The Impact of the Economic Crisis on Labour and Education in Europe

In summer 2007, the US subprime crisis emerged and economic growth in industrialisedcountries started to slow down. The situation deteriorated after the default of LehmanBrothers in September 2008 and despite massive government interventions, the UnitedStates and most European countries slid into recession. We investigate the influence of therecent economic and financial crisis on European labour market perspectives andeducational attainment decisions. Furthermore we disentangle the differential impacts ofthe crisis on various demographic subgroups. We find that young male workers have beenhit hardest, while older workers and women have been partially protected bynon-redeemable contracts and the fact that they work in sectors which have been lessseverely hit by the crisis. Focusing on the education sector, it seems that the demand foreducation increases because individuals try to circumvent the tight labour market, whilethe supply of education suffers because of the increased pressures on federal budgets inmost European countries. However, we conclude that it is too early to make a definitestatement because the full impact of the crisis on the education sector is still to come.JEL classification: I20; J01; J1