Measuring Full Employment

Full Employment Index is a composite index that takes into account employment and unemployment levels which have an impact on human economic welfare. Adult employment, Youth employment, long term employment, employment to population ratio and job creation rate, the sub-indices of FEI, have an equal impact on economic welfare and security. The 25+ employment rate tells us if human potentials and skills have been utilized effectively. The Job creation Index rewards and monitors the capacity of the economy to generate new jobs. Youth employment is of particular importance because future wellbeing depends on the capacity of the society to create opportunities for youth entering the workforce. Prolonged period of unemployment brings undesirable effects such as loss of income. Thus, a high proportion of short-term unemployed indicates a high job creation rate which in turn has an impact on the FEI. In this paper, separate sub-indices of employment and unemployment are combined and incorporated in HEWI, a composite index of human economic welfare.

Two versions of the Full Employment Index have been tried in this working paper. The second version contains the Long term Unemployment Rate while the first version doesn’t. The first section of the paper contains the data, methodology and commentary of the first version and the other section, the alternate version.

Please click here to download the working paper.