A study on labour market transitions using micro-data from the Statistics on Income and Living Conditions (SILC) : final report

This report presents empirical evidence on labour market transitions in the European labour markets using micro data from the Statistics on Income and Living Conditions (SILC) and from the European Union Labour Force Survey (EU‐LFS). The aim of the study is to analyse labour market transitions between labour market states and contract types (temporary and permanent contracts), and how these have been affected by the recent financial and economic downturn. In doing so, we focus on labour market transitions coming from the labour market states employment (including self‐employment), unemployment and education. Furthermore, we identify similarities and differences between the EU Member States and between demographic groups. The report starts by giving a short overview of the extent and evolution of the economic and financial crisis. We then summarise the theoretical and empirical literature which is most relevant for our analyses. Here, the search and matching model of the labour market takes centre stage, both for the theoretical background as well as for the empirical investigation. The empirical analysis is based on the SILC data set, as well as on the EU‐LFS, which we use for Germany and Romania, as these two countries are not sufficiently covered by SILC. We analyse labour market transitions both descriptively and econometrically, using multinomial logit models. The results of our study show reduced employment stability (i.e. higher outflows from employment) during the recession, and a corresponding increase in employment‐tounemployment transition rates. Furthermore, men are more negatively affected than women by the crisis with respect to employment stability and employment‐to‐unemployment flows. In addition, employment‐to‐unemployment transitions increase significantly more for young workers than for workers belonging to other age groups. For flows out of temporary employment, the effects of the business cycle are much larger, and the impact on certain sociodemographic groups is much more differentiated. Men are much more affected by the crisis due to a higher increase in the transition probability from temporary employment to unemployment. Furthermore, the transitions from temporary employment into unemployment increase most for the youngest workers. In addition, the stepping‐stone function of temporary work is most strongly reduced for high‐skilled compared to any other skill group during the crisis.