Machine Learning Ensemble Modelling for Predicting Unemployment Duration

Abstract

Predictions of the unemployment duration of the economically active population play a crucial assisting role for policymakers and employment agencies in the well-organised allocation of resources (tied to solving problems of the unemployed, whether on the labour supply or demand side) and providing targeted support to jobseekers in their job search. This study aimed to develop an ensemble model that can serve as a reliable tool for predicting unemployment duration among jobseekers in Slovakia. The ensemble model was developed using real data from the database of jobseekers (those registered as unemployed and actively searching for a job through the Local Labour Office, Social Affairs, and Family) using the stacking method, incorporating predictions from three individual models: CART, CHAID, and discriminant analysis. The final meta-model was created using logistic regression and indicates an overall accuracy of the prediction of unemployment duration of almost 78%. This model demonstrated high accuracy and precision in identifying jobseekers at risk of long-term unemployment exceeding 12 months. The presented model, working with real data of a robust nature, represents an operational tool that can be used to check the functionality of the current labour market policy and to solve the problem of long-term unemployed individuals in Slovakia, as well as in the creation of future government measures aimed at solving the problem of unemployment. The measures from the state are financed from budget funds, and by applying the appropriate model, it is possible to arrive at the rationalization of the financing of these measures, or to specifically determine the means intended to solve the problem of long-term unemployment in Slovakia (this, together with the regional disproportion of unemployment, is considered one of the most prominent problems in the labour market in Slovakia). The model also has the potential to be adapted in other economies, taking into account country-specific conditions and variables, which is possible due to the data-mining approach used.