a column by Reamonn Lydon, Thomas Y. Mathä and Stephen Millard for VOX: CEPR’s Policy Portal
Short-time work schemes are a fiscal stabiliser in Europe. Between 2010 and 2013, they were used by 7% of firms, employing 9% of workers in the region.
This column uses ECB data to show that firms use the schemes to offset negative shocks and retain high-productivity workers. High firing costs and wage rigidity increase the use of short-time work, which in turn reduces the fall in employment brought on by a recession.
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Showing posts with label labour_supply. Show all posts
Showing posts with label labour_supply. Show all posts
Wednesday, 20 February 2019
Wednesday, 30 January 2019
Subsidising labour hoarding in recessions: New evidence from Italy’s Cassa Integrazione
a column by Giulia Giupponi and Camille Landais for VOX: CEPR’s Policy Portal
Labour hoarding – the practice of retaining excess employees during a negative shock – could potentially help firms avoid re-hiring and training costs when economic conditions improve and act as a form of insurance for workers.
This column uses Italian micro data to show how labour hoarding in the form of short-term work programmes can be beneficial despite being ineffective in the long term.
Continue reading
Labour hoarding – the practice of retaining excess employees during a negative shock – could potentially help firms avoid re-hiring and training costs when economic conditions improve and act as a form of insurance for workers.
This column uses Italian micro data to show how labour hoarding in the form of short-term work programmes can be beneficial despite being ineffective in the long term.
Continue reading
Monday, 17 December 2018
The family working-time model: Towards more gender equality in work and care
an article by Kai-Uwe Müller, Michael Neumann and Katharina Wrohlich (German Institute for Economic Research (DIW Berlin), Germany) published in Journal of European Social Policy Volume 28 Issue 5 (December 2018)
Abstract
Since the millennium, the labour market participation of women and mothers is increasing across European countries. Several work/care policy measures underlie this evolution.
At the same time, the labour market behaviour of fathers, as well as their involvement in care work, is relatively unchanging, meaning that employed mothers are facing an increased burden with respect to gainful employment and providing care.
We propose a family working-time model that incentivizes fathers and mothers to both work in extended part-time employment. It provides a benefit in the form of a lump-sum transfer or income replacement for each parent if, and only if, both parents work 30 hours/week. Thus, it explicitly addresses fathers and – contrary to most conventional family policies – actively promotes the dual earner/dual carer paradigm.
Combining microsimulation and labour supply estimation, we empirically analyse the potential of the family working-time model in the German context. The relatively small share of families already choosing the symmetric distribution of about 30 working hours would increase by 60 percent.
By showing that a lump-sum transfer especially benefits low-income families, we contribute to the debate about redistributive implications of family policies. The basic principles of the model generalize to other European countries where families increasingly desire an equal distribution of employment and care.
In order to enhance the impact of such a policy, employers’ norms and workplace culture as well as the supply of high-quality childcare must catch up with changing workforce preferences.
Abstract
Since the millennium, the labour market participation of women and mothers is increasing across European countries. Several work/care policy measures underlie this evolution.
At the same time, the labour market behaviour of fathers, as well as their involvement in care work, is relatively unchanging, meaning that employed mothers are facing an increased burden with respect to gainful employment and providing care.
We propose a family working-time model that incentivizes fathers and mothers to both work in extended part-time employment. It provides a benefit in the form of a lump-sum transfer or income replacement for each parent if, and only if, both parents work 30 hours/week. Thus, it explicitly addresses fathers and – contrary to most conventional family policies – actively promotes the dual earner/dual carer paradigm.
Combining microsimulation and labour supply estimation, we empirically analyse the potential of the family working-time model in the German context. The relatively small share of families already choosing the symmetric distribution of about 30 working hours would increase by 60 percent.
By showing that a lump-sum transfer especially benefits low-income families, we contribute to the debate about redistributive implications of family policies. The basic principles of the model generalize to other European countries where families increasingly desire an equal distribution of employment and care.
In order to enhance the impact of such a policy, employers’ norms and workplace culture as well as the supply of high-quality childcare must catch up with changing workforce preferences.
Friday, 23 November 2018
Commuting time and family labour supply decisions
a column by Francesca Carta and Marta De Philippis for VOX: CEPR’s Policy Portal
Commuting time has been regarded mainly as affecting labour supply decisions at the individual level. Previous analyses do not consider the interactions between partners’ commuting times and their labour supply. This column shows that, in response to the husband’s longer commute, the wife’s employment decreases and the husband works slightly more. These results suggest that intra-family interactions need to be considered when evaluating policies that apparently affect one partner only.
Continue reading
Commuting time has been regarded mainly as affecting labour supply decisions at the individual level. Previous analyses do not consider the interactions between partners’ commuting times and their labour supply. This column shows that, in response to the husband’s longer commute, the wife’s employment decreases and the husband works slightly more. These results suggest that intra-family interactions need to be considered when evaluating policies that apparently affect one partner only.
Continue reading
Tuesday, 20 November 2018
Aggregating labour supply elasticities: The importance of heterogeneity
a column by Orazio Attanasio, Peter Levell, Hamish Low and Virginia Sánchez Marcos for VOX: CEPR’s Policy Portal
Economists disagree on the size of labour supply elasticities.
The column uses a model of female labour supply to show that there is substantial heterogeneity in both cross section and over the business cycle. It is not possible to think about labour supply elasticity as a unique structural parameter.
To understand the consequences of income tax changes, for example, we need to be explicit about whose tax is changing.
Continue reading
Economists disagree on the size of labour supply elasticities.
The column uses a model of female labour supply to show that there is substantial heterogeneity in both cross section and over the business cycle. It is not possible to think about labour supply elasticity as a unique structural parameter.
To understand the consequences of income tax changes, for example, we need to be explicit about whose tax is changing.
Continue reading
Saturday, 28 April 2018
Youth minimum wages and youth employment
an article by Maria Marimpi (Geneva School of Business Administration, Carouge, Switzerland) and Pierre Koning (VU University Amsterdam, The Netherlands; Leiden University, The Netherlands; Tinbergen Instute, Amsterdam, The Netherlands; IZA, Bonn, Germany) published in IZA Journal of Labor Policy Volume 7 (2018 Article 5)
Abstract
This paper performs a cross-country level analysis on the impact of the level of specific youth minimum wages on the labor market performance of young individuals. We use information on the use and level of youth minimum wages, as compared to the level of adult minimum wages as well as to the median wage (i.e., the Kaitz index).
We complement these data with variables on the employment, labor force participation, and unemployment rates of 5-year age interval categories – all derived from the official OECD database. We distinguish between countries without minimum wages, countries with uniform minimum wages for all age groups, and countries with separate youth and adult minimum wages.
Our results indicate that the relative employment rates of young individuals below the age of 25 – as compared to the older workers – in countries with youth minimum wages are close to those in countries without minimum wages at all.
Turning to the smaller sample of countries with minimum wages, increases in the level of (youth) minimum wages exert a substantial negative impact on the employment rate for young individuals.
JEL Classification: J21, J23, J31
Full text (PDF 18pp)
Abstract
This paper performs a cross-country level analysis on the impact of the level of specific youth minimum wages on the labor market performance of young individuals. We use information on the use and level of youth minimum wages, as compared to the level of adult minimum wages as well as to the median wage (i.e., the Kaitz index).
We complement these data with variables on the employment, labor force participation, and unemployment rates of 5-year age interval categories – all derived from the official OECD database. We distinguish between countries without minimum wages, countries with uniform minimum wages for all age groups, and countries with separate youth and adult minimum wages.
Our results indicate that the relative employment rates of young individuals below the age of 25 – as compared to the older workers – in countries with youth minimum wages are close to those in countries without minimum wages at all.
Turning to the smaller sample of countries with minimum wages, increases in the level of (youth) minimum wages exert a substantial negative impact on the employment rate for young individuals.
JEL Classification: J21, J23, J31
Full text (PDF 18pp)
Friday, 2 February 2018
Immigration in the era of automation
a column by Gaetano Basso, Giovanni Peri and Ahmed Rahman for VOX: CEPR’s Policy Portal
The US and Europe have both seen wage polarisation in the last three decades, in parallel with increasing technical automation. This column analyses the impact of immigration on this wage divergence via its effect on the labour supply side. It finds that immigration partially reverses natives’ polarisation of employment opportunities and wages by expanding aggregate demand and allowing natives to move to better paying occupations. Policies to reduce low-skilled migration with the aim of favouring native middle-class labour market opportunities may in fact do the opposite.
Continue reading
The US and Europe have both seen wage polarisation in the last three decades, in parallel with increasing technical automation. This column analyses the impact of immigration on this wage divergence via its effect on the labour supply side. It finds that immigration partially reverses natives’ polarisation of employment opportunities and wages by expanding aggregate demand and allowing natives to move to better paying occupations. Policies to reduce low-skilled migration with the aim of favouring native middle-class labour market opportunities may in fact do the opposite.
Continue reading
Saturday, 6 January 2018
Responsiveness of wives’ labour supply to husbands’ job loss
a column by Julia Bredtmann, Sebastian Otten and Christian Rulff for VOX: CEPR’s Policy Portal
Little is known about how unemployment shocks are absorbed within the household. This column uses longitudinal micro data for 28 European countries to investigate the effect of husbands’ job loss on wives’ labour supply. Overall, there is evidence that women increase their labour supply in response to their husband losing a job. However, the response varies over both the business cycle and across different welfare regimes.
Continue reading
Little is known about how unemployment shocks are absorbed within the household. This column uses longitudinal micro data for 28 European countries to investigate the effect of husbands’ job loss on wives’ labour supply. Overall, there is evidence that women increase their labour supply in response to their husband losing a job. However, the response varies over both the business cycle and across different welfare regimes.
Continue reading
Friday, 17 February 2017
The impact of acute health shocks on the labour supply of older workers: Evidence from sixteen European countries
an article by Elisabetta Trevisan (University of Padua, Italy and Netspar, Tilburg, The Netherlands) and Francesca Zantomio (Ca' Foscari University Venice, Italy) published in Labour Economics
Volume 43 (December 2016)
Highlights
We investigate the consequences of experiencing an acute health shock, namely the first onset of myocardial infarction, stroke or cancer, on the labour supply of older workers in Europe. Despite its policy relevance to social security sustainability, the question has not yet been empirically addressed in the European context.
We combine data from the English Longitudinal Study of Ageing and the Survey of Health, Ageing and Retirement in Europe and cover sixteen European countries, representative of different institutional settings, in the years spanning from 2002 to 2013.
The empirical strategy builds on the availability of an extremely rich set of health and labour market information as well as of panel data.
To remove the potential confounding bias, a selection on observables strategy is adopted, while the longitudinal dimension of data allows controlling for time invariant unobservables. Implementation is based on a combination of stratification and propensity score matching methods.
Results reveal that experiencing an acute health shock on average doubles the risk of an older worker leaving the labour market, and is accompanied by a deterioration in physical functioning and mental health, as well as by a reduction in perceived life expectancy.
Men’s labour market response appears driven by the onset of impairment acting as a barrier to work. In the case of women, preferences for leisure and financial constraints seem to play a prominent role. Heterogeneity in behavioural responses across countries – with the largest labour supply reductions observed in the Nordic and Eastern countries, and England – are suggestive of a relevant role played by social security generosity.
JEL Classification: J22, J18, I10, C14
Highlights
- Experiencing a first acute health shock doubles the risk of labour market exit.
- Conditional on remaining in work, men increase hours worked, women do not.
- Stroke causes the largest LMP response, followed by cancer, and then infarction.
- Men’s response is driven by impairment, women’s by preferences and finances.
- Access to disability benefits drives cross-country heterogeneity in LMP response.
We investigate the consequences of experiencing an acute health shock, namely the first onset of myocardial infarction, stroke or cancer, on the labour supply of older workers in Europe. Despite its policy relevance to social security sustainability, the question has not yet been empirically addressed in the European context.
We combine data from the English Longitudinal Study of Ageing and the Survey of Health, Ageing and Retirement in Europe and cover sixteen European countries, representative of different institutional settings, in the years spanning from 2002 to 2013.
The empirical strategy builds on the availability of an extremely rich set of health and labour market information as well as of panel data.
To remove the potential confounding bias, a selection on observables strategy is adopted, while the longitudinal dimension of data allows controlling for time invariant unobservables. Implementation is based on a combination of stratification and propensity score matching methods.
Results reveal that experiencing an acute health shock on average doubles the risk of an older worker leaving the labour market, and is accompanied by a deterioration in physical functioning and mental health, as well as by a reduction in perceived life expectancy.
Men’s labour market response appears driven by the onset of impairment acting as a barrier to work. In the case of women, preferences for leisure and financial constraints seem to play a prominent role. Heterogeneity in behavioural responses across countries – with the largest labour supply reductions observed in the Nordic and Eastern countries, and England – are suggestive of a relevant role played by social security generosity.
JEL Classification: J22, J18, I10, C14
Friday, 3 February 2017
Free childcare and parents’ labour supply: is more better?
IFS Working Paper (W16/22)
Authors: Mike Brewer (Institute for Social and Economic Research, University of Essex and Institute for Fiscal Studies), Sarah Cattan (Institute for Fiscal Studies), Claire Crawford (University of Warwick and Institute for Fiscal Studies) and Birgitta Rabe (Institute for Social and Economic Research, University of Essex)
Abstract
Despite the introduction of childcare subsidies in many countries, the cost of childcare is still thought to hinder parental employment.
Many governments are considering increasing the generosity of their childcare subsidies, but the a priori effect of such a policy is ambiguous and little is known empirically about its likely impact.
This paper compares the effects on parents’ labour supply of offering free part-time childcare and of expanding this offer to the whole school day in England using an empirical strategy which, unlike previous studies, exploits both date of birth discontinuities and panel data.
We find that the provision of free part-time childcare has little, if any, causal impact on the labour market outcomes of mothers or fathers.
Increasing the number of hours of free childcare to cover a full school day, however, leads to significant increases in the labour supply of mothers whose youngest child is eligible, with impacts emerging immediately and increasing over the months following entitlement.
JEL classification: I21, J22
Full text (PDF 43pp)
Authors: Mike Brewer (Institute for Social and Economic Research, University of Essex and Institute for Fiscal Studies), Sarah Cattan (Institute for Fiscal Studies), Claire Crawford (University of Warwick and Institute for Fiscal Studies) and Birgitta Rabe (Institute for Social and Economic Research, University of Essex)
Abstract
Despite the introduction of childcare subsidies in many countries, the cost of childcare is still thought to hinder parental employment.
Many governments are considering increasing the generosity of their childcare subsidies, but the a priori effect of such a policy is ambiguous and little is known empirically about its likely impact.
This paper compares the effects on parents’ labour supply of offering free part-time childcare and of expanding this offer to the whole school day in England using an empirical strategy which, unlike previous studies, exploits both date of birth discontinuities and panel data.
We find that the provision of free part-time childcare has little, if any, causal impact on the labour market outcomes of mothers or fathers.
Increasing the number of hours of free childcare to cover a full school day, however, leads to significant increases in the labour supply of mothers whose youngest child is eligible, with impacts emerging immediately and increasing over the months following entitlement.
JEL classification: I21, J22
Wednesday, 18 January 2017
The Impact of Immigration: Why Do Studies Reach Such Different Results?
Christian Dustmann and Uta Schönberg (University College London, UK) and Jan Stuhler (Universidad
Carlos III de Madrid, Spain) Dustmann, Schönberg and Stuhler also at Centre for Research and Analysis of Migration (CReAM) at
UCL) published in Journal of Economic Perspectives Volume 30 Number 4 (Fall 2016)
Abstract
We classify the empirical literature on the wage impact of immigration into three groups, where studies in the first two groups estimate different relative effects, and studies in the third group estimate the total effect of immigration on wages.
We interpret the estimates obtained from the different approaches through the lens of the canonical model to demonstrate that they are not comparable. We then relax two key assumptions in this literature, allowing for inelastic and heterogeneous labor supply elasticities of natives and the "downgrading" of immigrants.
"Downgrading" occurs when the position of immigrants in the labor market is systematically lower than the position of natives with the same observed education and experience levels. Downgrading means that immigrants receive lower returns to the same measured skills than natives when these skills are acquired in their country of origin.
We show that heterogeneous labor supply elasticities, if ignored, may complicate the interpretation of wage estimates, and particularly the interpretation of relative wage effects. Moreover, downgrading may lead to biased estimates in those approaches that estimate relative effects of immigration, but not in approaches that estimate total effects.
We conclude that empirical models that estimate total effects not only answer important policy questions, but are also more robust to alternative assumptions than models that estimate relative effects.
JEL Classification: I26 J15 J22 J24 J31 J61
Full text (PDF)
Abstract
We classify the empirical literature on the wage impact of immigration into three groups, where studies in the first two groups estimate different relative effects, and studies in the third group estimate the total effect of immigration on wages.
We interpret the estimates obtained from the different approaches through the lens of the canonical model to demonstrate that they are not comparable. We then relax two key assumptions in this literature, allowing for inelastic and heterogeneous labor supply elasticities of natives and the "downgrading" of immigrants.
"Downgrading" occurs when the position of immigrants in the labor market is systematically lower than the position of natives with the same observed education and experience levels. Downgrading means that immigrants receive lower returns to the same measured skills than natives when these skills are acquired in their country of origin.
We show that heterogeneous labor supply elasticities, if ignored, may complicate the interpretation of wage estimates, and particularly the interpretation of relative wage effects. Moreover, downgrading may lead to biased estimates in those approaches that estimate relative effects of immigration, but not in approaches that estimate total effects.
We conclude that empirical models that estimate total effects not only answer important policy questions, but are also more robust to alternative assumptions than models that estimate relative effects.
JEL Classification: I26 J15 J22 J24 J31 J61
Full text (PDF)
Wednesday, 30 November 2016
Does temporal and locational flexibility of work increase the supply of working hours? Evidence from the Netherlands
an article by Daniel Possenriede and Wolter H.J. Hassink (Utrecht University School of Economics and IZA) and Janneke Plantenga (Utrecht University School of Economics) published in IZA Journal of Labor Policy Volume 5 2016 Article 16
Abstract
In recent years, many employees have gained more control over temporal and locational aspects of their work via a variety of flexible work arrangements, such as flexi-time and telehomework. This temporal and locational flexibility of work (TLF) is often seen as a means to facilitate the combination of work and private life.
As such it has been recommended as a policy to increase the average number of working hours of part-time workers. To the best of our knowledge, the effectiveness of this policy instrument has not been tested empirically yet.
We therefore analyse whether flexi-time and telehomework arrangements increase the number of actual, contracted, and preferred working hours. Based on Dutch household panel data, our results indicate that the link between TLF and working hours is quite weak.
Telehomework is associated with moderate increases in actual hours, but not in contracted or preferred hours. Flexi-time generally does not seem to be associated with an increase in hours worked. Despite positive effects on job satisfaction and working time fit, we do not find any convincing evidence of a positive effect of TLF on labour supply.
JEL classification: J22, J32, M52, M54
Full text (HTML)
Abstract
In recent years, many employees have gained more control over temporal and locational aspects of their work via a variety of flexible work arrangements, such as flexi-time and telehomework. This temporal and locational flexibility of work (TLF) is often seen as a means to facilitate the combination of work and private life.
As such it has been recommended as a policy to increase the average number of working hours of part-time workers. To the best of our knowledge, the effectiveness of this policy instrument has not been tested empirically yet.
We therefore analyse whether flexi-time and telehomework arrangements increase the number of actual, contracted, and preferred working hours. Based on Dutch household panel data, our results indicate that the link between TLF and working hours is quite weak.
Telehomework is associated with moderate increases in actual hours, but not in contracted or preferred hours. Flexi-time generally does not seem to be associated with an increase in hours worked. Despite positive effects on job satisfaction and working time fit, we do not find any convincing evidence of a positive effect of TLF on labour supply.
JEL classification: J22, J32, M52, M54
Full text (HTML)
Tuesday, 6 August 2013
Underemployment and the productivity paradox
via The Work Foundation by Ian Brinkley
The new blog from Danny Blanchflower is a timely reminder that the unemployment numbers do not tell the full story when it comes to measuring labour supply and demand.
Together with Jonathon Portes, Professor Blanchflower has estimated the number of hours that people would like to work and the number of hours that employers are willing to pay for. This shows that there is much more “slack” in the labour market than the unemployment rate indicates.
Continue reading includes links to lots of useful information
The new blog from Danny Blanchflower is a timely reminder that the unemployment numbers do not tell the full story when it comes to measuring labour supply and demand.
Together with Jonathon Portes, Professor Blanchflower has estimated the number of hours that people would like to work and the number of hours that employers are willing to pay for. This shows that there is much more “slack” in the labour market than the unemployment rate indicates.
Continue reading includes links to lots of useful information
Tuesday, 9 April 2013
Incentives, shocks or signals: labour supply effects of increasing the female state pension age in the UK
IFS Working Paper W13/03 by Jonathan Cribb and Gemma Tetlow (Institute for Fiscal Studies and University College London) and Carl Emmerson (Institute for Fiscal Studies)
Abstract
In 1995, the UK government legislated to increase the earliest age at which women could claim a state pension from 60 to 65 between April 2010 and March 2020.
This paper uses data from the first two years of this change coming into effect to estimate the impact of increasing the state pension age from 60 to 61 on the employment of women and their partners using a difference-in-differences methodology. Our methodology controls in a flexible way for underlying differences between cohorts born at different times.
We find that women’s employment rates at age 60 increased by 7.3 percentage points when the state pension age was increased to 61 and their probability of unemployment increased by 1.3 percentage points. The employment rates of the male partners also increased by 4.2 percentage points.
The magnitude of these effects, and the results from subgroup analysis, suggest they are more likely explained by the increase in the state pension age being a shock or through it having a signalling effect rather than them being due to either credit constraints or the effect of individuals responding to changes in their financial incentives to work.
Taken together, our results suggest that the fiscal strengthening arising from a one-year increase in the female state pension age is 10% higher than a costing based on no behavioural change, due to additional direct and indirect tax revenues arising from increased earnings.
JEL classification: H55, J21, J26
Full text (PDF 31pp)
Abstract
In 1995, the UK government legislated to increase the earliest age at which women could claim a state pension from 60 to 65 between April 2010 and March 2020.
This paper uses data from the first two years of this change coming into effect to estimate the impact of increasing the state pension age from 60 to 61 on the employment of women and their partners using a difference-in-differences methodology. Our methodology controls in a flexible way for underlying differences between cohorts born at different times.
We find that women’s employment rates at age 60 increased by 7.3 percentage points when the state pension age was increased to 61 and their probability of unemployment increased by 1.3 percentage points. The employment rates of the male partners also increased by 4.2 percentage points.
The magnitude of these effects, and the results from subgroup analysis, suggest they are more likely explained by the increase in the state pension age being a shock or through it having a signalling effect rather than them being due to either credit constraints or the effect of individuals responding to changes in their financial incentives to work.
Taken together, our results suggest that the fiscal strengthening arising from a one-year increase in the female state pension age is 10% higher than a costing based on no behavioural change, due to additional direct and indirect tax revenues arising from increased earnings.
JEL classification: H55, J21, J26
Full text (PDF 31pp)
Monday, 4 March 2013
The labour supply effects of a partial cash-out of in-kind transfers to single mothers
an article by Paul Bingley (Danish National Centre for Social Research, Copenhagen) and Ian Walker (Lancaster University Management School, UK) published in IZA Journal of Labor Economics Volume 2 Issue 1 (2013)
Abstract
We estimate a model of labour supply and participation in multiple cash and in-kind welfare programmes. The modelling exploits a reform that affected UK single mothers.
In-work cash entitlements increased under this reform but eligibility to in-kind child nutrition programmes was lost for some households. When we allow for differences in the costs associated with each welfare programme we find that in-work cash and in-work in-kind transfers both have large positive labour supply effects.
There is, however, a utility loss from programme participation which is estimated to be larger for the cash programme than for the child nutrition programmes. Our findings imply that the partial cash out of the in-kind transfers reduced labour supply and suggest that there may be a place in policy portfolios for in-kind programmes despite their “inefficiency”.
JEL Classifications: C31, C35, D12, J22
Full text (PDF 28pp + charts)
Abstract
We estimate a model of labour supply and participation in multiple cash and in-kind welfare programmes. The modelling exploits a reform that affected UK single mothers.
In-work cash entitlements increased under this reform but eligibility to in-kind child nutrition programmes was lost for some households. When we allow for differences in the costs associated with each welfare programme we find that in-work cash and in-work in-kind transfers both have large positive labour supply effects.
There is, however, a utility loss from programme participation which is estimated to be larger for the cash programme than for the child nutrition programmes. Our findings imply that the partial cash out of the in-kind transfers reduced labour supply and suggest that there may be a place in policy portfolios for in-kind programmes despite their “inefficiency”.
JEL Classifications: C31, C35, D12, J22
Full text (PDF 28pp + charts)
Tuesday, 6 November 2012
Effects of Temporary In-Work Benefits for Welfare Recipients: Examination of the Australian Working Credit Programme
an article by Roger Wilkins (Melbourne Institute of Applied Economic and Social Research, University of Melbourne) and Andrew Leigh (Parliament of Australia) published in Fiscal Studies
Volume 33 Issue 3 (September 2012)
Abstract
We investigate the impact of ‘Working Credit’, a nationally-implemented programme which created increased incentives for welfare recipients to undertake temporary work.
Highlighting the difficulties in identifying programme effects in the absence of a randomised controlled trial or a natural experiment, we produce estimates of impacts under alternative identifying assumptions and also undertake various robustness checks.
Unconditional and regression-adjusted difference-in-difference estimates suggest that the introduction of the Working Credit programme increased employment rates, earnings and exits for those on income support, but matching methods and various robustness checks provide conflicting evidence on the impact on movements from welfare to work for unemployment benefit recipients.
Moreover, estimated effects on earnings while on benefits are sensitive to identifying assumptions. Notwithstanding our inability to conclusively identify causal effects of the programme, we note that our findings are broadly consistent with the incentive effects of the programme, with recipients making use of the credits to increase earnings while on benefits, but not increasing movements off welfare.
JEL classifications: H24, J08, J22
Abstract
We investigate the impact of ‘Working Credit’, a nationally-implemented programme which created increased incentives for welfare recipients to undertake temporary work.
Highlighting the difficulties in identifying programme effects in the absence of a randomised controlled trial or a natural experiment, we produce estimates of impacts under alternative identifying assumptions and also undertake various robustness checks.
Unconditional and regression-adjusted difference-in-difference estimates suggest that the introduction of the Working Credit programme increased employment rates, earnings and exits for those on income support, but matching methods and various robustness checks provide conflicting evidence on the impact on movements from welfare to work for unemployment benefit recipients.
Moreover, estimated effects on earnings while on benefits are sensitive to identifying assumptions. Notwithstanding our inability to conclusively identify causal effects of the programme, we note that our findings are broadly consistent with the incentive effects of the programme, with recipients making use of the credits to increase earnings while on benefits, but not increasing movements off welfare.
JEL classifications: H24, J08, J22
Friday, 17 August 2012
Educational qualifications mismatch in Europe: Is it demand or supply driven?
an working paper by Emanuela Ghignoni and Alina Verashchagina published by the Sapienza University of Rome
Abstract
Most papers dealing with individual overeducation risks focus on labour supply characteristics and workers behaviour.
On the other hand, only few studies consider labour demand characteristics and technological change.
In this paper we analyse the influence of both demand and supply factors on educational mismatch in a set of ten European countries. Our hypothesis, confirmed by results obtained using ordered probit model with sample selection, is that demand factors generally play a major role in reducing educational mismatch in technologically more advanced countries, whereas supply factors are more important in countries that are lagging behind in the international division of labour.
At the same time, important cross-country and gender differences have been identified in the way the demand/supply factors operate. All this calls for the fine-tuning of policies aimed to tackle the problem of educational mismatch.
Apparently, EPL does not appear either to hinder technological development, nor increase overeducation.
Full text (PDF 45pp)
JEL classification: I2, J24, C35
Abstract
Most papers dealing with individual overeducation risks focus on labour supply characteristics and workers behaviour.
On the other hand, only few studies consider labour demand characteristics and technological change.
In this paper we analyse the influence of both demand and supply factors on educational mismatch in a set of ten European countries. Our hypothesis, confirmed by results obtained using ordered probit model with sample selection, is that demand factors generally play a major role in reducing educational mismatch in technologically more advanced countries, whereas supply factors are more important in countries that are lagging behind in the international division of labour.
At the same time, important cross-country and gender differences have been identified in the way the demand/supply factors operate. All this calls for the fine-tuning of policies aimed to tackle the problem of educational mismatch.
Apparently, EPL does not appear either to hinder technological development, nor increase overeducation.
Full text (PDF 45pp)
JEL classification: I2, J24, C35
Monday, 13 February 2012
Parental Leave and Mothers’ Careers: The Relative Importance of Job Protection and Cash Benefits
a University of Zurich Working Paper (no 42) by Rafael Lalive (University of Lausanne and CEPR), Analía Schlosser (Tel Aviv University), Andreas Steinhauer (University of Zurich) and Josef Zweimüller (University of Zurich and CEPR) published October 2011
Abstract
Parental leave regulations in most OECD countries have two key policy instruments: job protection and cash benefits. This paper studies how mothers’ return to work behavior and labour market outcomes are affected by alternative mixes of these key policy parameters. Exploiting a series of major parental leave policy changes in Austria, we find that longer cash benefits lead to a significant delay in return to work and that the magnitude of this effect depends on the relative length of job protection and cash benefits. However, despite their impact on time on leave, we do not find a significant effect on mothers’ labor market outcomes in the medium run, neither of benefit duration nor of job-protection duration. To understand the relative importance (and interaction) of the two policy instruments in shaping mothers’ return to work behaviour, we set up a non-stationary job search model in which cash benefits and job protection determine decisions of when to return to work and whether or not to return to the pre-birth employer. Despite its lean structure, the model does surprisingly well in matching empirically observed return to work profiles. The simulation of alternative counterfactual regimes shows that a policy that combines both job protection and benefits payments succeeds to induce mothers to spend some time with the child after birth without jeopardizing their medium run labor market attachment.
Full text (PDF 51pp)
Hazel’s comment:
That link direct in to the PDF took some finding!!
Abstract
Parental leave regulations in most OECD countries have two key policy instruments: job protection and cash benefits. This paper studies how mothers’ return to work behavior and labour market outcomes are affected by alternative mixes of these key policy parameters. Exploiting a series of major parental leave policy changes in Austria, we find that longer cash benefits lead to a significant delay in return to work and that the magnitude of this effect depends on the relative length of job protection and cash benefits. However, despite their impact on time on leave, we do not find a significant effect on mothers’ labor market outcomes in the medium run, neither of benefit duration nor of job-protection duration. To understand the relative importance (and interaction) of the two policy instruments in shaping mothers’ return to work behaviour, we set up a non-stationary job search model in which cash benefits and job protection determine decisions of when to return to work and whether or not to return to the pre-birth employer. Despite its lean structure, the model does surprisingly well in matching empirically observed return to work profiles. The simulation of alternative counterfactual regimes shows that a policy that combines both job protection and benefits payments succeeds to induce mothers to spend some time with the child after birth without jeopardizing their medium run labor market attachment.
Full text (PDF 51pp)
Hazel’s comment:
That link direct in to the PDF took some finding!!
Sunday, 28 August 2011
The impact of a time-limited, targeted in-work benefit in the medium-term:…
an evaluation of in work credit
IFS (Institute for Fiscal Studies) Working Paper W11/14 by Mike Brewer (Institute for Social and Economic Research, University of Essex and IFS), James Browne and Haroon Chowdry (IFS) and Claire Crawford (Institute of Education, University of London and IFS)
Abstract
Conventional in-work benefits or tax credits are now well established as a policy instrument for increasing labour supply and tackling poverty. A different sort of in-work credit is one where the payments are time-limited, conditional on previous receipt of welfare, and, perhaps, not means-tested. Such a design is cheaper, and perhaps better targeted, but potentially less effective. Using administrative data, this paper evaluates one such policy for lone parents in the UK which was piloted in around one third of the country. It finds that the policy did increase flows off welfare and into work, and that these positive effects did not diminish after recipients reached the 12 month time-limit for receiving the supplement. Most of the impact arose by speeding up welfare off-flows: the job retention of programme recipients was good, but this cannot be attributed to the programme itself.
This paper is based on research commissioned by the UK Department for Work and Pensions (DWP).
Full text (PDF 39pp)
IFS (Institute for Fiscal Studies) Working Paper W11/14 by Mike Brewer (Institute for Social and Economic Research, University of Essex and IFS), James Browne and Haroon Chowdry (IFS) and Claire Crawford (Institute of Education, University of London and IFS)
Abstract
Conventional in-work benefits or tax credits are now well established as a policy instrument for increasing labour supply and tackling poverty. A different sort of in-work credit is one where the payments are time-limited, conditional on previous receipt of welfare, and, perhaps, not means-tested. Such a design is cheaper, and perhaps better targeted, but potentially less effective. Using administrative data, this paper evaluates one such policy for lone parents in the UK which was piloted in around one third of the country. It finds that the policy did increase flows off welfare and into work, and that these positive effects did not diminish after recipients reached the 12 month time-limit for receiving the supplement. Most of the impact arose by speeding up welfare off-flows: the job retention of programme recipients was good, but this cannot be attributed to the programme itself.
This paper is based on research commissioned by the UK Department for Work and Pensions (DWP).
Full text (PDF 39pp)
Wednesday, 27 July 2011
Population ageing and labour markets
an article by Anna Cristina D'Addio, Mark Keese and Edward Whitehouse (Directorate for Employment, Labour and Social Affairs, OECD) published in Oxford Review of Economic Policy (Volume 26 Number 4 (Winter 2010)
Abstract
In the face of rapid population ageing, the long-run fall in effective retirement ages in most OECD countries needs to be reversed. There are some positive signs that this is beginning to happen, but early exit from the labour force, i.e. well before official old-age pension ages, still remains a very common phenomenon in OECD countries. In this paper we first compare recent trends in the labour situation of older workers across OECD countries. This is followed by a discussion of supply-side and demand-side factors that have been driving these trends. In particular, new evidence is presented on incentives to retire that are embedded in pension systems. We conclude that recent reforms in most countries in this area are working in the direction of encouraging later retirement, although in a few countries there are still substantial incentives to stop working early. We then examine to what extent there are barriers on the demand side which may also be discouraging work at an older age such as age discrimination, seniority rules in wage setting, low training participation and employment protection rules. We conclude that countries have also begun to tackle these barriers as well. Nevertheless, while considerable pension reform has undoubtedly strengthened incentives to continue working at an older age, further action is still required on the demand side to ensure that those older workers who wish to work longer can do so.
Abstract
In the face of rapid population ageing, the long-run fall in effective retirement ages in most OECD countries needs to be reversed. There are some positive signs that this is beginning to happen, but early exit from the labour force, i.e. well before official old-age pension ages, still remains a very common phenomenon in OECD countries. In this paper we first compare recent trends in the labour situation of older workers across OECD countries. This is followed by a discussion of supply-side and demand-side factors that have been driving these trends. In particular, new evidence is presented on incentives to retire that are embedded in pension systems. We conclude that recent reforms in most countries in this area are working in the direction of encouraging later retirement, although in a few countries there are still substantial incentives to stop working early. We then examine to what extent there are barriers on the demand side which may also be discouraging work at an older age such as age discrimination, seniority rules in wage setting, low training participation and employment protection rules. We conclude that countries have also begun to tackle these barriers as well. Nevertheless, while considerable pension reform has undoubtedly strengthened incentives to continue working at an older age, further action is still required on the demand side to ensure that those older workers who wish to work longer can do so.
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