Synthetic Labor Market Index: construction and application to the Spanish case

G. Álvarez-Fernández, D. Roch Dupré, G. Gomez-Bengoechea

International Journal of Manpower Vol. 46, nº. 8, pp. 1563 - 1586

Summary:

Purpose

Traditional labor market indicators capture specific aspects or realities rather than offering an integrated view of its performance. We propose a comprehensive tool to analyze labor market performance, guide policy decision-making and motivate academic research from a holistic perspective: the Synthetic Labor Market Index (SLMI).

Design/methodology/approach

The SLMI is a composite indicator formed by 30 variables grouped into four categories: Unemployment, Employment, Protection for the Unemployed and Salaries. This paper discusses the SLMI’s construction, the results for the case of Spain (2008–2022), and its relationship with other economic indicators. Specifically, we empirically test the validity of the indicator under Okun’s Law’s theoretical background.

Findings

Our analysis demonstrates the robustness of the SLMI from the methodological and empirical standpoints, which suggests its potential usefulness for academic research and policy formulation.

Originality/value

The SLMI proposed by the paper is unprecedented at depicting the labor market in a holistic way.

Spanish layman's summary:

El Synthetic Labor Market Index (SLMI) integra 30 variables en cuatro categorías (desempleo, empleo, protección y salarios) para evaluar el mercado laboral de forma holística. Aplicado a España (2008–2022), demuestra robustez metodológica y utilidad en investigación y políticas.

 

English layman's summary:

The Synthetic Labor Market Index (SLMI) integrates 30 variables into four categories (unemployment, employment, protection, and wages) to assess the labor market holistically. Applied to Spain (2008–2022), it demonstrates methodological robustness and usefulness in research and policy.

Keywords: Labor market, Composite indicator, Okun's law, Synthetic index

JCR-JIF Impact Factor and WoS quartile: 2,600 - Q2 (2025)

DOI reference: https://doi.org/10.1108/IJM-04-2024-0252

Published on paper: September 2025.

Published on-line: August 2025.

Citation:
G. Álvarez-Fernández, D. Roch Dupré, G. Gomez-Bengoechea, "Synthetic Labor Market Index: construction and application to the Spanish case", International Journal of Manpower, Vol. 46, nº. 8, pp. 1563 - 1586, September 2025. [Online: August 2025] doi: 10.1108/IJM-04-2024-0252