Over-indebted Youth: Unemployment and Deleveraging in the Euro Zone

Harald Sander

No 2013/10, Working Papers from Maastricht School of Management

Abstract: This paper looks at the Euro-zone crisis from the point of view of the Euro-zone youth. Young people in many Euro-zone countries are today confronted with high and persistent unemployment with potentially long-lasting “scarring effects” compromising their present and future well-being. While lower and sustainable public debts are desirable from the point of view of inter-generational justice, it is argued that this objective cannot be achieved by means of front-loaded austerity policies. With long-term negative consequences of short-term austerity it is shown that not only social consideration but also the underlying public debt dynamics in the presence of scarring and other hysteresis effects make a strong case for a gradual growth-oriented approach to deleveraging that carefully aims at balancing short- and long-term costs and benefits while protecting vulnerable young people.

Keywords: Youth unemployment; scarring effects; hysteresis; debt deleveraging; European Monetary Union; financial crisis (search for similar items in EconPapers)
JEL-codes: E6 F4 H63 J4 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2012-09
New Economics Papers: this item is included in nep-eec, nep-eur and nep-mac
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http://web2.msm.nl/RePEc/msm/wpaper/MSM-WP2013-10.pdf First version, 2013 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:msm:wpaper:2013/10

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