Understanding Unemployment Across California Counties

Unemployment rates differ widely and persistently across counties. This article examines equilibrium forces related to this geographic disparity with a focus on California. We show that although seasonal variation in employment can account for some of the differences, it cannot explain the total variation. Factors such as educational attainment, age, and gender appear to be strongly related to unemployment differences. Individuals living in higher‐unemployment areas also have a lower propensity to migrate. Because migration is usually considered to be the main equilibrating force, this evidence helps further explain why unemployment rates across counties are persistently different.     

UNEMPLOYMENT AND OTHER MEASURES OF LABOR MARKET INEFFICIENCY: A COMPARISON OF U.K. AND U.S. LABOR MARKETS 1931–96

Although unemployment is often used as a measure of labor market inefficiency, economic theory indicates that market inefficiency is determined by both the gap between and the elasticities of supply and demand. Using time series data for the United States and United Kingdom, this article investigates how good the unemployment rate is as a measure of labor market inefficiency by calculating the deadweight loss associated with unemployment rates over time. Results show that the loss arising from unemployment is low across time and countries and that the unemployment rate is often a weak proxy for comparing labor market inefficiency. (JEL J6 )     

Exits from Self-Employment: Is There a Native-Immigrant Difference in Sweden?1

It is well established that non-western immigrants in Sweden are more likely to be self-employed than natives. Whether there is also a difference in the exit rate out of self-employment remains an unexplored question. Using panel data for the period 1998–2002, this study analyzes the exit rates by looking at all exits, and also at exits to different labor market states. We find that the exit rate is about 7% points higher among non-western immigrants than among natives and exits to unemployment is 14% points higher. Decomposing these differences, we find that differences in industry and earlier labor market status are important explanatory factors.     

STRUCTURAL UNEMPLOYMENT IN THE UNITED STATES: THE EFFECTS OF INTERINDUSTRY and INTERREGIONAL DISPERSION

The effects of sectoral shifts, measured by dispersion in the growth rates of employment or earning across industries or regions, on unemployment are tested in a specification controlling for the effects of other labor-market variables and shifts in the demographic composition of the labor force. Interindustry and geographical shifts in labor demand have significant unemployment effects, with adult males the group most strongly affected. The estimated equations imply that most of the fluctuation in unemployment over the period 1956-87 was been due to microeconomic causes rather than aggregate demand.     

Unemployment,immigration, and NAFTA: a panel study of ten major U.S. industries

We conduct a pooled cross-section and time-series analysis of the unemployment rates across ten major industries in the U.S. from 1983 to 1994 to assess the effect of NAFTA and immigration. Our results indicate that the output produced by the industry, unemployment benefit coverage, and interest rates are significant determinants of industry unemployment rates, but union presence does not affect industry unemployment. Both Canadian and Mexican immigrants appear to be complements to the U.S. labor force, with Canadian immigrants highly complementary to American labor. Finally, the Chow test provides no evidence that NAFTA has changed the structure of unemployment determination in these industries. We are indebted to Emily Hoffman and Matthew Higgins for their comments and suggestions. The usual disclaimer applies.     

Income taxation and the allocation of market labor

The allocation of work effort within the market economy will be unaffected by taxation if all returns from labor market activity are taxed equally. However, if the earnings from certain types of market employment are taxed at relatively lower rates, labor will shift into these areas until after-tax earnings are equal across all types of employment. This paper presents evidence suggesting that income taxation induces labor to move from high- to low-tax geographic areas and from wage and salaried jobs into self-employment activities. By affecting the allocation of market labor, the income tax generates a welfare loss in addition to that resulting from the tax’s effect on total work effort.     

LABOR MARKETS, INDUSTRIAL MONOPOLIZATION, WELFARE, AND IMPRISONMENT:

Various theorists posit that the rate of unemployment is linked to the rates of both welfare and imprisonment. This assumes a competitive labor market tied to specific controls of surplus populations. This article argues that contemporary labor markets lie on a continuum between competitive (secondary) and relatively non-competitive (primary) structures which creates a pattern of labor market segmentation. Such segmentation is linked with specific policies of incarceration or welfare, depending on the competitiveness of the labor market. Data from a cross-section of urban, industrial U.S. counties test the relationship between labor market segmentation, monopolization of industries, and the rates of welfare and imprisonment, controlling for a variety of other relevant variables. Regression analyses results suggest that as labor market structures become less competitive (i.e., move from predominantly secondary toward predominantly primary labor market characteristics), rates of welfare recipients and welfare benefits rise and rates of imprisonment fall. They also suggest that increasing industrial monopolization raises rates of imprisonment and lowers rates of welfare benefits. These findings indicate that the two major dimensions of economic segmentation (industrial competition and labor market competition) oppositely affect levels of welfare benefits and rates of imprisonment.     

Before Crisis: Gender and Economic Outcomes of the Two Largest Immigrant Communities in Spain1

In this study, we compare labor force outcomes of the two largest immigrant communities in Spain (Moroccans and Romanians) before the economic crisis hit. We are interested in understanding if and how gender influences the labor force outcomes (wage per hour, labor force participation, and unemployment rate) of these two immigrant groups. Our analyses show that, overall, gender is an important variable on Spanish labor market, but it affects differently the two groups. There is a male job market and a female job market for both Romanian and Moroccan immigrants, with men earning significantly higher wages than women. However, while for Moroccans, working women differ significantly from men in terms of demographic characteristics, Romanian women and men have similar demographic characteristics and comparable levels of labor force participation, but differ in terms of wage levels.     

The nation's youth: an employment perspective

Statistics on youth employment problems are quite revealing—they accounted for almost one fourth of the unemployed eventhough they constituted only one-tenth of the nation's labor force in 1977. Youth unemployment is universally high, but variations by area of residence are evident and can be useful in analyzing their job market problems. To this end, data on the labor force characteristic of the nation's 16.5 million young people in three geographic areas—central cities, suburbs, and nonmetropolitan areas were examined. This investigation utilizes metropolitan and nonmetropolitan area data gathered monthly through a sample survey of some 47,000 households throughout the nation during 1977. Further, the labor market experience of both whites and blacks, and males and females are compared.     

Unemployment,Reemployment, and Health Insurance Status Among Older Workers in the Flexible Labor Market

As employment becomes more precarious, and spells of displacement become more common across the labor market, many individuals are forced to make decisions about the speed at which they seek reemployment and the types of employment they will seek. Using repeated cross‐sectional data from various years of the Displaced Worker Supplement of the Current Population Survey, we examine the degree to which employer‐provided health insurance and organizational provision of advanced layoff warning helped workers—particularly those from earlier birth cohorts—navigate the labor market during a period of growing employment flexibility. Our results indicate that workers from older cohorts, rather than older chronological ages, suffered more from displacement in terms of longer unemployment spells and declines in job quality upon reemployment. Workers able to obtain a job with health insurance had shorter unemployment durations, while those displaced from jobs with health insurance remained unemployed for longer periods of time. Advance notice appears to reduce some of the disproportionately negative effects of displacement for older workers, perhaps by easing the shock of a psychological contract breach. Our findings point to the importance of historical and cultural factors in shaping labor market outcomes.     

The Effect of Unemployment Duration on National Suicide Rates: A Time Series Analysis, 1948–1982

Abstract

Periods of increasing unemployment are associated with increases in suicide rates. Unemployment increases suicide among laid off persons, new entrants, reentrants to the labor market, and groups indirectly affected—the underemployed, those fearing unemployment, the families of the unemployed, and even those suffering from falling real wages, a condition endemic in major recessions. The present investigation deals with a neglected unemployment measure: the duration of unemployment, a condition known to be critical to the generation of extreme behavior such as suicide. Controls are introduced from alternative perspectives on the problem including the incidence of divorce. The data analyzed refer to yearly measures of the variables over a 31 year period. 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. The duration of unemployment increases suicide rates for both males and females. The model explains between 59 and 88 percent of the variance in suicide.     

DOMESTIC CONTENT LEGISLATION: HOUSE VOTING AND THE ECONOMIC THEORY OF REGULATION

House voting on domestic content legislation provides a rare opportunity to examine the political economy of protectionism with respect to a particular issue rather than by using the traditional interindustry approach. The results indicate that a representative's vote in favor of the content legislation and the intensity of the legislator's preferences are positively related to the importance of the auto and steel industries in the representative's district, an increasing unemployment rate, campaign contributions from labor groups, affiliation with Democratic Party, and a liberal ideology. Despite ideology's statistical significance, the results suggest this variable can be disregarded because neither the predictive accuracy nor the explanatory power of the model is improved by its inclusion. The estimates also provide insights concerning the impact of changes in the independent variables upon voting patterns.     

How do Students Respond to Labor Market and Education Incentives? An Analysis of Homework Time

This study examines the extent to which high school students respond to education and labor market incentives when making decisions about homework. Student and state fixed effects estimators are used to control for unobserved individual and geographic heterogeneity and selection. I find that students’ choices about homework respond to unemployment rates and changes in the minimum wage, but not to changes in the price of higher education. These responses are not constant throughout the population: female students, low income students, and low achieving students in particular increase their homework time in response to a higher minimum wage, while male students are more responsive to changes in the unemployment rate.     

Labor Supply,Labor Demand,and Men's Underemployment in Rural and Urban Labor Markets1

Abstract This paper examines how the structure of the labor market differentially affects white men's underemployment in urban and rural areas. The effects of labor supply and demand, including special measures of public employment and two previously neglected aspects of competition—global industrial competition and sexual labor market competition—on unemployment, low-wage employment, and low-hours employment are examined. A higher proportion of females in the labor force in rural labor market areas provides benefits to men in the form of lower unemployment, but also costs them, through an increased prevalence of low-wage employment, while the opposite effects are evident for areas with concentrations in periphery service industries. The findings suggest that industrial restructuring in the form of increased foreign competition and an increased loss of core transformative jobs are especially threatening to rural men's employment adequacy.     

What Happens to Defined Contribution Accounts When Labor Markets and Financial Markets Move Together?

The relationship among earnings, savings, and retirement is well known; however, the linkage between labor market outcomes and financial market performance is generally unacknowledged. We examine the implications of the link between labor markets and financial markets for workers who save money in individual retirement accounts. Specifically, differences in labor market outcomes across groups may imply differences in the timing of investments, which may reduce savings over time for these groups compared to their counterparts. Using monthly data from the Current Population Survey (1979–2002), we generate hypothetical investment portfolios using stock and bond indices. We exploit differences across demographic groups in unemployment and wage growth and use these differences to examine each group's investment outcomes. We then disaggregate the total effects into short-term and long-term components. We find some evidence of short-term market timing effects on investment, but we find much larger long-term effects for some groups. Our findings suggest that, for many people, the retirement savings losses associated with the timing of markets are similar to the costs of annuitizing savings upon retirement. The differences are especially pronounced by education and gender.     

Disconnected Geography: A Spatial Analysis of Disconnected Youth in the United States

Since the Great Recession, US policy and advocacy groups have sought to better understand its effect on a group of especially vulnerable young adults who are not enrolled in school or training programs and not participating in the labor market, so called ‘disconnected youth.’ This article distinguishes between disconnected youth and unemployed youth and examines the spatial clustering of these two groups across counties in the US. The focus is to ascertain whether there are differences in underlying contextual factors among groups of counties that are mutually exclusive and spatially disparate (non-adjacent), comprising two types of spatial clusters – high rates of disconnected youth and high rates of unemployed youth. Using restricted, household-level census data inside the Census Research Data Center (RDC) under special permission by the US Census Bureau, we were able to define these two groups using detailed household questionnaires that are not available to researchers outside the RDC. The geospatial patterns in the two types of clusters suggest that places with high concentrations of disconnected youth are distinctly different in terms of underlying characteristics from places with high concentrations of unemployed youth. These differences include, among other things, arrests for synthetic drug production, enclaves of poor in rural areas, persistent poverty in areas, educational attainment in the populace, children in poverty, persons without health insurance, the social capital index, and elders who receive disability benefits. This article provides some preliminary evidence regarding the social forces underlying the two types of observed geospatial clusters and discusses how they differ.     

PUNISHMENT AND SOCIAL STRUCTURE REVISITED: UNEMPLOYMENT AND IMPRISONMENT IN THE UNITED STATES, 1948–1984

Several recent empirical studies of imprisonment trends in the United States and Western Europe confirm Rusche and Kirchheimer's thesis that unemployment affects imprisonment directly with crime held constant. This empirical confirmation, however, remains suspect because these studies fail to address alternative explanations adequately. This article examines these alternatives more thoroughly and considers a limitation on the scope of the thesis. In particular, because the thesis concerns competitive labor markets of industrial capitalism, we reason that unemployment plays less of a role in the dynamics of imprisonment where the labor market is less freely competitive. The analysis of post-World War II trends reveals robust results for the Rusche-Kirchheimer thesis and limited empirical support for differences in labor markets.     

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.     

Befristete Beschäftigung: Chance oder Risiko?

The paper investigates whether increased labor market flexibility leads to a reinforcement of the existing segmentation of the labor market or whether it is dismantling the barriers in the labor market. Using spell data (employment and unemployment periods) from the German Socio-economic Panel (GSOEP, time period: 1984–1999) both determinants of fixed-term contracts and their consequences (renewed temporary employment, unemployment) are investigated with the help of random-effects logit-models. The results show that respondents’ characteristics (amount and type of human capital, formerly experienced periods of unemployment), structural variables (branch, firm size), and occupational characteristics (position, marginal employment) are influencing the risk of getting a temporary job. Furthermore it becomes evident that fixed-term contracts are increasing the risk of getting a temporary job again or of becoming unemployed after termination of the temporary job. These results show that fixed-term contracts above all are part of the secondary labor market, and that they especially have negative consequences for the employees in this segment. On the other hand fixed-term contracts can be seen as a chance in the way that they offer at least an alternative to unemployment. Hence, a too narrow evaluation of temporary employment would be too simplistic.     

The Impact of the Labor Market on Health Insurance

This paper examines the impact of labor market conditions on employer-sponsored health insurance (ESHI). Unique data from the Louisiana Health Insurance Surveys linked to unemployment data and the Louisiana Job Vacancy Surveys prior to and after Hurricane Katrina provide very large variation in the job vacancy and unemployment rates, our measures of labor market conditions. Results suggest a significant relationship between both unemployment and industry specific job vacancy rates and ESHI.