This article aims to investigate if education policies moderate the association between unemployment and well-being among young adults. Based on the capability approach, we argue that education policies mitigate the negative effects of unemployment by providing opportunities for education and thus ways to exit unemployment. Education policies can strengthen capabilities, enhance the control that individuals have over their situation, and thereby reduce the stress associated with unemployment. We estimated cross-level interactions between education policies and unemployment status using multilevel methods and data from the European Social Survey. Results showed that policies that increase educational opportunities—such as generous second chance opportunities—were associated with smaller negative effects of unemployment on well-being and that this moderating impact was stronger for young adults with low education. Further analyses show that education policies are also associated with perceived capabilities among unemployed, supporting the proposed mechanism.
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