Employment sentiment behavior during European economic crises: Time trends and persistence analysis

Abstract

This study analyzes employment sentiment dynamics in the Euro Area during recessions using long memory models and time–frequency causality tests. Results show strong persistence in expectations and evidence of bidirectional causality with recession indicators. Employment sentiment serves as a short- and medium-term predictor of recessions, while downturns have lasting effects on labor market perceptions. These findings highlight the relevance of sentiment indicators for macroeconomic forecasting and policy design.