Using Survey Data for Labor Market Leading Index
The main objective of this paper is to introduce and discuss the results of a newly composed leading indicator for the Polish labor market. It was constructed as one of the tools to improve forecasting techniques of labor market changes, be able to inform the entrepreneurs of new tendencies and prevent growing unemployment. The other goal is to recognize and monitor structural unemployment. We start to develop the Labor Market Leading Index for two regions in Poland. Those regions, Podkarpackie and Lubelskie voivodeships, are two of the less industrialized regions in Poland, with high unemployment rate (around 18%), low-skilled labor, lowest wages in the country, and a large economic migration abroad. On the other hand, foreign direct investment intensified in this area during 2005, which created additional demand for labor. All this gave us the opportunity to asses the usefulness of this leading indicator as a tool for monitoring structural changes in the labor market. As the main components, we considered data from business, trade, building and consumer surveys. Regional labor market conditions expectations and the confidence about future business performance are the main components obtained from the survey. Sometimes, changes in consumers' or managers' confidence may not move in the same direction as the labor market; an improvement in business may not always lead to higher job creation. To estimate the new job creation process we introduce The Help Wanted Index for Poland, which measures the number of job ads in a leading Polish daily paper. The Help Wanted Index methodology is adjusted to Polish economic circumstances. The performance of the created indicator is tested against a chosen coincident labor market indicator. The Index we propose measures labor market conditions and gives additional information on structural unemployment. (original abstract)
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