Economic Insecurity, Inflation and Labour Market Dynamics: A Panel Analysis for EU countries

In the context of the global economic and financial downturns and social and political instability, the concept of economic insecurity has become a major concern for both researchers and policy-makers. Generally defined as the perceived or actual risk of financial instability and the awareness of the inability to address it, the economic insecurity has a great impact on both individual well-being and macroeconomic prosperity. Therefore, the purpose of the present paper is to analyse the impact of inflation and labour market dynamics on the economic insecurity within the European Union (EU) countries. To measure the economic insecurity, we used an index that was previously developed and which takes into account six variables: Inability to afford paying for one-week annual holiday away from home, Inability to face unexpected financial expenses, Children aged 0-17 living in jobless households, Arrears, Housing cost overburden rate and Inability to make ends meet. The analysis was conducted by using three different types of regression: OLS, Fixed Effects and Random Effects, and then it was validated by three types of robustness tests: the first one is regional decomposition, the second one is based on economic insecurity levels and in the third one we added institutional variables. The final results show robustness for six variables: Inflation rate, Household final consumption expenditure, Unemployment for 15-24 and 55-74 and Part-time and Vulnerable employment.