Economics in a picture
A significant number of inactive individuals move to employment every quarter
The classification of an individual as unemployed relies on the degree of attachment to the labour market, based on the job search criterion. An individual aged between 15 and 74 years old is considered unemployed if one is not working but is actively searching for a job and is available to start working in the next two weeks. However, several individuals classified as inactive have a degree of attachment to the labour market close to those officially unemployed.
Among these individuals stands out the so-called “marginally-attached” who wish to work but are not actively searching for a job or are not immediately available to start. These include the discouraged workers that despite being available are not actively searching for a job. On average, about 12% of these marginally-attached individuals move to employment every quarter. This transition rate is lower than for the short-term unemployed (27.5%) but close to the long-term unemployed (17.1%) and clearly higher than that of the other inactive individuals (4.6%). Employment inflows originating from inactivity are substantial and surpass in absolute terms employment inflows originating from unemployment.
For further details see Martins and Seward (2019): “Into the heterogeneities in the Portuguese labour market: an empirical assessment”, Banco de Portugal Working Paper, No. 8/2019.
Prepared by Fernando Martins and Domingos Seward. The analyses, opinions and findings expressed above represent the views of the authors and not necessarily those of Banco de Portugal or the Eurosystem.
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