Youth Unemployment in Spain - Example

Youth Unemployment in Spain To what extent is the high rate of youth unemployment in Spain today a result of the government’s macroeconomic policy decisions? Exam session: May 2012 Subject registered in: Economics Candidate name: Nikolaus Lawitschka Candidate number: Word count: 4527 words Abstract Youth unemployment in Spain is a severe economic problem, with a current rate of 44.1% in the first quarter of 2011. Spain is the ‘leading’ country in Europe in terms of unemployment rate. There are many reasons for this increase,; the most significant cause will be discussed in this essay. It seemed as if the government was culpable for the high rate therefore the research question of this essay is to ascertain to what extent high youth unemployment rate in Spain today is a result of the government’s macroeconomic policy decisions. I started with an in-depth research on the youth unemployment situation in Spain. The next step was to apply economic theories to identify the initial reasons, in order to analyze to what extent it was unemployment was a result of government decisions. The anecdotal primary data, retrieved through 28 surveys conducted in Spain’s capital, Madrid was used to support the author’s results. This essay focuses on the initial cause of the situation and what role the government played, therefore detailed reference to other related economic factors such as budget deficit overpowers the scope of this study. Through my research I have come to the conclusion that the Spanish government is partly responsible for the increase in youth unemployment due to the affects of the fiscal policy and Spain’s austere labor market& laws. An appropriate and rapid response was lacking, while public money was spent inappropriately. Zapatero’s government chose to focus on reducing the budget deficit rather than the unemployment rate, what would have happened otherwise remains uncertain. Table of Contents 1 Introduction 6 2 Economic theory 7 2.1 Youth Unemployment Rate 7 2.2 Microeconomic Demand Andand Supply 7 2.4 The Concept Ofof A Minimum Wage 8 2.5 Demand-Side Policies 9 2.5.1 Expansionary Fiscal Policy: 10 2.5.2 Contractionary/Deflationary Fiscal Policy: 10 2.5.3 Monetary Policies: 10 2.6 Supply-Side Policies 10 2.6.1 Market-Oriented Policies 11 2.6.2 Interventionist Policies 11 2.7 Exchange Rates 11 3 Investigation: 12 3.1 Investigative Process 12 3.1.1 Collecting Secondary Data 12 3.1.2 Collecting Primary Data 13 3.2 Intention of Investigation 14 4Presentation4 Presentation Ofof Data Andand Application Ofof Economic Theory 15 4.1 History of Spanish economy 15 4.2 2008 Spanish Property Bubble 16 4.2.1 Application Ofof Economic Theory 22 4.3 The Spanish Labor Market 25 4.3.1 Application Ofof Economic Theory 27 4.4 Recent Government Actions 29 4.4.1 Application Ofof Economic Theory 31 4.5 Effect Ofof Euro Onon Spanish Economy 33 4.5.1 Application Ofof Economic Theory 34 4.6 Presentation of primary data 35 5 Analysis of Results 36 6 Conclusion: 38 7 Works Cited 41 8 Appendix 46 8.1 Appendix 1 47 To what extent is the high rate of youth unemployment in Spain today a result of the government’s macroeconomic policy decisions? 1 Introduction Youth unemployment has been a dilemma to Spanish labor market. The main contributors of this unemployment crisis in Spain are attributable to government macroeconomic policy decisions and lack of an adequate education system due to early school leaving. The year 2008 was a key point for the Spanish economy. It marked the turning point from good to bad for most economic indicators, especially the youth unemployment rate i.e. the percentage of the total workforce between 15-24 years of age available and actively seeking employment yet without. Unemployment rate has risen from 17.5% in 2007 to 44.1%, in the first quarter of 2011 (European Commission, 2011). With the highest rate in Europe, Spain faces problems such as mental damage, an increased crime rate, abate consumption and the evolution of a ’Lost Generation.’ 2008 was also the year of the global financial crisis and the Spanish Property Bubble, the initial situation played a significant role to the unemployment crisis, however the Spanish government seems to also be responsible. There being no preventative actions to be realized the risk of a “lost generation” of one’s own age shocks every teenager. The great extent to which the youth unemployment today is a result of the government’s macroeconomic policy decisions can be analyzed using exchange rate, macroeconomic equilibrium and unemployment theories. 2 Economic theory 2.1 Youth Unemployment Rate The youth unemployment rate is a percentage of the total workforce between 15-24 years of age available and actively seeking employment, yet without. This rate generally takes into account youths who have or are in transition from school to work environment. 2.2 Microeconomic Demand and Supply A specific market is at equilibrium when the quantity supplied is equal to the quantity demanded. A change in any of the determinants of demand (income, other products prices, season, etc.) or the determinants of supply (cost of production, other products prices, etc.) will shift the curve. A change in the price of a product, however, means a movement along the existing curve. Fig. 1 shows a situation of microeconomic equilibrium. Fig. 1 Microeconomic equilibrium (Trading Charts, 2011)2.3 The Labor Market The labor market represents the supply and demand for labor in a specific industry. When the demand for labor is equal to the supply of labor (i.e. the two curves intersect) then the labor market is in equilibrium. Any changes in the determinants of the supply of labor (e.g. increase in wage rate, war, etc.) or in the determinants of the demand of labor (e.g. profits, wage rate, etc.) will shift the curve. These labor market deficits in demand and supply are largely as a consequence of inefficient in education system. 2.4 The Concept of Minimum Wage A minimum wage keeps the labor market operating at a wage rate above the free market level; a change in the minimum wage affects the employers’ costs of production and therefore the employment rate. As can be seen on fig. 2, there is a surplus of labor from Q1 to Q2at the minimum wage, Mw. Fig. 2 Minimum wage 2.5 Demand-Side Policies These are the measures that governments undertake to stimulate employment in an economy. They either use the fiscal or monetary policies to influence country’s aggregate demand. 2.5.1 Expansionary Fiscal Policy: These policies are designed to restrain the economy by increasing aggregate demand when there is or anticipation of inflation. These includes Lower taxes (income tax, corporate tax,) Increased government expenditure 2.5.2 Contractionary/Deflationary Fiscal Policy: These policies are designed to reduce aggregate demand in an economy, and may include; Increased taxes Decreased government expenditure 2.5.3 Monetary Policies: Monetary policies affect the "supply of money in the economy and the level of interest rates in the economy” (Dorton and Blink, 2007). An expansionary monetary policy would decrease interest rates to stimulate investment and consumption, therefore increasing aggregate demand. A contractionary monetary policy increases interest rates as a mean of decreasing aggregate demand. 2.6 Supply-Side Policies “The overarching goal of supply-side policies is to increase the potential output of the economy by increasing the quantity of the factors of production and/or improving the quality of the factors of production”, (Dorton and Blink, 2007). They are applied by government to combat frictional and real wage unemployment assisting in reducing unemployment. These polices shift the aggregate supply curve to the right. 2.6.1 Market-Oriented Policies These policies are intended to promote free market operation with the lowest possible degree of government intervention. They include a decrease in income/corporate taxes, deregulation and reduction/elimination of minimum wage. 2.6.2 Interventionist Policies These policies aim at increasing productivity using education and training, research and development, the provision of infrastructure, etc. 2.7 Exchange Rates Low unemployment translates to higher exchange rates as it culminates to higher interest rates, but specifically; Possible effects of a high exchange rate are: Downward pressure on inflation, imports are cheaper, increase in efficiency of domestic producers Export, tourism and domestic industry less competitive Possible effects of a low exchange rate are: Benefit for export and domestic industry, unemployment decreases Inflation due to increased price of imports. 3 Investigation This section will demonstrate how and why data was gathered. 3.1 Investigative Process Due to the choice of topic, it was evident that secondary data from governmental or national statistical agencies would be very important, while primary data would be less useful and difficult to collect. 3.1.1 Collecting Secondary Data Step 1: Research of Spain’s economic history. Sources: World Bank Data, Wikipedia, European Commission, national statistical agencies. Step 2: Investigation on the 2008 Spanish Property Bubble, its affects and relation to the youth unemployment rate. Sources: Newspaper articles, national statistical agencies. Step 3: Investigation of Spanish labor market, temporary work contracts, wage rates and supply of labor. Sources: OECD, newspaper articles, Spanish Labour Force Survey (EPA), Eurofund, Google Public Data Explorer. Step 4: Research on recent government actions, such as fiscal or monetary policies, supply-side policies, legislations. Sources: national statistical agencies, ANSAmed, newspaper articles. Step 5: Research of effect of Euro on Spanish economy. Sources: World Bank Data. 3.1.2 Collecting Primary Data The primary data was collected by surveying 28 pedestrians around the ‘Ciudad Universitaria’ in Moncloa (Madrid’s university area) and near the Puerta del Sol (Madrid’s city center).It was aimed at pedestrians appearing 17 years and over. The study included personal information and 16 questions concerning the history, current state of employment and the person’s opinion. An example question would be: “How long did it take you to find this job after completing your prior degree of education?” An example of a completed survey can be found in appendix 1. 3.2 Intention of Investigation In order to answer the research question reliable secondary and primary data had to be collected during the investigation. The purpose of the investigation was to gather data about the initial reasons of Spain’s youth unemployment, the government’s actions and what effect they had on reducing or alleviating the employment crisis. 4 Presentation of Data and Application of Economic Theory 4.1 History of Spanish economy Before the Spanish economy was severely affected by the global financial crisis in 2008, the Spanish economy was flourishing. “Spain’s economy grew every year from 1994 through 2008 before entering a recession that started in the third quarter of 2008” (Trading Economics, 2010). Besides being attractive to foreign investment, Spain’s Gross Domestic Product (GDP) and GDP per capita numbers were steadily increasing until the end of 2008 (Wikipedia, 2011). Prior to 2008 a very promising economic future was expected. “From 2002 until 2010, the average inflation rate in Spain was 2.78 percent reaching an historical high of 5.30 percent in July of 2008 and a record low of -1.40 percent in July of 2009” (Trading Economics, 2010). The macroeconomic objective of low unemployment has never been met by Spain, the lowest point being reached with 8% in 2007. Considering unemployment at around 20% in 1998 the property and tourism boom drove unemployment down steadily to reach its lowest point in March 2007 at 8.0% (Trading Economics, 2010). Unemployment has been increasing rapidly to reach “20.9 percent in the second quarter of 2011” (Trading Economics, 2010).Spain has had a budget deficit of 4.2% in 2009 and 11.1% of GDP in 2010 (Trading Economics, 2011). 4.2 2008 Spanish Property Bubble The Spanish Property Bubble commenced in 1985 when real estate prices started to increase significantly. In 1985 the average price per square meter in Spain was around 250 Euros, at its peak shortly before the burst of the bubble the price was around 2900 Euros, (see fig.3 2008). As can be seen on the graph the average price per square meter was approximately 2250 Euros in 2005 and 2500 Euros in 2006. In 2005 528,754 properties were demanded (Wikipedia, 2011). While in 2006 it was 865,561 properties (Euler , 2008). Fig. 3 Evolution of house prices in Spain from 1984 to 2011 (Wikipedia, 2011) Fig. 4 shows the annual percentage house price change, the burst of the bubble can be identified in 2008, where the price change is negative. Fig. 4 Annual percentage house price change (Global Property Guide, 2009) Before the burst of the bubble in 2008, the increase in construction caused 1 million homes to remain unsold (Morgan, 2010). Companies started minimizing costs by laying-off workers, the majority were youngsters on temporary contracts. This burst caused thousands of bankruptcies and the collapse of the construction sector accounting for 10% of GDP, 25% of all new jobs created during 1998–2007 and 13.9% of all employees in 2007 (Arasanz Diaz, 2008). The average number of employees in the construction sector in the first three quarters of 2008 was 2578000 workers; in 2009 this value had decreased to 1950000 workers (ILO, 2010). The global financial crisis caused the burst of the bubble due to falling consumer confidence. This was due to losses of private savings and other effects. In addition, the prices of real estate decreased by an approximate value of 500 Euros per square meter. 4.2.1 Application of Economic Theory A bubble indicates that prices are on a continuous rise, causing people to speculate according to the positive wealth effect. There was an incentive to invest in the Spanish real estate sector prior to 2008. The speculation during this period could have been driven by media, word of mouth, high confidence, deregulation for banks (a reduction in the number and/or austerity of regulation making riskier investments easier) and the general levels of wealth in the global economy. This shifted the demand for houses (fig. 5) from 528,754 to 865,561 houses, consequently supply increased from S1 to S2 to meet new equilibrium point ‘b’ with a price increase from 2250 to 2500 Euros. Fig. 5 2008 Spanish Property Bubble After the burst of the bubble, companies started minimizing costs of their factors of production by decreasing the demand for labour (fig. 6) from 2578000 to 1950000 workers, while the supply of labour remained constant. The decrease in demand for labour at new wage rate W2 symbolizes the 628,000 workers who lost their jobs. New equilibrium is met at point ‘b’. The number of 15-24 year olds part of these 628,000 accounted for the increase in youth unemployment. Fig. 6Decrease in demand for labour 4.3 The Spanish Labor Market Some Characteristics of Spain labor market are: Spain has a rigid, two-tier labor law, creating a typical insider / outsider labor market, (Economics Help, 2011)(Euromonitor, 2010) Temporary Work Agencies (TWA’s) are strongly present: “93% of the total of contracts signed in 2007 was term-fixed”, of which 95% where short-term, meaning of duration no longer than 6 months (Duran, 2010) Young unskilled workers (the so called ‘mil euristas’ – “thousand euro workers”) that have dropped out of school early during the building boom, mostly worked on temporary contracts (Morgan, 2010) Spain’s labor law permits young unskilled workers from receiving easy access to full-time contracts. Older and more-established workers have a high degree of protection (Morgan, 2010) “ An OECD economist estimates that 85 percent of the jobs lost were temporary contracts,”(Morgan, 2010) The Spanish Labour Force Survey (EPA) has publicized that in 2007 62.8% of the working 16-24 year olds were on temporary contracts. “Act 43/2006” was part of Spain’s 2006 labor reform and was aimed at “reducing the number of temporary employment contracts, supporting permanent contracts and the conversion of temporary contracts into permanent ones” (Gorelli , 2007). Spain’s minimum wage has seen an overall rise from 537 Euros in January 2004 to 748 Euros in July 2011. A significant amount of 15 to 24 year olds are unskilled workers on contracts close to minimum wage. Country comparison to Germany: In Germany the labor law states that Temporary Work Agencies and not the companies employ workers, making the TWA’s responsible. The companies sign a contract with the TWA’s which has to be fulfilled. Furthermore there is a principle of Equal-Pay in Germany, so that workers for TWA’s receive the same wage as if employed by the company freely, just more protection from being laid-off immediately (Mitlacher, 2005) 4.3.1 Application of Economic Theory The Spanish labor law is a disincentive for companies to employ new/young labor. The high degree of protection for existing workers makes replacement expensive for companies, and this is shown in fig. 7. The increase in costs for companies shifts the supply of labor to the left from SL1 to SL2 to meet new equilibrium point ‘b’ at wage rate W2. Q1 to Q2 symbolizes the increase in unemployment. Therefore in the 2008 recession temporary workers have been the factors of production easiest target for minimizing costs. Fig. 7 Effect of labor protection Spain’s increasing minimum wage is a disincentive to hire new workers or keep existing ones. Spain’s labor market (fig. 8) would be in equilibrium at wage rate We and quantity of workers Qe. The minimum wage has risen from to Mw in 2011, decreasing demand for labor from Qe to Q1 and increasing supply of labor from Qe to Q2, to give a Q1 – Q2 surplus of labor. Qe to Q1 symbolizes the increase in unemployment, affecting 15-24 year olds working at minimum wage. Fig. 8 Surplus of labor 4.4 Recent Government Actions Spain has a history of low public spending in the education sector, in 2007 Spain spent 4.3% of GDP on education, ranking it 94th worldwide according to the Central Intelligence Agency and 15th in the education ranking. In comparison to Denmark, ranked 11th in spending and 1st in education (CIA, 2007)(Wikipedia, 2011). In 2001 4.5% of GDP were spent on education and 4.29% in 2003, the numbers were mostly close to 4.3% (Nation Master, 2003) (Trading Economics, 2007). According to the European Union’s guidelines, countries are not permitted to have a budget deficit higher than 3%, in order to comply with these guidelines the Spanish government introduced a contractionary fiscal policy in February 2010. According to a research project found on Scribd, “The current fiscal policy of Spain as of February 2010 has a goal of increasing the tax pressure on companies and individuals. These mainly focus on the Value-Added Tax (VAT) increase from 16% to 18%” (Scribd, 2011). Since February 2010 the highest income tax rate in Spain is 43%, overall tax revenue has reached 33.9% of GDP (Heritage Foundation, 2011). While Spain’s GDP decreased from 1464.09 billion dollars in 2009 to 1407 billion dollars in 2010 (Tradingeconomics, 2010). A decrease of another 4.669 million Euros in government spending can be expected for 2012 (Economics Newspaper, 2010). On the 27th November of 2008 Spain’s Prime Minister Zapatero introduced the “Investment against the Crisis Plan”. Initially intended to be an 11 billion Euros public spending project with 8 components, of which 9.03 billion were planned to be spent on infrastructure. None of the spending areas listed included education or training (Foreign Affairs and International Trade Canada, 2009). 43. 9 billion Euros accounting for 3.2% of GDP were spent on teacher training, school resources, infrastructure and vocational training. In contrast, Germany spent 104.7 billion Euros or 3.6% of GDP while Netherlands spent 34.3 billion Euros or 5.1% of GDP (OECD, 2011). Consequences of the government’s actions: The quality and validity of education worsened, qualitative educational supplies have become unavailable and classes are unproductive. Repetition rates have increased, while secondary completion rates have decreased. Due to this lack of investment, a large proportion of the youth remains unskilled, and majority of whom do not have the means to attain vocational training or another degree of education. Therefore, Spain is experiencing a skills mismatch dilemma; many skilled workers do not have appropriate skills for finding a job and cannot consider re-education/training. Spain had 31.2% of student’s dropout of school before the age of 16, the highest rate in Europe in 2006. (Ansamed, 2010) The dropout rate still is 30% in 2011. “According to the EU report, 51% of Spanish students who dropped out of secondary school between 2000 and 2009 are without work today; this figure is also double the European average”(Ansamed, 2010). Going hand in hand with an almost 50% dropout rate of Spanish students at local universities within their first 3 years of study in 2000 (Times Higher Education, 2000). The lack of investment affects the quality of the education system, causing Spain to be ranked amongst the worst education systems in Europe (Wikipedia, 2011). 4.4.1 Application of Economic Theory The contractionary fiscal policies have decreased Spain’s aggregate demand (AD), (fig. 9) from 1464.09 to 1407 billion dollars. New equilibrium is met at point ‘b’ at a price of P2 with a lower real output. Fig. 9 Effect of contractionary fiscal policy Incentives are important for the education of the young generation, in Spain the spending cuts since 2008 have been acting as a disincentive for teachers and students. Especially for less-successful students, leaving school early to look for work seems more reasonable. The decrease in real output in fig. 9 and the low skill level of labor market entrants has decreased the demand for labor (Fig. 10)shifting the curve from ADL1 to ADL2 to meet new equilibrium at W1. Since supply of young labor is inelastic, it has remained constant. Fig. 10 Spanish labor market Efficient investment into education and vocational training could decrease the number of early school leavers in the long-run and prepare those who do with vocational training or apprenticeships for entering the labor market with skills, this would improve Spain’s skills mismatch dilemma and increase demand for labor. 4.5 Effect of Euro on Spanish Economy The Spanish economy is forced to cope with the strong euro exchange rate. In combination with the effects of the financial crisis and property bubble the strong Euro has made Spanish goods and services more expensive for non-EU countries. In addition, 6.3% of Spain’s exports have gone to the United Kingdom in 2010 (CIA, 2011).Tourism and real estate were great sources of foreign money inflow into the Spanish economy, the effects of the global financial crisis in other countries and the increase in price of Spanish goods and services has caused tourism and real-estate consumption by foreigners to decrease. The tourism and real estate industry was very labor-intensive prior to 2008. While domestic producers and the export industry are negatively affected, the decrease in oil price is an advantage for Spain. 4.5.1 Application of Economic Theory The increase in price of Spanish exports has made the export, tourism and real estate industry less competitive. Demand for labor in these industries has decreased due to a drop in company profits. The Euro prevents the Spanish government from using devaluation to make Spanish goods more attractive. The advantages of a strong currency are not much of a benefit since 4 of Spain’s 6 major import partners are within the Euro zone (CIA, 2011). 4.6 Presentation of primary data Due to the choice of topic the collected primary data is only of limited significance and serves more as anecdotal support. A survey summary: In Madrid I interviewed 19 year old Tobias Abellan, who dropped out of school with 16 years in June 2008, he immediately started working as a dishwasher in a large in hotel in Madrid. He was on a temporary contract for 4 months over the summer. Due to the tourism boom, his and many other temporary contracts were renewed, therefore, many including him, applied for a permanent contract at the hotel. None of them received one. In fact, he reported that 11 of the 18 dishwashers were laid off when they applied for their next temporary contract in December 2008. Please see appendix 1 for Abellan’s survey. 5 Analysis of Results The investigation has identified the 2008 Spanish Property Bubble, the Spanish labor market, the government’s actions and the strong Euro as the main reasons for today’s youth unemployment rate. These four the government is in full control of two; the labor market and the policies. Concerning the Spanish labor market the investigation has shown that the high protection of existing workers, in combination with the strong presence of temporary contracts and the high minimum wage is responsible for a certain proportion of the youth unemployment. The protection of existing workers has caused the youth unemployment rate to increase proportionally more than the general unemployment rate, although this exceeds the scope of this essay it would be interesting to compare the outcome of this trade-off. The government has also failed to increase aggregate supply as a measure of stimulating the number of workers employed. Concerning the temporary work contracts; it would have either required a fast and effective labor reform following the 2008 crisis or a different labor law initially to prevent the mass loss of jobs. Yet the government took no action, so workers that have made a small fraction of the boom time profits are having their full share of the recession losses. Furthermore, the minimum wage prevents the exploitation of workers and increases their disposable income. This may cause increase in consumption and benefit the economy. On the other hand, labor is made unattractive for hirers so demand for labor remains weak, increasing youth unemployment. The Spanish government’s actions show that no emphasis was made on reducing the youth unemployment rate, investment in education is insufficient and the “Investment Against The Crisis Plan” does not include long-run solutions, since the construction of infrastructure would increase employment only in the short run. Alternatively the extent to which it can be argued that the lack of spending is the government’s fault has its limitations. This is because the opportunity cost of increasing expenditure on education would require running an even higher budget deficit and despising the EU guidelines. But it can be argued that the government’s money was not spent efficiently to fight youth unemployment. Possibly political intentions and interests have outweighed the issue of youth unemployment in government decisions, but this lies outside this essay’s scope. 6 Conclusion In regard to this essay I have tried to answer to what extent today’s youth unemployment rate in Spain is a result of the governments macroeconomic policy decisions. My approach has shown that the 2008 Spanish Property Bubble and the strong Euro are two significant factors of youth unemployment that are out of the government’s reach. However Spanish labor laws and the government’s actions, especially the fiscal policy, have, in theory, contributed largely to the increase in youth unemployment. The Spainish government has, according to my analysis, applied inappropriate techniques and neglected the severity of the issue, by focusing more on the reduction of its budget deficit. The outcome of my analysis is that a labor reform, supply-side policies and a different distribution of spending areas would have been a more appropriate approach. Rather than using the Spanish government’s policies, supply-side policies like a reduction in corporation taxes or deregulation (reducing the number and/or austerity of regulations for companies), would increase profits for companies and money available for investment, companies will have an incentive to increase output and therefore hire labor. Instead of spending 30 billion Euros on unemployment benefits, Spain could incentivize companies to hire young labor, like several other European countries, by subsidizing companies that employ workers under the age of 25, excepting them from paying social security charges for workers and/or awarding tax reductions (Schwartz, 2010)(Euromonitor, 2010). Of course interventionist policies, increasing spending on education and training would have been a solution, however this essay’s limitation lies in the government’s opportunity cost of tackling youth unemployment against reducing the budget deficit. Since this essay is only a study of one of these, other outcomes are highly theoretical. Furthermore, the actual percentage of the rise in youth unemployment that is owed to the government’s decisions is not known. Due to the choice of topic the collecting of useful primary data was difficult for the author, and that data collected is only of limited significance, yet it is an anecdotal support to the analysis. To improve this, contact to governmental bodies, more interviews and interviews of people from different backgrounds, e.g. teachers, social workers, middle-class and university graduates, would be required. Using interviews or other research methods the impact of the government’s actions on the population would have to be investigated. Furthermore, the biasness of Spanish citizens towards the situation may have affected the validity of the survey. Some interesting topics of study have arisen that lie outside the scope of this essay, for example the political influence on the government’s decisions, a comparison between the outcomes of the trade-off decision taken between protecting existing or young workers, how my proposed solution would have affected youth unemployment and the long-term outcome of choosing to reduce budget deficit over youth unemployment. 7 Works Cited ANSAmed. "SPAIN: EU REPORT, 31% DROP-OUT RATE DUE TO BUILDING BOOM." ANSAmed. N.p., 1 Feb. 2010. Web. 5 Sept. 2011. Arasanz Diaz, Juan. "Sharp downturn in construction sector." Eiro online. Eurofund, 14 Nov. 2008. Web. 5 Sept. 2011. Read More