EU-Mediterranean youths in the crisis: substitution vs. income effect

The economic crisis that erupted in 2008 has had particularly adverse effects on the youth labour market outcomes in the European Union Mediterranean economies. So far little evidence is available on the reaction of the young to the adverse conditions their household members faced due to the crisis. Youths could have decided to prolong or stay in education instead of participating on the labour market (substitution effect) or they could have decided to increase their participation (income effect). By using the EU Labour Force Survey data, we explore the probability of young adults changing their labour market status from (i) inactivity to employment, (ii) inactivity to unemployment, (iii) employment to education, and (iv) unemployment to education in response to labour market outcome changes in their households: (i) both parents losing the job; (ii) one of the parents losing the job, (iii) both parents becoming inactive, (iv) one of the parents becoming inactive, and (v) both parents remaining unemployed. Estimated probit models include seven EU Mediterranean countries during the 2006–2015 period. Results support both income and substitution effect, without clear identification of the dominance of one effect over the other.     

Youth earnings and labour market volatility in Europe

The authors provide new evidence on youth earnings and labour market volatility, including flows into and out of employment, across Europe during the Great Recession. EU‐SILC data for the period 2004–13 reveal large disparities in volatility levels and trends across European countries. As expected, the Great Recession increased youth labour market volatility, offsetting the trends observed over the previous years of economic prosperity. A variance decomposition exercise points to greater exposure to worker turnover in southern Europe. Fixed effects regression on labour market institutions relates higher unemployment benefits and more stringent employment protection legislation to lower earnings and labour market volatility.     

Employment and labour productivity in high unemployment countries

Contemporary development strategies emphasize labour productivity growth because it has historically underpinned rising living standards. Today, however, poverty reduction and inclusive development in those developing countries with high unemployment require increasing the employment rate even if this means lower average labour productivity. We critique the International Labour Organization (ILO) for its overly universalizing advocacy of high‐productivity growth strategies and for failing to confront the trade‐off between more and better‐quality jobs. This is particularly problematic in high unemployment contexts in Southern Africa, where labour productivity growth between 2000 and 2013 came at the cost of a falling employment rate.     

A multidimensional employment quality index for Brazil, 2002–11

In countries where informal, insecure jobs are widespread, traditional labour market indicators – such as the unemployment rate, labour force participation rate and wages – are not necessarily the most meaningful. The authors use a multidimensional employment quality index to analyse the Brazilian labour market over the period 2002–11, across three dimensions: earnings, formality (measured by the existence of an employment contract and social security contributions) and job tenure. The results show a significant increase in employment quality overall, especially in the years 2009–11, but with considerable differences between wage employees and self‐employed workers, and between industries.     

Six central features of the Chinese labour market: A literature survey

In this comprehensive analytical overview, the author pays particular attention to the changing structure of China's employment towards more private‐sector jobs in urban areas; its rising wages and widening earnings inequality; the persistence of its hukou system, causing labour market discrimination, an urban labour shortage and a rural labour surplus; its more market‐oriented wage structure, albeit with segmentation between firm ownership types; its relatively low unemployment; and the relatively weak role of its traditional labour market institutions, including minimum wages and trade unions. The aim is to contribute to the development of more suitable, China‐specific theoretical models and sound policy analysis.     

The labour market absorption of CIS immigrants to Israel: 1989-1994

The labour market absorption in the 1990s of some 600,000 immigrants from the ex-USSR has, on the whole, been a major success. The rate of unemployment among immigrants who came in 1990 has converged on the rate of unemployment for native Israelis. However, concern has been focused on the low rates of occupational retention and the waste of human capital that this implies. We use three micro data sets to investigate the absorption dynamics of CIS immigrants in the Israeli labour market in the 1990s.
Our findings suggest that the employment absorption process is steady, if slow. The Labour Force Survey suggests that "academics" experience positive duration dependence during the first four years in Israel. Vocational training did not appear to promote employment absorption. However, Hebrew training has a beneficial effect on employment absorption. We caution against the interpretation of occupational mismatch as being identical with the waste of human capital. It takes a long time until owners of human capital can fully adapt it to their new milieu.     

The economic significance of laws relating to employment protection and different forms of employment: Analysis of a panel of 117 countries, 1990–2013

The authors use time series econometric analysis applying non‐stationary panel data methods to estimate the relationships between employment protection legislation and legal protection of different forms of employment (part‐time, fixed‐term and agency work), and economic outcomes, with a data set based on the Centre for Business Research Labour Regulation Index (CBR–LRI), covering 117 countries from 1970 to 2013. Findings suggest that these laws have become significantly more protective over time and that strengthening worker protection is associated with an increase in labour's share of national income, rising labour force participation, rising employment, and falling unemployment, although the observed magnitudes are small when set against wider economic trends.     

Women's Employment in Transition, 1992–4: the Case of Poland

Since the early 1990s the Polish economy has, in the move towards a market economy, undergone substantial economic reforms which resulted initially in a severe recession and notably in widespread unemployment. In a country where women have traditionally played a major role in the workforce it is pertinent to ask how their role has been affected during the early years of transition to a market economy, what factors explain this, and what their employment prospects are likely to be in a free market economy. After sketching the key features of women's employment in Poland pre-transition the article then addresses these questions using data drawn mainly from the Labour Force Surveys of 1992 and 1994. It finds that women's labour market position has been changing and in 1994 could be said to be mixed: while on the one hand it seems to be deteriorating (rising rates of inactivity and unemployment, the feminization of part-time work), on the other women seem to have been relatively protected from the worst effects of marketization and are in a better position than men according to some unemployment indicators. Prospects for women's employment under a free market economy also appear to be mixed, with much depending on whether the Polish government introduces a framework of national measures to support and encourage women who enter into paid employment.     

Remittances and labour market outcomes: Evidence from Mexico

The effects of remittances on labour market outcomes have been studied by many researchers, primarily using micro‐level data. While a few studies have also used macro‐level data, they suffer from endogeneity bias due to the inclusion of remittances in their estimations. The present study attempts to fill the gap in the literature by using a set of panel data of Mexican states and by addressing the endogeneity bias with a system GMM (generalized method of moments) estimator. The main conclusions are that remittances increase labour force participation rates and reduce median hours worked, critical employment and unemployment duration.     

Regional wages and subjective measures of employment opportunities

We utilise a rich set of regional labour market variables to explain regional variation in Norwegian manufacturing wages. In particular, regional indicators of labour market conditions are computed from survey data in which respondents are asked to evaluate local employment opportunities. We find that average reported satisfaction with local job prospects and other survey-based indicators perform better in regional wage equations than traditional labour market variables, including the regional unemployment rate. Our results suggest that subjective measures of employment opportunities provide useful information about wage pressure.     

Job access after leaving education: a comparative analysis of young women and men in rural Germany

Rural labour markets for youth are an interesting research area for labour force transition studies because gender differences begin to appear with the out-migration that leads to a shortage of young women in Europe. Whilst existing studies provide insight into this migration flow, little is known about the young women and men who remain in the labour force in rural areas. The aim of this study is to provide insight into the determinants of job access after leaving education in Germany among the young population aged 15–29 based on the Labour Force Survey of 2002–2009. First, an empirical analysis of student to employment flow in rural areas with respect to social position (degree discipline, age, and socio-professional category) has been conducted. Second, gender-specific multinomial logit models are used to estimate the determinants of access to a first job without a long-term unemployment spell. The results suggest that there are substantive differences in student to employment flow between female and male samples for the variables urbanisation degree of residence (rural, urban, and peri-urbain) and marital status. Contrary to our expectations, living in rural areas does not suggest a significant negative effect in accessing a job within a year. In line with previous studies, being married has a negative influence on female graduates but is positive for their male counterparts.     

Does deregulation decrease unemployment? An empirical analysis of the Spanish labour market

Spain underwent two major labour reforms in 2010 and 2012 under the assumption that deregulating the labour market and decentralizing collective bargaining would automatically reduce unemployment (deregulation hypothesis). This article highlights the impact of demand and the sectoral structure of the economy to explain the behaviour of this variable (structural hypothesis). Analysing subnational panel data, the authors assess the capacity of these two hypotheses to explain unemployment trends. Their results cast doubt on the deregulation hypothesis and indicate the importance of cyclical and structural factors.     

Labour market turnover in Latin America: How intensive is it and to what extent does it differ across countries?

The study of labour market turnover is particularly significant in Latin America, which is characterized by marked economic cycles and limited social protection coverage. This article estimates the intensity of transitions from employment in six countries in Latin America in the new millennium and decomposes the differences observed, furthermore evaluating the employment destinations of workers making such transitions. The countries under analysis show very different turnover rates, which are mostly explained by a dissimilar incidence of informal and temporary employment. In all cases, a large share of job exits imply transitions to precarious jobs or unemployment.     

The effect of labour market polarization on university students’ job market‐related outcomes in the Republic of Korea: Implications for youth unemployment

This article aims to assess the effect of the labour market environment on university students’ labour market‐related behaviour in the Republic of Korea. Using data from the country's Graduates Occupational Mobility Survey for 2005–13, the author estimates the effect of macroeconomic variables on university students’ job market‐related outcomes. Results indicate that labour market polarization, as measured by the labour market polarization index developed by Chung and Jung (2016), has a significant effect on both the nominal and masked (through extension of university enrolment and university transfers) unemployment of university students. These findings imply that the labour market structure is a key element in understanding youth unemployment.     

Shifting the Beveridge curve: What affects labour market matching?

This article explores short‐run determinants of the matching between labour demand and supply by identifying shifts in the Beveridge curves for 12 OECD countries between 2000Q1 and 2013Q4. Using three complementary methodologies (visual examination, cointegration techniques and non‐linear estimations), we find that labour force growth and employment protection legislation reduce the likelihood of outward shifts, and the higher the share of employees with intermediate levels of education and the long‐term unemployment, the more difficult the matching process. Active labour market policies (such as incentives for start‐ups or job‐sharing programmes) could facilitate matching, while passive policies (unemployment benefits or labour taxation) make matching significantly more difficult.     

US and them: Job quality differences between natives and immigrants in Europe

Using microdata from the European Union Labour Force Survey (EU-LFS) and aggregate indicators of labour market institutions, this article compares the job quality of native and non-native workers across European countries and analyses the impact of the institutional settings on the job quality differential between both groups. The LFS is used to measure a job quality index for the period 2005–2017. We find that some immigrant groups fare worse than natives, the contribution of the “composition effect” to explain this differential is large, and the institutional framework affects the immigration gap in job quality. In particular, some labour market institutions (more centralized wage bargaining, stricter employment protection legislation) tend to be detrimental for immigrants relative to natives, while integration policies seem to work well in reducing these differences.     

The scars of youth: Effects of early‐career unemployment on future unemployment experience

Does early‐career unemployment cause future unemployment? The authors approach this question using German administrative matched employer–employee data that track almost 700,000 individuals over 24 years. Instrumenting early‐career unemployment with firm‐specific labour demand shocks, they find significant and long‐lasting “scarring effects”. In the mean, each additional day of unemployment during the first eight years on the labour market increases unemployment in the following 16 years by half a day. However, quantile regressions show that the scarring effects are much stronger for individuals who already suffer from lengthy and repeated spells of unemployment.     

More but not better jobs in Chile? The fundamental importance of open‐ended contracts

Chilean governments since 1990 have relied on economic growth to generate employment, higher wages and better conditions of employment. But the results of this policy have been mixed: quantitative improvements in employment and wages have not been matched by improvements in job quality. Contrasting Chile's seemingly rigid regulatory framework with its actual labour market flexibility, the authors stress the importance of employment conditions in assessing labour market performance. They empirically explore the effects of individual and job characteristics on employment and income‐generating capabilities, whose most powerful determinant, they find, is employment under an open‐ended contract. They conclude with a discussion of policy implications.     

Can welfare and labour market regimes explain cross‐country differences in the unemployment of young people?

No single institution can reduce (long‐term) youth unemployment. Welfare and labour market institutions function as “bundles”, through multiple inter‐institutional synergies. Based on a focused literature review for theory and on cluster analysis for empirics, the author identifies five such regimes across the EU‐27 and estimates their effects on the youth unemployment ratio and on long‐term youth unemployment. The most helpful institutional arrangement for young people in the labour market would be a combination of strong dual apprenticeship embedded in a corporatist labour market regime with high levels of social security, active labour market policy, and spending on education and childcare.