Determinants of Brazilian Youth Employment Variation: A Structural Decomposition Analysis for 2002–2015

Abstract

Between 2002 and 2015, the number of young people participating in the labor market fell by 19.98% while the number of employed adults increased by 34.18%. The mismatch between these two rates is related to a set of factors such as the economic cycle, qualification levels, and individual decisions to participate in the labor market. In addition, variations in the final demand composition and in the sectoral labor use may explain the drop in youth employment, a point that is barely explored in the literature. In this context, this paper examines the causes of the variation in employment of young Brazilians using a Structural Decomposition Analysis. For this purpose, we used input-output matrices estimated from the National Accounts data and microdata from the National Household Sample Survey for the period 2002–2015. The results showed that the main explanatory factors for the occupational reduction of young people in the period were the decrease in the relative participation of young people in total employment, the increase in the overall sectoral labor productivity, and the reduction in the degree of labor utilization of the youth employment. On the other hand, the components of the final demand contributed positively to the variation in employment of this group. The increase in household consumption was responsible for most of the jobs creation for young people, followed in importance by investment, exports, and government consumption.