It is clear that youth unemployment leads to many negative outcomes in terms of both material and mental wellbeing. Here, Ronald McQuaid summarises the multiple scarring effects of youth unemployment. Current high levels of youth unemployment will therefore be felt by society for decades, making effective policy responses incredibly important. 
Being unemployed when young leads to a higher likelihood of long-term ‘scarring’ in later life in terms of subsequent lower pay, higher unemployment and reduced life chances according to much research (see, for example, work by Bell & Blanchflower and Strandh et al). There is also evidence of greater mental health problems in their 40s or 50s. So the impacts of current high levels of youth unemployment will be felt by society for decades.
There are lots of problems with analysing the causes and effects of such long-term scarring and the reasons for it appear inter-connected. For instance wellbeing and mental health may affect subsequent income and chances of getting and keeping a job, but are themselves influenced by unemployment. Some broad overlapping reasons for scarring include: (1) employer responses, (2) the person’s human capital, (3) their expectations, (4) job search and (5) the influence of external factors in the economy and society.
First, employers may consider periods of unemployment on someone’s CV to be a negative signal, for example signalling perceived low productivity, hence increasing the likelihood of a person not being hired or being offered only a lower level job.
Second, unemployment at the start of their career may lead to having lower skills or to a general loss of confidence by the individual. Cognitive skills (for example, learning skills and the ability to process information) are likely to affect the productivity and adaptability of a worker and hence their likely pay or ability to get a suitable job later in life. Indeed, having no or few qualifications is usually a predictor of unemployment. Non-cognitive skills (for example, a person’s dependability, self-discipline, inter-personal skills, communication, adaptability, consistency, persistence and self-confidence) are also important.
Chosen excerpts by Job Market Monitor. Read the whole story at British Politics and Policy at LSE – Youth unemployment produces multiple scarring effects.
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