Constructing a composite indicator of early employment security

The conventional measures of entrance to the labour market usually focus on single outcome variables such as youth unemployment rate, temporary or part-time employment, or horizontal/vertical education-to-job matching. However, such measures oversimplify the complex character of entry to the labour market. This chapter proposes a new composite index of early job (in)security for European countries based on raw micro-data drawn from the EU Labour Force Survey, which captures the whole process of a young individual’s entry into the labour market, including the labour market conditions, the quality of jobs available and the transition smoothness of moving from education to the labour market. The suggested composite indicator summarizes the multi-faceted character of labour market entry to a single measurement. The dimensionality of the indicator is examined through scaling and factor analysis, evaluated and validated with the use of correlation analysis, including two indicators used in the literature for measuring early job insecurity.