We observed earlier that the unemployment rate for young workers is higher than for older workers, in both France and the United States. We can understand why by thinking about the search and matching process.
When lawyers, doctors, professors, and other professionals change jobs, they typically do so with little or no intervening unemployment. Search and matching is easy because they have visible records, meaning their productivity at a particular job is relatively easy to figure out. In general, the longer someone has been in the workforce, the more information is available to potential new employers. Also, experienced workers have a good understanding of the kinds of job that they like.
Just the opposite is more likely in the labor market for young workers. Firms know relatively little about the young workers they hire. Likewise, young workers, with little employment experience, are likely to be very uncertain about whether or not they will like a new job. The result, at least in the United States, is a lot of turnover for young workers. Young workers sample different jobs in the labor market until they find one suited to their tastes and talents. They take advantage of the fluid nature of the US labor market to search for a good match. The gain is a better fit once they find a job they like. The cost is occasional spells of unemployment.
In Europe, search and matching is much harder. Some young workers are even effectively guaranteed jobs for life by the government from the moment they finish college. By contrast, young workers without jobs find it difficult to obtain employment. Given the lack of fluidity in European labor markets, it is surprising neither that more young workers are unemployed, nor that they stay unemployed for longer periods of time.
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