Short Time Series in labour market: a trajectory analysis for EU countries from 1995 to 2022

Summary of background data: In statistical literature, many contributions investigated the relation between macro-economic variables and the employment rates obtained from the Labour Force Survey. In this work, beyond the total employment rate, other rates referred to particular categories of the population have been analyzed in correspondence with the Gross Domestic Product and an index of inequality income. The source data is Eurostat in the period 1995-2020 for some European countries. Objectives: The main aim of the work is to detect the presence of an economic growth, measured by GDP, followed by a positive dynamic of the considered employment rates in some EU countries. When this relationship is confirmed, then it is possible to define the concept of inclusive growth. Methods: A three-way data analysis approach has been proposed to track the evolution of the relationship during time in each country. The points in the trajectory analysis represent a short time series with not enough observations to achieve good predictions through usual techniques. For this reason, an original approach based on the superior influence of the most recent observations has been used to obtain predictions for the future coordinates of the trajectories. The proposed method also provided prediction intervals in order to display not only the exact next point of the single trajectory but also a measure of the prediction error. Results and discussions/conclusions: The graphical analysis allowed to compare the paths of different countries. The trajectory analysis showed interesting results synchronized to macro-economic events, for example the impact of economic crisis is evident on the trajectories which tend to shrink at that time. About the inclusive growth, only some countries show a clear path toward this direction.