Economic crisis and labour force transition to inactivity: a comparative study in German rural and urban areas

Abstract

Economic crisis and labour force transition to inactivity: a comparative study in German rural and urban areasThis study analyses the determinants of labour force transition to inactivity in the German labour market. Using German Labour Force Survey data the infl uence on the transition fl ow to inactivity of factors such as age, education, marital status, sex and registration with the public employment service are examined. We present estimates of degree of urbanisation-specifi c multinominal logit models to analyse the determinants of individuals' transition probabilities in rural and urban areas. By comparing the infl uence of the factors that affect transition to inactivity before (2002-07) and during (2008-09) the global economic crisis, this paper contributes to the general understanding of transitional labour market fl ow dynamics during the crisis period. The fi ndings suggest that during the crisis period education level and marital status have had different impacts in rural and urban regions on the transition to inactivity. While these two factors infl uenced the transition to inactivity before the crisis, their effect has been stronger during it. Additionally the results suggest that the interaction of individuals with institutional settings (e.g. registration with the public employment service) have to be taken into account when designing active labour market policy measures, especially during crisis periods. Knowledge about the infl uence of these factors on the transition to inactivity, and their different effects in rural and urban areas, provides important information for designing policies aiming to reduce the transition to inactivity during crisis periods.

Adaptation of a microsimulation model at the municipality level: demographic and employment evolution in the Altmark region of Germany

“…Further, it is highly likely that during the crisis period factors that influence transition flow differs in rural and urban regions in Germany. 21 Based on our simulation findings, it was shown that even though the simulation was able to correctly replicate past trends before the crisis, it was impossible to reproduce post-crisis trends given that the dynamics were strongly affected by external factors not considered in the model. Such an impact should serve as a reminder of the limitation of these types of models.…”

“…Further, it is highly likely that during the crisis period factors that influence transition flow differs in rural and urban regions in Germany. 21…”

The Original Measurement of the Unemployment Rate is Obsolete-Interpretation of the Unemployment and Inactivity is Cumbersome and Redundant

“…Gailhard and Kataria (2014) introduce several factors, which might explain the flow between inactive and employed. As German data (similarly to other publications) shows that the probability to be reemployed is similar both in case of unemployed and inactive, and as such the differences cannot be simply explained by active job search or no search at all.…”