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Corresponding Author:
Parvesh K. Chopra, International Centre for Development and Performance Management (ICDPM), Leeds, West Yorkshire, United Kingdom

A Systems Model to Measure Labour Market Dynamics

Volume 75 - Issue 4 - Papers in memoriam of Amedeo Amato, November 2022
(pp. 465-518)
JEL classification: C1; C3; E24; J6; P42
Keywords: Labour Market Dynamics; Multivariate Model; Global Economic System; Economic Liberalisation; International Migration; Science and Technology Inventions; Shocks; Failures and Interventions


The deeper and underlying causes of labour market dynamics in an economy reveal painful truths about the way the global economy works. Labour market shifts such as rising unemployment, decreasing job availability, instability and uncertainty, technological changes, growing number of working poor, and so on have major consequences for certain groups of individuals. Labour market disruptions caused by pandemic, the war in Ukraine and other global events, overtly or covertly, affect labour market flows (job-finding rates, job-exit rates, job-to-job transition rates) differently across the globe. Moreover, numerous driving forces, channels, and processes influence labour, jobs and economic activities in a unified one-world. Since labour market is a system in persistent change, its functioning in a global economy is determined within the prevailing forces of global economic system that fabricates various channels through which the dynamics of labour market are influenced. It is lucid that labour market dynamics are heterogeneous among different countries. Then, what are the fundamental underlying forces behind labour market performances that might help in explaining these differences? What is more, how can we model the dynamics of labour market by taking into account the forces of global economic system affecting globalized labour and jobs? Considering this, the present paper purports at proposing a systems model to measure labour market dynamics inspired by systems thinking approach. The proposed measurement system of labour market dynamics subsumes a conceptual model, operational model, a multivariate structural model and a measurement model within the boundaries of global economic system. It also provides a theoretic framework to study the causality and mechanisms among various critical latent variables of the model. The interplay between the pathways of global economic system and labour market dynamics have been, for the first time, outlined by constructing a robust, structural and multivariate causal pathways system to understand and analyse the dynamics of labour market. This paper contributes to this domain of research by building and offering a multivariate framework that pinpoints the driving forces that determine the dynamics of labour market and reveals how the key labour market aggregates/outcomes are statistically related to various internal and external shocks, failures and interventions in a global economy.

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