Switzerland is a small country with rich cultural and geographic diversity. The Swiss unemployment rate is low, at around 4%. The rate has remained at that level since the year 2000, despite a massive increase in the foreign labor force, the Great Recession, and a currency appreciation shock, demonstrating the Swiss labor market's impressive resiliency. However, challenges do exist, particularly related to earnings and employment gaps between foreign and native workers, as well as a narrowing but persistent gender pay gap. Additionally, regional differences in unemployment are significant.

Long-lasting structural issues may arise in case of discrepancies between job requirements and the skills of unemployed workers: A mismatch occurs in the labour market. The following thesis analyses labour market mismatch in Switzerland between 1993 - 2018. The focus of this research lies on individuals aged 15 - 24 in comparison to older workers, accounting for specific challenges young job seekers face in the labour market. Mismatch is measured by comparing an optimal distribution of open positions among unemployed across sectoral and occupational submarkets to the actual distribution. The resulting mismatch index captures hires lost due to misallocation for every time period t. A counterfactual unemployment rate is then calculated to obtain a measure of efficiency loss. The analysis shows that the level of mismatch ranges between 2.47% and 15.24% for older job seekers and between 2.29% and 10.28% for young workers. At maximum 15% of the unemployment rate of older workers is due to mismatch, while mismatch accounts for 20% of the youth unemployment rate at most. Comparing these numbers internationally, although such comparisons must be made with caution, indicates a rather low level of mismatch in the Swiss labour market. The obtained results do not allow a final conclusion on the differences in mismatch exposure between the two age groups. Using a base index with homogeneous matching efficiencies across submarkets, a generally higher level of mismatch for youth is observed. However, integrating sector-specific matching efficiencies into the model decreases the index significantly for young workers, leading to a generally lower level of mismatch compared to older job seekers.

This paper presents an analysis of the behavior of the Swiss labor market, which emphasizes both changes to labor supply and real wage inflexibility as determinants of recent unusually high levels of unemployment. Supply responses in the past meant that measured unemployment rates were rarely high. The paper suggests that these responses also meant that real wages were probably less responsive to shocks as a result. Econometric tests reported in the paper broadly confirm these suggestions, and imply that the level of unemployment consistent with stable inflation has risen in Switzerland.

This paper presents an analysis of the behavior of the Swiss labor market, which emphasizes both changes to labor supply and real wage inflexibility as determinants of recent unusually high levels of unemployment. Supply responses in the past meant that measured unemployment rates were rarely high. The paper suggests that these responses also meant that real wages were probably less responsive to shocks as a result. Econometric tests reported in the paper broadly confirm these suggestions, and imply that the level of unemployment consistent with stable inflation has risen in Switzerland.

The 2018 edition of the OECD Employment Outlook reviews labour market trends and prospects in OECD countries.