Vulnerable to (un)employment during the Great Recession

This thesis investigates the vulnerability to unemployment of employees in the Netherlands during the Great Recession which started in 2008. The effects on the labour market of an economic recession and the subsequent demand shock are mainly through the labour demand side of the labour market. The theoretical framework is shows that the labour demand depends on the marginal benefits and the marginal costs of labour. The marginal benefits of labour are determined by the marginal product of labour and the marginal costs of labour are determined by the wages and labour adjustment costs. The costs of other production factors could also affect the demand of labour, especially in the long run. From the theory is expected that younger employees, employees with flexible contracts, unskilled and low skilled employees and employees working in occupations sensitive to demand shocks, are most likely to become unemployed during an economic recession. The likelihood to inflow in unemployment benefits or benefit income support is empirically estimated by a logistic model using data of employees in the Netherlands between 2008 and 2013. Besides demographic characteristics are socio-economic, regional and sectoral data used to estimate the vulnerability to unemployment. The results demonstrates that prime age men with foreign origin and low income level are vulnerable to inflow in unemployment benefits or benefits income support. Employees living in the more rural areas of the Netherlands or living in high urbanized areas are more likely to become unemployed. Workers employed in temporary jobs or occupations sensitive to demand shocks are also more likely to lose their job.