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The iceberg decomposition: a parsimonious way to map the health of labour markets

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  • Stijn Baert

Abstract

This article introduces the metaphor of the iceberg in the labour market. While policy in most OECD countries has historically focussed on reducing unemployment (the tip of the iceberg), the group of inactive people (below the waterline) is much larger. Therefore, we point to the clear limitations of the unemployment rate as the (single) key macro-economic indicator of the health of the labour market. A parsimonious dashboard approach utilising the unemployment-to-population ratio and the inactivity-to-population ratio as two highly appropriate and complementary measures is defended. We show that the ratio of these two indices varies greatly between countries, which calls for different policies for different countries.

Suggested Citation

  • Stijn Baert, 2020. "The iceberg decomposition: a parsimonious way to map the health of labour markets," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 20/1002, Ghent University, Faculty of Economics and Business Administration.
    • Handle: RePEc:rug:rugwps:20/1002
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    Cited by:

    1. Lippens, Louis & Vermeiren, Siel & Baert, Stijn, 2023. "The state of hiring discrimination: A meta-analysis of (almost) all recent correspondence experiments," European Economic Review, Elsevier, vol. 151(C).
    2. Lippens, Louis & Dalle, Axana & D'hondt, Fanny & Verhaeghe, Pieter-Paul & Baert, Stijn, 2023. "Understanding ethnic hiring discrimination: A contextual analysis of experimental evidence," Labour Economics, Elsevier, vol. 85(C).
    3. Stijn Baert, 2022. "What shifts did covid-19 year 2020 bring to the labour market in Europe?," Applied Economics Letters, Taylor & Francis Journals, vol. 29(15), pages 1447-1454, September.
    4. Lucia Svabova & Eva Nahalkova Tesarova & Marek Durica & Lenka Strakova, 2021. "Evaluation of the impacts of the COVID-19 pandemic on the development of the unemployment rate in Slovakia: counterfactual before-after comparison," Equilibrium. Quarterly Journal of Economics and Economic Policy, Institute of Economic Research, vol. 16(2), pages 261-284, June.

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    More about this item

    Keywords

    employment; unemployment; inactivity; labour market policy; labour market indicators;
    All these keywords.

    JEL classification:

    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy

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