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Fixing Europe’s Youth Unemployment and Skills Mismatch

Floreani, Vincent Arthur, Fixing Europe’s Youth Unemployment and Skills Mismatch, Can Public Financial Support to SMEs Be Effective? The Case of the European Commission and European Investment Bank Joint Initiatives (April 1, 2014). Available for download at SSRN:

““We risk having a generation that hasn’t held a job. Personal dignity comes from working […] Young people are in a crisis.” Pope Francis – July the 22nd, 2013. Youth unemployment is a critical issue across the European Union with 5.5 million people unemployed among the 18-24 years age group (23.3% unemployment rate). Evidence reveals that youth unemployment in the EU mainly arises from two sources. Firstly, young people lack some of the relevant skills for the labor market. Secondly, firms’ ability to hire them is challenged by a constrained access to finance. In reaction, European leaders have implemented “offensive” programs (F. Hollande). Among them, leading initiatives sponsored by the European Commission(EC) and the European Investment Bank (EIB), aim to provide subsidized loans to Small and Medium Enterprises (SMEs) for hiring and training young people. This approach seems relevant and sustainable as it addresses the two sources of youth unemployment and ought to combine jobs opportunities with skills development. This thesis assesses the relevance and scope for effectiveness of concessional loans provision to SMEs as a strategy to bolster youth employment and training opportunities. Starting with a comprehensive analysis of the EU youth unemployment, it outlines the rationale for a public intervention supporting SMEs based vocational training programs for youth. In addition, it exposes the main instruments mobilized in this field by the EU institutions. Through a deep demand-driven firm level and regional analysis, it determines both the needs and expected returns of such initiatives. Eventually, these results associated with a review of some successful case studies, set out the most effective programmatic, policy and financing intervention types, which ought to be scaled up within the EU.”

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