Economic determinants of employment sentiment: A socio-demographic analysis for the euro area

Oscar Claveria, Ivana Lolić, Enric Monte () and Petar Soric ()
Additional contact information
Enric Monte: Department of Signal Theory and Communications, Polytechnic University of Catalunya.
Petar Soric: University of Zagreb, Faculty of Economics and Business

No 202001, IREA Working Papers from University of Barcelona, Research Institute of Applied Economics

Abstract: In this study we construct quarterly consumer confidence indicators of unemployment for the euro area using as input the consumer expectations for sixteen socio-demographic groups elicited from the Joint Harmonised EU Consumer Survey. First, we use symbolic regressions to link unemployment rates to qualitative expectations about a wide range of economic variables. By means of genetic programming we obtain the combination of expectations that best tracks the evolution of unemployment for each group of consumers. Second, we test the out-of-sample forecasting performance of the evolved expressions. Third, we use a state-space model with time-varying parameters to identify the main macroeconomic drivers of unemployment confidence and to evaluate whether the strength of the interplay between variables varies across the economic cycle. We analyse the differences across groups, obtaining better forecasts for respondents comprised in the first quartile with regards to the income of the household and respondents with at least secondary education. We also find that the questions regarding expected major purchases over the next 12 months and savings at present are by far, the variables that most frequently appear in the evolved expressions, hinting at their predictive potential to track the evolution of unemployment. For the economically deprived consumers, the confidence indicator seems to evolve independently of the macroeconomy. This finding is rather consistent throughout the economic cycle, with the exception of stock market returns, which governed unemployment confidence in the pre-crisis period.

Keywords: Unemployment; Expectations; Consumer behaviour; Forecasting; Genetic programming; State-space models yield. JEL classification: C51; C53; C55; D12; E24; E27; J10. (search for similar items in EconPapers)
Pages: 29 pages
Date: 2020-01, Revised 2020-01
New Economics Papers: this item is included in nep-eec, nep-for, nep-lab and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Working Paper: Economic determinants of employment sentiment: A socio-demographic analysis for the euro area (2020)
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