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.     

Rehires and Unemployment Duration in the Swedish Labour Market — New Evidence of Temporary Layoffs

The paper investigates temporary layoffs in the Swedish labour market. Previous reports of few temporary layoffs are rejected. About 45 percent of unemployed people who found a job returned to a previous employer. As a stock measure, 10 percent of the unemployed are on temporary layoff. Using new job and recall as distinct exits in a competing risks model, one cannot reject a horizontal duration dependence for new jobs, while the recall hazard shows a strong, negative duration dependence. Clearer predictions of the effect of education on job probabilities are also found. Further, the results probably have implications for the interpretation of several policy parameters, including labour market programme outcomes.     

Macroeconomic Determinants of Equilibrium Unemployment Insurance

This paper proposes a new modeling strategy as regards the definition of an optimal level of unemployment benefits. While the traditional methodology privileges labor market equilibrium to derive optimal employment, wage and unemployment benefit levels, we present a model in which the optimal level of unemployment benefits is a function of the government’s macroeconomic objectives in terms of inflation and output fluctuations. In a second stage, the model allows for the investigation of unemployment insurance effects on labor market equilibrium.     

Unemployment Insurance Policy and Union Wage Formation

Abstract. The paper considers the wage and employment effects of alternative social security policies. Such a policy can take the form of a fixed benefit level or linking the level of unemployment benefits to private sector wages. The latter is an important social security policy instrument to guarantee an equitable distribution of income. A fixed benefit level policy yields lower wages and larger employment than an automatic link between the level of benefits and the wage rate. Further, if the government decides to make the link conditional on the stabilization of the tax rate, wages are lower and employment is higher than in both former alternatives. By endogenizing its social security policy, the government is able to reduce the loss in employment that the link policy brings about.     

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.     

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。     

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.     

如何有效利用我国失业保险基金以促进再就业

我国失业保险基金大量闲置,促进就业功能难以发挥,国内对失业保险优化相关领域的研究又基本空缺.本文针对这一问题总结了西方基于促进就业的优化失业保险的四种途径,并在此基础上根据我国目前的状况,提出了合理运用我国失业保险基金、优化我国失业保险的一系列政策建议.     

Unemployment Propensity and Unemployment Duration

ABSTRACT: This paper analyses the factors affecting the duration of an unemployment spell. The results indicate the absence of statistically significant ‘‘duration dependence‘‘ effects for men. Person-specific unemployment propensity is found to have a significant effect on re-employment probabilities. The latter implies an unequal distribution of unemployment burden among the population.     

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.     

Uncertainty and Unemployment

This paper studies the impact of time‐varying idiosyncratic risk at the establishment level on unemployment fluctuations over 1972–2009. I build a tractable directed search model with firm dynamics and time‐varying idiosyncratic volatility. The model allows for endogenous separations, entry and exit, and job‐to‐job transitions. I show that the model can replicate salient features of the microeconomic behavior of firms and that the introduction of volatility improves the fit of the model for standard business cycle moments. In a series of counterfactual experiments, I show that time‐varying risk is important to account for the magnitude of fluctuations in aggregate unemployment for past U.S. recessions. Though the model can account for about 40% of the total increase in unemployment for the 2007–2009 recession, uncertainty alone is not sufficient to explain the magnitude and persistence of unemployment during that episode.     

Unemployment and Business Cycles

We develop and estimate a general equilibrium search and matching model that accounts for key business cycle properties of macroeconomic aggregates, including labor market variables. In sharp contrast to leading New Keynesian models, we do not impose wage inertia. Instead we derive wage inertia from our specification of how firms and workers negotiate wages. Our model outperforms a variant of the standard New Keynesian Calvo sticky wage model. According to our estimated model, there is a critical interaction between the degree of price stickiness, monetary policy, and the duration of an increase in unemployment benefits.     

Search and Rest Unemployment

This paper develops a tractable version of the Lucas and Prescott (1974) search model. Each of a continuum of industries produces a heterogeneous good using a production technology that is continually hit by idiosyncratic shocks. In response to adverse shocks, some workers search for new industries while others are rest unemployed, waiting for their industry's condition to improve. We obtain closed‐form expressions for key aggregate variables and use them to evaluate the model's quantitative predictions for unemployment and wages. Both search and rest unemployment are important for understanding the behavior of wages at the industry level.     

Heterogeneity and Unemployment Duration

ABSTRACT: Various unemployment duration models are estimated on a large Norwegian dataset covering labour market history 1.1.1989-31.12.1992 for all persons who became unemployed during October 1990. As many unemployed leave the unemployment register without going directly to a job, two alternative definitions of unemployment are used — register unemployment and joblessness. The problem of heterogeneity is addressed both by partitioning the individuals into four categories by previous unemployment history, and by including a random term in the job hazard. Observed as well as unobserved heterogeneity affects the estimates of expected duration to a great extent. When gamma-distributed unobserved heterogeneity is accounted for, the estimates of duration dependence become more positive relative to models where unobserved heterogeneity is ignored. Among persons who are entitled to unemployment benefit, the duration dependence appears to be significantly positive. Alternative specifications of the baseline hazard hardly affect estimates of the effects of the covariates on duration.     

Unemployment and Endogenous Growth

In this paper we develop a two-sector endogenous growth model with a dual labour market, based on efficiency wages. Growth is driven by intentional R&D performed in the high-tech and high-wage sector. How a change in rivalry among firms affects simultaneously growth and unemployment is examined. On the one hand, an increase of the elasticity of substitution between the product varieties of different high-tech firms reduces market power and leads to higher growth but reduces job prospects. On the other hand, if barriers to entry exist, an increase of the number of rivals in the market (due to removal of entry barriers) leads to lower growth, whereas the effect on aggregate employment is ambiguous.     

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.     

On the Dynamics of Unemployment and Wage Distributions

Postel‐Vinay and Robin's (2002) sequential auction model is extended to allow for aggregate productivity shocks. Workers exhibit permanent differences in ability while firms are identical. Negative aggregate productivity shocks induce job destruction by driving the surplus of matches with low ability workers to negative values. Endogenous job destruction coupled with worker heterogeneity thus provides a mechanism for amplifying productivity shocks that offers an original solution to the unemployment volatility puzzle (Shimer (2005)). Moreover, positive or negative shocks may lead employers and employees to renegotiate low wages up and high wages down when agents' individual surpluses become negative. The model delivers rich business cycle dynamics of wage distributions and explains why both low wages and high wages are more procyclical than wages in the middle of the distribution.     

Mixed Unemployment and Differentiated Policies

ABSTRACT: The works related to the disequilibrium theory often show that situations of classical unemployment and of Keynesian unemployment coexist on a long-term basis. The following study deals with a theoretical model of mixed unemployment reflecting this coexistence. In this model, prices are assumed to be flexible upward, but not downward. Hence, classical unemployment leads to inflation, without quantitative rationing on demand, which is closer to reality. The study analyses the asymmetric relations between the classical and the Keynesian sectors as well as the resulting implications for economic policy. What comes out is that differentiated policies always have a stronger impact than aggregate policies. The highest level of efficiency is obtained by stimulating the supply of firms set in the classical situation, provided that one acts on the non-wage determinants of supply in order not to further depress the outlets for firms set in the Keynesian situation.