1. CEDEFOP
Session 2: Closer look at the roadmap Potential impacts of Brexit and other macroeconomic issues
Production of Skills Supply and Demand Forecasts
Alphametrics
Eva Alexandri, Cambridge Econometrics
Skillsnet Technical Workshop, November 2016, Thessaloniki

2. Outline of the presentation
Uncertainty – assumptions and policies
Main assumption needed for the forecast
Brexit – what does this mean for us?
Potential modelling issues
E3ME model developments
Brief outline of new model version
Developments relevant to current framework

3. Main assumptions in our modelling work
Population growth (EUROPOP 2013)
GDP growth trends
Short-run trends (AMECO)
Long-run growth outlook
Other policies
Retirement age and pensions
Benefit schemes
Other labour market policies

4. Brexit and Uncertainty
The economy – long-term impacts on UK and EU economy
The deal with the EU
The deal with other countries
The labour market
Changes to the movement of people
Labour market regulation
EU regulation and targets
Europe 2020
Climate and energy targets
EU regulation and renegotiations – renegotiations of targets. Change in burdens for MS.

5. Brexit and the labour market forecast
Changes to the population forecast?
Changes to migration and these will affect population growth
Changes to labour market participation patterns?
Assumptions about long-term growth
Long-term GDP growth forecast
Changes to the structure of the economy? Relocation of businesses?
New policies and regulations
Other issues
New regulations not directly related to economic policies (e.g. visas, environmental regulation)?

6. The E3ME model
Global model covering 59 regions and 69 sectors (43 for non-EU regions)
Improved treatment of trade – bilateral trade equations
Improved treatment of electricity supply
Improved treatment of the road transport
Improved treatment of employment – now male and female split
New visualisation interface

7. E3ME and Employment by Gender
New development relevant to current framework
New equation sets looking at employment by gender
Econometric equation set for total employment
Econometric equation set based on relative shares of each gender in the labour market
Model structure incorporates differences in wages
we assume wage differentials over the forecast are the same as historical. We do not model wage differentials!
But we can adjust wage differentials as a scenario inputs to reflect response to policy.
E3ME model assumes that both men and women apply for each job vacancy that arises, according to their relative shares in the labour market (so more women in the labour market suggests that more women will apply for jobs). The choice of an employer may also depend on the expected differences in wage rates between men and women. The econometric equation describing employment demand thus features the relative labour market shares and wage rates as explanatory variables (ideally any differences in productivity would also be captured but the data do not support this).
Differences between the wage rates of men and women were also incorporated into the model structure. As gender-specific productivity data are not available we have not estimated a set of econometric equations for wage differentials, but the specifications allows us to vary wage differentials in the pathways described in the next chapter

8. E3ME and Employment by Gender
Ongoing work for looking at gender equality
Scenarios we have been looking at:
Closure of the gender pay gap
Closure of the gender gap in activity rates
Closure of the gender gap in STEM graduates
More equal sharing of unpaid work (eg. childcare), leading to a higher fertility rate
EIGE | European Institute for Gender Equality
DG Justice work
Not published yet

9. Summary Uncertainties Suggestions on recent E3ME developments
Things you might find useful

10. Further information
Cambridge Econometrics Eva Alexandri, Rachel Beaven, E3ME model