This paper includes a brief review of the economic litera-
ture on unemployment, with implications for empirical work
on youth unemployment and participation; original empirical
work using linear probability and logit models on 1980 Cen-
sus microdata; and suggestions for structural models to be
used in future work with microdata on youth labor force be-
havior.
On Census Day in 1980, 41.4% of black male teenage school-
leavers, but only 15.9% of white male teenage school—leav-
ers, were out of the labor force as well as out of school.
Among the labor force participants, the white male unemploy-
ment rate was 18.5%, while the black male rate was 30.5%.
The behavior of young women was quite similar, except for
worse labor force participation among white school leavers.
For student male teenagers, the racial differential in la-
bor force nonparticipation was only half as bad as for non-
students, but the unemployment differential was 22% more
unfavorable to blacks. The female student differential in
unemployment rates was 14% more unfavorable to blacks.
Among both students and nonstudents, and among both young
men and young women, there was no significant or large
racial differential in the ratio of unemployment to popu-
lation. The large racial differential in unemployment is
counterbalanced by a large racial differential in labor
force participation. There are two very different struc-
tural interpretations of these findings: higher black reser-
vation wages and discouraged worker effects.
As previous researchers have found using other data, sim-
ple statistical models do not explain much of the individ-
ual variation in youth labor force behavior. Structural
models of youth unemployment are proposed for estimation
with microdata. These models are designed to ameliorate
biases in the simple models from ignoring simultaneity and
ecological correlation. These models for microdata have
added worker and discouraged worker effects exactly anal-
ogous to those in macroeconomic models.

We use comparable micro data sets for the U.S. and Canada to study the responses of young
workers to the extemal labor market forces that have affected the two countries over the past 25
years. We find that young workers adjust to changes in labor market opportunities through a
variety of mechanisms, including changes in living arrangements, changes in school enrollment,
and changes in work effort. In particular, we find that poor labor market conditions in Canada
explain why the fraction of youth living with their parents has increased in Canada relative to the
U.S. recently. Paradoxically, this move back home also explains why the relative position of
Canadian youth in the distribution of family income did not deteriorate as fast as in the U.S.