Abstract
This study investigates the determinants of youth unemployment rate in 18 NSP (New Southbound Policy) countries over the period of 1991-2016 by employing the dynamic panel data analysis. The estimation technique used is the two steps System Generalized Method of Moments (GMM). The empirical results show that gross domestic product, minimum wage, foreign direct investment have significant effects on youth unemployment rate. This implies that the demand side of labor market has an important influence on youth unemployment rate in 18 NSP countries. Furthermore, the results also indicate that the one period lagged variable of the youth unemployment rate's coefficients are positive and highly significant through all models. In view of this, we examines the degree of persistence of youth unemployment for each country by using a first-order autoregressive model. We find that the degree of persistence of youth unemployment is particularly high in Brunei Darussalam and South Asian countries, such as India and Nepal. Therefore, policy makers should implement appropriate policies to improve the employability of young workers, specifically active labor market policies can prevent short-term unemployment from becoming long-term structural unemployment.