Abstract The rise of youth unemployment has been one the most serious problems which policymakers have had to deal with over last two decades. Neoclassical economic theory suggests that deregulation (i.e. higher flexibility) labour market stimulates firms hire young people and—therefore—reduces unemployment. aim this study is empirically test validity hypothesis, analysing data on and regulatio...

We quantitatively analyze an equilibrium job-matching model in the presence of time-varying discount rates and persistent aggregate shocks to labor productivity. In our model workers and firms learn about an unobservable, idiosyncratic component of match productivity. We obtain three results. First, the unemployment rate of young, inexperienced workers is more sensitive to economic conditions t...