Measuring employment deprivation in the EU using a household-level index

We propose an aggregate measure of employment deprivation among households that follows a methodological framework developed to measure wellbeing. This index verifies a set of reasonable axioms that other available measures do not: increases in three relevant employment deprivation elements-incidence, intensity and inequality. Incidence captures how many households in a population are touched by a lack of employment, while employment deprivation intensity reflects how far households are, on average, from being non-deprived of employment. Finally, employment deprivation inequality increases with the concentration of unemployment among few households. Based on this index, we analyze employment deprivation across the European Union using information from Labor Force Surveys during the current “Great Recession.” Our results provide evidence on the relevance of incorporating the household dimension to identify unemployment profiles, with a variety of implications, in terms of household wellbeing. Specifically, we show that countries with similar (intermediate) unemployment rates differ in their patterns of employment deprivation once the structure of employment across households is incorporated.