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 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.     

The Role of Entrepreneurship in the Context of Career Trajectories: Moving Back into Wage Employment or into Unemployment?

This study investigates patterns of movement from self‐employment to wage employment or to unemployment in Belgium. Non‐parametric techniques and complimentary log–log analyses are used to determine the significance of stable individual traits (e.g. gender) and of time‐dependent characteristics (e.g. family and organizational context, labour market mobility) in moving back to wage employment or to unemployment. Evidence is provided on the possibility of entrepreneurship acting as a ‘steppingstone’ between long‐term unemployment and paid work. Yet, significant relationships also emerge between ex‐ante time spent in unemployment and the possibility of continued unemployment upon self‐employment exit.     

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。     

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)     

Effects of Changes in the Unemployment Insurance Eligibility Requirements on Job Duration — Swedish Evidence

This paper investigates the impact of the unemployment insurance (UI) entrance requirement on employment duration among earlier unemployed in Sweden. I exploit changes in the rules taking place in 1994 and 1997 to study behavioural adjustments in the timing of job separation in 1992, 1996, and 1998, respectively. Performing across‐year analyses with years involving different working requirements, I find some evidence of clustering of job exits at the time of UI qualification. By using predicted hazard rates for each week, I calculate an approximate 2.3‐week extension in average employment duration between 1996 and 1998, due to the 5‐week prolonging of the entrance requirement.     

A Note on Immigrant Representation in Temporary Agency Work and Self‐employment in Sweden

Abstract. This is a note on the immigrant representation in two forms of atypical employment in Sweden: self‐employment and temporary agency work. The employment rate among non‐western immigrants is substantially lower than among natives and using register data for the population in Sweden who were employed in 1999, we find that immigrants are over‐represented in both these forms of atypical employment. Immigrants from Asia are over‐represented in both forms of employment, whereas immigrants from South America are over‐represented among temporary agency workers but underrepresented among the self‐employed. These findings can be interpreted as an indication of that temporary agency work and self‐employment are used as alternatives to regular employment by groups in which unemployment is high.     

Employment Protection and Temporary Work Agencies

Employers who use temporary agency staff in contrast to regular staff are not affected by employment protection regulations when terminating a job. Therefore, services provided by temporary work agencies may be seen as a substitute for regular employment. In this paper, we analyse the effects of employment protection on the size of the temporary work agency sector in a model of equilibrium unemployment. We find that higher firing costs may even reduce temporary work agency employment if agencies themselves are subject to employment protection, a consideration that distinguishes our results from those for fixed‐term employment arrangements.     

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.     

Employment Transitions after Motherhood in Spain

Abstract. This paper investigates transitions from employment to non‐employment and downward occupational mobility after motherhood in Spain. Around 40 per cent of Spanish women who were at work 1 year before childbearing leave employment, most permanently, and one‐third of these exits move to unemployment. The probability of staying on at work after birth is reduced with the rise of fixed‐term contracts and increased with experience and level of education. Downward occupational mobility is not common amongst women remaining employed since they do not switch to part‐time jobs.     

Marginal employment for welfare recipients: stepping stone or obstacle?

Marginal employment (ME) is one of the largest forms of atypical employment in Germany. We analyse whether ME has a ‘stepping stone’ function for unemployed individuals, i.e., whether ME increases the subsequent probability of regular employment. We find differing treatment effects by unemployment duration. According to our results, ME increases the likelihood of regular employment within a 3‐year observation period only for those who take up ME several months after beginning to receive benefits. In contrast, for those starting ME within the first months of receiving benefits, there is no effect on the probability of regular employment. Although we took several measures to minimize the impact of unobserved heterogeneity, our results can only be interpreted as causal if the conditional independence assumption holds.     

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.     

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‐protecting Labour Market Institutions and Inward Foreign Direct Investments

Abstract. This paper proposes labour market institutional arrangements as a strategic device to induce or deter export‐substituting inward foreign direct investments (FDI) — in either instance protecting domestic employment. In a union‐oligopoly context it is shown that, if the FDI‐associated unit costs (FC) are not high enough, then employment‐neutral (‐enhancing) inward FDI will emerge in equilibrium if the domestic wage setting is credibly centralized and the unemployment benefit is sufficiently high (low), each instance arising for a different range of — intermediate — FC values. If however the FC values are sufficiently high, then the centralized structure of wage setting along with a low enough unemployment benefit will deter employment‐reducing inward FDI.     

UNEMPLOYMENT INSURANCE IN EUROPE: UNEMPLOYMENT DURATION AND SUBSEQUENT EMPLOYMENT STABILITY

This paper provides evidence on the effect of unemployment insurance on unemployment and subsequent employment duration in Europe using individual data from the European Community Household Panel. Country‐specific estimates based on a multivariate discrete‐time duration model, which takes into account dynamic selection issues and the endogeneity of benefit receipt, suggest that although receiving benefits has an adverse effect in the sense of increasing unemployment duration, there is also a positive effect associated with the increased duration of subsequent employment. This beneficial effect of unemployment insurance on employment stability is pronounced in countries with relatively generous benefit systems, and for recipients who have remained unemployed for at least six months. These findings are in line with theories that suggest a matching effect of unemployment insurance. (JEL: J64, J65, C41)     

Impact of Multiple Labour Market Programmes on Multiple Outcomes: The Case of Norwegian Youth Programmes

Abstract. Unemployed youth in Europe have access to a variety of labour market programmes, the intention of which is to improve the chances of employment or education. A particular two‐stage modelling and estimation procedure designed to analyse the effects of multiple programmes on multiple outcomes is used to control for selection bias. The model is applied to non‐experimental longitudinal data on young unemployed individuals in Norway in the early 1990s, a period during which unemployment was rising. Separate analyses for subgroups indicate that employment programmes increase the full‐time employability of females but not of males, and for the younger age group, but not of those over 20 years of age. Training programmes have no positive effects, irrespective of subgroup. Vocational programmes are counterproductive for teenagers, which is the group at which it is targeted.     

Self‐financing Unemployment Insurance and Bargaining Structure

Abstract. This study examines how the size of trade unions relative to the labor force impacts on the desirability of different organizational forms of self‐financing unemployment insurance (UI). For this purpose, we compare the outcome of a model with a uniform payroll tax to a model where workers pay taxes according to their systematic risk of unemployment. Our results highlight the importance of the bargaining structure for the assessment of a particular UI scheme. Most importantly, it depends on the relative size of the unions whether efficiency favors a uniform or a differentiated UI scheme.     

How Many Labour Force States? An Analysis Based on the British Household Panel Survey (BHPS)

Abstract. The motivation of this paper is to investigate the characteristics of the British labour force, using data from the British Household Panel Survey (BHPS). The goal is to examine whether there are statistically significant differences between the unemployed and non‐participants, as well as inside each of the two groups, considering their transitions in the job market. Using logistic regression for a pooled cross‐section time‐series sample of employed as well as non‐employed persons, three different Out of Work subgroups are identified: Seeking Out of Work, Attached Out of Work, and Voluntary Out of Work. The first group can be broadly assimilated to the official definition of unemployment, International Labour Organization unemployment, whereas all the others are usually classified as economically inactive. Nonetheless, the last two groups are characterized by significantly different transition rates, showing a behaviourally distinct attitude in their labour market dynamics. This result points out that the aggregate non‐employment has several dimensions, which are not caught by the distinction between unemployment and economic inactivity, and should be accounted for by policy makers and researchers.     

Unemployment Exits Before and During the Crisis

Using administrative data from Spain, we compare the pattern and the determinants of individual unemployment durations and the stability of jobs found after unemployment before and during the recent crisis. We find particularly strong effects of the crisis on the hazards in the beginning of the unemployment spell. The groups hit hardest by the crisis are men, immigrants, older workers, and low‐educated individuals. The disadvantage of men is mainly due to the more pro‐cyclical nature of men's jobs. The increase in average unemployment duration and the fall in the duration of new jobs are not explained by composition effects.     

Regional Labour Market Adjustment: Are Positive and Negative Shocks Different?

This paper analyses regional labour market adjustment in the Finnish provinces during 1971–96. It investigates the interrelations of employment, unemployment and labour force participation to examine how a change in labour demand is adjusted to. The study questions the usual assumption that positive and negative shocks evoke similar adjustment processes. Instead, we test for the possibility that the effects of positive and negative shocks are asymmetric. The analysis reveals that there is little asymmetry in the adjustment to region‐specific labour demand shocks, but adjustment to total (region‐specific plus common component) shocks displays more asymmetry. The region‐specific component of a labour demand shock has short‐lived effects on unemployment and participation, and its effect on employment is very small but permanent [persistent?]. Initially, most of the fall in employment is absorbed by the unemployment and participation rate, but after a few years migration plays a larger role in the adjustment process.