mismatch on the labor market in brussels metropolitan

Talent for Growth in Brussels Metropolitan - 7 November 2012

Mismatch on the labor market in Brussels Metropolitan

Prof. Dr. J. Konings&

Drs. W. Torfs

University of [email protected]


OverviewI. Some stylized facts about the labor market in Brussels

Metropolitan

II. A matching framework to analyze labor market dynamics

III. What explains Matching efficiency

IV. Policy recommendations


STYLIZED FACTSPart I


Brussels Metropolitan reflects the typical characteristics of a Metropolitan Area (2010):- High unemployment in the centre- Low unemployent in the suburbs


61% of the unemployed in Brussels Metropolitan are lowly educated. Most of which (82%) are located in the Brussels’ capital region (the centre)

High15% - 19021

Medium24% - 30221

Brussels82% - 62583

Brabant-Wal-lon

10% - 7837

Halle-Vilvoorde8% - 6009 2010


Within Brussels Metropolitan the centre is attracting most commuters: 122.000 commuters from the periphery to the core (2010).


Summary 1

Brussels Metropolitan is characterized by the typical labor market features of other Metropolitan area’s:

-Large spatial differences in terms of unemployment

-Large spatial differences in terms of skills

-Labor mobility flowing mainly towards the centre


A MATCHING FRAMEWORK FOR ANALYZING THE LABOR MARKET

Part II


Inflows = Outflows Steady unemployment (U)

Matching


Negative correlation between Vacancies (V) and Unemployment (U): The Beveridge curve


Beveridge Curve for:(i) Brussels Metropolitan (2010-2012)

2010q1

2010q2

2010q3

2010q4

2011q1

2011q2

2011q3

2011q4

2012q1

2012q2

7000

7500

8000

8500

9000

9500

Vacatures

135000 140000 145000 150000Werklozen


Beveridge Curve for:(ii) Brussels Capital Region (2004-2012)

2004q1

2004q2

2004q3

2004q4

2005q12005q2

2005q3

2005q4

2006q1

2006q2

2006q3

2006q4

2007q1

2007q2

2007q32007q4

2008q1

2008q2

2008q3

2008q42009q1

2009q2

2009q3

2009q42010q12010q2

2010q3

2010q4

2011q1

2011q2

2011q32011q4

2012q12012q2

1500

2000

2500

3000

3500

4000

Vacatures

90000 95000 100000 105000 110000Werklozen


Beveridge Curve for: (iii) Halle-Vilvoorde (2004-2012)

2004q1

2004q22004q3

2004q4

2005q1

2005q22005q32005q4

2006q1

2006q2

2006q3

2006q4

2007q1

2007q2

2007q3

2007q42008q1

2008q2

2008q3

2008q4

2009q1

2009q2

2009q3

2009q4

2010q1

2010q22010q3

2010q4

2011q1

2011q2

2011q3

2011q42012q1

2012q2

2000

3000

4000

5000

Vacatures

12000 14000 16000 18000Werklozen


Beveridge Curve for: (iv) Brabant-Wallon (2010-2012)

2010q1

2010q2

2010q3

2010q4

2011q1

2011q2

2011q3

2011q4

2012q1

2012q2

1200

1300

1400

1500

Vacatures

14000 16000 18000 20000Werklozen

In 2003,17380 unemployed


Beveridge Curve for low skilled: (v) Brussels’ Capital Region (2004-2012)

STRONG SHIFT!

2004q1

2004q2

2004q3

2004q4

2005q12005q2

2005q32005q4 2006q1

2006q2

2006q32006q4

2007q1

2007q2

2007q3

2007q4

2008q1

2008q2

2008q32008q4

2009q1

2009q2

2009q3

2009q42010q12010q2

2010q3

2010q42011q12011q2

2011q3

2011q4

2012q1

2012q2

400

500

600

700

800

Vacatures

55000 60000 65000 70000 75000Werklozen


Halle-Vilvoorde: Low Skilled

2004q1

2004q22004q3

2004q42005q1

2005q22005q32005q4

2006q1

2006q2

2006q3

2006q4

2007q1

2007q22007q3

2007q42008q1

2008q2

2008q3

2008q4

2009q1

2009q22009q3

2009q4

2010q1

2010q2

2010q3

2010q4

2011q1

2011q2

2011q3

2011q42012q12012q2

500

1000

1500

2000

2500

Vacatures

5500 6000 6500 7000 7500Werklozen

Beveridge Curve for low skilled:Halle-Vilvoorde (2004-2012)


Summary 2-Brussels Metropolitan is characterized by an outward shift of the Beveridge curve, mainly driven by a shift out in the Brussels’ capital region.

-This indicates a reduction in the matching efficiency or an increase in structural unemployment.

- The reduced matching efficiency is mainly driven by a reduced matching efficiency of the low skilled, in the centre


WHAT EXPLAINS MISMATCH?Part III


Analyzing Matching EfficiencyThe role of mismatch

• In general : M = E m(u,v)• M=number of new hires, u =unemployed, v = vacancies• m = the matching function, which reflects the rate at

which unemployed workers are being matched with vacant jobs.

• E = Indicator of matching efficiency , normalized at 1 initially.

• Thus if E>1, then Em increases for a given u & v, so we obtain better matching efficiency, while if E<1, then Em decreases for a given u & v, so we obtain worse matching efficiency.


Evolution Matching Efficiency in Halle-Vilvoorde and Brussels’ Capital Region

0.650000000000001

0.700000000000001

0.750000000000001

0.800000000000001

0.850000000000001

0.900000000000001

0.950000000000001

1

1.05

Matching Efficiency Brussels Polynomial (Matching Efficiency Brussels)Matching Efficiency H.V Polynomial (Matching Efficiency H.V)


Especially for the low skilled, matching efficiency decreased in Brussels’ capital region (2004- june 2012)


Index of Skill Mismatch within each district in Brussels Metropolitan

0

0.1

0.2

0.3

0.4

0.5

0.6

Halle-Vilvoorde Brussels Brabant-Wallon

Brabant-Wallon

Halle-Vilvoorde

Brussels’ Capital Region


Index of Spatial Mismatch across the three districts in Brussels Metropolitan

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

low mid high

High skilled

Medium skilled

Low skilled


Halle-Vilvoorde Brabant-Wallon Brussels-21

-1

19

39

59

79

99

119

3.7 9.4

112U/V

Number of low skilled unemployed per low skilled open vacancy in each district (June 2012)


Summary 3-Brussels’ Metropolitan is characterized by high spatial mismatch for the low skilled.

-The centre, Brussels’ capital region, is characterized by high skill mismatch (vacancies for the high skilled, but local unemployed have low skills).

- Skill mismatch has increased with the crisis, which explains lower matching efficiency and signals persistent structural problems in the Brussels’ Metropolitan.


POLICY RECOMMENDATIONSPart IV


IV. Some Policy Recommendations

1. Reskilling and reschooling of the unemployed

- Reschooling & reskilling is more successful when it is done in close collaboration with firms or when it is organized by and within firms.

- On-the-job training & internships should be encouraged.

- Long run: More investment in education, including ‘second chance’ education


2. Improving mobility of low skilled unemployed- Tighter monitoring and guidance of the unemployed.

- Increasing minimum distance for accepting a job vacancy (= part of the current labor market reform)

- Further intense collaboration and coordination between ACTIRIS, VDAB and FOREM.

- Improving infrastructure in public transport in Brussels’ Metropolitan.

- Note that spatial mismatch & skill mismatch is a general Belgian problem (recent study NBB)


3. Job Polarization in terms of high quality & low quality jobs is typical for Metropolitan area’s

Facilitating development of low skilled service jobs, complementing high skilled, complex jobs.


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mismatch on the labor market in brussels metropolitan

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