Poland on the dole: The effect of reducing the unemployment benefit entitlement period during transition

We analyse the unemployment benefit regime change that occurred in Poland in December 1991 using data from the Polish Labour Force Survey. Before December 1991, the entitlement period to unemployment benefits was unlimited. Thereafter, it was reduced to 12 months (with a few exceptions). Using the difference-in-differences approach within a hazard rate framework, we find that the regime change did not have a significant effect on the duration of unemployment. The results thus give credence to the view that the unlimited entitlement period of the old unemployment benefit regime was not the main culprit for the long durations of unemployment in Poland, although the generous eligibility criteria may have contributed to the increase in the incidence of registered unemployment at the beginning of the transition process. Received: 21 May 1997/Accepted: 15 March 1999     

The unemployment insurance compensation experience of immigrants in Canada, 1980-1988

This paper utilizes a new data set, compiled by Citizenship and Immigration Canada, Revenue Canada and Statistics Canada, to examine the unemployment experience of Canadian immigrant cohorts over the time period 1980 to 1988. Using the records of unemployment insurance benefits of persons who immigrated to Canada in those years and who filed income tax returns, the unemployment experiences of those people are compared by landing year, gender, level of education, language ability, and country of last permanent residence. The determinants of the proportion of each immigrant cohort that received unemployment insurance benefits are estimated by relating the proportions to landing year, duration of time in Canada, and labour market conditions. Briefly, we find no obvious influences on UI receipt behaviour following the immigration reforms of 1982. However, the recession of 1981–82 had a major impact on incomes which did not recover until 5 or 6 years later. Nevertheless, more generous UI benefits did raise slightly the likelihood of UI receipts. Received: 5 December 1995 / Accepted: 14 August 1996     

Assessing the effects of an early retirement program

We investigate induced retirement effects of the Norwegian early retirement program AFP and emphasize effects caused by relocations of some individuals from disability pension and unemployment to AFP. Theoretical considerations predict that AFP unambiguously induces more early retirement. Analyzing Norwegian register data 1994–96 with parametric and non-parametric methods, we demonstrate that i) economic incentives influence the retirement decision, ii) there is a significant net induced retirement effect, iii) by a conservative judgment, at least 50% of the AFP retirees would have stayed in the labor force without the scheme.All correspondence to Espen Bratberg. We are indebted to the referees for detailed remarks, which significantly improved the paper. Financial support from the Norwegian Research Council and the Ministry of Health and Social Affairs is greatly appreciated. We are grateful for valuable comments from Erik Hernæs and Astrid Grasdal, seminar participants at the Norwegian School of Management in Oslo, the Institute for International Economic Studies in Stockholm, and the University of Linz, the 2000 Conference of the European Society for Population Economics in Bonn, and the German-Norwegian Seminar on Social Insurance in Berlin, 2000. Bratberg would also like to thank the Humboldt University for its hospitality during a stay in the winter of 2003. Responsible editor: Christoph M. Schmidt.     

Changing fertility rates in developed countries. The impact of labor market institutions

During the last two decades fertility rates have decreased and have become positively correlated with female participation rates across OECD countries. I use a panel of 23 OECD nations to study how different labor market arrangements shaped these trends. High unemployment and unstable contracts, common in Southern Europe, depress fertility, particularly of younger women. To increase lifetime income though early skill-acquisition and minimize unemployment risk, young women postpone (or abandon) childbearing. Further, both a large share of public employment, by providing employment stability, and generous maternity benefits linked to previous employment, such as those in Scandinavia, boost fertility of the 25–29 and 30–34 year old women.Financial help from a CRB grant from the University of Illinois is gratefully acknowledged. I would like to thank Carles Boix, Barry Chiswick, Carmel Chiswick, Evelyn Lehrer, three anonymous referees and seminar participants at ESPE 2000 (Bonn), Illinois Economic Meetings 2000 (Chicago), Simposi dAnalisi Economica 2000 (Barcelona), 2001 Winter meetings of the Econometric Society in New Orleans, ESPE 2001 (Athens), Braga (Portugal), University of Chicago, De Paul University, PAA 2002 (Atlanta) for helpful comments; Gosta Esping-Andersen for providing some data and Cristina Mora for excellent research assistance. Responsible editor: Junsen Zhang.     

Do stepping-stone jobs exist? Early career paths in the medical profession

In the Netherlands, students who want to become a medical specialist have to enrol in a training program which is in limited supply. During the search for a position as trainee (or “junior medical specialist”), they may accept a temporary job as a medical assistant. We use a micro data set to investigate whether such work experience increases the probability of becoming junior medical specialist. To deal with selectivity, we simultaneously model the transitions from unemployment to trainee, from unemployment to medical assistant, from medical assistant to trainee and from medical assistant to unemployment. We find that a job as medical assistant helps to become a medical specialist. Received: 27 July 2000/Accepted: 31 January 2001 All correspondence to Gerard J. van den Berg. Responsible editor: John F. Ermisch.     

Comparing migrants to non-migrants: The case of Dutch migration to New Zealand

We analyse post-war Dutch migration to New Zealand. We document that history, reflect on analytical and econometric modelling and then combine a sample of Dutch migrants in New Zealand with a representative sample of Dutch in The Netherlands to estimate wage equations and the determinants of the migration decision. We use the results for ex post evaluation of the migration decision.Joop Hartog is Fellow of IZA (Bonn), CESifo (München), AIAS and Tinbergen Institute (Amsterdam). Work on this project was begun when Hartog was Erskine Visitor at the University of Canterbury, Christchurch New Zealand. Rainer Winkelmann is Fellow of CEPR and IZA (Bonn). This paper is produced as part of a CEPR research programme on European Migration from Economic Analysis to Policy Response, supported by a grant from the Commission of the European Communities under its Human Capital and Mobility Programme (no. ERBCHRXCT940515).It was presented at the European Society for Population Economics meetings in Bonn, June 2000. We gratefully acknowledge comments by Justin Lee Tobias, Jacques Poot, Ed Vytlacil, an anonymous referee and Paul Schultz. Responsible editor: T. Paul Schultz.     

Divorce as risky behavior

Given that divorce often represents a high-stakes income gamble, we ask how individual levels of risk tolerance affect the decision to divorce. We extend the orthodox divorce model by assuming that individuals are risk averse, that marriage is risky, and that divorce is even riskier. The model predicts that conditional on the expected gains to marriage and divorce, the probability of divorce increases with relative risk tolerance because risk averse individuals require compensation for the additional risk that is inherent in divorce. To implement the model empirically, we use data for first-married women and men from the 1979 National Longitudinal Survey of Youth to estimate a probit model of divorce in which a measure of risk tolerance is among the covariates. The estimates reveal that a 1-point increase in risk tolerance raises the predicted probability of divorce by 4.3% for a representative man and by 11.4% for a representative woman. These findings are consistent with the notion that divorce entails a greater income gamble for women than for men.     

Supplemental security income, labor supply, and migration

The Supplemental Security Income (SSI) program in the USA creates incentives for potential aged recipients to reduce labor supply prior to becoming eligible, and past research finds evidence of such behavior for older men. There may be a migration response to across-state variation in SSI benefits, which is of interest in its own right and can bias estimates of the effects of SSI benefits on labor supply. We fail to find evidence that older individuals migrate in response to SSI benefits, or that the labor supply disincentive effects of SSI are spurious and instead reflect migration behavior.The author Neumark is also a Senior Fellow at the Public Policy Institute of California, a Research Associate of the National Bureau of Economic Research, and a Research Fellow at Institute for the Study of Labor. The views expressed are not those of the Public Policy Institute of California.     

Natives and migrants in the London labour market, 1929–1931

Migrants are sometimes regarded as marginal workers in metropolitan labour markets. London has long been a major destination for migrants from elsewhere in Britain and abroad. In this paper we examine the earnings and unemployment experience in 1929–1931 of male workers who migrated to London, or within London. We use data from the New Survey of London Life and Labour, a large survey of working class households, the records from which have recently been computerised. Our findings indicate that migrants were not marginal, in fact they enjoyed slightly higher earnings and lower unemployment incidence than native Londoners. Much of the advantage can be explained by differences in average skill levels and personal characteristics. Received: 2 November 1999/Accepted: 3 August 2000     

Welfare participation and welfare dependence among the unemployed

We regard individual unemployment duration as an important determinant of individuals welfare dependence. Welfare receipt is modelled for a unique data set of 4,655 Finnish unemployed individuals. A two-stage binomial hurdle model is applied, and estimations are made by both ML and GMM. Disregarding the full interrelation between unemployment and welfare clearly underestimates the importance of the former. Unemployment has a clear impact on both the probability of welfare participation and on welfare dependence among recipients. Using a finite mixture model we find that there is a small minority of unemployed welfare recipients who are locked-in in welfare dependence.All correspondence to Maria Melkersson. We thank participants at the ESPE 2001 conference, João Santos Silva and two anonymous referees for valuable comments. Financial support from Rektor för Åbo Akademi is gratefully acknowledged (Saarela). Responsible editor: Junsen Zhang.     

Self-selection,earnings, and out-migration: A longitudinal study of immigrants to Germany

In this paper we examine the process of out-migration and investigate whether cross-sectional earnings assimilation results suffer from selection bias due to out-migration. Our 14 year longitudinal study reveals that emigrants are negatively selected with respect to occupational prestige and to stable full time employment. Our results show no selectivity with respect to human capital or gender. The likelihood of return migration is strongly determined by the range and nature of social attachments to Germany and origin countries. It is also the highest during the first five years since arrival, and grows higher toward retirement. Selective emigration, however, does not appear to distort cross-sectional estimates of earnings assimilation in a relevant way.All Correspondence to Douglas S. Massey. This study has been made possible through various research visits to DIW Berlin and IZA in Bonn. We are grateful for the access to the data, and many useful comments on various drafts by Klaus F. Zimmermann. Earlier drafts were presented at the annual conference of the Population Association of America in Atlanta, and research seminars at Princeton University and IZA, Bonn. We wish to thank many participants for stimulating discussions and useful comments. We have benefitted in making revisions from the comments of three anonymous referees. Responsible editor: Klaus F. Zimmermann.     

Long run opportunity-costs of children according to education of the mother in the Netherlands

Children claim a large part of the parents' potential resources, particularly their time. Direct time costs arise through the time spent out of the labour force while the children are small, indirect costs are the result of lower investment into human capital. It is demonstrated in this paper that the average opportunity costs of children of lower educated mothers can be higher than those of higher educated mothers.The author wishes to thank his colleagues from de Leerstoel Vergelijkende Bevolkings- en Emancipatie-economie, especially Siv Gustafsson, John F. Ermisch and two anonymous referees for their comments and suggestions on earlier drafts of this paper. The author is also thankful for Mr. and Mrs. van Ingen for their advice on improving the English text. Financial support from the FMO is gratefully acknowledged. Responsible editors: Siv S. Gustafsson, John F. Ermisch.     

Health effects of child work: Evidence from rural Vietnam

We test whether work in childhood impacts on health. We focus on agricultural work, the dominant form of child work worldwide. Data are from the Vietnam Living Standards Survey, 1992–93 and 1997–98. We correct for both unobservable heterogeneity and simultaneity biases. Instruments are land holdings and commune labour market and school quality indicators. We examine three indicators of health: weight-for-age Z-score; reported illness; and, height growth. There is clear evidence of a healthy worker selection effect. We find little evidence of a contemporaneous negative impact of child work on health but, particularly for females, work undertaken during childhood raises the risk of illness up to five years later. For boys, the risk is increasing with the period of time in work. There is no evidence that work impedes the growth of the child. This work was undertaken as part of the Understanding Children's Work project, an inter-agency program between the International Labour Organisation, UNICEF and the World Bank. The views expressed are those of the authors alone and do not reflect positions of the sponsoring organisations. We are grateful to the Government of Vietnam for permission to use the data. We thank two referees for very helpful comments. Responsible editor: Alessandro Cigno.     

The (Non-) Effect of Unemployment Benefits: Variations in the Effect of Unemployment on Life-Satisfaction Between EU Countries

A negative effect of unemployment on subjective well-being has been demonstrated in many studies casting substantial doubt about assumptions of decisions of individuals to choose unemployment voluntarily as the utility-maximising option. These studies have been extended to take into account national-level context factors which have been shown to moderate the relationship between unemployment and life-satisfaction. So far most studies focussed mainly on economic indicators, although demographic and cultural differences between countries also affect how unemployment is perceived. An important variable that is not included in the majority of proper multilevel studies is the extent of unemployment benefits. Traditional micro-economic approaches argue that more extensive provisions should reduce the cost of unemployment and therefore reduce the motivation to regain employment—reflected in a reduction of the negative impact of unemployment. This study investigates this claim by using European Values Study data from all European Union countries and Norway as well as harmonised macroeconomic statistics from Eurostat. It finds that the effect of unemployment on life-satisfaction is indeed moderated by economic and demographic national-level factors, but not by unemployment benefits. To what extent unemployment reduces life-satisfaction varies greatly between countries, but appears to not be influenced by the extent of state unemployment provisions.     

Do immigrants displace young native workers: The Austrian experience

This paper studies the effect of increased immigration in Austria on the unemployment risk of young natives. Austria experienced a dramatic rise in the share of alien workers as a result of the breakdown of the former communist regimes (especially from former Yugoslavia). We concentrate on unemployment entry of young male workers, who are supposed to compete most heavily with new immigrants. Our results indicate that the detrimental impact – if it exists at all – is only minor. This is irrespective of the analyzed proxy for competition: The share of foreign workers in an industry or in a region. Received: 7 March 1996/Accepted: 20 March 1998     

Immigration,skills and the labor market: International evidence

Using the 1994–1998 International Adult Literacy Survey, this paper compares cognitive skills and employment of immigrants in Canada, New Zealand, Switzerland, and the United States. Immigrants had lower cognitive test scores than natives in each country, with the largest gaps in the US, and small gaps in Canada and New Zealand. Male immigrants in the US were no less likely to work than natives, while in the other countries, male immigrants were less likely to be employed. Female immigrants were less likely in each country to be employed than natives, with an especially large gap for the US.The author thanks Francine D. Blau and two anonymous referees for helpful comments and suggestions and Katsuhide Yamashita for excellent research assistance. Responsible editor: Christoph M. Schmidt.     

Should I stay or should I go? Educational choices and earnings: An empirical study for Portugal

We analyse educational choices and earnings of individuals at two different levels in the Portuguese educational system. At each exit we consider two decisions: the decision to continue studying and the employment decision. We find empirical support for the existence of selectivity bias as the errors of the earnings functions are in general correlated with the disturbances of the decision functions. The obtained rates of return to education vary between 2.4 and 9.4 percent, depending on whether or not selectivity and quantity effects are excluded from the computations. Note that selectivity represents three quarters of this difference. Received: 5 March 2001/Accepted: 10 October 2001 I am grateful for the comments of the editor and two anonymous referees. Responsible editor: John F. Ermisch.     

Public policy and the labor market adjustment of new immigrants to Australia

Two separate cohorts of immigrants to Australia are compared in order to assess the potential role of immigrant selection criteria, labor market conditions, and income-support policy in facilitating the labor market adjustment of new arrivals. Although these two cohorts entered Australia only five years apart, their initial labor market outcomes varied dramatically. The results indicate that changes in immigration policy may have led to increased human capital endowments that in turn resulted in higher participation rates and reduced unemployment. At the same time, improvement in Australian labor market conditions and changes in income-support policy over the 1990s – which most likely altered the returns to human capital – were probably instrumental in reinforcing the effects of tighter immigrant selection criteria. As much as half of the fall in unemployment rates among women and one third the decline among men appears to have occurred as the result of changes in the returns to demographic and human capital characteristics. Responsible editor:Christoph M. Schmidt     

Unemployment and consumption near and far away from the Mediterranean

We study the insurance mechanisms employed by households to absorb unemployment shocks using comparable data for four countries: Italy, Spain, Great Britain, and the US. Results on family transfers when the male household head becomes unemployed suggest that family networks are the weakest in Britain, while unemployment benefits there are instead the most generous across the four countries. Despite these differences, food consumption losses induced by unemployment of the male household head are similar across countries. These findings are consistent with the view that family support and the Welfare State substitute each other in mitigating the consequences of unemployment shocks. The first author is also affiliated with CEPR and CESifo, the second author with EUI, CEPR, CESifo, and IZA.