STUDY Boom and Bust Effects on Youth Unemployment in Estonia MARGE UNT November 2012  Estonia is a small, open economy, highly dependent on external factors. In response to the recession, the youth unemployment rate reached its peak in 2010 – at 33 per cent it was one of the highest in the EU. It fell sharply in 2011, to 22 per cent, but this is still double the rate in 2007. Young people not in employment, education or training(NEETs) comprised 13 per cent in 2011. Eurofound has calculated that the annual cost of the NEET group is 1.5 per cent of GDP in comparison to the EU21 average of 1.1 per cent.  Education resources play a crucial role in youth labour market opportunities. The most vulnerable are people with less than a secondary education. People graduating during the recession 2008–2011 are not more likely to continue their studies com­pared to those graduating during the boom years of 2001–2007. The only excep­tion is people who obtained a BA. Compared to the economic boom, a downward substitution process is observable in the social position of young people during the recession. Only an MA seems to have retained a distinct value in the labour market, since the likelihood of those with such a degree becoming unemployed or taking precarious employment has not increased.  In Estonia, mainly reactive policies have been developed to assist the labour market entry of the unemployed. However, there is clear need for a wider range of measures, including those related to formal education and training. Although education is not a miracle cure, it can still be said that, in addition to specific knowledge and skills, it also fosters flexibility. Generally, people who have been educated for longer are bet­ter able to engage in retraining, if necessary, and to adjust to economic changes. In order to promote a more proactive approach and more sustained prospects, the co­ordination of youth policy measures between the Ministry of Social Affairs(Employ­ment Office) and the Ministry of Education and Research(education system) is vital.