Measures of labour underutilization: a european comparison

In this paper we present some estimates of the degree of labour underutilizationin the production process for a number of European Union countries. Our measures areinspired by the ones proposed by the Bureau of Labor Statistics in the United States and bythe Bank of Italy. The joint use of such measures allows for a more complete internationalcomparison across different labour markets and for an analysis of the effects of the businesscycles that do not translate into a change in the number of unemployed individuals.The international comparison highlights the fact that, between 2008 and 2010, the Italianofficial unemployment rate has been lower than in other core countries of continental Europe(Germany in 2010 being an exception). However, if we count as underutilized labour forcethose individuals that, although officially employed, are not participating in the productionprocess, and those inactive individuals with low job-search intensity, we see how the Italianrate of labour underutilization has increased more than in other European countries. In 2010,such rate was estimated at 20,9 percent, 8 percentage points higher than in France and 10percentage points higher than in Germany, while the gap with respect to Spain decreases from more than 10 to less than 6 percentage points. In Southern Italy, the rate of labour underutilization is exceptionally high, even when compared to underdeveloped regions of other European countries.