Forecasting National and Regional Youth Unemployment in Spain Using Google Trends

Abstract In Spain, the youth unemployment rate is one of the highest in the European Union. With the pandemic caused by Covid-19, young people face high unemployment rates and are more vulnerable to a decrease in labour demand. This paper analyses and predicts youth unemployment using Google Trends indices in Spain for the period between the first quarter of 2004 and the second quarter of 2021, being the first work to carry out this study for Spain and the first to use the regional approach for the country. Vector autoregressive Bayesian models and vector error correction models have been used for national data, and Bayesian panel data models and fixed effects model for regional data. The results confirm that forecasts based on Google Trends data are more accurate in predicting the youth unemployment rate.