Mitigating Long-term Unemployment in Europe

Nujin Suphaphiphat and Hiroaki Miyamoto

No 2020/168, IMF Working Papers from International Monetary Fund

Abstract: While unemployment rates in Europe declined after the global financial crisis until 2018/19, the incidence of long-term unemployment, the share of people who have been unemployed for more than one year to the total unemployed, remained high. Moreover, the COVID-19 pandemic could aggravate the long-term unemployment. This paper explores factors associated with long-term unemployment in European countries, using panel of 25 European countries over the period 2000–18. We find that skill mismatches, labor market matching efficiency, and labor market policies are associated with the incidence of long-term unemployment. Among different types of active labor market policies, training and start-up incentives are found to be effective in reducing long-term unemployment.

Keywords: WP; incidence of LTU; LTU; incidence; LTU rate; active labor market policies; employment incentive; EU labor markets; start-up incentive; Labor markets; Labor market policy; Unemployment; Employment; Active labor market policies; Europe; Long-term unemployment; labor market matching efficiency; active labor market policy (search for similar items in EconPapers)
Pages: 32
Date: 2020-08-21
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