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Nordic Economic Policy Review

Labour Market Consequences of the Economic Crisis

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The Nordic Economic Policy Review is published by the Nordic Council of Ministers and addresses policy issues in a way that is useful for informed non-specialists as well as for professional economists. All articles are commissioned from leading professional economists and are subject to peer review prior to publication. The Nordic Economic Policy Review is published twice a year. The journal is distributed free of charge to members of the Nordic economic associations. The easiest way of subscribing to the NEPR is therefore to become a member of one of these associations, i.e., Denmark: Nationaløkonomisk Forening Finland: Taloustieteellinen Yhdistys Norway: Samfunnsøkonomene Sweden: Nationalekonomiska Föreningen For institutional subscriptions, please contact [email protected] Content: Introduction - Lars Calmfors and Bertil Holmlund Youth unemployment in Europe and the United States: David N.F. Bell and David G. Blanchflower Comment by Oskar Nordström Skans Employment consequences of employment protection legislation - Per Skedinger Comment by Assar Lindbeck Business cycle contingent unemployment insurance - Torben M. Andersen and Michael Svarer Comment by Erik Höglin Is short-time work a good method to keep unemployment down? - Pierre Cahuc and Stéphane Carcillo Comment by Ann-Sofie Kolm What active labor market policy works in a recession? - Anders Forslund, Peter Fredriksson and Johan Vikström Comment by Clas Olsson Regular education as a tool of counter-cyclical employment policy - Christopher Pissarides Comment by Björn Öckert

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Comment on Pissarides: Regular education as a tool of counter-cyclical employment policy

Should we add regular education to our toolbox of active labor market policies? In a thoughtful and well-written paper, Christopher Pissarides argues that we should. The main reason is that the opportunity cost of education, i.e. forgone production while studying, falls during economic downturns. However, if all youths were hit equally by an economic recession, even quite substantial increases in the unemployment rate would only have marginal effects on the costs of going to college. But, as Pissarides points out, the risk of unemployment is not evenly spread, and letting individuals who would otherwise be long-term unemployed go to college would probably reduce youth unemployment.

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