Nowcasting Register Labour Force Participation Rates in Municipal Districts Using Survey Data

In the Netherlands, very precise and detailed statistical information on labour force participation is derived from registers. A drawback of this data source is that it is not timely since definitive versions typically become available with a delay of two years. More timely information on labour force participation can be derived from the Labour Force Survey (LFS). Quarterly figures, for example, become available six weeks after the calendar quarter. A well-known drawback of this data source is the uncertainty due to sampling error. In this article, a nowcast method is proposed to produce preliminary but timely nowcasts for the register labour force participation on a quarterly frequency at the level of municipalities and neighbourhoods, using the data from the LFS. As a first step, small area estimates for quarterly municipal figures on labour force participation are obtained using the LFS data and the unit-level modelling approach of Battese, Harter and Fuller (1988). Subsequently, time series of these small area estimates at the municipal level are combined with time series on register labour force participation in a bivariate structural time series model in order to nowcast the register labour force participation at the level of municipalities and neighbourhoods.