Spell incidence, spell duration and the measurement of unemployment

The proportion of the population out of work is an unsatisfactory measure of unemployment because it is indifferent to the way in which a given amount of unemployment time is distributed across the population. This paper offers a new way of measuring unemployment which takes account of both the frequency and duration of unemployment spells. The proposed unemployment index may be interpreted as the ‘welfare equivalent’ period of unemployment, and decomposes into the product of three components: a spell incidence factor, a duration factor, and the average unemployment rate.     

On the measurement of unemployment

This paper investigates how alternative measures of unemployment may be derived from information on unemployment duration. It begins by listing various properties that unemployment indices should satisfy, and shows how ‘duration profiles’ can usefully represent unemployment data. Theorem 1 establishes that unemployment indices are unanimous iff the duration profiles do not intersect. Two families of unemployment indices are examined in detail. Both allow unemployment to be decomposed across population subgroups. In addition, they can be expressed as the product of three components reflecting the contributions of the unemployment rate, mean unemployment duration, and differences in duration among the unemployed.     

Race differences in the effect of unemployment on marital instability: A socioeconomic analysis

In 1965, Daniel Moynihan asserted that unemployment, in general, and its interaction with the matriarchal structure of black families was a major cause of the “crumbling‘ of the Negro family. Moynihan did not address the relation of unemployment and marital instability in white families. This study examines the relationship between unemployment and marital instability in black and white families over the period 1970–1978. The theoretical framework emphasizes that the effects of unemployment on the family cannot be understood in purely utilitarian terms i.e. lost income. A socioeconomic model that incorporates both the social-psychological and psychological responses to unemployment is developed and the parameters estimated using Event History Analysis on a sample from the Panel Study of Income Dynamics for the years 1967–1979. Moynihan's main assertion that unemployment destabilizes families—both black and white—is confirmed. Also confirmed is Moynihan's assertion that families with a patriarchal head are less likely to experience marital instability. The results contradict some of the other predictions of the Moynihan hypothesis. First, black families are at less risk of marital instability at moderate levels of unemployment than are white families. Second, although black families appear to be more vulnerable than white families to chronic unemployment, the difference disappears when black males have only average scores on internal locus of control. When black males have above average scores on internal locus of control the risk of marital instability in the face of chronic unemployment is negligible. Third, while stabilizing for families where males who do not experience unemployment, patriarchal values prove quite destabilizing when the male head experiences unemployment. Indeed, the families facing the greatest risk of instability due to unemployment were white families headed by a man who had partriarchal attitudes. Fourthly, this study produced no evidence that black women are. behaviorally, more matriarchal than white women. Finally, this research indicates that the financial problems caused by unemployment appear to be a minor factor in martial dissolution. It appears that socioeconomic, that is, normative and affective factors, rather than utilitarian factors, are critical is shaping a family's reaction to unemployment.     

The duration of unemployment in the construction industry

This paper examines the duration and frequency of unemployment contingent on personal characteristics using multinomial logit techniques. Both are important, since unemployment is the product of the duration and frequency of unemployment. The key result of this paper is that union and nonunion unemployment experiences are very different. Nonunion construction workers’ duration and frequency experiences depend on personal characteristics. In the union sector, in spite of rules which appear to favor experienced workers, duration experiences do not differ greatly by demographic group; only the probability of unemployment varies with personal characteristics. The report was prepared for the Employment and Training Administration. U.S. Department of Labor, under Research and Development Grant No. 91-42-77-33. Since grantees conducting research and development projects under Government sponsorship are encouraged to express their own judgment freely, this report does not necessarily represent the official opinion or policy of the Department of Labor. The grantee is solely responsible for the contents of this report. I have benefited from comments by Robert E. Hall, Franklin M. Fisher, Lester C. Thurow, James Medoff, Dennis Carlton, and especially Jerry Hausman. James Medoff supplied the CPS tape used in the study. Martin VanDenburgh gave expert programming advice.     

Can the low unemployment rate of Swedish speakers in Finland be attributed to structural factors?

A previous study has shown that the substantially lower unemployment rate of Swedish speakers in Finland, as compared with Finnish speakers, cannot be attributed to demographic and socio-economic characteristics. This paper studies the role of structural factors. Using cross-section and longitudinal data of the total population, we find that Swedish speakers benefit from constituting the local majority, but that they have significantly lower unemployment rates than the Finnish speakers also in Finnish dominated areas. Industrial structure and family-related factors are important determinants of unemployment incidence, but they can to a fairly limited extent be related to the unemployment gap.     

The psychological impact of unemployment and joblessness

Economists have identified two principal adverse effects of unemployment. One is the output foregone that could have been produced if unemployed workers had been productively employed. The second is the psychological damage suffered by unemployed workers and their families. Psychologists have offered theories to explain how experiences such as Joblessness may lead to a deterioration in mental health. They also have designed and validated survey instruments capable of measuring various aspects of emotional health. Unfortunately, their efforts to document the psychological impact of unemployment have been plagued by data limitations, while economists largely have ignored this task. The purpose of this study is three-fold. First, we discuss why unemployment and Joblessness are likely to influence an individual's perception of personal efficacy, locus of control, and hence psychological well-being. Second, we discuss and critique existing efforts to examine the relationship between labor force experiences and locus of control. Third, we investigate the relationship between Joblessness and its component parts—unemployment and dropping out of the labor force—on personal locus of control, using observations from the NLSY and an alternative methodological framework. The NLSY is a longitudinal data set that contains detailed information on the personal characteristics of individuals in the sample, their labor force experiences and a specific personal locus of control. In discussing the results we also attempt to shed some new light on the debate between Clark and Summers (1979) and Flinn and Heckman (1982, 1983) over the question of whether being out of the labor force and being unemployed should be thought of as distinct states. We add further insight into this issue by examining whether there are psychological differences, as measured by locus of control, between otherwise comparable members of these two groups. Finally, we reconsider the Ellwood and Ruhm exchange over whether joblessness and unemployment lead to “psychological” scarring. We find that labor force experiences fail to influence personal locus of control for male youths. There is evidence, however, that perception of personal efficacy is altered by joblessness among young women. As the duration of a current unemployment spell lengthens, the likelihood of holding beliefs of personal efficacy decline for young women. There is also some evidence of scarring among women. For females who in the past have spent time both unemployed and out of the labor force, the greater the duration of their joblessness the more likely is a reduction in feelings of personal efficacy and more aggravated one's self-perception of helplessness. We also offer psychological evidence on the relative emotional well-being of the unemployed and labor force drop outs that largely supports the position of Clark and Summers that these conditions are largely indistinguishable.     

Explaining differences in the political meaning of unemployment across time and space

This article is a first attempt at theorizing the differences in the political meaning of unemployment and how governments create these differences. It first reviews existing explanations about why unemployment is an especially pressing political threat to those in power. In lieu of a an existing literature on the sources of variation in this threat, the next section puts forward four alternative explanations based on related arguments about politics and the economy. These are the approaches of power resources, protest mobilization, deprivation, and ideology. Guided by the promises and pitfalls of these respective theories, the subsequent section argues for an alternative institutional-constructivist approach. Starting with the historical observation that the category of unemployment was invented alongside particular social institutions and employment practices, this approach seeks to explain how variation in these institutionalized practices is responsible for differences in the political salience of unemployment. The section that follows discusses how government policies can reconstruct the meaning of unemployment by reconfiguring the available set of institutional choices in the labor market and by designating what kinds of choices constitute involuntary joblessness. It is argued that “unemployment” is defined against institutionalized norms of what kinds of work constitute “employment.” Changes in the boundaries of the concept of unemployment come about through changes in the ways that governments hold certain kinds of work as exemplary while granting other forms of work lesser recognition. The final section considers how this reciprocal relationship between the construction of unemployment and employment both imposes political constraints for governments and creates opportunities. Governments face numerous conflicting incentives whether to expand or restrict the institutionalized definition of unemployment. While they must retain semblance with inherited conceptions of unemployment; they can redefine the problem of unemployment through the institutionalization of new solutions.     

Coping with the unemployment crisis in Europe

Since the 1970s, Europe has been plagued by a chronic unemployment crisis, which has escalated with the current Great Recession. The author discusses a number of relevant elements in this regard, including the extent to which social dialogue and social pacts have been successful in reforming labour markets and pension systems, the effect of active labour market policies and the characteristics of “resilient” economies. She concludes with the need to rethink social dialogue, social safety nets, the granting of loans – especially to SMEs – and the coordination of macroeconomic policies to increase labour demand.     

American unemployment in historical perspective

During the twentieth century, the annual average unemployment rate reported by the Bureau of Labor Statistics data has varied between 1.2 and 24.9 percent. This article, derived from our recent book,Out of Work: Unemployment and Government in 20th Century America, examines and explains variations in unemployment over time. These large fluctuations in unemployment probably account for this century’s obsession with joblessness. Alfred Marshall’sPrinciples of Economics, published in 1890, barely mentions unemployment. Only two short generations later, unemployment was the dominant topic of interest among economists, and the most influential economics book of this century, Keynes’sGeneral Theory of Employment, Interest and Money, was concerned largely with explaining its existence.     

Measuring the effect of matching problems on unemployment

This article shows how matching problems reduce employment figures – and hence also raise those for unemployment – by creating a gap between labour demand and employment. It also shows how this gap can be measured by unfilled jobs (unmet demand) as distinct from job vacancies (recruitment processes) and reports results from the Swedish vacancy survey which measures both. In fact, while a shift of the matching function indicating longer recruitment times suggests increasing matching problems, this can only be verified by measuring unfilled jobs, which also quantifies the effect on unemployment.     

Unemployment duration and the measurement of unemployment

We propose a framework in which the welfare bases of various unemployment measures available in the literature can be analyzed and a decomposition of these measures can be made into aggregate unemployment and the concentration of its distribution. A set of axioms for an unemployment measure is then introduced, which relate to the sensitivity of an unemployment measure to the inequality in the distribution of the unemployment. An unemployment measure is derived on the basis of these axioms that captures the distributional considerations in the measurement of unemployment.      

Parental unemployment and child health in China

This paper studies the causal effect of maternal and paternal unemployment on child health in China, analyzing panel data for the period 1997–2004, when the country underwent economic reforms leading to massive layoffs. Using a FE-IV strategy, we find that paternal unemployment reduces child health, while maternal unemployment has beneficial child health impacts. Analysis of channels shows that paternal and maternal unemployment have different effects on income, time use, and children’s diets. Though many estimates are imprecise, a key finding is that paternal unemployment significantly reduces children’s fat intake and dietary diversity. To the best of our knowledge, this is the first evidence on the causal effect of parental unemployment on the nutrient intake of children aged 0–17. In all, our estimates are consistent with the notion that traditional gender roles can explain why mothers’ and fathers’ unemployment affect child health differently.

     

Economic convergence and life satisfaction in the European Union

The issue of convergence or divergence in the European Union (EU) is usually viewed from a macroeconomic perspective, using indicators such as the income per head, the unemployment rate and the inflation rate. Little attention has been paid to the possibility of an associated convergence in ‘well-being’ across countries. Since recent literature has shown that subjective well-being (life satisfaction, ‘happiness’) is significantly affected by macroeconomic variables, it is natural to ask not only whether or not subjective well-being converges, but also, whether, how and to what extent this process is linked to macroeconomic convergence. In this paper we use self-rated life satisfaction elicited in large scale surveys to address these questions. We find evidence of convergence of life satisfaction across the member states of the EU, which can be attributed to a considerable extent to the convergence in macroeconomic conditions. Among the various macroeconomic indicators, the convergence in inflation rates has played a major role for the convergence in life satisfaction.     

The ecological effect of unemployment on the incidence of very low birthweight in Norway and Sweden

Little attention has been paid to the ecological effects of unemployment, despite strong theory suggesting that being socially or economically connected to unemployed persons can induce illness. Theory suggests, for example, that the labor market experience of adult males should affect maternal and infant health. We advance this line of inquiry by testing the hypothesis that quarterly increases in unemployment among Norwegian and Swedish males were associated with increased incidence of very low weight births from 1973 through 1995. Results support the hypothesis. We estimate that approximately 188 very low weight births could have been averted in Norway, and about 329 in Sweden, if quarterly increases in male unemployment had been constrained to the median over the 23-year period. Our findings imply that the social cost of unemployment may be underestimated by focusing on unemployment as an individual risk factor.     

The minimum wage can harm workers by reducing unemployment

Economists may disagree over how much raising the minimum wage increases unemployment, though few argue that the unemployment effect is zero. According to the standard model, the less the unemployment caused by a minimum wage increase, the less the harm (or greater the good) that results. But by recognizing that minimum wage workers receive fringe benefits, I show that increasing the minimum wage may not cause any unemployment and harms workers because it doesn 't. Furthermore, when there is lumpiness in providing fringe benefits, a minimum wage increase may harm workers by     

Does unemployment lead to isolation? The consequences of unemployment for social networks

Popular accounts in both social science and society claim that unemployment goes together with social withdrawal. However, empirical support for this conclusion is largely derived from cross-sectional studies or indirect measurements of social contacts. In this study, we argue that consequences of unemployment for personal networks differ across social groups and by length of unemployment. Using longitudinal data from the Swiss Household Panel (1999–2010), we focus on three frequently employed social network statistics: network size, contact frequency, and perceived support by friends, family, neighbors, and acquaintances. We estimate how short (<1 year) and long term (>1 year) unemployment relates to these network characteristics for men and women, people below and above 50 years of age, and lower and higher educated individuals. Our results provide a more-nuanced perspective on the commonly assumed social withdrawal following unemployment.     

Job security and unemployment in an efficiency-wage model

Job security and its effects on unemployment are controversial issues. I investigate the effects of job security in an efficiency-wage model of unemployment. Though efficiency-wage ideas have wide appeal and provide strong foundations of involuntary unemployment, not much has been written about the ramifications of job security in these scenarios. I show that job security creates wage and unemployment effects when efficiency-wage aspects are relevant, because employment guarantees shift the burden of workers' effort attraction to the wage mechanism. These effects are further enhanced when workers have some bargaining power. My results, therefore, suggest a trade-off between employment stability and employment: High employment security leads to smaller employment (or larger involuntary unemployment). I thank Ron Oaxaca and participants at the W.E. Upjohn Conference on Unemployment Insurance for useful comments.     

The effect of unemployment duration on national suicide rates: a time series analysis, 1948-1982

The relationship between unemployment and suicide in the United States is examined. Data for the period 1948 to 1978, primarily from the U.S. Public Health Service, are used to examine the effect of the duration of unemployment on suicide. "The results of a Cochrane-Orcutt iterative regression analysis indicate that the greater the duration of unemployment the greater the suicide rate. Using ex post forecasting techniques it is estimated that increases in unemployment during the Reagan administration have been associated with at least 929 additional deaths from suicide."     

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.     

Spatial variations in U.S. unemployment

Interstate unemployment rate differentials are large, tend to persist, and have not converged in recent times. The interstate differential in the natural rate of unemployment seems partially explained by several factors related to labor costs, including wage rates and such institutional factors as unionization, welfare, and probably tax policy. Differential welfare incidence may explain the black-white unemployment differential. Variations in intertemporal fluctuations in unemployment across states seem related to institutionalized wage rigidity caused by such factors as unions and welfare. For still unexplained reasons, unemployment tends to be higher in the West, deep South, and the industrial Midwest.