This report highlights the impact of economic shocks on young people in the labour market.

The authors identify distinct challenges that young people, particularly recent graduates, experience during and after economic downturns. It can be a long-term struggle for youth to overcome these challenges. The short-term effects of economic shocks include reduced hours and wages, and job losses. Over time, these can lead to lasting negative impacts on earnings and career opportunities, which is known as “labour market scarring.”

The paper also emphasizes that labour market scarring is felt disproportionately by young people who already face barriers to successfully entering the workforce.

The authors point out that dealing with the short-term impacts of economic shocks tends to be of primary concern to policymakers. However, policy responses focused on the longer-term impacts—such as labour market scarring—could be more consequential and therefore deserve more attention.

The authors conclude the report with several policy recommendations.