Patterns of non-employment: labor market institutions and the employment performance of social groups

Increasing labor market participation to a high level is seen as a necessary means for international economic competitiveness and sustainable financing of the welfare state. One of the major goals of labor market research is therefore to explore why certain social groups are less likely to be employed. While most research focuses on the determinants of unemployment, this study includes also inactive persons, thus examining the total non-employed population. The paper argues that labor market insti-tutions interact with individual characteristics and resources, thereby shaping nationally specific pat-terns of non-employment. Following a social structural approach, it analyzes the institutional effects on individual employment performance in 14 countries using the European Labour Force Survey. Non-employment patterns are disaggregated by gender, age group and educational level. Institutional ar-rangements are modeled by including macroeconomic indicators into pooled cross-sectional models with country, country-education level, country-age group, and year fixed-effects. Results not only indi-cate the important role of the institutional context in forming absolute levels of non-employment, the observed group differences also underline that labor market institutions shape the social composition of non-employment. Furthermore, institutional arrangements commonly associated with inactivity have an impact on overall non-employment. The evidence for institutional interactions supports the need for developing comprehensive models of national employment regimes.