Average Duration Of Unemployment Research Articles

Employer Credit Checks: Poverty Traps Versus Matching Efficiency

Abstract We develop a framework to understand pre-employment credit screening as a signal from credit markets that alleviates adverse selection in labour markets. In our theory, people differ in both their propensity to default on debt and the profits they create for firms that employ them; in our calibrated economy, highly productive workers have a low default probability. This leads firms to create more jobs for those with good credit, which creates a poverty trap: an unemployed worker with poor credit has a low job finding rate, but cannot improve her credit without a job. This manifests as an endogenous loss in present-discounted wages that is typically taken as exogenous in quantitative models of consumer default. Banning employer credit checks eliminates the poverty trap, but pools job seekers and reduces matching efficiency: average unemployment duration rises by 2 days for high productivity workers and falls by 13 days for low-productivity workers.

Employer Credit Checks: Poverty Traps versus Matching Efficiency

We develop a framework to understand pre-employment credit screening through adverse selection in labor and credit markets. Workers differ in an unobservable characteristic that induces a positive correlation between labor productivity and repayment rates in credit markets. Firms therefore prefer to hire workers with good credit because it correlates with high productivity. A poverty trap may arise, in which an unemployed worker with poor credit has a low job finding rate, but cannot improve her credit without a job. In our calibrated economy, this manifests as a large and persistent wage loss from default, equivalent to 2.3% per month over ten years. Banning employer credit checks eliminates the poverty trap, but pools job seekers and reduces matching efficiency: average unemployment duration rises by 13% for the most productive workers after employers are banned from using credit histories to screen potential hires.

U.S. Unemployment insurance through the Covid-19 crisis

The Unemployment Insurance (UI) system in the United States has played a decisive lifeline role in effectively mitigating the economic and social impact of the Covid-19 pandemic, which prompted the largest expansion of UI programs in history, one that is unprecedented in scope, scale and cost. However, the crisis has once again exposed some well-known challenges of the program, perhaps best epitomized by the steady decline since the 1980s of both the recipiency rate and the wage replacement rate, which is partly related to the UI system's funding structure. As a result, on the eve of the pandemic less than one in three unemployed workers used to collect UI benefits – of lower amounts and often for shorter periods of time than before – despite that the average duration of unemployment had almost doubled in the aftermath of the Great Recession. The pandemic has also laid bare additional shortcomings – most notably in the effectiveness of the UI delivery infrastructure to provide timely and accurate payments – which have prompted further calls for modernizing the UI system. The objective of this paper is threefold: first, after a brief description of the main structural characteristics of the UI system, it compares the role played by UI in mitigating the impact of the 2008–09 Great Recession and the 2020 Covid-19 pandemic; second, it reviews the empirical evidence from the pandemic on potential demand-side (countercyclical stabilization) and supply-side (job-search disincentives) effects of emergency extensions of UI programs. Finally, it discusses the main lessons that the expansion of UI programs to respond to the pandemic can offer to inform – and enrich – the debate on whether and how to reform the UI system. The experience with the UI system provides fundamental lessons that can usefully inform the debate on whether and how to introduce – for example in Europe – a common unemployment insurance scheme for macroeconomic stabilization.

Modeling unemployment duration, determinants and insurance premium pricing of Malaysia: insights from an upper middle-income developing country.

This paper investigates the behavior and determinants of unemployment in Malaysia, an upper middle-income country with relatively low unemployment but rising labor market mismatches, and derives a model-based insurance premium pricing schedule that broadens the country's unemployment insurance coverage. The unemployment profile is best fitted with Burr distribution, and using survival analysis, the average unemployment duration is found to be the highest for the youths and it decreases gradually after age 20. The results of the Cox proportional hazards model show that age, gender, and education are significant explanatory variables of unemployment. While all age groups are statistically significant in explaining unemployment, the youngest cohort has the least likelihood of being hired, while the older groups are found to have a lower hazard ratio that could be attributed to work experience. The significant gender effect is also characterized by the female workforce taking a longer time to exit unemployment as shown by its lower hazard rate than male workers. Similar to findings for other countries, those with higher education have the highest chance of gaining employment. Fitting the estimated parameters to a standard unemployment insurance premium pricing framework based on the Capital Asset Pricing Model (CAPM), the analysis shows that the coverage of the existing national unemployment insurance scheme can be expanded to all income categories at lower premium prices. The widening of the coverage will contribute to the strengthening of the country’s social safety net in addition to reducing inequalities in the post-COVID-19 period.Supplementary InformationThe online version contains supplementary material available at 10.1007/s43546-022-00287-2.

The effects of contract-type mismatch and matching frictions on unemployment duration: evidence for Portugal

ABSTRACT This paper analyses the impact of matching frictions in the Portuguese labour market on individual unemployment hazard rates and unemployment durations. The coexistence of permanent contracts and temporary contracts in the Portuguese (dual) labour-market is akin to a matching friction, with a contract-type mismatch between jobseekers who prefer permanent contracts, whereas firms, in turn, prefer to offer temporary contracts. The paper uses a rich micro dataset which allows to compute a time and space varying contract-type mismatch index, over 86 local labour markets (job-centers of the Portuguese Public Employment System) and five years. Employing discrete time hazard models and a stock-flow matching mechanism, we find that local labour markets with higher contract-type mismatch rates are characterized by lower hazard rates and longer unemployment duration. Improving the desirability of temporary contracts and information about local contract-type mismatch rates may reduce matching frictions and average unemployment duration.

Measuring labor-force participation and the incidence and duration of unemployment

The underlying data from which the U.S. unemployment rate, labor-force participation rate, and duration of unemployment are calculated contain numerous internal contradictions. This paper catalogs these inconsistencies and proposes a unified reconciliation. We find that the usual statistics understate the unemployment rate and the labor-force participation rate by about two percentage points on average and that the bias in the latter has increased over time. The BLS estimate of the average duration of unemployment substantially overstates the true duration of uninterrupted spells of unemployment and misrepresents what happened to average durations during the Great Recession and its recovery.

The Effects of Shortening Potential Benefit Duration: Evidence from Regional Cut-Offs and a Policy Reform

We quantify labour market effects of changes in the potential benefit duration (PBD) in Poland. Individual workers' PBD depends on the county unemployment rate relative to the national average - 12 months of PBD above a cut-off of 125 per cent and 6 months below. This cut-off shifted from 125 to 150 per cent in a 2009 reform. We utilize i) the natural experiment of the reform, and ii) the sharp discontinuity generated by the cut-offs to estimate effects of shortening the PBD. Our administrative data cover unemployment spells for prime age workers during the years 2006-2018. A one-month shorter PBD decreases average benefit duration by 0.5 months and average unemployment duration by 0.4 months. The PBD reduction by six months increased the job finding rate within the first 9 months by 6 percentage points. Using the stock of unemployed per county, we find evidence for positive aggregate employment effects.ment duration by 0.4 months. The PBD reduction by six months increased the job finding rate within the first 9 months by 6 percentage points. Using the stock of unemployed per county, we find evidence for positive market-level employment effects.

Effects of face-to-face counselling on unemployment rate and duration: evidence from a Public Employment Service reform

In a Public Employment Service reform implemented in 2013, sixty Finnish municipalities experienced an involuntary employment office closure. The Government’s objective was to replace traditional face-to-face employment counselling with modern online counselling and simultaneously generate savings in outlays. The reform created natural experiment circumstances that allowed us to estimate the aggregate causal effects of face-to-face counselling and advice. We estimated the effects of the reform on the unemployment rate and the average unemployment duration using municipality-level panel data and various panel data estimators. We found that while the reform had a barely discernible effect on municipal unemployment rates, it increased average unemployment durations by 2–3 weeks. Hence, face-to-face counselling and online counselling are not perfect substitutes in decreasing the length of unemployment spells. Consequently, the fiscal costs of the reform outweigh the fiscal benefits by a large margin.

Effects of U.S. Banking Deregulation on Unemployment Dynamics

I use state-level banking deregulation in the U.S. to study the causal impact of credit expansion on unemployment through its effects on the average monthly job-finding and job-losing rates. State-level analysis shows that deregulation increased the average job-finding rate and decreased the job-losing rate, and thus led to a lower unemployment rate. I also find that deregulation decreased the average unemployment duration. Extending the analysis to industry-state level, I find that the impact of deregulation on the job-finding rate is positive, but does not show any pattern across industries with respect to their needs for external finance. However, deregulation reduced the average job-losing rate, and the reduction monotonically increases with industries’ dependence on external finance.

Unemployment as an indicator of economic security in the employment sector: A regional dimension

Subject. To achieve a high level of economic security is a key priority of national development. Employment reveals one of the most important aspects of social development of the individual that is associated with his or her needs satisfaction in the sphere of employment and is boon to economic security. Objectives. The purpose of the study is to show the impact of unemployment on economic security in employment. Methods. I apply such scientific methods as dialectical, historical and logical unity, structural and functional analysis, traditional techniques of economic analysis and synthesis. The methods of multivariate statistical and comparative analysis serve as a methodological basis of the study. To determine the indicator of unemployment, I use the band theory. Results. I underpin the growing role of employment in ensuring economic security. The paper presents a comprehensive assessment of the unemployment status and a comparative analysis of the indicator in the Republic of Mordovia, the Volga Federal District, and the Russian Federation as a whole. I identify trends in the average duration of unemployment, show the distribution of unemployed by level of education and age groups. Conclusions. The average annual unemployment rate in the Republic of Mordovia is lower than in Russia and the Volga Federal District. The findings may be useful for public authorities to substantiate their employment policy at both macro- and meso-levels, for designing programs and strategies for socio-economic development of regions and the social security doctrine, as well as in practical activities of employment services.

Unemployment duration, Fiscal and monetary policies, and the output gap: How do the quantile relationships look like?

We use country-level panel data on average unemployment duration (AvgUD) to explore how the conditional distribution of AvgUD varies with primary fiscal balance (fiscal policy), short-term interest rate (monetary policy), and the state of the business cycle (output gap). We obtain the quantile estimates via a Bayesian quantile mixed effects model, which has so far received limited attention in economics. Our results reveal rich heterogeneity in both the sign and strength of these associations at different quantiles of AvgUD, in different gender and age groups, and in some transition economies that have markedly different labour markets. A higher fiscal balance/surplus is associated with higher middle-upper quantiles of AvgUD among prime-age and old-age men, whereas the empirical association is weak at all quantiles of AvgUD among young men and women. The association between quantiles of AvgUD and fiscal and monetary policies tends to be weaker among women than men. A better state of the business cycle is associated with a lower AvgUD at all quantiles among young men and women.

Labour market fluidity and employment outcomes in Colombia: Evidence from employer-employee linked data

Labour market flexibility has been a traditional subject of study in labour economics; recent literature has focused on the related concept of fluidity, broadly understood as the mobility of workers and jobs in the labour market. Here, we compute standard measures of fluidity for the Colombian urban labour market, finding evidence of increased fluidity, especially after 2010. Recent developments in equilibrium unemployment models predict, in general settings, a negative relationship between some fluidity measures and the equilibrium rate of unemployment. Recent literature on worker and job flows has identified benign aspects of fluidity, in that fluid labour markets are expected to have shorter average unemployment duration. We find evidence for a positive effect of fluidity on different employment and occupation indices using instrumental variable regression models that exploit variations in labour market outcomes and fluidity measures over time.

Analysis of supply side factors influencing employability of new graduates: A tracer study of Bahir Dar University graduates

The purpose of this study was to determine the job placement profiles of the graduates of Bahir Dar University and the relevance of school-related factors to job placement. The study was conducted at Bahir Dar University with participants who were first-degree graduates from the 2015 and 2016 cohorts. Stratified multistage random sampling was used to select respondents. Out of 4208 graduates, 867 graduates were selected to participate in the study. To determine the potential factors for graduate employability in the labour market, both descriptive and inferential statistics were applied.Results revealed that 79% percentof surveyed graduates were gainfully employed, with the majority (93%) having their first job related to their completed course. The time taken to find employment was from 1 to 6 months and the overall average duration of unemployment was 5.08 months. Sixty five percent of graduates reported that they used a public advertisement to find their first job and 58% reported that their employers used examinations to select potential candidates. A 12% variation in employability was explained by CGPA, preferred field of study, the number of companies contacted and time management skills of graduates. Moreover, graduates’ transitional employability has a positive association with cumulative GPA, preferred field of study, and internship practice. It is recommended that sustainable employment of graduates can be secured if the University improves its current curriculum to incorporate more employability skills demanded by the labour market.

Measuring Labor-Force Participation and the Incidence and Duration of Unemployment

The underlying data from which the U.S. unemployment rate, labor-force participation rate, and duration of unemployment are calculated contain numerous internal contradictions. This paper catalogs these inconsistencies and proposes a reconciliation. We find that the usual statistics understate the unemployment rate and the labor-force participation rate by about two percentage points on average and that the bias in the latter has increased since the Great Recession. The BLS estimate of the average duration of unemployment overstates by 50% the true duration of uninterrupted spells of unemployment and misrepresents what happened to average durations during the Great Recession and its recovery.

Long Average Unemployment Duration Implies Better Job Market

Long Average Unemployment Duration Implies Better Job Market

Analysis of the duration of unemployment and outcomes for unemployed persons in the Bolivarian Republic of Venezuela

Although, at first glance, it would seem to be a contradiction in terms, official statistics indicate that both unemployment and economic activity in the Bolivarian Republic of Venezuela are on a steep downward trend. However, a decline in unemployment can, in fact, occur in the midst of an economic recession if a portion of the actual unemployment rate is concealed by employment in the informal sector and/or by a significant number of people abandoning their job search. Using maximum likelihood estimates for homogeneous Markov matrices applied to household sample survey data for the period starting with the first half of 2012 and ending with the second half of 2013, this study analyses the average duration of unemployment and the outcomes for unemployed persons. The results indicate that long-term unemployment prompts some people to abandon their search for a job (whereupon they cease to be a part of the labour market) and others to move into the informal workforce.

Labour income inequality and the informal sector in Colombian cities

Labour markets in developing countries are crucial to determine income inequality. In this paper, we use a panel data approach to study the effect of the informal sector on labour income inequality for thirteen cities in Colombia from 2002-2015. We use the rate of underemployment, the average duration of unemployment and the intensity of forced migration from armed conflicts as instruments for the urban informal sector. Results suggest that the informal sector has a positive and statistically significant effect on labour income inequality, which implies that an increase by one percentage point in the informal sector increases the Gini coefficient of labour income by about 0.07.

Unemployment Exits Before and During the Crisis

AbstractUsing administrative data from Spain, we compare the pattern and the determinants of individual unemployment durations and the stability of jobs found after unemployment before and during the recent crisis. We find particularly strong effects of the crisis on the hazards in the beginning of the unemployment spell. The groups hit hardest by the crisis are men, immigrants, older workers, and low‐educated individuals. The disadvantage of men is mainly due to the more pro‐cyclical nature of men's jobs. The increase in average unemployment duration and the fall in the duration of new jobs are not explained by composition effects.

Self-esteem and emotional distress in a population of unemployed persons

IntroductionFor most individuals, basic life requirements are met through employment. It can satisfy creative urges, promote self-esteem, and provide an avenue for achievement and self-realization.ObjectiveTo assess the level of depression, anxiety and self-esteem in a population of unemployed persons.MethodIt was a cross-sectional study involving unemployed people we met in the office of employment of Sfax in Tunisia. The level of anxiety and depression was assessed by the Beck depression and anxiety inventories. The self-esteem Rosenberg scale allowed us to evaluate the level of self-esteem of our population.ResultsThe average age of oursubjects was 33 years six months. The average duration of unemployment of our population was 4 years 7 months and 38.2% of them had never worked before. The anxiety level was moderate in 38.2%, while moderate to severe depression was found in 47%. Self-esteem was low to very low in 47.1%. A low level of depression was positively correlated with a low socioeconomic level (P = 0.000), a low level of anxiety (P = 0.000) and a high self-esteem level (P = 0.000).ConclusionPeople with strong support systems and greater self-esteem seemed to experience less unemployment stress. Identifying those who are at high risk for psychological and physical problems and finding ways of preventing them from suffering the adverse effect of unemployment are important areas for further study.Disclosure of interestThe authors have not supplied their declaration of competing interest.

Unemployment Exits Before and During the Crisis

Using administrative data from Spanish Social Security, we compare the pattern and the determinants of individual unemployment durations and the stability of jobs found after unemployment before and during the recent crisis. We find particularly strong effects of the crisis on the hazards in the beginning of the unemployment spell. The groups hit hardest by the crisis are men, immigrants, older workers, and individuals with lower levels of education. The disadvantage of men is mainly due to the more pro-cyclical nature of men´s jobs. Decompositions show that the increase in average unemployment duration and the decrease in average duration of the new job during the crisis are not explained by changing characteristics of the individuals who become unemployed.