Labor Underutilization in European Countries: Some Facts About Age and Gender

Abstract

It is undeniably accepted that labor underutilization has important consequences for economies and societies. Unemployment that is the narrowest measure of labor underutilization is one of the main concerns for policymakers, investors, and society. Besides the standard unemployment rate, there are alternative measures of labor underutilization providing a wider picture of the underutilization of workforce. This study aims to delineate some facts about labor underutilization by age and gender for a group of European countries in a broader view. For this purpose, specifically, time-related underemployment and potential labor force data are employed to measure the labor underutilization along with unemployment. It is observed that there are significant gender and age differences in the labor underutilization components across countries. Elasticity and descriptive analyses together verify that time-related underemployment is more sensitive to unemployment than the potential labor force. While the sensitivity of time-related underemployment to changes in unemployment differs by gender and age, the potential labor force is almost equally sensitive to unemployment regardless of age and gender. The study additionally displays the degree of reallocation between underutilization components and suggests a higher reallocation for the young than adults. On the other hand, reallocation between labor underutilization components is not gender-biased.