Page 34 - Guiding-at-risk-youth-through-learning-to-work-Lessons-from-across-Europe

Guiding at-risk youth through learning to work
Lessons from across Europe

Figure 2. The cost of school failure
Private
• Higher unemployment incidence and unemployment duration.
Higher own discount rate, i.e. valuing less present relative to future
income, thus be willing to invest in human or other capital
• Lower initial and lifetime earnings, and own health status
• Less risk aversion and lifelong learning participation
• Lower lifetime satisfaction

Social
• Increased criminality
• Lower positive spillover effects on coworkers and lower rate of economic
growth. Lower intergenerational effects on children and parents, and lower
public health status. Lower social cohesion
• Higher unemployment

Fiscal
• Lower tax revenues
• Higher police and criminal justice expenditure

NB: ‘Higher’ or ‘lower’ is defined relative to a control group situation of non-school failure,
however the latter is defined.
Source: Psacharopoulos, 2007.

Many young people who leave school early want to work to earn money.
However, one of the main barriers young people came across when looking for
work is their lack of experience. Many school leavers are unable to find a job until
they have experience, but they struggle to get a job to get experience in the first
place. For this reason, unemployment is far more common among school drop-
outs than their more highly educated peers. According to the 2007 Labour force
survey, unemployment among lower secondary school graduates in the EU at
13.2 % was more than five percentage points higher than that of young people
who had obtained an upper secondary level qualification (7.9 %). Once in
employment, the earnings of those who have completed upper secondary
education are approximately one-third more than the earnings of those who left
after completing lower secondary level (Psacharopoulos, 2007). Others have
estimated the rate of return on a year of schooling at between 10 % and 20 %
(Carneiro and Heckman, 2003; Psacharopoulos, 2007).
Supporting the acquisition of high level skills is even more important in the
context of the current economic climate. In financially difficult times, companies
downsize their recruitment campaigns and benefit from the greater availability of
qualified candidates on the job market (European Commission, 2008a).
Unemployment has been rising sharply in the European Union since March 2008
and the statistics show that young people have been particularly vulnerable
(Eurostat and Hijman, 2009). Youth unemployment increased by 3.9 percentage

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