The Effect of Unemployment Insurance Generosity on Unemployment Duration and Labor Market Transitions

This paper examines the impact of unemployment insurance (UI) benefit generosity on labor market transitions in Turkey from 2002 to 2012. Using a unique administrative dataset, I take advantage of a sharp discontinuity in treatment assignment at 900‐paid‐premium‐days to identify the impact of generosity on the outcome variables. I find that unemployment benefit duration is increased by approximately 0.07 weeks per additional week of UI. However, more generous benefits lead to lower probabilities of transition to employment and the impact is greater compared to developed countries. In addition, workers who are entitled to longer UI periods have lower probabilities of cheating the system and rejecting the services of the Turkish Employment Agency.     

UNEMPLOYMENT INSURANCE IN WELFARE STATES: THE IMPACTS OF SOFT DURATION CONSTRAINTS

Abstract Based on a major reform of Norwegian unemployment insurance (UI), we examine the behavioral impacts of soft and hard UI duration constraints. A constraint is interpreted as hard if a claimant cannot rely on any form of income support after exhaustion, and as soft if UI is replaced by follow‐on benefits or participation in active labor market programs (ALMP). We find that both hard and soft constraints raise the job hazard significantly, with surprisingly similar spikes at UI exhaustion. Participation in ALMP raises the probability of eventually finding a job, but at the cost of lengthening the overall job‐search period.     

The Transition to Work for Italian University Graduates

This study is focused on the transition from university to first job, taking into account the graduates’ characteristics and the effects relating to degree subject. A large data set from a survey on job opportunities for the 1998 Italian graduates is used. The paper uses a non‐parametric discrete‐time single‐risk model to study employment hazard. Alternative mixing distributions have also been used to account for unobserved heterogeneity. The results obtained indicate that there is evidence of positive duration dependence after a short initial period of negative duration dependence. In addition, a competing‐risk model has been estimated to characterize transitions out of unemployment.     

失业保险给付期限差异下的失业持续时间研究

本文对享受不同失业保险给付期限的失业者的失业持续时间差异进行了实证研究。根据工作搜寻理论,应用存活分析方法建立了含有失业保险给付期限因素的失业持续时间模型,并对青岛市失业者登记数据进行了实证研究。结果表明:享受失业保险者的失业持续时间明显长于不享受失业保险者的失业持续时间,在失业保险给付额度相同的条件下,失业保险给付期限与失业持续时间成同向变动关系。     

Unemployment Insurance and Entrepreneurship

Based on administrative registers from Norway, we examine how unemployment insurance (UI) and active labor market programs (ALMP) affect the transition rates from unemployment to regular employment and entrepreneurship, as well as subsequent earnings levels. We find that both the employment and entrepreneurship hazards rise sharply in response to UI sanctions and UI exhaustion. On average, transitions to entrepreneurship are more profitable than transitions to regular employment. While employment transitions are highly pro‐cyclical, entrepreneurship transitions are weakly counter‐cyclical. ALMPs targeted at entrepreneurship are rare in Norway, but the few start‐up subsidies that are provided are successful in terms of generating paid work.     

Unemployment Insurance and Underemployment

Should unemployment insurance (UI) systems provide coverage for underemployed job seekers? Based on a statistical analysis of Norwegian unemployment spells, we conclude that the answer to this question is yes. Allowing insured job seekers to retain partial UI benefits during periods of insufficient part‐time work not only reduces UI expenditures during the part‐time work period, but it also unambiguously reduces the time until a regular self‐supporting job is found. Probable explanations are that even small temporary part‐time jobs provide access to useful vacancy information and that such jobs are used by employers as a screening device when hiring from the unemployment pool.     

Earning While Learning: When and How Student Employment is Beneficial

Although studies of student employment (‘earning while learning’) mostly find positive wage effects, they do not adequately consider the relation of the employment to the field of study. We investigate how different types of student employment during tertiary education affect short‐ and long‐term labour market returns. Beyond examining differences between non‐working and part‐time working students, we distinguish between student employment related and unrelated to the field of study. Our results show significant positive labour market returns of ‘earning while learning’ only for student employment related to the field of study. These returns consist of a lower unemployment risk, shorter job‐search duration, higher wage effects, and greater job responsibility.     

Modes of Entrance by Gender and Wage Differential in the French Labour Market

Abstract. This paper explores the gender wage differential after the exit from school in France. Using survey longitudinal data on young men and women leaving the French school system in 1998, we show that the residual entrance‐level wage differential by gender may be explained by the expected gender differential of access to job opportunities. A hierarchical classification is used to estimate the probability to obtain easy access to non‐subsidized jobs. After control for hours worked and hierarchical levels, and for the predicted values of this previous estimation, we find no significant impact of gender on entrance‐level wages.     

The Labour Market in Macedonia: A Labour Demand Analysis

Abstract. This paper examines the labour market in Macedonia, a country with the highest unemployment rate in Europe. I describe labour market institutions and policies during the transition. I also examine job creation and job destruction using firm‐level data and I estimate short‐term and long‐term elasticities of the labour demand. The analysis shows that there are regulatory barriers to the labour market flexibility. I can also conclude that the privatization of socially owned enterprises has failed to promote job creation. Nevertheless, labour market problems seem to stem from factors other than substantial sluggishness of firms in adjusting employment to variations in wages.     

Internet‐Based Employer Search and Vacancy Duration: Evidence from Finland

This study investigates the effect of the introduction of the public employment agency's Internet‐based service on the duration of employer search. The analysis exploits the introduction of a web‐based service by the Finnish Employment Agency in October 2002. The results, based on information on job vacancies announced via the public employment agency between 2002 and 2003, indicate that the introduction of the web service, in general, shortened the duration of employer search. However, we find that the introduction of the web‐based service shortened the average duration of vacancies in some regions but not in others. In addition, employers in urban areas were more likely to benefit from the introduction of the online service.     

Shocks,Stocks, and Socks: Smoothing Consumption Over a Temporary Income Loss

We investigate how households in temporarily straitened circumstances due to an unemployment spell cut back on expenditures and how they spend marginal dollars of unemployment insurance (UI) benefit. Our theoretical and empirical analyses emphasize the importance of allowing for the fact that households buy durable as well as non‐durable goods. The theoretical analysis shows that in the short run households can cut back significantly on total expenditures without a significant fall in welfare if they concentrate their budget reductions on durables. We then present an empirical analysis based on a Canadian survey of workers who experienced a job separation. Exploiting changes in the unemployment insurance system over our sample period we show that cuts in UI benefits lead to reductions in total expenditure with a stronger impact on clothing than on food expenditures. Our empirical strategy allows that these expenditures may be non‐separable from employment status. The effects we find are particularly strong for households with no liquid assets before the spell started. These qualitative findings are in precise agreement with the theoretical predictions. (JEL: D11, D12, D91, J65)     

Skill Acquisition in the Informal Economy and Schooling Decisions: Evidence from Emerging Economies

Informal jobs offer skill acquisition opportunities that may facilitate a future switch to formal employment for young workers. In this sense, informal training on the job may be a viable alternative to formal schooling in an economy with a large and diverse informal sector. In this paper, I investigate if these considerations are relevant for the schooling decisions of young individuals using panel data for 17 Latin American countries and micro‐level data for Turkey. Specifically, I ask if the prevalence of informal jobs distorts schooling attainment. I concentrate on three measures of schooling outcomes: (1) secondary education enrollment rate; (2) out‐of‐school rate for lower secondary school; and (3) tertiary education graduation rate. I find that the secondary education enrollment rate is negatively correlated with the size of the informal economy, whereas the out‐of‐school rate is positively correlated. Moreover, the tertiary education graduation rates tend to fall as the informal employment opportunities increase. This means that informal training on the job may be crowding out school education in developing countries. Policies that can potentially affect the size of the informal sector should take into consideration these second‐round effects on aggregate schooling outcomes.     

Post‐Migratory Employment Prospects: Evidence from Finland

This paper analyses the role which migration plays in improving post‐migratory employment prospects of migrants (long‐distance) within Finland, by examining the employment status of migrants and non‐migrants at the end of the migration interval. The analysis is based on micro data from the period 1985–90. The results from multivariate analyses suggest that migration by itself has not augmented the likelihood of getting a job, even though tabular comparisons of re‐employment rates between migrants and non‐migrants suggest this to be the case. Migration, however, has an indirect role in enhancing job search outcomes as it moves workers to labour markets characterized by more favourable employment opportunities.     

Gender Differences in Formal On‐the‐Job Training: Incidence,Duration, and Intensity

This paper explores whether there is a gender gap in the incidence, duration, intensity, and number of events of on‐the‐job training. Overall, women appear to receive a higher incidence of on‐the‐job training whereas men receive on‐the‐job training of longer duration. Including measures intended to capture the extent of labor force attachment and expected tenure fails to reduce the gender gap in the duration of on‐the‐job training. Therefore, the gender gap in the duration of on‐the‐job training must be attributed to differences in unobserved worker characteristics that differ by gender or discrimination.     

Do Benefit Hikes Damage Job Finding? Evidence from Swedish Unemployment Insurance Reforms

Abstract. In 2001 and 2002, Sweden introduced several unemployment insurance reforms. A major innovation in the first reform was the introduction of a two‐tiered benefit structure for some unemployed individuals. This system involved supplementary compensation during the first 20 weeks of unemployment. The 2002 reform retained the two‐tiered benefit structure but involved also substantial benefit hikes for spells exceeding 20 weeks. This paper examines how these reforms affected transitions from unemployment to employment. We take advantage of the fact that the reforms had quasi‐experimental features where the ‘treatments’ differed considerably among unemployed individuals. We find that the reforms had strikingly different effects on job finding among men and women. The two reforms in conjunction are estimated to have increased the expected duration of unemployment among men but to have decreased the duration of unemployment among women. The overall effect on the duration of unemployment is not statistically different from zero. However, the reforms reduced job finding among men who remained unemployed for more than 20 weeks.     

Employment Policy,the Crowding‐out Effect and Imperfect Competition

This paper presents a macroeconomic model with imperfect competition in the commodity market, and uses it to address how the commodity market’s structure is related to the efficacy of government employment policies. It is found that job creation in the public sector may lead to a decrease in output and an increase in prices. In particular, these adverse side‐effects will be alleviated when competition in the goods market is less perfect. We also find that public‐sector job creation definitely has a positive effect on total employment, though it may crowd out private‐sector employment.     

DISTANCE TO RETIREMENT AND OLDER WORKERS‘ EMPLOYMENT: THE CASE FOR DELAYING THE RETIREMENT AGE

This paper presents empirical evidence and a theoretical foundation in favor of the view that the retirement age decision affects older workers' employment prior to retirement. To the extent that there are search frictions on the labor market, the return on jobs is determined by their expected duration: The time to retirement is then key to understanding older workers' employment. Countries with a retirement age of 60 are indeed characterized by lower employment rates for workers aged 55–59. Based on the French Labor Force Survey, we show that the likelihood of employment is significantly affected by the distance to retirement, in addition to age and other relevant variables. We then extend McCall's job search model by explicitly integrating life‐cycle features with the retirement decision. Using simulations, we show that the distance effect in interaction with the generosity of unemployment benefits and the depressed demand for older workers explains the low rate of employment just before the eligibility age for the Social Security pension. Finally, we show that implementing actuarially fair schemes not only extends the retirement age, but also encourages a more intensive job search by older unemployed workers. (JEL: J22, J26, H55)     

Unemployment and Employment Protection in a Unionized Economy with Search Frictions

Abstract. In the theoretical literature, the effects of employment protection on unemployment are ambiguous. Higher employment protection reduces job creation as well as job destruction. However, in most models, wages are bargained individually between workers and firms. Using a conventional matching model in which a monopoly union sets wages, I show that employment protection can unambiguously increase unemployment. Interestingly, I find that tightening the restrictions on redundancies and dismissals may even increase the probability of dismissal.     

Long‐term Effects of Cash for Childcare on Mothers' Labour Supply

Abstract. In 1998–99 a cash benefit for 1‐ to 2‐year‐olds who do not use subsidized childcare on full‐time basis was introduced in Norway. A large‐scale appraisal shortly after introduction concluded that the effects on mothers' labour supply were surprisingly small. The more long‐term effects reported in this paper suggest that this conclusion may need modification. Almost 4 years after the reform the employment probability had declined significantly, and employed mothers were much more likely to be on leave. All in all the reduction in labour supply is estimated to be 3¾ hours per week or almost 20 per cent.     

On Government‐Subsidized Training Programs for Older Workers

We analyze the impact of subsidized training programs for older workers. We apply a dynamic matching approach using German registry data. We find that subsidized training improves the probability to remain in paid employment by approximately 2.5 percentage points in the 2 years following treatment. The impact on benefit claims is small and largely insignificant. Effects are more pronounced for part‐time workers, for long‐duration program participants, and for workers older than 55 years. The results suggest that the main driver of these outcomes is postponed retirement, potentially because of improved job satisfaction.