Labour market attachment in the Nordic countries

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This report is the first in a larger research project examining how to increase the labour force participation among vulnerable groups in the Nordic countries. In this first report we use microdata from Eurostat to examine the labour force participation among vulnerable groups in the Nordic countries. Vulnerable groups include young people, seniors, immigrants, and people with disabilities.

The research shows that no single Nordic country excels in labour market attachment among all vulnerable groups and interesting cross-Nordic differences exist. This among other things highlights the potential for cross-country learning among the Nordic countries.

Further, we use a simple benchmark approach to demonstrate that if Sweden, Denmark, Finland and Norway have had the same employment rate as that of these countries with the highest employment rate for relevant subgroups in the labour market, then the combined employment of these countries would increase by 700,000 individuals.

In future phases of this research project, we will further examine and assess relevant barriers that lead to labour market exclusion for vulnerable groups in the Nordic countries and use unsupervised machine learning techniques to group people according to the barriers they face. Our objective is to identify and group individuals based on the barriers they face, rather than solely on their observable characteristics. Subsequently, we assess how current activation and labour support policies in the Nordic countries suit the identified group of individuals. This evaluation will be achieved through a combination of extensive literature reviews and qualitative research, including interviews with relevant practitioners, with the ultimate aim of presenting concrete, evidence-based policy recommendations to enhance labour market participation among vulnerable groups in the Nordic countries. The next reports are expected to be released during 2023.

This research project is funded by the Nordic Council of Ministers and is conducted in partnership with VIVE - The Danish Center for Social Science Research.

HBS Economics and VIVE (2022): Labour Market Attachment in the Nordic countries