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Youth unemployment in the EU

Hysteresis in the periphery
Recently, financial markets around the world have undergone a sharp correction in response to fears of an eventual tapering in the Federal Reserve’s Quantitative Easing program. The reaction was spurred by Ben Bernake’s, Chairman of the Federal Reserve, comments to the press that QE will be slowed if unemployment falls to 7% and inflation remains within their target. Cautiously this may be sooner than expected as the US economy is beginning to show sustained periods of healthy increases in employment growth.
However, the same cannot be said for the European Union. GDP in countries in the periphery continues to decline, with Italy suffering a 2.4% decline and Greece a 5.6% decline in the first quarter of 2013. Alarmingly it’s Italy’s worst recession in 20 years. With this persistently poor performance, comes the danger of hysteresis.

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What will advancement in technology mean for jobs in the future?

From the earliest forms of technology such as spears and knives which led to more efficient hunting, to the advent of manufacturing during the industrial revolution, followed by various inventions such as light bulbs, computers and even cars over the 20th century, technological progress has vastly contributed to the development of our economies and subsequently our material and non-material living standards.  Fast forward to today, we continue to see improvements in existing technology, from the latest computers to new inventions previously not even dreamed of, like solar panels and online shopping. In short technology is the result of expanding innovative ideas that build on existing ideas. We see this in  cars, which were modelled off of steam engine mechanics, which themselves were built from pre-existing technologies (from basic metals to even the wheel). Given the increasing speed at which technology is progressing, one of the major concerns people have is how technological progress will impact jobs in the future.

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Should you be studying?

From discussing the possibilities of making tertiary education more accessible, I now segue to the other side of the debate: Are there too many people getting university degrees, and are they worth it?
The issue is exacerbated in the US, where the stakes are so much higher. A college education not only incorporates all the learning during the years of your degree, but is also the quintessential cultural experience of every middle-class youth: from madly rushing fraternities, to playing beer pong at the pre-football match tailgate party, to sharing the best places on campus for an all-nighter before finals – there comes a time in every man’s life, and college is not that time. But behind all the fun are the hours spent working and the years of family planning to accumulate the college fund necessary to pay for the degree.
Peter Theil, American entrepreneur, venture capitalist, hedge fund manager, first outside investor in Facebook and all-round success-story offers his two cents:
“Education is a bubble in a classic sense…It’s basically extremely overpriced. People are not getting their money’s worth…And at the same time it is something that is incredibly intensely believed; there’s this sort of psycho-social component to people taking on these enormous debts when they go to college simply because that’s what everybody’s doing.”1

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Downing Lecture 2012 – GFC and Household Incomes

I attended my first Downing Lecture on Thursday night, and heard a fascinating speech by Professor John Micklewright, a research fellow from the Melbourne Institute. It was an interesting account on how the GFC had affected household incomes and income distribution across OECD countries. This blogpost will focus only on Professor Micklewright’s research on household incomes, starting with his findings and then giving you my response and reaction to his research.

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