Choosing between alternative classification criteria to measure the labour force state

Abstract

Labour force counting relies on general guidelines that are set by the International Labour Office to classify individuals into three labour force states: employment, unemployment and inactivity. However, the resulting statistics are known to be sensitive to slight variations in operational definitions which are prima facie consistent with the general guidelines. We consider two interpretations of the general guidelines, operationalized by the criterion that is currently followed by Eurostat and a criterion that was followed by the Italian Statistical Office up to 1992. After showing that the labour force statistics resulting from the two criteria differ considerably, we compare individuals whose classification depends on the criterion that is adopted with individuals whose classification is common between criteria to study the boundary between unemployment and inactivity. An application of our strategy is presented using data from the Italian Labour Force Survey, painting a picture neatly against the criterion that is currently followed by Eurostat. © 2007 Royal Statistical Society.