Unemployment, Well-Being and Institutions. The Intricacies of using the standard unemployment rate (UR) as an Indicator for contemporaneous Labour Markets (1) New LMStats Project (a) Who are we? (b) What do we do? NAIRU, productivity etc. (2)Empirical strategies Well-Being (WB) (a) headcount-measures => employment inadequacy rate (b) synthetic indices including institutional variables (3)Theorising WB and an example (a) a methodology: values, preferences and indicators (b) subjective WB in Europe (c) objective LMWB – an index

How reliable is NAIRU for the US?

Example: UR, Growth, and Productivity

2nd Example: A New Headcount-Measure EIR = employment inadequacy rate

Executive Summary The principal aim of the paper is to add to an understanding of how to measure well-being of people participating in the labour market. A brief survey of the literature shows that well-being consists of both subjective and objective aspects and that the problems of selection and aggregation of indicators are inherently normative in nature. A definition of labour market well-being is suggested consisting of four components: basic values, subjective preferences, objective indicators and economic interdependences. The relationship between values and preferences and indicators is tested for the case of member countries of the European Union. In addition, a pooled cross-section analysis shows how labour market well-being may be under- or overstated by the use of simple unemployment rates for given countries. It also shows that there may be serious conflicts between social and political preferences and economic necessities in terms of interdependences between indicators. Investigating subjective and objective notions of labour market well-being (Draft)

plurality of approaches for general Well-Being (WB) Definition of WB as a set of... values, ‚subjective‘ preferences, indicators, interdependencies basic values specified as... Income, Leisure, Choice, Security aims: finding an indicator of aggregate labour market (LM) WB, comparing it to the standard unemployment rate An Approach for Determining WB in Labour Markets Part I

An Approach for Determining WB in Labour Markets Part II Example: LMWB in the European Union: 1.) Relationship between values and overall job satisfaction 2.) Relationship between indicators and values => selection of subjectively relevant indicators How to aggregate these indicators? => unemployment rate as benchmark Regression of indicators on unemployment rate rule of thumb: if predicted unemployment rate smaller than actual one => unemployment rate underestimates LMWB!

Beispiel: predicted vs. Actual unemployment