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The Iceberg Decomposition: A Parsimonious Way to Map the Health of Labour Markets

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  • Baert, Stijn

    (Ghent University)

Abstract

This article introduces the metaphor of the iceberg in the labour market. While policy in most OECD countries has historically focussed on reducing unemployment (the tip of the iceberg), the group of inactive people (below the waterline) is much larger. Therefore, we point to the clear limitations of the unemployment rate as the (single) key macro-economic indicator of the health of the labour market. A parsimonious dashboard approach utilising the unemployment-to-population ratio and the inactivity-topopulation ratio as two highly appropriate and complementary measures is defended. We show that the ratio of these two indices varies greatly between countries, which calls for different policies for different countries.

Suggested Citation

  • Baert, Stijn, 2020. "The Iceberg Decomposition: A Parsimonious Way to Map the Health of Labour Markets," IZA Discussion Papers 13512, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp13512
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    Cited by:

    1. Stijn Baert, 2021. "What Shifts Did Covid-19 Year 2020 Bring To The Labour Market In Europe?," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 21/1014, Ghent University, Faculty of Economics and Business Administration.

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    More about this item

    Keywords

    employment; unemployment; inactivity; labour market policy; labour market indicators;
    All these keywords.

    JEL classification:

    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy

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