"Solving youth unemployment is the most pressing problem governments are facing today," Blachflower wrote in the paper.
The forum, "Tackling the Jobs Crisis," preceded the OECD Labour and Employment Ministerial meeting. Scholars assessed the economic crisis from a social perspective and recommended policy changes to address unemployment. The forum's discussions were closed to the media.
Research suggests that youth unemployment creates long-term handicaps in employability and physical and psychological health, Blanchflower wrote in the paper he presented at the meeting. Unemployment rates for those under 25 are 19.7 percent in the European Union and 17.8 percent in the United States, according to the paper.
Blanchflower and Bell used data from the National Child Development Study in the United Kingdom. The study, started in March 1958, followed unemployed respondents through their 20s, 30s and 40s. Blanchflower's study found that youth unemployment contributed to later unemployment, lower wages and job satisfaction, and poorer health.
Blanchflower said in the paper that current employment programs, including retraining and job search assistance, do not significantly stimulate wage increases. These programs also shift jobs from person to person, rather than creating new jobs, he wrote.
"The evidence that these programs have a strong effect is very weak," Dartmouth economics professor Bill Fischel said in an interview with The Dartmouth.
Blanchflower said that governments should instead subsidize the hiring of young workers, encouraging companies to hire younger workers without laying off older workers.
Public sector organizations could also hire young workers for a specified period of time, compensating them with the equivalent of the unemployment benefits they would have received for that time period, he wrote.
Temporarily lowering the minimum wage for workers younger than 25 could also encourage hiring during the recession, according to Blanchflower's analysis.
Fischel said that lowering the minimum wage might be a possibility in the United States, but would likely not prove attractive in countries like France.
"Many economists in the U.S. would endorse this, but the French are very attached to their labor market," Fischel said. "President Nicolas Sarkozy attempted to reduce the minimum wage, and there were riots in the streets, so I doubt the French would receive that suggestion very well."
Similar measures taken by other European countries include private sector employment incentives and enterprise support, Blanchflower wrote in his paper.
As a member of the MPC, Blanchflower worked to set interest rates based on regional economic data. He consistently voted for rate cuts, putting him at odds with the rest of the committee. Seen by many in England as having predicted the current recession, Blanchflower warned in a December 2008 Royal Economic Society Paper that unemployment in Britain could surpass three million during the downturn.
