The Implications of Applying Alternative-Supplementary Measures of the Unemployment Rate to Subpopulations and Regions: Evidence from the European Union Labour Force Survey for Southern Europe, 2008–2015

Abstract

The unemployment rate is an important indicator with both social and economic dimensions considered signifying a country’s social and economic wellbeing. For its measurement the European Union Labour Force Survey (EU-LFS) applies a synthesized economic construct computed according to the International Labour Organization (ILO) conventional definitions of the employed, unemployed and inactive. However, in the literature, the need for using more than one measure especially in recessionary times is emphasized. In this paper, we investigate the implications of applying two broader alternative definitions of the unemployment rate to subpopulations and regions of interest for social policy purposes. The analysis is based on the 2008–2015 annual datasets of the EU-LFS for Southern Europe: Greece, Italy, Portugal and Spain. Two alternative measures of the unemployment rate are formulated as variations of the ILO conventional definitions. Applying these two measures to the EU-LFS data, the findings show an increase of the official unemployment rate. Moreover, they reveal threatening unemployment rates for women, the young, the single and those with primary (Italy, Portugal and Spain) and secondary (Greece) education and an altered distribution of regional disparities. The results are reported for the age group 15–74 to allow for comparability with the ILO conventional definition of unemployment. Although, the changes in the definitions presented do not exhaust all possibilities, the results indicate the need, especially in recessionary times, for implementing alternative measures of the unemployment rate to the EU-LFS in the tradition of the Current Population Survey.