Abstract
Abstract While unemployment rates in Europe declined after the global financial crisis until 2018/2019, the incidence of long-term unemployment, the share of people who have been unemployed for >1 year to the total unemployed, remained high. Moreover, the COVID-19 pandemic could aggravate the long-term unemployment. This paper explores the factors associated with long-term unemployment in European countries using a panel of 25 European countries over the period 2000–2018. We find that skill mismatches, labor market matching efficiency, and labor market policies are associated with the incidence of long-term unemployment. Among the different types of active labor market policies, training and startup incentives are found to be effective in reducing long-term unemployment.
Highlights
SECTION II: LONG-TERM UNEMPLOYMENT IN EUROPE 6 Long-term Unemployment Rate 6 Incidence of Long-term Unemployment 7 Impact of long-term unemployment 7
Using the panel data for 25 European countries over the period 2000–18, this paper finds that skill mismatches and labor market matching efficiency are associated with the incidence of long-term unemployment (LTU)
These are consistent with the literature on the effects of active labor market policies (ALMPs) on employment, which shows that training and private sector employment programs are generally more effective in alleviating unemployment in the medium-to-long term, while direct job creation is less effective (Card et al, 2010, 2018)
Summary
SECTION IV: UNDERSTANDING THE POTENTIAL DRIVERS OF LTU _______ 14 Labor market policy interventions: what, how, and which ones? 14 Skill mismatches: closing the digital skills gap 18 Labor market matching efficiency: the role of public employment services 22
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