The impact of COVID-19 on economic insecurity of young europeans: exploring the role of local institutions

In this paper, I examine the role of local institutions on economic insecurity among young Europeans in the wake of the pandemic. To do so, I exploit a survey of young adults residing in Italy, Germany, France, and Spain. The analysis, using a difference-in-differences estimation strategy, shows how the quality of local institutions acted as a mediating factor in the evolution of individuals' economic insecurity after the outbreak of the COVID-19 pandemic. Estimates evidence a lower level of economic insecurity of about 10.3% in regions with high-quality institutions (75th percentile) compared to regions with low-quality institutions (25th percentile). Furthermore, nearly two years of post- COVID-19 data confirm that the effect was not only temporary. Overall, the quality of local institutions - by inhibiting the rise in perceived economic insecurity among young individuals - is likely to have mitigated consequent negative economic effects.