YOUTH EMPLOYMENT AND REGIONAL INTEGRATION IN THE EURO-MEDITERRANEAN REGION QUALITATIVE AND QUANTITATIVE ECONOMIC ANALYSIS ON WHETHER AND HOW REGIONAL INTEGRATION COULD LEAD TO YOUTH EMPLOYMENT Rym Ayadi (Project Scientific Leader), Fragkiadakis Kostas, Leonidas Paroussos, Karkatsoulis Panagiotis, Raul Ramos, Carlo Sessa, Emanuele Sessa, Research Assistance: Antoine Apprioual, Project Manager: Roger Albinyana Saigi FINAL STUDY - 09 JULY 2017
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10 20 30 0 5 10 15 20 25 0 AUT BEL BGR CYP CZE DEU DNK ESP EST FIN FRA GBR GRC HRV HUN IRL ITA LTU LUX LVA MLT NLD POL PRT ROU SVK SVN SWE ALB BIH DZA EGY ISR JOR LBN LBY MAR MNE MRT PSE SYR TUN TUR
20 40 60 80 EGY DZA SYR JOR ITA PRT FRA SVK ROU FIN LBN SWE BEL BGR POL IRL LUX HUN MAR LTU SVN TUR GBR LVA MLT CZE EST AUT DNK DEU ISR NLD TUN > 3 times > 2 times LBY ESP GRC MKD SRB HRV PSE MNE CYP ALB BIH MRT > adult 0 5 10 15 20 25 30 Adult unemployment rate
20 40 60 80 LBN EGY JOR DZA SYR MAR TUR TUN ALB LBY MNE > 3 times > 2 times PSE BIH > adult MRT ISR 0 5 10 15 20 25 30 Adult unemployment rate
.05.1.15.2 0 ALB BIH DZA EGY ISR JOR LBN LBY MAR MNE MRT SYR TUN TUR
BIH 10 20 30 40 50 60 LBY SYR DZA MRT EGY TUN SVN MAR SRB GRC ESP MKD HRV ITA MNE CYP PRT SVK ALB BGR HUN POL FRA BEL SWELVA ROU LTU LBN CZE FIN EST TUR LUX DNK MLT ISRNLD AUT DEU IRL GBR JOR 5 6 7 8 Economic Freedom Index
BIH 10 20 30 40 50 60 LBY SYR DZA MRT EGY TUN MAR TUR LBN MNE ALB ISR JOR 5 6 7 8 Economic Freedom Index
Long-run elasticity of employment to GDP growth -.5 0.5 1 ALB BIH DZA EGY ISR JOR LBY MAR MNE SYR TUN TUR 1 Crivelli, E., Furceri, D., Toujas-Bernaté, J. (2012), Can Policies Affect Employment Intensity of Growth? A Cross-Country Analysis, IMF WP/12/218.
40.000 Official development assistance, other official flows and private aid (total receipts from European Commission and EU Member States in million US$) 35.000 30.000 25.000 20.000 15.000 10.000 5.000 0-5.000 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Albania Algeria Bosnia and Herzegovina Egypt Jordan Lebanon Mauritania Montenegro Morocco Palestine Tunisia Turkey
700 600 500 400 300 200 100 0-100 -200 Balance of trade in goods and services (US$ billion) 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 AC-3 MED-8 Israel Turkey EU-28
300 Total number of individuals selected from AC4 and MED9 countries 200 100 0 2005 2006 2007 2008 2009 2010 2011 2012 2013
4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0%
3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0%
4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0%
4.50% 4.00% 3.50% 3.00% 2.50% 2.00% 1.50% 1.00% 0.50% 0.00%
6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0%
6.00% 5.00% 4.00% 3.00% 2.00% 1.00% 0.00%
+ Employment friendly growth Job creation-destruction balance (since 2016) Alternative growth scenarios for the Mediterranean region Short-term creation of low-tech jobs Creation of jobs in competitive sectors Changing work and social security 2020 2025 2030 2040 Loss of low-tech jobs in more open markets Inclusive Growth Scenario - Reinforced regional integration - High quality education, health, public services - (Youth) employment in a new circular, resource efficient and collaborative economy model - Leverage of investments in connectivity infrastructure - Automation and digitalization transforming jobs and work organization/ work-life balance - New social security and welfare model (basic income) - More territorial and social cohesion Growth Horizons Jobless growth - Technological unemployment and social insecurity Unfair Growth Scenario - Deteriorating regional integration - Low quantity/quality of education, health, public services - Automation and digitalization disrupting jobs (Industry 4.0), work continuity & quality (gig economy) - (Youth) employment in polarized jobs (few high skill, many low skill) - Less territorial and social cohesion
Technology Technology High-tech Production (innovation-based competitive advantage) Medium-tech Production (scale economiesbased competitive advantage) Low-tech Production (labour cost-based competitive advantage) Vertical hubs of value creation (innovation mercantilism) MEDITERRANEAN Co-Development High skill jobs in non tradable services Medium skill jobs in non tradable services Low skill jobs in non tradable services Jobs in high-tech business Jobs in medium-tech business Jobs in low-tech business Creation of jobs in export sectors Loss of jobs in import sectors Creation of jobs in export sectors Loss of jobs in import sectors Creation of jobs in export sectors Loss of jobs in import sectors Single market standards help high-tech productions and jobs to thrive Migration of high-skilled workers Free movement of capital and low transport costs create opportunities to delocalise production to low labour cost areas Migration of medium-skilled workers Failure to comply with single market standards cause jobs to disappear Migration of low-skilled workers Horizontal nodes of production and distribution (resource mercantilism) Market High-tech Production (innovation-based competitive advantage) Medium-tech Production (scale economiesbased competitive advantage) Low-tech Production (labour cost-based competitive advantage) Vertical hubs of value creation (innovation mercantilism) MEDITERRANEAN Co-Development «Non tradable» services (research, education, health, local services) High skill jobs in non tradable services Medium skill jobs in non tradable services Low skill jobs in non tradable services Jobs in high-tech business Jobs in medium-tech business Jobs in low-tech business Domestic markets Creation of jobs in export sectors Loss of jobs in import sectors Creation of jobs in export sectors Loss of jobs in import sectors Creation of jobs in export sectors Loss of jobs in import sectors Free Trade Areas Single market standards help high-tech productions and jobs to thrive Migration of high-skilled workers Free movement of capital and low transport costs create opportunities to delocalise production to low labour cost areas Migration of medium-skilled workers Failure to comply with single market standards cause jobs to disappear Migration of low-skilled workers Horizontal nodes of production and distribution (resource mercantilism) Single Market Market Tradable goods & services (manufacturing, business, transport, energy, media, financial etc. services)
Resource loops Landfill & marine litter Waste-to-energy processes Recycle (secondary raw materials &water reuse) Remanufacture Resource saving Resource efficiency Natural resources Energy efficiency & renewable energy Energy Raw materials & water use Substitution & Optimization Manufacturing 3D Printing (compufacturing) Reuse & Repair Logistic, retail & other services Virtualization, automation and logistic commons Consumption Collaborative consumption Waste Zero-waste and nature-based solutions
1 1 1 (1 ) tpj t i i, j i, j j XD X e (1 ) j tp t Pi e X i, j XDi i, j PX i, j Pi XDi PX i, j X i, j ( zero profit condition) j δ σ 1 1 (1 ) tpj t 1 i i, j i, j j P PX e X (1 ) j tp t Pi e i, j XDi i, j PX i, j P XD PX X (zero profit condition) i i i, j i, j j
Production (output) Capital Electricity Labour Materials Fuels Capital Electricity Materials Fuels Labour Coal Oil Gas Telecommunication services Transports Services of credit and insurance institutions Other market services Non-market services Agriculture Ferrous and non-ferrous ore/metals Chemical products Other energy intensive industries Electrical goods Transport equipment Other equipment goods industries Consumer goods industries Building and construction max U( q( t)) e t u( q( t)) dt, where u( q( t)) log( q( t) ) t 0
w( t) r w( t) y( t) p' q( t) Total Expected Income Disposable income Leisure Savings Labour Supply Consumption Durable goods Non-durable goods and services Cars Heating Systems Consumption of non-durables linked to the use of durables Food Clothing Housing Housing furniture and operation Medical care and health expenses Purchased transport Communication recreation, entrertainment etc. Other services Fuels and power Operation of transports
EXPORTER IMPORTER ARMINGTON-TYPE MIX OF IMPORTS BY ORIGIN THROUGH RELATIVE EXPORT PRICES TOTAL IMPORTS TOTAL EXPORTS COMPETITIVENESS EFFECTS EXPORT PRICES FROM DOMESTIC PRICES BY COUNTRY COUNTRY-SPECIFIC DEMAND BASED ON RELATIVE PRICES
Wage Rate w* Effective Labour Supply Potential Labour Supply Labour Demand LS LP U=LP-LS Labour
w = a + ( 1 u ) b