In a recent study, researchers Radha Jagannathan, Michael J Camasso, Jocelyn LaFleur, and Simona Monteleone explored the employment decisions of young adults in nine European countries. The study focused on individuals aged 18 to 35 and sought to understand why they choose employment over unemployment or continuing education.
The research utilized data from the Cultural Pathways to Economic Self-sufficiency and Entrepreneurship (CUPESSE) project. It involved estimating country and gender-specific conditional logit models adjusted for various factors such as individual work values, soft skills, demographic characteristics, and local labor markets.
The findings indicated that young women in Czechia, Germany, Greece, Hungary, and Italy, along with both men and women in Spain and the United Kingdom, respond to exogenous wage offers. This provides evidence supporting job search theory and the reservation wage hypothesis.
Simulations conducted during the study showed that a 10% increase in wages could potentially boost employment by 2 percentage points in the UK and up to 14 percentage points in Czechia and Spain. Additionally, if unemployment benefits were reduced by 10%, employment could rise by 20 percentage points in Czechia and 17 percentage points in Spain.
The researchers demonstrated how revealed preference analysis can assist policymakers through applications like strength of preference, uptake rate, and willingness-to-pay.
