Structural Unemployment in Luxembourg: Bad Luck or Rational Choice?

November 8, 2019

Preview Citation

Format: Chicago

William Gbohoui. Structural Unemployment in Luxembourg: Bad Luck or Rational Choice?, (USA: International Monetary Fund, 2019) accessed December 26, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

This paper combines both micro and macro approaches to identify the drivers of (un)employment and inactivity in Luxembourg. The young, low-skilled, and non-EU migrants are found to be the most vulnerable groups in the labor market. In addition to skills mismatches, work disincentives embedded in the tax-benefit system constitute a factor explaining structural unemployment. High unemployment of young and low-skilled workers reflects substantial unemployment traps, while disincentives for second earners (respectively the generosity of the pension system) contribute to lower labor market participation of women (respectively seniors). Further reduction of structural unemployment requires better integration of vulnerable groups into the labor market and improved targeting of benefits to make work more rewarding.

Subject: Employment, Expenditure, Labor, Labor markets, Unemployment, Unemployment benefits, Unemployment rate

Keywords: (Un)Employment, Activity rate, Co-habiting worker, Employment, Employment probability, Global, Job search assistance, Labor market attachment, Labor market in Luxembourg, Labor market intervention, Labor market outcome, Labor market participation, Labor market performance, Labor market prospects, Labor markets, Luxembourg labor market, Participation, Tax-Benefit System, Unemployment, Unemployment benefits, Unemployment rate, Work Incentives, Worker group, Work-Welfare Trade-off, WP

Publication Details

Pages:

42
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2019/243
Stock No:

WPIEA2019243
ISBN:

9781513515427
ISSN:

1018-5941

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