An analysis of the possible determinants of youth unemployment in Malta

Abstract

The aim of this dissertation is to undertake an extensive analysis into the possible determinants of youth unemployment rate in Malta. Using the knowledge gained from the empirical studies and economic theory, this study will analyse the impact of economic variables on the Maltese youth unemployment rate. This will be done through the use of a multiple regression model, using quarterly data for the years between 2001 and 2012. The main conclusion of this study is that unions in Malta tend to have a substantial influence on the Maltese youth unemployment rate. The reason for this is that unions have the power to safeguard the jobs of current workers which makes it difficult for the youths to find an occupation. Moreover, education level attained by the youths also affects the Maltese youth unemployment rate. In fact, it was established in this study that the lower the education level attainment is, the higher will be the youth unemployment rate. Inflation rate, interest rate and real GDP growth rate also tend to have an influence on the youth unemployment rate in Malta. The Government of Malta, just like the other members of the European Union, has to try and reduce such increasing levels of youth unemployment rates as this would obviously have repercussions in the future. Furthermore, Europe is facing the problem of ageing population which makes it difficult for the Government to sustain its rising costs in the welfare system.