Disentangling the relationship between Digitalization and Active Ageing: an explorative analysis in Europe

Background Job insecurity - defined as the perceived threat to the continuity of one's professional trajectory - is a critical construct in social sciences, especially when examining vulnerable gorups such as mature workers. Despite the pressing need for actionable insights to guide policymakers in addressing this issue, most research to date has adopted a predominantly empirical focus. In addition, due to the inherent difficulties in quantifying job insecurity, studies have tended to overlook the influence of macroeconomic variables, concentrating instead on individual-level factors. Yet, there is broad agreement that job insecurity is shaped not only by personal circumstances but also by the allocative decisions of private agents and the policy choices of public institutions. As such, a comprehensive modeling of job insecurity must be grounded in economic theory and account for macroeconomic factors. Research aims This work represents the first attempt to conceptualize job insecurity through the lens of economic theory. It has three primary objectives: (1) to establish a theoretical and empirical relationship between job insecurity, macroeconomic variables (including shocks), and individual-level factors, in order to develop a new robust and integrative measure of job insecurity; (2) to assess the short-run and long-run impacts of fiscal and monetary policy interventions on job insecurity, identifying which policy tools mitigate or exacerbate the phenomenon and how policymakers can proficiently act to stem the latter during periods of economic distress; (3) to decompose job insecurity in two terms: a risk component, which reflects the predictable part of the threat by workers based on available information, and an uncertainty component, which captures the unquantifiable, Knightian uncertainty. This decomposition allows policymakers to better understand which aspects of job insecurity can be influenced through targeted interventions. Methodology To accomplish the research goals above, the study introduces and solves an original, small-scale, rational expectations, New Keynesian model with asymmetric information. In this framework, it is assumed that public agents (e.g., government and central bank) are fully informed, whereas private agents (i.e., households and firms) operate with partial information and must form expectations about unobservable variables. To focus on mature workers, the model is calibrated using both macroeconomic indicators and micro-level time-series data collected from Eurostat and the Survey of Health, Ageing, and Retirement in Europe (SHARE), which involves workers aged 50 and over across 29 countries. The selected estimation technique is given by the High-Dimensional Dynamic Factor models (High-Dimensional DFM), which address the identification issues of structural innovations due to the measurement errors in macroeconomic variables and account for the autoregressive nature of shocks.The estimated parameters are used to compute the responses of job insecurity to fiscal and monetary shocks. Innovation The research moves beyond the conventional individual-centered approach to job insecurity by proposing an integrated framework that combines macroeconomic, individual and organizational-level determinants. Crucially, the study provides policy recommendations based on rigorous theoretical modeling and empirical validation, offering policymakers a scientifically grounded toolkit to mitigate job insecurity, particularly for mature workers in times of economic stress.