­

How Tight is the Labour Market? A Micro-Based Macro Indicator

Link to article:

[PDF]

Authors:

Gaure, Simen and Røed, Knut

Year:

2003

Reference:

Memorandum
Number in series: 9

Summary

We develop a new indicator of labour market tightness, based on the pure calendar time changes in individuals’ transition rates from unemployment to employment. Based on Norwegian register data from the 1989-2002 period, we show that this indi-cator, in contrast to the aggregate rate of unemployment, correlates well with an ex-post-calculated GDP-based business cycle indicator, even around the time of business cycle turning points. The indicator can be calculated just as quickly as the unem-ployment rate, both at an aggregate and a disaggregate level, and hence improve pol-icy makers ability to assess current labour market developments.

JEL:

C41, E32, J64

Keywords:

Labour market tightness, Business cycles, Unemployment

Project:

Oppdragsgiver: Aetat Arbeidsdirektoratet og Finansdepartementet
Oppdragsgivers prosjektnr.:
Frisch prosjekt: 1412 - A new business cycle indicator

Contact:

knut.roed@frisch.uio.no