The unemployment rate is one of the key labor market indicators, which contains information about labor market activity and overall state of the economy. This information is important for economic decisions made by governments, businesses and private individuals. However, individuals rely on what they believe the unemployment to be, and those beliefs might differ a lot from the official statistics. The perception of unemployment is influenced by different country-and individual-specific factors that can make low unemployment seem high and potentially distort people’s behavior. This paper studies perception of unemployment in European countries and explores the factors affecting it. The dataset comes from the European Social Survey (ESS) and covers two years: 2008 and 2016. The paper has three main results: 1) in all the countries in the sample, perceived unemployment is higher than the actual one; 2) the degree of misperception varies across countries and socio-demographic groups; 3) the same conclusions hold for both years in the sample. The author finds that the perceptual errors are the smallest in the Scandinavian countries, Switzerland and the Czech Republic. The degree of misperception is the highest in Southern Europe, Slovenia and Russia. These cross-country differences hold for both years in the sample. One of the main factors affecting perception of unemployment is the actual unemployment rate: the higher the actual level, the higher its perception. Another important factor is sustained economic growth: the countries with stable economy are less prone to overestimating unemployment. The socio-political context also contributes to how people perceive economic indicators. In particular, the general state of anxiety in society makes people more pessimistic in how they assess economic conditions. Perceptual errors vary across social groups between and within countries. Individuals with weak positions in the labor market (e. g. women, young people) are more likely to overstate unemployment. Their misperception might be due to a lower level of education, previous unemployment experience, temporary contracts, health problems.
unemployment rate, perception of unemployment, fear of unemployment, misperception, cross-country comparisons, European social survey, economic behavior
- Stigler G. Information in the labor market. The Journal of Political Economy, 1962, no. 5, pp. 94-105.
- Orland A. Personality Traits and the Perception of Macroeconomic Indicators – Survey Evidence. Working Paper Ruhr Economic Papers, 0424. Bochum, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, 2013. 47 p.
- Cardoso A. R., Loviglio A., Piemontese L. Misperceptions of Unemployment and Individual Labor Market Outcomes. IZA Journal of Labor Policy, 2016, vol. 5, issue 13, pp. 1-22.
- Blanchflower D.G. Fear, Unemployment and Pay Flexibility. Economic Journal, 1991, vol. 101, issue 406, pp. 483-496.
- Blanchflower D., Shadforth Ch. Fear, Unemployment and Migration. NBER Working Paper, no. 13506. Cambridge, MA, October 2007. 55 p.
- Gimpelson V., Kapeliushnikov R., Ratnikova T. Strakh bezrabotitsy i gibkost’ zarabotnoi platy v Rossii [Fear of Unemployment and Wage Flexibility in Russia]. Ekonomicheskii Zhurnal VSHE, 2003, vol. 7, no. 3, pp. 341-370.
- Gimpelson V., Monusova G. Strakh bezrabotitsy: opyt mezhstranovykh sopostavlenii [Fear of Unemployment: Cross-Country Comparisons]. Voprosy ekonomiki, 2010, no. 2, pp. 117-138.
- Kunovich R. Perceived Unemployment: the Sources and Consequences of Misperception. International Journal of Sociology, 2013, vol. 42, no. 4, pp. 100-123.
- The European Social Survey. Available at: https://www.europeansocialsurvey.org (accessed 10.10.2019).
- ILOSTAT. Available at: https://www.ilo.org/ilostat (accessed 10.10.2019).
- OECDstat. Available at: http://www.oecd.org/employment/emp/oecdindicatorsofemploymentprotection.htm (accessed 15.10.2019).
- IPSOS MORI. Available at: https://www.ipsos.com/sites/default/files/publication/1970-01/ipsos-mori-global-trends‑2014.pdf (accessed 23.10.2019).
- Europeans’ Knowledge of Economic Indicators. Special Eurobarometer. Brussels, The European Commission. April 2008. 69 p.
- IPSOS VIEWS Perils of Perception. Available at: https://www.ipsos.com/sites/default/files/publication/1970-01/ipsos-views-perils-of-perception-april‑2016.pdf (accessed 17.10.2019).
- Employment Outlook. Chapter 5. Is Job Insecurity on the Increase in OECD Countries? Paris, OECD, 1997. Available at: http://www.oecd.org/employment/emp/2080463.pdf (accessed 12.08.2019).
- Erlinghagen M. Self-perceived Job Insecurity and Social Context. Are There Different European Cultures of Anxiety? German Institute for Economic Research. DIW, Berlin, DP 688, April 2007. 40 p.
- Green F., Dickerson A., Carruth A., Campbell D. An Analysis of Subjective Views of Job Insecurity. Department of Economics Discussion Paper. Canterbury, April 2001. 25 p.
- Economic and Financial Affairs. European Commission. Available at: https://europa.eu/economy_finance/db_indicators/tab/ (accessed 25.10.2019).
- Doing Business 2010. Available at: https://www.doingbusiness.org/content/dam/doingBusiness/media/Annual-Reports/English/DB10-FullReport.pdf (accessed 27.10.2019).
- Treisman D. The Geography of Fear. NBER Working Paper, 2011, no. 16838. 63 p.
- Conover P.J., Feldman S., Knight K. Judging Inflation and Unemployment: the Origins of Retrospective Evaluations. The Journal of Politics, 1986, no. 3, pp. 565-588.
- Duffy D., Lunn P.D. The Misperception of Inflation by Irish Consumers. The Economic and Social Review, 2009, vol. 40, no. 2, pp. 139-163.
- Gudkov L. Strakh kak ramka ponimaniya proiskhodyashchego [Fear as a Framework for Understanding what is Happening]. Monitoring obtshestvennogo mneniya, 1999, no. 6, pp. 46-53.
Registered in system SCIENCE INDEX