Swedish Youth Unemployment - An Empirical Study of the Municipal Factors Affecting Youth Unemployment

Abstract

Sweden has one of the highest youth unemployment rates in Europe despite lacking the traditional characteristics that are usually associated with high youth unemployment. This can impose large societal challenges if not addressed. This thesis has therefore utilised panel data from Statistiska Centralbyrån and Arbetsförmedlingen to investigate microeconomic factors that possibly relate to youth unemployment at the municipal level in Sweden. These factors are also measured in relation to adult unemployment to observe if different factors are related to youth and adult unemployment differently. Utilisingatwowayfixedeffectspanelregressionseveraltheoreticallysupportedvariables were found to have a statistically significant relationship with youth unemployment at a correlation level. The factors of income per capita, fiscal policy, share with foreign background and share with tertiary education were all found to have a statistically significant relation to youth unemployment. Income per capita was consistently the strongest indicator across the different specifications and tertiary education was the strongest in the base specification. However the explanatory power of the models in this thesis were all below 10% when measuring youth unemployment, therefore indicating that there likely exists many other unmeasured factors. Despite the low explanatory power this thesis provided initial insights on the issue of Swedish youth unemployment at the municipal level. These results can assist local policy makers in addressing youth unemployment.