Thursday, 18 August 2011

Education as confound in youth unemployment?

With due respect, this only matters if we have substantially more kids in education who are also in the labour market now than was the case in the mid-2000s. From the NZ Herald:
The Government is questioning the extent of youth unemployment by claiming that many defined as unemployed may be at school or university.
The youth unemployment rate - for those aged 15 to 24 - is 17.4 per cent for the June quarter, according to the Household Labour Force Survey.
For those aged 15 to 19, the rate balloons to 27.6 per cent.
Yesterday Prime Minister John Key downplayed this figure during question time, saying 60 per cent of the people being counted were at school or university.
It was not clear if he was quoting an official figure.
This week Mr Key suggested the survey's definition of "unemployed" was different to how people normally interpreted the term.
"They may well be at university. They may be at school. That does not mean they are unemployed."
Maybe StatsNZ has better data on the proportion of those youths reporting unemployment while in education compared to during prior downturns. It's sure not in the publicly available HLFS data.

But really, this ought to affect the employment rate rather than the unemployment rate. Usually, folks in education aren't in the labour force. That's why I've been using the unemployment rate rather than the employment rate. Most folks look at the employment rate for overall effects of minimum wages, but I'm focusing on youths and worried that lots of kids dropping out of the labour force to head into education would skew results. The unemployment rate only counts folks claiming to be looking for work. (Note: I've also run everything using the employment rate instead of the unemployment rate; nothing much changes.)

Can we build a story where education is driving things? I can imagine one. Suppose in the prior period the government was far more generous with living expenses for kids in education. A regime change for student funding for tertiary could send a bunch of kids into the part-time labour force where they'd often report unemployment. That's certainly possible. Except that, as I understand things, National's only really talked about cutting loans for living expenses for mature students - the over 55 group. Somebody correct me if I'm wrong here though.

I am trying to get some of the more disaggregated Stats data....


  1. In the June HLFS comments we get this:

    "The NEET rate (the proportion of 15 to 24 year-olds Not in Employment, Education or Training) was 9.8% for the year to June 2011, down from 10.7% a year ago. There were 62,300 youth who were NEET in the year to June 2011.

    The fall in the NEET rate appears to be due to a modest increase in employment for 20 to 24 year-olds. While 15 to 19 year-olds have experienced falling employment and rising unemployment, a greater proportion of this age group are still at school and the NEET rate for this age group decreased during the year. This indicates that many young people are deciding to stay in education for longer, or enter education, as labour market conditions remain challenging."

    Which is pretty confusing and seems to indicate a buildup since about 2008 of 62,000 kids who "wanted" to leave education but over half didn't because there were no jobs.
    That would justify the Govt using just the actual numbers being paid the dole..?


  2. @JC: Sure, but we don't know how many NEETS are in the labour force. If they're not either looking for work or in work, they're not in the labour force.

  3. Hi Eric,

    Can I ask where you got the series for adult unemployment? I found the series you used for youth unemployment on infoshare. There didn't seem to be a single category that would correspond to adult - total all ages seemed closest but also includes 15 to 19 year olds.

    Did you construct the measure for adult unemployment?

    Alex Olssen

  4. I had to construct it. Take total unemployed minus youth unemployed over total labour force minus youth labour force. I put a Stata dataset up with it a while back.