Goldman kicks us off.
China’s youth unemployment rate (16-24 year olds) rose to 20.4% in April, despite a tick lower in the overall urban unemployment rate in April. Cross country experiences suggest youth unemployment rates tend to be higher than overall unemployment rates as this group appear particularly vulnerable to economic downcycles, likely due to a lack of experience. In this note, we examine potential drivers of China’s high youth unemployment rate.
We think both cyclical and structural factors have contributed to the elevated youth unemployment rate in China. On the cyclical front, the correlation between unemployment rate and services sector output gap is much stronger for the16-24 age group compared with the 25-59 year-olds. NBS’s labor survey shows that services industries such as hotel and catering, education, and information technology sectors tend to hire more young workers. Services sector slackening before reopening therefore contributed to the high youth unemployment rate.
