Dutch Labour Market Research Articles

Dynamics of Labour and Capital Adjustment - a Comparison of Germany and the Netherlands

In this paper we investigate the dynamic adjustment of labour and capital in German and Dutch firms. The Dutch labour market is characterised by greater flexibility in wages and work arrangements in comparison to Germany. These institutional differences imply that employment dynamics in the two countries should differ, and in particular, labour adjustment in the Netherlands should be more responsive to economic changes. On the other hand, there is unlikely to be such a divergence in capital dynamics as investment conditions are similar. Our results are consistent with this hypothesis. Furthermore, there is no evidence that labour market regulations in the two countries affect the dynamics of capital adjustment.

From Controlling to Constructive: Youth Unemployment Policy in Australia and The Netherlands

Youth unemployment is an issue that has increasingly troubled western countries since the 1970s. This paper provides data on youth unemployment in Australia and the Netherlands, and discusses government policy in both countries. The rate of youth unemployment was similar in both countries in the mid 1980s, but since then it has declined dramatically in the Netherlands, while changing little in Australia. Youth unemployment policy in Australia has been driven by the concept of obligation, while in the Netherlands youth unemployment policy has been organised around the principle of a guarantee for youth. The Dutch labour market programme offers more continuity and coherence than the rather ad hoc Australian programmes. However, the paper argues that youth labour market policy in both countries is of a controlling nature, and does not serve marginalised youth. Moreover, policy in neither country meets OECD criteria for effective labour market programs. The paper concludes with the description of a Dutch program which, to a large extent, does meet the OECD criteria, and demonstrates that a more constructive approach to youth unemployment is possible.

Size and Causes of the Occupational Gender Wage-gap in the Netherlands

Research from the United States consistently shows that female-dominated occupations generally yield lower wages than male-dominated occupations. Using detailed occupational data, this study analyses the size andcauses of this occupational genderwage-gap in the Dutch labourmarket using multi-levelmodelling techniques.The analyses showthat bothmen andwomen earn lowerwages if they are employed in female-dominated occupations. This especially indicates the signi¢cance of gender inWestern labour markets, since overall levels of wage inequality are relatively small in the Netherlands compared to, for example, the United Kingdom and the United States. Diierences in required responsibility are particularly important in accounting for this occupational wage-gap. Nonetheless, we find large wage penalties for working in a female-dominated instead of a maledominated occupation for occupations that require high levels of education, skills, and responsibility.

Gender composition effects in the Netherlands: a multilevel analysis of occupational wage inequality

US-based research consistently shows that female-dominated occupations tend to yield lower wages than male-dominated occupations, net of diverse individual- and occupation-level controls. However, few studies have explicitly compared the effect of occupational gender composition to the within-occupation gender gap in terms of their relative contribution to overall gender wage inequality. We address this by testing a two-level hierarchical linear model, using highly reliable wage and occupational data from the Dutch labor market. Our results suggest that although female-dominated occupations pay less than male-dominated occupations, much of this gap is explained by a set of individual-, and occupation-level controls. However, we find compelling evidence of men’s net wage advantage across all occupations, regardless of occupational gender composition. Finally, we find that this male wage advantage decreases as percentage female in an occupation increases.

Loosening Hours Constraints on the Supply of Labor: What if Germans Had a Dutch Labor Market?

Total employment in Germany is supposed to increase if people could realize their desired working hours. However, this back-of-the-envelope calculation overestimates the effect of loosening hours constraints, because even in a very flexible labor market there will exist hours restrictions for certain jobs and occupations. Therefore, I simulate Germans' working hours in a more flexible but real world, namely the Dutch labor market. The results indicate that the average weekly working hours of German employees would indeed decrease if they had a Dutch Labor market. Thus, there exists some potential for additional work-sharing in Germany. Furthermore, the match between actual and desired hours of Germans would improve if Germans faced the same hours flexibility as Dutch employees. This holds both for men and for women. Another piece of good news is that hours restrictions shrank over time, which means, Germany seems to be moving towards a more flexible labor market.

Managing an aging workforce and a tight labor market: views held by Dutch employers

Despite the strong growth in employment of the past years, the Dutch labor market faces a number of persistent problems. One such problem is the large number of people on disability benefits. Another problem is the low labor force participation of women, not so much in terms of people, but in terms of hours worked (Henkens et al. 2002). And, despite an increase since the mid-1990s, the labor force participation of people over 50 is also much lower than the European average (OECD 1996). These low labor force participation rates should be seen against the backdrop of a strong increase in labor demand in recent years. In many sectors of the Dutch economy, this has led to tightness in the labor market (CPB 2000). Given that the population of the Netherlands is aging, new imbalances are looming on the horizon. Structural changes need to be implemented to pay for the growing number of pensioners. [....]

Labour Market Flexibility in the Netherlands

Almost two decades have passed since Dutch employers, unions and the government, in their struggle against unemployment, agreed on a policy to increase labour market flexibility. Over the years the share of flexible jobs in the Netherlands has gradually increased to around ten percent. According to some parties the introduction of more labour market flexibility would lead to more inequality and a division in the labour market between workers with permanent employment and an underclass of women, immigrant workers and poorly educated workers with temporary contracts. The Dutch government has always claimed that a special set of legal rules regarding labour market flexibility would prevent the development of such an underclass. In this article three questions are addressed: Who has a flexible labour contract and who is in permanent employment? What is the pattern of transition to permanent contracts? What are the consequences for wage rates for those on permanent or flexible contracts respectively? The answers to these questions are provided using panel data for the period 1986-96. The results show that labour market flexibility has been introduced into the Dutch labour market without detrimental consequences for specific groups of workers.

Regional labour market dynamics in the Netherlands

This paper analyses the response of the Dutch labour market to a regional labour demand shock. European-wide studies and US labour market studies found that in Europe adjustment to such a shock runs primarily through changes in participation, while in the US this is through migration of workers. Another striking difference is that the admustment process in the US takes places a much higher speed than in regions in European countries The main explanation for this phenomenon is the rigid labour market in Europe, against the flexible labour market in the US, which is expressed by the fact that spatial mobility among US workers is much higher than among European workers. A similar approach to the Dutch labour market shows that adjustment to labour demand shocks is primarily through changes in participation. In that sense it fits the European picture. As far as the speed of adjustment to a shock is concerned, the Dutch labour market seems more in line with American than with European levels. A disaggregate analysis shows that particularly the response of the northern labour market stands out. Adjustment to a shock is absorbed faster than in other Dutch regions. Furthermore, unemployment and migration are more important as absorption channels in the North than in the other regions.

Building people and organisational excellence: the Start service excellence program

One of the largest companies for temporary labour in The Netherlands, Start, is implementing a service‐culture‐change program. This so‐called service excellence program has been initiated to help the organisation to become one of the leading companies in Europe with respect to service behaviour and service culture. After a short introduction of the company and the current situation in the Dutch labour market, this paper describes the reasons for adopting this program and how it is being implemented.

Trends in the Occupational Returns to Educational Credentials in the Dutch Labor Market: Changes in Structures and in the Association?

Trends in the Occupational Returns to Educational Credentials in the Dutch Labor Market: Changes in Structures and in the Association?

Underemployment in the Netherlands: How the Dutch `Poldermodel' Failed to Close the Education-Jobs Gap

Although the populations of the richest advanced industrial societies have achieved unprecedented levels of formal credentials, analysts report on the massive scale of underutilisation of knowledge and skills in current market economies. This paper describes the underemployment situation in the Netherlands (1977-95). We show by different methods that the `education-jobs gap' has widened increasingly. The return to credentials of Dutch employees has diminished for every educational category. Within the total labour population, an increasing share of employees can be considered as underemployed and deal with credential inflation. At the lower levels of education men have suffered from credential inflation more than women. At the higher levels of education it is the reverse. It also appears that young people deal with a `waiting-room effect': they enter the labour market at relatively low skill levels, given their educational level and gender. A further breakdown by educational specialisation shows that employees with an educational background in health care or technical studies have suffered relatively more from credential inflation compared to those with a commercial education. We conclude by stating that in spite of much rhetoric about the skill deficiencies of the current workforce, the lack of decent jobs has caused basic allocation problems at the Dutch labour market. From a human resources perspective, the growing wastage of employees' potential should not be underestimated or dismissed. We argue that an effective allocation of knowledge and skills to occupations will be the basic tenet of labour market policy and new forms of work organisation.

Underemployment in the Netherlands: How the Dutch ‘Poldermodel’ Failed to Close the Education–Jobs Gap

Although the populations of the richest advanced industrial societies have achieved unprecedented levels of formal credentials, analysts report on the massive scale of underutilisation of knowledge and skills in current market economies. This paper describes the underemployment situation in the Netherlands (1977-1995). We show by different methods that the ‘education-jobs gap’ has increasingly widened. Although the statistical association between employees' level of education and their jobs remained stable over time, employees' return to credentials has diminished for every educational category. Within the total labour population, an increasing share of employees can be considered underemployed and suffering from credential inflation. At the lower levels of education men have suffered from underemployment and credential inflation more than women. At the higher levels of education it is the reverse. It also appears that young people deal with a ‘waiting room effect’: they enter the labour market at relatively low skill levels, given their educational level and gender. A further breakdown of the return on credentials by educational specialisation shows that employees with an educational background in health care or technical studies have suffered relatively more from credential inflation than those in commercial education. We conclude by stating that in spite of much rhetoric about the skill deficiencies of the current workforce, the lack of decent jobs has caused basic allocation problems in the Dutch labour market. From a human resources perspective the growing wastage of employees’ potential should not be underestimated or dismissed. We argue that an effective allocation of knowledge and skills to occupations will be the basic tenet of new forms of work organisation.

Trends in the Occupational Returns to Educational Credentials in the Dutch Labor Market: Changes in Structures and in the Association?

In this article, we determine changes in the relationship between education and the labor market in The Netherlands since 1960, for which both developments in the distribution of the labor force according to educational attainment and level of occupation (structural changes) and shifts in the mechanism to allocate educated individuals to occupational positions (which modify the net association between education and occupation) are used. To observe both developments, we make use of data from the 1960 Census and four Labor Force Surveys held in 1973, 1977, 1985, and 1991. Loglinear analysis shows that the association between education and occupation has altered. We conclude that changes in the relationship between education and occupation are not only the result of structural changes, but also the outcome of changes in the way educated individuals are allocated to jobs. These shifts in the allocation mechanism are largely connected with the state of the business cycle: in times of high unemployment, employers increasingly select employees on the basis of their education. We also find some support for modernization theory, but as soon as the state of the business cycle is accounted for, the impact of modernization becomes non-significant.

Explaining unemployment trends in the Netherlands

In this paper, a small macroeconomic model of the Dutch labour market is estimated. The model is used to detect the causes of the rise in unemployment since the early 70s. In contrast to existing empirical work, we treat labour supply as an endogenous variable. This adjustment appears to have serious consequences for the conclusions drawn. In particular, we show that the detrimental effect of the replacement rate on unemployment has been overestimated in earlier studies. Furthermore, we include contractual working time in the analysis. Our estimates imply that work sharing does reduce unemployment, but at a high cost. Because hourly wages rise in response to reduced working hours, aggregate output is damaged quite strongly.

Effects of Sexual Preferences on Earnings in the Netherlands

A small literature suggests that bisexual and homosexual workers earn less than their heterosexual fellow workers and that a discriminating labor market is partly to blame. In this paper we examine whether sexual preferences affect earnings in the beginning of working careers in the Netherlands. We find (i) that young and highly educated gay male workers earn about 3 percent less than heterosexual men; (ii) that similarly qualified lesbian workers earn about 4 percent more than their heterosexual female coworkers; (iii) that in terms of earnings, bisexual workers are more comparable to heterosexual workers; and (iv) that among homosexual workers the gender gap is not observed. From this we conclude that the Dutch labor market does not discriminate on the basis of both sexual orientation and gender in entry level jobs.

Toward a Differentiated Concept of Labor

While most social strategies and policies reflect the notion that paid labor is the fundamental form of particpation in society, the wage labor system is in a state of crisis. The reasons for taking a more differentiated view of the current system are expounded, together with proposals for its reform. The problems are clearly illustrated by reference to two areas: Dutch labor market policies, and the forms of a-typical labor that have developed within the current situation.

Skill mismatches in the Dutch labor market

Over the past years a number of studies have appeared on the incidence and returns to overeducation in the labor market. In these studies various definitions of educational mismatches have been used. In this paper we analyze the validity and reliability of three of these definitions. It is found that the definitions differ widely in the workers who are identified as over‐ or undereducated. Further, the methods yield different estimates of the returns to over‐ and undereducation.

Tax reform and the Dutch labor market: an applied general equilibrium approach

This paper develops an applied general equilibrium model to explore various tax cuts aimed at combating unemployment and raising labor supply. The model calibrates modern labor-market theories on wage setting, job matching, labor supply and labor demand on Dutch data. It represents the core of a larger applied general equilibrium model for the Netherlands called MIMIC. Simulations reveal that targeting in-work benefits at the low skilled is the most effective way to cut economy-wide unemployment. However, targeting is likely to damage the quality and quantity of labor supply. Tax cuts in the higher tax brackets boost the quantity and quality of formal labor supply but are less effective in reducing unemployment and in raising unskilled employment and female labor supply.

Effects of reintegration activities on the Dutch labour market, regarding several levels of education

In the Netherlands during the early nineteen nineties social security administration offices and labour exchange offices decided to co-operate. Goal of this cooperation is to support the reintegration of unemployed people into the labour market and to shorten the individual spells of unemployment. As a result of the cooperation information is available about levels of education of the unemployed. This article primarely focuses on the effects of reintegration activities on the duration of unemployment for different levels of education. Results of the analysis are compared with the human capital theory. Also the question is discussed whether within the framework of the cooperation persons with a higher level of education have shorter spells of unemployment. Finally there is an analysis of the effects of activities undertaken by the unemployed themselves to find a job. People with a university degree have significant longer spells of unemployment. The reintegration activities of the social security administration offices shorten unemployment durations significantly for this group only. Activities undertaken by the unemployed themselves shorten the spells of unemployment for lower educated people (only primary education) and for persons with higher general secondary/secondary/intermediate vocational education as highest completed education.

Labour supply, the natural rate, and the welfare state in The Netherlands: the wrong institutions at the wrong point in time

This paper analyses the causes of the Dutch Miracle. Low wage increases in The Netherlands compared to the rest of Europe are the main factor explaining the fast employment growth. Two factors can explain wage growth lagging behind: the 1982 Wassenaar-agreement between trade unions and employers and the realignments in the welfare state. A small macroeconomic model for the Dutch economy is estimated to analyse these issues. The residuals of wage equation do not show systematic negative residuals for the post-1982 period. The generosity of the welfare stare has a clear effect, bur data do not allow the magnitude of this to be precisely established. Furthermore, our model shows that the Dutch labour market adjusts rapidly to adverse shocks. In fact, the exceptional performance of the Dutch labour market in the early 1990s is predominantly caused by its ability to adjust to shocks compared to the rest of continental Europe.