This paper finds that youth unemployment is significantly associated with an increase of the risk of political instability. It uses fixed-effects regression with instrumental variables on a sample of 24 developing countries over the period 1980-2010. The authors suggest that exceptionally large youth unemployment rate, associated with socioeconomic inequalities and corruption, make countries more susceptible to political instability and national insecurity.
The study used a sample of 24 developing countries for which it was possible to obtain both political instability and unemployment data. The period covered is from 1980 to 2010, with gaps. The identification strategy uses the two-step efficient generalized method of moments (GMM) estimator. Then two main instruments are used: the lagged unemployment variable and the first difference of unemployment variable. The authors find that the results are robust to the use of alternative instruments, alternative sample and alternative specification.
