Youth Unemployment in Russian Regions and Assessment of the Economic Loss

Background/Objectives: The objective of this study is to quantify the economic loss from underproduction in the regions of Russia caused by cyclical youth unemployment. We decomposed the youth unemployment into its natural rate and its cyclical component and made experimental calculations of the economic loss caused by cyclical youth unemployment. Methods/Statistical Analysis: We used the approach to analyzing and quantifying the economic loss from high youth unemployment that considers the economic loss as underproduction of gross value added with taking into account the age of the unemployed. Using the statistics posted on the official website of the Federal State Statistics Service, we calculated the rates of regional labor productivity. Findings: The approach we used enabled us to specify the methodology of calculating the economic loss and make more precise the labor productivity parameters, which allows differentiate the economic loss according to the age groups. Having made our calculations, we quantified the economic loss from cyclical unemployment among different age groups. We found that the loss is higher in the time of economic crisis and lower in the time of recovery growth. We also found that the greatest production growth potential due to the employment of young people belongs to the regions with high rates of labor productivity and high fractions of youth in the population. Applications/Improvements: The approach we presented in this study enabled us to specify the methodology for calculating the economic loss and make the labor productivity parameters more detailed, which in turn, allows differentiate the economic loss by age groups. This offers the opportunity to forecast the economic loss from youth unemployment by individual age groups on the basis of the existing dynamics. We found that the loss is greater in the time of economic crisis and smaller in the time of recovery growth.