A Dynamic Approach to Europe’s Unemployment Problem
Socio-Economic Research
Projects
Summary
This project aims to improve our understanding of unemployment and policies that would act to reduce it. We will study the main factors influencing unemployment at both an aggregate level and at an individual level. We will produce answers to a variety of key research questions surrounding the issue of unemployment in Europe, including the nature of aggregate unemployment dynamics and individual unemployment transitions, the role of labour market institutions, and the lessons from international comparisons. We will focus on the roles of ‘flexible’ employment forms, labour market frictions, labour market regulation, welfare provision, taxation, active labour market policies, macroeconomic policy, and innovation and the role of new technologies. We aim to make our analysis accessible to and important for policy-makers at national and European level. Thus the project has a scientific objective of enhancing our knowledge of unemployment and a policy objective of contributing to European policy formation.
This project adopts a dynamic approach to the analysis of unemployment and applies this to the central policy issue of European unemployment. The work of the project includes both theoretical and empirical analysis, though the emphasis is on the latter. We view it as a major and distinctive strength of this project that we will support our findings using a wide range of empirical techniques and data sources. The project is split into seven separate work-packages, focusing on different aspects of the issues to be studied: aggregate unemployment dynamics, individual unemployment transitions, inactivity, ‘flexible’ employment forms, labour market frictions, institutions and labour market performance, and international comparisons of unemployment dynamics. A key feature of this project is the use of new data sources. The days are gone when analysis of unemployment was conducted solely using short time series on aggregate variables: such data have by now been sucked dry of all information. This project will use many different types of data, including micro (individual) and macro (aggregate) data, longitudinal data, administrative data, matched worker-firm datasets, and local labour market data.
The main expected results of the project are contributions to scientific knowledge and to policy formation. This includes the following issues: assessing the key factors which affect unemployment and improving our understanding of how it might be reduced; the role of macroeconomic policy, the welfare system and active labour market policies; the part played by labour market institutions; what can be learnt from comparisons with other areas. We will report and explain our findings to a wide range of audiences, including European Union officials, national governments, the policy community, fellow scientists and the press. We will produce scientific papers, a Policy Report and construct a website to help disseminate our work.
The project is split into seven separate workpackages, focusing on different aspects of the issues to be studied:
- Aggregate unemployment dynamics
- Individual unemployment transitions
- Inactivity
- ‘Flexible’ employment forms
- Labour market frictions
- Institutions and labour market performance
- International comparisons of unemployment dynamics
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