an article by Richard Dorsett (National Institute of Economic and Social Research) published in Labour Economics Volume 31 (December 2014,)
Abstract
A recent experimental programme for unemployed welfare recipients in the UK found that temporary earnings supplements combined with post-employment services led to a sustained rise in employment.
This paper examines whether this was due to increases in employment entry or to reductions in employment exit. Using a hazard rate model, we find a significant effect on initial employment entry but not on subsequent transitions.
The results also show that the length of a completed unemployment spell has a negative effect on the hazard of exit from the next unemployment spell. While the direct effect of the programme is to shorten the initial unemployment spell, an indirect effect arises due to this lagged duration dependence.
JEL codes: C31, C41, J64, J68
Showing posts with label unobserved_heterogeneity. Show all posts
Showing posts with label unobserved_heterogeneity. Show all posts
Wednesday, 10 June 2015
Tuesday, 12 March 2013
Never give up? The persistence of welfare participation in Sweden
an article by Thomas Andrén (The Swedish Confederation of Professional Associations and IZA, Sweden ) and Daniela Andrén (Örebro University School of Business and CELSI, Sweden) published in IZA Journal of European Labor Studies Volume 2 Number 1 (2013)
Abstract
Long-term social assistance dependency is a growing concern in Sweden and other European countries.
In order for policy makers to design effective welfare reforms it is important to know how strong the state dependence associated with social assistance is in the population and to what extent it varies with different factors, and among different groups.
We estimate the effect of the state dependence in social assistance for Sweden during the 1990s, for both Swedish-born and foreign-born.
Using a dynamic discrete choice model that controls for unobserved heterogeneity and the initial conditions problem, we found that the effect is three times larger for foreign-born compared to Swedish-born.
However, when the effect is distributed over time, it decreases and loses significance after three years for both groups.
This suggests that resources should be allocated for programmes that connect working-age recipients with the labour market as early as possible.
JEL classification: I30, I38, J18
Full text (PDF 24pp)
Hazel’s comment:
Deep sigh! Back in the 1970s employment advisers were very well aware that the best, i.e. most effective from everybody’s viewpoint, time to get an unemployed person into another job was within four to six weeks of unemployment commencing. Where did the government pour most of its money? Into helping the long-term unemployed.
Very suppressed rude words going through my head because the flippin’ government of whichever political complexion has been doing it ever since!!!
Abstract
Long-term social assistance dependency is a growing concern in Sweden and other European countries.
In order for policy makers to design effective welfare reforms it is important to know how strong the state dependence associated with social assistance is in the population and to what extent it varies with different factors, and among different groups.
We estimate the effect of the state dependence in social assistance for Sweden during the 1990s, for both Swedish-born and foreign-born.
Using a dynamic discrete choice model that controls for unobserved heterogeneity and the initial conditions problem, we found that the effect is three times larger for foreign-born compared to Swedish-born.
However, when the effect is distributed over time, it decreases and loses significance after three years for both groups.
This suggests that resources should be allocated for programmes that connect working-age recipients with the labour market as early as possible.
JEL classification: I30, I38, J18
Full text (PDF 24pp)
Hazel’s comment:
Deep sigh! Back in the 1970s employment advisers were very well aware that the best, i.e. most effective from everybody’s viewpoint, time to get an unemployed person into another job was within four to six weeks of unemployment commencing. Where did the government pour most of its money? Into helping the long-term unemployed.
Very suppressed rude words going through my head because the flippin’ government of whichever political complexion has been doing it ever since!!!
Monday, 25 February 2013
Retirement incentives, individual heterogeneity and labor transitions of employed and unemployed workers
an article by J. Ignacio García-Pérez and Alfonso R. Sánchez-Martín (Universidad Pablo de Olavide, Spain) and Sergi Jiménez-Martín (Universitat Pompeu Fabra, Barcelona GSE, Spain and FEDEA, Spain) published in Labour Economics
Volume 20 (January 2013)
Abstract
In this paper, we analyse the sensitivity of the labour market decisions of workers close to retirement with respect to the incentives created by public regulations. We improve upon the extensive prior literature on the effect of pension incentives on retirement by jointly modelling the transitions between employment, unemployment and retirement, paying special attention to the transition from unemployment to retirement (which is particularly important in Spain and other European countries, and whose relevance is increasing as a result of the recent economic crisis).
Using administrative data, we find that, when properly defined, economic incentives have a strong impact on labour market decisions.
Unemployment regulations are shown to be particularly influential for retirement behaviour, along with the more traditional determinants linked to the pension system. Pension variables also have a major bearing on workers’ re-employment decisions. The quantitative impact of the incentives, however, is greatly affected by the existence of unobserved heterogeneity among workers. Its omission leads to sizeable biases in the assessment of the sensitivity to economic incentives.
We confirm the importance of this potential problem in the case of the change in early retirement provisions legislated in Spain in 2002 (which we analyse with a difference-in-difference approach).
JEL classification H55, J14, J26, J64
Full text (PDF 15pp)
Abstract
In this paper, we analyse the sensitivity of the labour market decisions of workers close to retirement with respect to the incentives created by public regulations. We improve upon the extensive prior literature on the effect of pension incentives on retirement by jointly modelling the transitions between employment, unemployment and retirement, paying special attention to the transition from unemployment to retirement (which is particularly important in Spain and other European countries, and whose relevance is increasing as a result of the recent economic crisis).
Using administrative data, we find that, when properly defined, economic incentives have a strong impact on labour market decisions.
Unemployment regulations are shown to be particularly influential for retirement behaviour, along with the more traditional determinants linked to the pension system. Pension variables also have a major bearing on workers’ re-employment decisions. The quantitative impact of the incentives, however, is greatly affected by the existence of unobserved heterogeneity among workers. Its omission leads to sizeable biases in the assessment of the sensitivity to economic incentives.
We confirm the importance of this potential problem in the case of the change in early retirement provisions legislated in Spain in 2002 (which we analyse with a difference-in-difference approach).
JEL classification H55, J14, J26, J64
Full text (PDF 15pp)
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