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

Sammanfattning

Sweden has one of the highest youth unemployment rates in Europe despite lacking the traditionalcharacteristics that are usually associated with high youth unemployment. This can impose largesocietal challenges if not addressed. This thesis has therefore utilised panel data from StatistiskaCentralbyrån and Arbetsförmedlingen to investigate microeconomic factors that possibly relate toyouth unemployment at the municipal level in Sweden. These factors are also measured in relationto adult unemployment to observe if different factors are related to youth and adult unemploymentdifferently. Utilisingatwowayfixedeffectspanelregressionseveraltheoreticallysupportedvariableswere found to have a statistically significant relationship with youth unemployment at a correlationlevel. The factors of income per capita, fiscal policy, share with foreign background and share withtertiary 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 andtertiary education was the strongest in the base specification. However the explanatory power of themodels in this thesis were all below 10% when measuring youth unemployment, therefore indicatingthat there likely exists many other unmeasured factors. Despite the low explanatory power thisthesis 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.