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Why unemployment can hide labour-market change

A stock is a snapshot. A flow is movement over time. Unemployment can stay flat while entries and exits rise, masking a changing labour market.

  • The following diagrams compare the proportion of people moving between employment, unemployment and not in the labour force between May and June.
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Italy shows the trap: employment fell by 14,000 quarter on quarter in 2016, yet rose by 239,000 year on year. Stocks can move on different clocks.

  • pisa italy 752x532
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Flows add detail: Italy saw more moves from unemployment into work in 2016, but only modestly more moves from inactivity into work.

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In 2017, fixed-term jobs drove much of employment growth, while conversion to permanent work fell from 24.3% to 16.5%.

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The India panel page returned reCAPTCHA, so its evidence cannot be verified here. The takeaway remains: read transitions, not just the unemployment stock.

  • 4 happy Indian women workers standing with arms crossed at a factory photo
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