Human Capital Integration on the Labor Market through Education and Unemployment in the European Union

The main aim of this paper is to assess the impact of different education reforms that are oriented towards human capital integration on the labour market on the unemployment rate. Considering that the EU-28 countries can be grouped in two clusters based on new and old integrated countries, a mixed-effects model was built for explaining unemployment rate of young people (20-24 years) not in education and training with 1-3 years since graduation in the period 2014-2016. The empirical results indicated that the following education reforms contribute to unemployment decrease: monitoring the socio-economic characteristics of the student body, status of continuing professional development for education staff, use of student performance data in external school evaluation, performance-based funding mechanisms with a social dimension focus, availability of external career guidance services, incentives to include work placements/practical training in higher education programs. Moreover, the expenditure on education reduces the unemployment.