The Relationship Between R&D Expenditures and Youth Unemployment in the European Union Countries: A Comparison of the Old and New Member States

The purpose of this study is to analyze the relationship between Research and Development (R&D) expenditures and youth unemployment. The analysis covers the European Union (EU) member states. Unemployment is one of the major problems of the EU. The study attempts to reveal the effect of ever-increasing R&D expenditures today, when the fourth Industrial Revolution is happening, on the unemployment problem especially faced by young people in these countries. The member countries of the EU were compared after being divided into two groups as the old and new member states. The countries that established the European Union in the years before the collapse of the Soviet Union and the countries that became members over time were classified as “old member states,” and the countries that declared their independence after the collapse of the Soviet Union and later became members of the EU were classified as “new member states.” The reason for this was the presence of various structural differences between these two groups. Panel cointegration analysis was implemented as the research methodology. The analysis covers the period 2000–2018. The annual data obtained from Eurostat were utilized in the study. As a result of the analysis, it was determined that R&D expenditures reduced youth unemployment by 5.6% for older members and had a 4.1% decreasing effect for new member states.