The need for relocating unemployed workers to different sectors of the economy implies mismatches on the labour market that will make unemployment more persistent in the years to come.
These mismatches are already manifested by an outward shift of the euro area Beveridge curve and by outward shifts of the Beveridge curve in countries most severely hit by sectoral shocks.1,2 Failure to reallocate young workers would lead to a lost generation Given the magnitude of the youth unemployment problem, European economies cannot afford to fail in relocating the unemployed young workers to new jobs.