is over one
and quarter standard deviations below Portugals. Of
course, this indicator is far from perfect though it has
been constructed to incorporate very detailed aspects of
legislation in each country (OECD, 1999: 4968). But
because we here use the scale that refers to regular

129

employment the measure fails to take into account that,

in some countries with high levels of worker protection,
the application of such legislation is restricted in various
ways (for example, to firms employing more than a certain number of workers) and that exemptions exist, in
the form of specified temporary contracts, for the
employment of younger job seekers. Such contracts have
long existed in France, for example, and have been
extensively used in Spain since the early 1990s. On the
other hand, the index provides the only cross-nationally
comparable data set on worker protection against dismissals, and its shortcomings are not great enough to
cast serious doubt on the conclusions one would draw
about the pattern of differences in the regulation of the
labour markets between the types of countries identified
in Figure 1.
The degree to which the educational systems outputs
send clear signals to employers about their suitability is
measured by the percentage of those men and women
enrolled in upper secondary education who are in vocational and technical programmes that combine school
and work-based training. This information relates to
1996 and comes from Education at a Glance, 1998.
Scores range from zero (observed in 10 countries) to 69
(Poland) and there are no outliers. Both this variable
and the measure of employment protection are taken as
constant within each country over the 19951999
period.1
The dependent variable in the analysis is the youth
unemployment rate in a given country in a given year.
The underlying assumption is that the rate can be written as a multiple of the adult rate, with the multiple
varying according to the countrys level of employment
protection and of educational signalling. Table 3 shows
some illustrative data for countries in each of the categories identified in Figure 1. The only surprise in the allocation of countries to categories is perhaps Belgium,
whose low level of employment protection and lack of
vocational training places it among the liberal (type D)
countries.
From Table 3 it is clear that the youth/adult ratio is
lowest in countries that combine high protection and

Table 2 Descriptive statistics

Ratio of youth to adult unemployment rates

Employment protection index
Enrolment rate in secondary vocational and technical
education which combines school and work-based training

Mean

SD

Minimum

Maximum

2.4
2.17
16.38

0.65
0.86
22.21

1.076
0.2
0

4.05
4.3
69

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Table 3 Youth/adult unemployment rates, employment protection and education/ work linkages in selected countries,
average values 19951999
Ratio of youth/adult
unemployment rates

Employment
protection

Educational
signalling

Low employment protection and low signalling (D)

Australia
Belgium
Canada
New Zealand
Ireland
UK
USA
Average

2.30
2.63
2.00
2.40
1.69
2.15
2.79
2.28

1.0
1.5
0.9
1.7
1.6
0.8
0.2
1.1

0
3
missing
8
5
0
missing
3.2

High employment protection and high signalling (A)

Germany
Austria
Czech Republic
Poland
Netherlands
Hungary
Average

1.14
1.46
2.25
2.55
2.05
2.05
1.92

2.8
2.6
2.8
2.2
3.1
2.1
2.6

52
34
47
69
23
26
41.8

High employment protection and low signalling (C)

Portugal
Italy
Spain
Greece
France
Sweden
Norway
Finland
Japan
Korea
Mexico
Turkey
Average

2.42
3.62
2.04
3.80
2.46
2.55
3.21
2.23
2.35
3.31
2.25
2.91
2.76

4.3
2.8
2.6
2.4
2.3
2.8
2.4
2.1
2.7
3.2
2.3
2.6
2.7

0
0
2
0
11
0
0
5
0
0
0
missing
1.6

Others
Denmark
Switzerland
Average

1.68
1.52
1.60

1.6
1.2
1.4

48
60
54

Sources: Ratio of youth to adult unemployment: OECD Employment Outlook (various) Employment protection: OECD Employment Outlook, June 1999.
Educational signalling (percentage in upper secondary education school and work-based training): OECD Education at a Glance, 1998.

high matching (type A in Figure 1). The differences

between types D and C, which reflect the effect of high
employment protection, are much less marked,
although present.2 Within each grouping there is considerable heterogeneity in the ratio, suggesting that other
factors (such as demography) may also play important
roles. Equally, there is no simple relationship between
welfare state regime type (Esping-Andersen, 1990) and

the groupings shown here. Although countries with liberal welfare regimes are found in group D, and all southern European welfare states are in group C, both the
social democratic regimes and the conservative regimes
are divided between categories A and C. And, as noted
earlier, Switzerland and Denmark might be held to
constitute a fourth group, B, in which employment protection is low but matching is high.

CROSS-NATIONAL VARIATION IN YOUTH UNEMPLOYMENT

Results

Table 4 Regression results: the effects of market and institutional factors on youth unemployment rates
(standard errors in parentheses)

The model is operationalized as follows:

ln[Y(i,t)] = b0 + b1x1 + b2x1x2
+ b3 ln[A(i,t)] + it

(2)

The dependent variable, Y(i,t), is the youth unemployment rate in country i in year t; x1 is the countrys score on
the OECD employment protection index; x2 is its enrolment rate in secondary vocational and technical education
which combines school and work-based training (educational signalling); and A(i,t) is the adult unemployment
rate. The non-existence of liberal labour markets and high
matching is reflected in the models specification: the
absence of a main effect of x2 assumes no effect of matching in the absence of labour market regulation.3
Making use of the logarithmic formulation of equation
(2) and rearranging yields
Y(i,t) = A(i,t)b3 B0 exp[x1 (b1 + b2x2)]

131

(3)

where B0 is equal to exp(b0). The youth rate is proportionate to a non-linear function of the adult rate. The
non-linearity depends on b3 and the proportionality factor
depends on a constant, B0, and on the effects of employment protection and educational signalling. As written
in equation (3) these latter effects can be expressed in
terms of employment protection, whose effect is positive
in the absence of signalling (because we expect b1 > 0)
but is then offset the greater the degree of educational
signalling (because we expect b2 < 0).4 One interpretation of the b3 coefficient is that it allows the ratio of
youth to adult unemployment rates to vary according to
the level of adult unemployment, so that a value of b3 > 1
would indicate that the ratio was greater the higher the
level of adult unemployment.
The models are estimated using 5 years worth of data
(19951999) for the 27 OECD countries. We omit Portugal because it is a large and potentially influential outlier on x1 and we omit Canada, the USA and Turkey, all
of which are missing information on x2. This leaves us
with 113 observations5 from 23 countries. The observations from within a country are not independent and the
standard errors are corrected to allow for this using
Statas cluster sub-command. This produces robust
estimates of standard errors and it also allows for the fact
that observations are independent between countries
but not within them.6
The coefficient estimates and standard errors of the
model are shown in Table 4. All the coefficient estimates

Dependent variable Ln(youth

unemployment rate)

Constant
x1 (employment protection index)
x1 x2 (employment protection
index enrolment rate)
Ln(adult unemployment rate)

Coefficient

0.787 (0.178)
0.111 (0.047)
0.003 (0.001)
0.950 (0.082)

N = 113, countries = 23, R = 0.84, RMSE = 0.238.

2

are significant at the 0.05 level or better and the model

accounts for a very large share of the variance in youth
unemployment rates. One important result is that the
95 per cent confidence interval for b3 runs from 0.78 and
1.12 and so we cannot reject the hypothesis that b3 = 1.7
Furthermore, the value of 0.78676 for the constant term,
b0, in this model yields a value of B0 [in equation (3)]
equal to 2.19 and in this case we cannot reject the
hypothesis that B0 = 2. Taken together these results
imply that there is a baseline ratio of youth to adult
unemployment rates of around two: this is the relationship that is expected to hold in a hypothetical liberal
country without either employment protection or any
enrolment in work-based vocational education. This
proportionality factor is then raised or lowered depending on the extent of employment protection and educational signalling. A country with the maximum
employment protection (3.2) and zero enrolment in
combined school and work-based training would have
an estimated youth unemployment rate more than three
times (3.14) its adult rate. But this effect of employment
protection is offset entirely when the educational enrolment rate is 32 per cent. When both x1 and x2 are at their
observed maximum (x1 = 3.2 and x2 = 69) the youth rate
is expected to be 1.45 times the adult rate. It is also the
case that when the enrolment rate exceeds 32 per cent,
the overall impact of employment protection on the
ratio becomes negative, reflecting the effects of a low rate
of dismissal from jobs and a high rate of inflow into jobs.
This explains why Switzerland and Denmark, which
have, respectively, values of x2 greater than or approximately equal to the German value and have lower values
on x1, nevertheless have higher youth/adult ratios. The
higher ratio for the Netherlands is explained by its combination of high employment protection and a rate of
enrolment in combined school and work-based training
that is less than the 32 per cent threshold. More generally

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the model confirms the hypothesis that the ratio of

youth to adult unemployment would be lowest in countries where the educational system sends clear signals
about a job seekers potential productivity. It is also
more effective in maintaining a low ratio than is a liberal
market regime.8

impact of protection and signalling in accounting for

variation between countries if they are strongly correlated, at the country level, with measures of employment
protection and educational signalling.

Notes
Conclusion
The results presented here support the argument that
institutional factors interact with market forces to shape
levels of youth unemployment in OECD countries. They
reinforce the view that systems of vocational training
which teach specific skills and incorporate a strong
work-based element provide a preventative to youth
unemployment by offsetting the negative effects of
extensive worker protection against dismissals.
It need hardly be said that factors other than signalling
and employment protection influence rates of youth
unemployment. On the one hand it may be that other
institutional requirements of specific vocational training
systems such as corporatism or centralised bargaining
have effects on youth unemployment in other ways. One
example would be through co-ordinated systems of early
retirement such as one finds in several continental European countries. But that these are not in themselves sufficient is clear from the fact that they are common not
only in Germany but also in France and Italy. On the
other hand, demography may be influential. In the
model developed here it was assumed that all age
cohorts were of equal size: however, if smaller cohorts
start to enter the labour market we might expect this to
depress youth unemployment.9 The conclusion to be
drawn from these considerations is that the model I have
presented is partial and the relative contribution of the
factors on which I have concentrated can only be established through the use of a more encompassing specification. More powerful tests could be devised by deriving
the models implications for individual behaviour, and
this would shift the focus from cross-sectional and
aggregate data to micro-level and longitudinal data. Not
only would this permit the use of more control variables,
it would also allow the testing of more subtle hypotheses
(such as that employment protection affects employment chances differentially, depending on the individual
job-seekers level of education or type of qualifications)
and the drawing of finer distinctions (between types of
vocational training, for example). But, although these
further controls may be important for explaining variation between individuals, they will only reduce the

1. This follows because we do not have annual measures of either, though the absence of temporal
change is a reasonable approximation to the truth,
given that both the extent of employment protection
and the nature of the education and training system
are likely to change slowly, if at all. Comparisons
between the index of employment protection used
here and the same index constructed for the late
1980s (OECD, 1999: 57) reveal remarkable stability.
2. One important difference between A and D is that in
the former dismissals will be infrequent while this
will not be so in the latter where matching in the
youth labour market is much more a process of trial
and error.
3. Models including x2 or replacing the interaction
term with the x2 main effect perform more poorly
(in terms of RMSE) than the one reported.
4. An earlier version of the paper reported the regression of the logarithm of the ratio of youth to adult
rates on x1 and x1 x2 (logs are used because the
ratio must be strictly positive). The current specification (which involves taking the denominator of
the dependent variable to the right hand side of the
equation) allows a much more flexible relationship
between youth and adult rates. In particular it
makes no assumption of linearity. Furthermore, by
having the adult rate as a regressor we avoid having
a model in which none of the explanatory variables
changes over time (which leads to predicted values
for each country that remain the same in every
year).
5. Greece and Poland have a missing value for the
dependent variable in 1999.
6. This is preferable to alternatives based on randomeffects models which rely on assumptions about the
distribution of the random effect component within
observations of the same country. Details of the
computation of standard errors using the cluster
sub-command can be found in the Stata manual.
7. In this model the rate of adult unemployment is
used to proxy the overall state of the labour market.
But it might be argued that the adult rate is a poorer
proxy in countries with high employment protection because here it cannot adjust so readily to

CROSS-NATIONAL VARIATION IN YOUTH UNEMPLOYMENT

changes in market conditions. This would imply

that b3 itself should depend on the level of employment protection. This was tested through the inclusion of an interaction term between the log of adult
unemployment and x1, but it proved non-significant.
8. It might be argued that a young person is better off
in a society in which youth unemployment is low
and the ratio of youth to adult rates is high than in
the reverse. This raises the question of whether the
institutional features on which I have focused are
themselves related to overall or to adult unemployment. If high levels of employment protection
reduced the rate of adult unemployment then, notwithstanding its effect in increasing the youth/adult
unemployment rate ratio, the absolute level of youth
unemployment might be lower in countries with
stringent employment protection. In fact this is not
the case. The correlation between the rate of adult
unemployment and the measure of employment
protection is 0.03 and between adult unemployment
and the enrolment rate in vocational and technical
education, which combines school and work-based
training, is 0.10.
9. This argument is advanced by, among others,
Korenman and Neumark (2000) on the basis of an
empirical study using data from several OECD
countries covering the period 19701994. On the
other hand, Gangl (2002), using Labour Force Survey data for 12 European countries, finds no significant
effects of declining relative size of youth cohorts.

Acknowledgements
Thanks to Lynn Cooke, John Goldthorpe, Karl Ulrich
Mayer, Leire Salazar, Louis Andre Vallet, Herman van de
Werfhorst, the current and former editors of European
Sociological Review, Hans Peter Blossfeld and Harry
Ganzeboom, and three anonymous referees for comments on earlier drafts of this paper.

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134

BREEN

Soro Bonmati, A. (2000). From School to Work:

a comparison of labour market transitions
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Authors Address
Nuffield College, Oxford OX1 1NF, UK. Email: richard.
breen@nuffield.ox.ac.uk.
Manuscript received: January 2003