The best of two worlds: Assessing the use of administrative data for the study of unemployment using the labour force survey as a benchmark

Social security administrative data are increasingly becoming available in many countries. These are very attractive data as they have a long panel structure (large N, large T) and allow to measure many different variables with higher precision. Because of their nature they can capture short, frictional unemployment which is usually hidden in survey data, due to design or timing of interviews. However, the definition of unemployment is also different in both datasets. As a result, the gap between total unemployment and registered unemployment is not constant neither across workers characteristics nor time.
In this paper I augment the Spanish Social Security administrative data by adding missing unemployment spells using the institutional framework and the Labour Force Survey as a benchmark. I compare the resulting unemployment rate to that of the Labour ForceSurvey, showing that both are comparable and thus the administrative dataset is useful for labour market research. Administrative data can also be used to overcome some of the problems of the Labour Force survey such as changes in the structure of the survey. This paper aims to provide a comprehensive guide on how to adapt administrative datasets to make them useful for studying unemployment.