DO UNEMPLOYMENT BENEFITS AFFECT ON‐THE‐JOB SEARCH? EVIDENCE FROM LABOR TURNOVER BEFORE ESTABLISHMENT CLOSURES

We develop a job search model that predicts that potential job losers would reduce on‐the‐job search (OTJS) effort and job‐to‐job transitions before layoffs, in response to an increase in the potential duration of unemployment benefits (UB). To test this prediction, we exploit changes in the maximum potential duration of benefits in Germany to analyze how it affected labor turnover before establishment closings. The evidence supports the model prediction that workers with longer potential benefit duration are more likely to remain with their establishments until closure and to enter nonemployment. These findings indicate that the effects of UB on the OTJS decisions of potential job losers should be considered in the optimal design of the parameters of unemployment insurance systems. (JEL J63, J64, J65)     

INVOLUNTARY, EMPLOYMENT IN CONTRACTS WITH RISKY JOB SEARCH

The implication of partially insurable job search risk for incentive compatibility in a standard contracting framework are explored. When unemployment spells provoke job search, workers face risk in spell duration and reemployment wages. When search effort is not variable, contracts including unemployment insurance will yield involuntary employment. When search effort is diminished by UI benefits, firms shift some compensation back to wages, increasing the relative attractiveness of employment. The analysis begins with a theorem on incomplete insurance by Imai, Geanakoplos and Ito [1981] for which a simple proof and economic intuition are provided.     

SELF‐EMPLOYMENT,EFFICIENCY WAGE,AND PUBLIC POLICIES

Empirical evidence suggests that unemployed workers are much more likely to become self‐employed than wage‐employed workers. Also, higher unemployment benefits significantly reduce the rate of self‐employment. This article develops a model of self‐employment which incorporates transitions between unemployment and self‐employment. It integrates two strands of theoretical literature—models of occupational choice and the efficiency wage models. In this model, a higher unemployment benefit reduces the self‐employment rate and the transition rate of unemployed workers to self‐employment, which is consistent with empirical evidence. (JEL J23, J58, J64)     

AFFIRMATIVE ACTION AND DYNAMICS OF WORK‐ETHIC PREFERENCES

This study examines the cultural‐transmission effects of compensatory‐discrimination affirmative action policies on work‐ethic preference dynamics for a population in a caste‐based segregated economy in which some high‐paid jobs are reserved for historically disadvantaged lower‐caste individuals. Cultural attitudes toward preferences for work‐loving and leisure‐loving traits evolve endogenously. The compensatory‐discrimination policies affect differently the preference dynamics for insiders (entitled to employment quota) and outsiders (not entitled to employment quota). Efficient and inefficient equilibria are possible, with larger or smaller proportions of individuals with a work ethic among the insider and outsider populations. The model shows that the commonly conceived conclusion that a job reservation policy benefits a disadvantaged group at the cost of efficiency and economic growth is not a necessary outcome. (JEL A12, C62, J71)     

THE EFFECTS OF MACROECONOMIC CONDITIONS AT GRADUATION ON OVEREDUCATION

This article shows that unfavorable economic conditions at graduation decrease the likelihood of a good job‐worker match over a worker's subsequent career. Mismatch is quantified in terms of overeducation by both industry and occupation. The German Socio‐Economic Panel and region‐level unemployment rates from 1994 to 2012 are used. Instrumental variables estimates account for endogenous graduation timing. A single percentage point increase in regional unemployment causes an increase in the probability of overeducation of 1.6–1.7 percentage points for university graduates. Effects for technical tertiary education and apprenticeship graduates are smaller. Labor market entry conditions affect workers for up to 9 years after graduation. (JEL J23, J22, E32, I23)     

NEW MEASURES OF THE COSTS OF UNEMPLOYMENT: EVIDENCE FROM THE SUBJECTIVE WELL‐BEING OF 3.3 MILLION AMERICANS

Using two large U.S. surveys, we estimate the effects of unemployment on the subjective well‐being (SWB) of the unemployed and the rest of the population. For the unemployed, the nonpecuniary costs of unemployment are several times as large as those resulting from lower incomes, while the indirect effect at the population level is 15 times as large. For those who are still employed, a one percentage point increase in local unemployment has an impact on well‐being roughly equivalent to a 4% decline in household income. We also find evidence indicating that job security is an important channel for the indirect effects of unemployment. (JEL E24, H23, J64, J68)     

Real household income and attitude toward immigrants: an empirical analysis

Previous studies have analyzed the (aggregate) effects of unemployment on attitudes towards immigrants and on right-wing crimes. In this paper, we investigate the effects of economic prosperity on attitudes towards immigrants, focusing not only on unemployment status but also on real household income. Using panel data from the German Socioeconomic Panel on around 33,000 individuals over the period 1992–2004 we find a robust negative relationship between real personal household income and self-declared concern about immigrants, both in levels and first differences. Both job loss and income reduction concerns about immigration. Our findings document an interesting interaction between economic variables and social attitudes which does not depend on economic growth per se but on its capacity to generate higher economic wellbeing at individual level, not only for unemployed people but also for those in employment, who may face a fall in real income during economic downturns.     

WHY DON'T ELIGIBLE FIRMS CLAIM HIRING SUBSIDIES? THE ROLE OF JOB DURATION

Only a small fraction of firms that hire disadvantaged workers claim the federal subsidies for which they qualify, namely, the Work Opportunity Tax Credit (WOTC) and Welfare‐to‐Work Tax Credit (WtW). Subsidy benefits depend partially on job duration, with higher subsidy rates above certain job‐duration thresholds. I estimate the relationship between a firm's WOTC/WtW participation and its eligible workers' job durations. Using unique Wisconsin administrative data, I find that workers' subsidy rates (determined by hours worked) have the expected relationship to participation: Firms with a larger fraction of workers exceeding the programs' job‐duration thresholds are more likely to claim the WOTC/WtW. I also find no evidence that firms systematically modify the job duration of their workers to maximize subsidy payments. (JEL J3)     

DO REEMPLOYMENT PROGRAMS FOR THE UNEMPLOYED WORK FOR YOUTH? EVIDENCE FROM THE GREAT RECESSION IN THE UNITED STATES

We present experimental evidence on the effects of four U.S. reemployment programs for youth unemployment insurance (UI) recipients during the Great Recession. The three programs that emphasized monitoring and service referrals reduced UI receipt but had minimal effects on employment and earnings; these programs mainly induced the early exit of participants. The fourth program, which combined mandatory job counseling with monitoring, caused the largest reductions in UI receipt and clearly increased employment and earnings. Both early participant exits and effective job counseling underlie these impacts. We conclude that policymakers should require job counseling for youth UI recipients during recessions. (JEL J0, J6, H4)     

Propensity of Canada's Foreign‐born to Claim Unemployment Insurance Benefits

This article examines the relationship between claiming unemployment insurance benefits in Canada and the immigrant class under which immigrants were admitted (namely skilled workers, assisted relatives, family class, refugees), using a new data set that combines income tax and immigration records. Claims rates (or the proportion of immigrants who claimed unemployment insurance benefits) are calculated for each immigrant landing class for the cohorts of immigrants who landed in 1980, 1985 and 1989; for each cohort, annual claims rates are presented from the year after landing to 1995. The claims rates indicate that there are significant differences among the different immigrant landing classes: those admitted as skilled workers have relatively low claims rates, those in the family class or assisted relatives have higher rates, and refugees have the highest rates. For all immigrant landing classes, claims rates rise rapidly during the two or three years after arrival in Canada, but decline thereafter for all classes. Differences in claims rates on unemployment insurance benefits remain across the immigrant landing classes after general economic conditions and some characteristics of the immigrants are controlled.     

Economic adaptation of refugees in Canada: experience of a quarter century

This paper examines the economic adaptation, in terms of employment and income, for 400,000 refugees, mainly displaced persons, Hungarians, Czechoslovaks, Ugandan Asians, Chileans, and Indochinese, in Canada during the last 25 years. The author looks at 1) east in obtaining a first job, 2) unemployment, 3) wives' employment, 4) job search techniques, and 5) occupation. Economic climate largely determines the time needed to find a first job. 55% of Hungarian refugees in 1957-58 found a job within a month; only 30% of Czechoslovak refugees in 1968-69 found a job within a month. Refugees and regular immigrants have higher unemployment than native Canadians; but the rate drops dramatically within a few years. Employment and unemployment for refugees is influenced by 1) prevailing labor market conditions, 2) English and/or French language proficiency, 3) sympathy by the population for the refugees, 4) support by people of the same ethnic group, and 5) the refugees' own adaptability. Survey results show that more refugee wives are employed than Canadian born wives; over 69% of Chilean refugee women worked in 1975-76. Most refugees use the Canada Employment Center, and informal channels such as "word of mouth" and friends and relatives to find jobs. Lack of qualifications and experience, and lack of language proficiency hinder many refugees in finding jobs for which they have trained. Income is an indicator of the success of refugee economic adaptation. Refugees, like regular immigrants, have lower than average income levels in their first years in Canada; however, they often earn more than the Canadian born after the difficult first years. Family incomes, because of female labor force participation, may widen the differences even more. Although many refugees are not working in their intended professions, most refugee groups have adjusted well economically in Canada.     

Patterns and correlates of involuntary unemployment and underemployment in single-mother families

Economic downturns, trends in the increased number of single-mother families and women entering the workforce, recent welfare reforms that make receipt of cash benefits contingent on employment, and changes in the economic environment that have increased employment problems, all highlight the importance of examining unemployment and underemployment particularly among single-mother families. The current study used the 2004 panel of the Survey of Income and Program Participation (SIPP) to examine patterns and correlates of unemployment and underemployment among single-mother families. The results indicate fairly substantial employment problems. Although approximately one-half (55.6%) of the single mothers had adequate employment, 30% experienced unemployment or involuntary job gaps, and approximately 15% experienced underemployment. Results further indicate that age, education level, past work experience, and homeownership are related to a reduced risk of employment problems. On the other hand, work disability, other family income, receipt of cash benefits, and state unemployment rates place single mothers at an increased risk of unemployment and underemployment. The findings suggest social policy implications and targeted assistance for those at-risk single mothers trying to secure adequate employment.     

REGIONAL AND SECTORAL EVIDENCE OF THE MACROECONOMIC EFFECTS OF LABOR REALLOCATION: A PANEL DATA ANALYSIS

This article revisits the sectoral shifts hypothesis by examining unemployment fluctuations for 48 U.S. states over the period 1990:M01–2011:M12. We develop a panel approach that incorporates dynamics, parameter heterogeneity, aggregate factors, and cross‐sectional dependence (CSD). Our findings provide support for a positive and significant effect of the employment dispersion index on unemployment. This outcome is robust under alternative specifications and measures of employment dispersion. The empirical evidence corroborates the presence and relevance of CSD and heterogeneity among states. The results show that, once unobserved common factors and cross‐state heterogeneity are taken into account, labor reallocation has a significant effect on unemployment that is half the size of the estimate when cross‐sectional dependence is not taken into account. (JEL E24, E32, J21, R23, C23)     

Immigrants and Social Networks in a Job‐Scarce Environment: The Case of Germany1

Though information about jobs passed through personal networks has been central to the labor market integration of immigrants in the United States, its role in the economic absorption of immigrants in Germany, where jobs are scarcer and employers more likely to demand formal qualifications, is less clear. Through analysis of German Socio‐Economic Panel data, we discovered that nearly half of all immigrant‐origin job changers found their positions through networks and that the most vulnerable to unemployment – the young and the less educated – were especially likely to rely on them. Also, jobs found through networks were as likely to lead to improved working conditions as jobs acquired through more formal means. These findings have implications both for debates about assimilation and for social policy.     

Economic Benefits of Self‐Employment for Canadian Immigrants

This paper evaluates the economic benefits of self‐employment in Canada for 12 groups of ethno‐racial immigrants. It tests whether or not their self‐employment earnings are higher or lower than similar groups in wage and salary employment, whether ethnic minorities earn more or less from self‐employment compared to White immigrants, and whether self‐employment earnings of immigrant groups vary by their industrial sectors of employment. Using the Canadian Census 2006, I show that self‐employed ethno‐racial immigrants earn less than White immigrants. I also show that the economic benefits of self‐employment depend on the ethno‐racial groups and the industrial mix of their self‐employment. Cet article évalue les avantages économiques du travail indépendant au Canada pour 12 groupes d'immigrés ethnoraciaux. Il teste si les revenus du travail indépendant sont supérieurs ou inférieurs aux groupes similaires au sujet de salaire et de travail avec le salaire annuel, si les minorités ethniques gagnent plus ou moins de travail indépendant par rapport aux immigrés blancs, et si les revenus du travail indépendant des groupes immigrés varient par leurs secteurs industriels de travail. En utilisant le Recensement du Canada de 2006, je montre que les immigrés ethnoraciaux qui sont indépendants gagnent moins que les immigrés blancs. Je montre aussi que les avantages économiques dépendent des groupes ethnoraciaux et du mélange industriel de leur travail indépendant.     

Immigrant Populations and the Labour Market in Greece at the Beginning of the Twenty‐First Century

Our purpose in undertaking this research is to methodically map the labour market circumstances of the main immigrant groups in Greece. We classify all of the Districts of Greece into three categories (Diverse, Mixed and Unmixed) according to the ethnic composition of each District. We measure how the employment status of the immigrants varies (1) according to the ethnic group and sex of the immigrant, and (2) according to the ethnic composition and economic structure of a District. In general, the majority of immigrants exhibit lower unemployment and higher economic activity rates than the indigenous Greeks. Three immigrant groups (Albanians, Bulgarians and “Other”), which make up two‐thirds of the foreign‐born population of Greece, have lower unemployment rates than the national average, and lower rates than Greeks as well. The poorest labour market outcomes are observed in Unmixed and Mixed Districts, whereas Diverse Districts are better off. At the regional level, the most disadvantaged Geographical Department is the Ionian Islands, since it presents the highest unemployment rates for the general population for both sexes. With regard to sex‐differential unemployment across immigrant groups, we found that women exhibit higher unemployment than men in almost every ethnic group.     

Ethnic Enclaves,Networks and Self‐Employment among Middle Eastern Immigrants in Sweden

The proportion of immigrants from countries in the Middle East living in Sweden has increased since the 1970s, and it is a well‐known fact that immigrants from the Middle East suffer from low earnings and high rates of unemployment on the Swedish labour market. There are often great hopes that self‐employment will enable immigrants to improve their labour market situation. Further, in Sweden as in many other countries, the question of whether the existence of ethnic enclaves are good or bad for immigrants’ earnings and employment opportunities has also been widely debated. This paper presents a study of the extent to which Middle Eastern ethnic enclaves and networks in Sweden enhance or hinder immigrants’ self‐employment. The results show that the presence of ethnic enclaves increases the propensity for self‐employment. Thus, immigrants in ethnic enclaves provide their co‐ethnics with goods and services that Swedish natives are not able to provide. The results also show that ethnic networks seem to be an obstacle to immigrant self‐employment. One explanation is that an increase in network size implies increased competition for customers among self‐employed immigrants. The question of whether ethnic enclaves are good or bad for the integration of immigrants into the labour market has been widely debated. The results of this paper provide us with information about the integration puzzle. Ethnic enclaves seem to enhance self‐employment propensities among Middle Eastern immigrants in Sweden.     

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.     

Stepping from Illegality to Legality and Advancing towards Integration: The Case of Immigrants in Greece1

This paper highlights how the social and economic situation of immigrants changes after their formal legalization and discusses what they nave to go through for their complete integration. Legalization can hardly solve the problem of immigrant employment, nor can it pull all immigrants out of the underground labor market and integrate them into the Greek economy ana society. The process towards complete integration is painful and involves a series of successive phases of various durations. During this period, apart from economic conditions, various institutional and cultural factors can hinder or delay integration. With respect to economic integration, immigrants seem to fare rather well. Their official unemployment rate is only slightly higher than the Greek unemployment rate, the two rates converging over time. This suggests increasing relative opportunities for immigrant employment, precarious or stable as it might be. Immigrant jobs come as a result of their flexible adjustment to the needs of the labor market ‐ official or underground ‐ compared to the inflexibility in the supply of Greek workers, due to labor mismatches and relatively high reservation wages. Wages of immigrants are generally lower, but are approaching the wages of their Greek counterparts. Educated immigrants much more than educated Greeks are forced by the circumstances to exercise jobs not measuring up to their qualifications.