Equilibrium unemployment and the duration of unemployment benefits

This paper uses microdata to evaluate the impact on the steady-state unemployment rate of an increase in maximum benefit duration. We evaluate a policy change in Austria that extended maximum benefit duration and use this policy change to estimate the causal impact of benefit duration on labor market flows. We find that the policy change leads to a significant increase in the steady-state unemployment rate and, surprisingly, most of this increase is due to an increase in the inflow into rather than the outflow from unemployment.     

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     

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     

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.     

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 benefits, risk aversion, and migration incentives

With reference to the EU enlargement, a framework is derived which allows the study of the effect of unemployment benefits on the migration decision. While benefits simply increase the expected gain for risk neutral individuals, they work as an insurance device for risk averse migrants; the results for the two groups might differ. Thus, the migration decision is reformulated as monetary lottery. Unsurprisingly, the paper finds that risk averse individuals are less likely to engage in migration. Yet, introducing unemployment benefits also makes them select a different set of countries. The implications of selection and sorting, however, depend crucially on the link between risk aversion and economically important personal characteristics. It is also shown that unemployment benefits give rise to intertemporal trade-offs in migration returns.The author is grateful for helpful comments by Hartmut Lehmann, Christoph M. Schmidt and three anonymous referees. I also like to thank my colleagues at CERT and participants of the R.O.S.E.S. Enlargement Conference 2003 in Paris. This work has been conducted before the author joint DWP and does not reflect the opinion of the department. Responsible editor: Klaus F. Zimmermann.     

A Comment on Ali Tas˛ıran's `Wage and income effects on the timing and spacing of births in Sweden and in the United States'

This note reviews and evaluates Taşıran's (1995) claim that estimated female wage effects on Swedish fertility dynamics reported by Heckman and Walker (1990) are not robust to the use of microwage data. The results reported here indicate that once individual wage measures have been purged of measurement error, estimated female wage effects are not sensitive to the introduction of microwages. The results reported by Heckman and Walker (1990) persist even with the use of microwage data. Received: 8 March 1996/Accepted: 4 December 2001 I thank Tom MaCurdy, Eric French and two anonymous referees for useful comments. This research was supported by NICHD grants HD-19226 and HD-28685. The usual disclaimer applies. Responsible editor: Klaus F. Zimmermann.     

Cyclical variations in unemployment duration

In this paper I study how individual unemployment durations vary over the business cycle, using unemployment spells of a sample of Danish workers. A compositional, an outflow, and a residual calendar-time component are identified, and they all contribute to explaining the variations in unemployment duration. Based on the analysis it is concluded that long-term unemployment is a phenomenon that is associated with periods of high unemployment, but nothing should prevent the long-term unemployed finding jobs again as aggregate unemployment eventually starts falling. In particular, there is no evidence of negative duration dependence, not even at long durations, and not when aggregate unemployment is high. Received: 7 December 1998/Accepted: 24 August 1999     

Evolution of recent economic-demographic modeling: A synthesis

This paper develops a flexible framework for modeling population's role in economic growth by assessing and extending a rendering suggested by several Harvard economists. Our framework includes a ``productivity' model explaining output-per-worker growth and a ``translation' model translating that growth into per-capita terms. We specify a core economic model and several ``enriched' demographic variants that include dependency, size, and density. Regressions using a cross-country panel spanning the period 1960-1995 reveal that combined impacts of demographic change have accounted for approximately 20% of per capita output growth impacts, with larger shares in Asia and Europe. An earlier draft of this paper was presented at a conference on ``Population Change, Labor Market Transition and Economic Development in Asia,' Institute of Economics, Academia Sinica, Taipei, Taiwan, 6–9 December 2002. A pre-publication version of this paper will be presented at a joint conference (by COE/JEPA) entitled ``Towards a new economic paradigm: Declining population growth, labor market transition and economic development under globalization,' held at the Awaji Yumebutai International Conference Center, Kobe, Japan, 17–19 December 2005. We have benefited from comments by Michelle Connolly, Andrew Mason, Pietro Peretto, Warren Sanderson, Alessandro Tarozzi, Jeffrey Williamson, and two anonymous referees. Responsible editor: Junsen Zhang.     

Residential location and youth unemployment: The economic geography of school-to-work transitions

In response to increased international policy attention to youth unemployment this study investigates post-secondary school transitions of school leavers. Multinomial logit models are estimated for male and female German youth. The models control for individual, parent, and household characteristics, for those of the youth's region of residence and local labor markets. The findings suggest that immigrant youth has particularly low participation rates in continued education, and that youth unemployment is centered in high unemployment states and metropolitan areas. More generous academic benefit policies seem to be correlated with increased academic enrollment, and men's transitions to the military do reflect recent changes in defense policies. Received: 30 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.     

Effect of childbearing on Filipino women's work hours and earnings

The effects of childbearing and work sector on women's hours and earnings in the 8 years following an index pregnancy were examined in a cohort of more than 2,000 women in the Cebu Longitudinal Health and Nutrition Survey. Change in cash earnings and hours worked were each modeled jointly with sector of labor force participation using an estimation strategy that deals with endogeneity of childbearing decisions and selectivity into sector of work. Two or more additional children born in the 8 year interval significantly reduced women's earnings, while having an additional child under 2 years of age in 1991 reduced hours worked. Received: 16 July 1998/Accepted: 22 March 2001 All correspondence to Linda Adair. The authors wish to thank Family Health International and the U.S. Agency for International Development (USAID) for their generous support. This publication was funded by USAID under Cooperative Agreement USAID/CCP-3060-A-00-3021-00 to Family Health International (FHI). David Guilkey's participation in this paper was also supported by the MEASURE Evaluation Project also with support from the United States Agency for International Development (USAID) under Contract Number HRN-A-00-97-00018-00. The conclusions expressed in this report do not necessarily reflect the policies of FHI or USAID. Helpful comments by two anonymous referees are gratefully acknowledged. Responsible editor: T. Paul Schultz.     

Bequest division and population growth: A lineal extinction probability approach

This study uses a lineal-extinction-probability-minimization approach proposed by Chu (1991) to study the relation between bequest division and population growth. Using a Markov branching process and “first-degree stochastic dominance” technique, our model's results imply that any specific bequest division, primogeniture or equal divisions, does not necessarily increase or reduce the population growth by itself. Whether the population does grow, or by how much, will be determined by the concurrent social-economic conditions. We find that if all family heads faced an increasing MRTS technology and/or a relatively unfair market chance, then they would tend to choose an unequal division as their optimal bequest policy, and population growth would increase. However, if an equal division was adopted involuntarily by family heads or was enforced by laws, then the population growth might decline. Received: 26 November 1999/Accepted: 26 October 2000     

Premium differentiation in the Unemployment Insurance system and the demand for labor

We simulate the effect of the introduction of premium differentiation (experience rating) in the Dutch Unemployment Insurance system on the demand for labor for a variety of sectors in the Dutch economy. For the simulations we use the Bentolila and Bertola (1990) framework as a point of departure. In the simulations, the introduction of experience rating is modeled as expenditure neutral: in the absence of premium differentiation the cost of financing UI is modeled as a wage tax (independent of the number of workers fired by the firm), whereas in the presence of experience rating this cost is attributed to firing cost (affected by the firing action). Thus, the introduction of experience rating results in a shift from wage cost to firing cost. Following the political debate on the issue in the Netherlands, we assume that the introduction of experience rating does neither lead to a change in tax rates paid by workers nor to a change in eligibility rules or replacement rates of benefit claimants. Specific attention is paid to the distinction between young and old workers . In the model, labor adjustment costs (hiring and firing costs) are linear. The model allows for uncertainty in the business cycle.All correspondence to Hans Bloemen. Responsible editor: Alessandro Cigno     

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.     

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.     

On the contribution of sectoral natural population growth to the aggregate poverty change

This note extends the Ravallion and Huppi (World Bank Econ Rev 5(1):57–82, 1991) aggregate poverty change decomposition to account for the distinct contribution of migration and differential natural population growth between sectors to the aggregate poverty change. We apply our decomposition to three Least Developing countries. We find that accounting for sectoral difference in natural population growth has a considerable impact on national poverty change. Responsible editor: Alessandro Cigno     

The determinants of fertility in rural Peru: Program effects in the early years of the national family planning program

Using data from the 1991 Peru Demographic Health Survey, a linked Situation Analysis, and a unique region-level data set, this paper examines the determinants of fertility in rural Peru before and after the 1985 enactment of its National Policy on Population. The empirical framework combines a model of the timing and spacing of conceptions with a model of the timing of the placement of family planning services in communities in order to control for non-random placement of services. Results show the program helped reduce fertility post 1985. The magnitude of the effects is quantified with simulations. All correspondence to David Guilkey.We thank the editor and two referees for detailed comments on an earlier draft of this paper. Funding support for this project was provided by the MEASURE Evaluation Project under a Cooperative Agreement between the U.S. Agency for International Development and the Carolina Population Center (Number HRN-A-00-97-0018-00). The views expressed herein are those of the authors and not the sponsoring agency. Responsible editor: Junsen Zhang.     

The decisions of Spanish youth: A cross-section study

This paper presents a simultaneous model for the joint decisions of working, studying and leaving the parental household by young people in Spain. Using cross-section data from the 1990–1991 Encuesta de Presupuestos Familiares, the model is estimated by a two stage estimation method. Endogeneity of the three decisions proves to be important in order to understand the dynamics of household formation. Our results also confirm a number of plausible intuitions about the effect of individual characteristics and economic variables on these decisions, and provide some new insights into the reasons for young people in Spain remaining in large numbers in the parental home. Most of the results are gender independent. Received: 18 September 1998/Accepted: 24 October 2000     

A note on the changing relationship between fertility and female employment rates in developed countries

In this paper we look at a panel of OECD aggregate fertility and labor market data between 1970 and 1995 and we report some striking recent developments. Total Fertility Rates (TFR) were falling and Female Participation Rates (FPR) were increasing, conforming to a well known long-run trend. Along the cross-sectional dimension, the correlation between TFR and FPR was negative and significant during the 1970's and up to the early 1980's. This seemed consistent with secular comovements. However, by the late 1980's the correlation had become positive and equally significant. We discuss our findings within the framework of standard neoclassical models of fertility and labor supply adapted to macro data, as in Butz and Ward (1979). Received: 14 April 2000/Accepted: 29 December 2000 All correspondence to Pedro Mira. Namkee Ahn is grateful for financial support received from the Bank of Spain and from Spain's Ministerio de Educación y Cultura, grant SEC97-1249. We benefited from comments by two anonymous referees and by seminar participants at FEDEA, CEMFI and ESPE-98. All remaining errors are our own. Responsible editor: John F. Ermisch.