Dutch Labour Market Research Articles

Modelling labour market dynamics with on-the-job search

A flow model of the Dutch labour market is used to calculate the effects of policy options which aim to enhance employment, especially at the lower end of the labour market. The model distinguishes between good and bad jobs, allows for endogenous wage formation and job creation, and describes the flows between these jobs so that job-to-job mobility and the vacancy chain is made endogenous. In the matching process employed job seekers with bad jobs compete with short-term and long-term unemployed for the filling of vacancies for good jobs. In each period part of the good and bad jobs are destroyed which results in inflow into unemployment. The model explicitly describes the flow of unemployed through the various duration classes of unemployment and it allows for negative duration dependence so that the escape probability from unemployment for long-term unemployed is smaller than for short-term unemployed. The model is used to simulate the effects of external shocks, such as structural productivity shocks. An impulse response analysis using the model is also conducted considering labour market policies which aims especially to enhance employment at the lower end of the labour market. In particular, the effects are analysed of measures subsidising the opening of bad jobs (jobs at the lower end of the labour market) and a rise in the productivity of a bad job as compared to a good job which can be achieved by changes in the tax system.

The Management of Redundancies in Europe: The Case of the Netherlands

The paper presents the findings of comparative and interdisciplinary legal and economic study on managing labour redundancies in seven EU member countries. It is structured for comparability between the systems examined. The introductory section contains an account of the evolution of the Dutch labour market, with special reference to redundancy trends, of the features of the programmes for managing redundancies, of the roles of firms and the ‘external environment’ in handling workforce adjustments. The second section presents a map of policies that work to prevent labour redundancies (preventive measures) such as flexibility, training etc. Next, the instruments for handling temporary labour redundancies (retentive measures) are examined (e.g. short‐time working, temporary layoffs etc.). The following section is devoted to instruments and programmes involved in the management of permanent labour redundancies (expulsive measures), e.g. collective dismissals, severance pay etc. The final section provides an overall assessment of the Dutch system for managing labour redundancies, and briefly discusses the national debate on the prospects for reform, in light of the principles and policies of convergence set forth by the European Union.

Mismatch between unemployment and vacancies in the Dutch labour market

We analyse the importance of educational mismatch between vacancies and unemployment in the Dutch labour market. Using unemployment and vacancy data by educational level, we estimate a matching function which incorporates the effect of educational mismatch on the aggregate flow of filled vacancies. Using the estimated parameters, we calculate how much of total unemployment can be attributed to educational mismatch. The results indicate that educational mismatch is not an important determinant of unemployment in the Netherlands. Moreover, it shows a remarkable trend. Contrary to common belief, the relative importance of mismatch appears to have strongly decreased since the end of the 1960s.

CPB models and employment policy in the Netherlands

The CPB Netherlands Bureau for Economic Policy Analysis plays an important role in the preparation of economic policy in the Netherlands. This paper addresses the interaction between CPB models and employment policy during the period 1950–1997. We discuss several examples of the impact of CPB models on employment policies. At the same time, the specific needs of policy makers influenced model building at the CPB. Several innovations of CPB models were needed to explain the actual developments on the Dutch labour market and to investigate the usefulness of various remedies addressing the disequilibria on this market.

Les Pays-Bas : une société à flexibilité limitée

The Netherlands flexibility under control. Catherine Bruno, Valérie Chauvin. Many of the other European countries envy the Dutch economic performance, especially in the field of employment : employment grew by about 20% from 1982 to 1996 and the unemployment rate has been cut by half from 1982 to 1996. Twenty years ago, economists were discussing about the Dutch disease. Now, they talk about the Dutch miracle. Over the last fifteen years, deep changes happened on the Dutch labor market : part-time jobs developed, wage increases were moderate and the labor time was reduced. The reduction of labor costs seems to be the most important change. Indeed, it improved the Dutch competitiveness, so that foreign trade could boost growth. Moreover, the same rate of growth would have led to more employment than the past thanks to labor time reduction and hourly productivity slowdown. The unemployment rate has been reduced despite the growth of labor force which stems from demographic factors but also from labor market policy changes. Nevertheless, labor market policy is still generous unemployment allowances are high and disabled persons, whose allowances are even higher, represent 10% of total labor force in 1996. So, the Dutch labor market is more flexible since 1982 but the government controls this flexibility in maintaining workers' advantages and social unity bet ween employers and employees.

Vacancy Dynamics and Labor Market Efficiency in the Dutch Labor Market

Vacancy Dynamics and Labor Market Efficiency in the Dutch Labor Market

Vacancy Dynamics and Labor Market Efficiency in the Dutch Labor Market

ABSTRACT This paper focuses on cyclical and regional variations in vacancy dynamics in labor markets with persistent imbalances between demand and supply. In particular the so‐called matching approach is used to investigate labor market efficiency across regions and over the business cycle. In this matching approach the relationship between the flow of filled vacancies and regional stocks of unemployed job seekers and vacant jobs is specified in a “search production” function. The matching approach is applied to the Dutch labor market, which is characterized by strong disequilibria and persistent regional differences in unemployment and vacancy rates. To explore the development of these regional imbalances from a demand side perspective, the dynamic structure of regional data on vacancies is analyzed over the business cycle. The movements of vacancy duration and the change in the vacancy stock over time appear to be similar across Dutch regions. Moreover, an investigation of the structural causes of regional variations in vacancy duration via shift‐share analysis makes clear that regional differences in sectoral composition of unfilled vacancies do not contribute to regional differences in vacancy duration in the period 1989–93. Estimation results of a matching model reveal that there are no region‐specific differences in labor market efficiency to produce filled vacancies. The ratio of vacancies to unemployment appears to be the critical determinant of the matching process in the Dutch regions. Another general (non region‐specific) finding is that the estimated labor market efficiency increases during recessionary and recovery periods while it decreases during an economic boom.

Are vacancies difficult to fill? an empirical investigation of the Dutch labour market

The search behaviour of employers is focused on by developing a model to analyse employers' recruitment behaviour taking into account job seekers' search process. In addition, the causes of anticipated difficulties on firms' recruitment behaviour that may slow down the process of filling vacancies is investigated empirically. To do so, a survey is employed which contains information on the two main problems encountered by Dutch employers during recruitment: namely, an insufficient number of applicants and too many rejections of job offers. High educational and experience requirements are found to cause a low rate of response to the vacancy posted; offers of permanent positions tend to be rejected by job seekers due to disagreements on the level of works offered. Further, the condition of the supply side of the labour market strongly influences employers' recruitment behaviour, as employers increase their search intensity whenever problems are anticipated.

Employers' recruitment behaviour and vacancy duration: an empirical analysis for the Dutch labour market

The functioning of labour markets from a demand-side perspective is examined. In particular, the determinants of vacancy duration are studied in the context of a model of employers' search behaviour. A model for the choice of the recruitment strategy at the start of the search process and the corresponding recruitment duration is developed in which allowance is made for different patterns of duration dependence for each recruitment strategy. This model is applied to data on employers' search behaviour in the Dutch labour market. It is found that employers prefer advertisements as the first recruitment channel when applicants are required to have work experience. Moreover, employers prefer to start searching via the labour exchange office when jobs in the secondary segment of the labour market have to be filled. It is also found that - when advertisements are used as the first recruitment strategy - employers need some time to acquire a pool of applicants and to select candidates from this pool. It is interesting as a contrast that applicants seem to be evaluated rather quickly if employers start searching via informal contacts.

Education and the contested empowerment of migrants on the Dutch labour market

Abstract In this paper, we analyse the emergence of a sub‐field of educational initiatives which aim at the empowerment of migrants on the Dutch labour market. Although the sub‐field attracts a lot of money, its effective margins are small, since the empowerment of migrants is a controversial affair and the growth of the employment volume is staggering. Drawing on Bourdieu's ‘field theory’, we trace the most important approaches of tackling the problem, and relevant ideologies informing them. Our analysis shows that the consensus with regard to interethnic relations in the Netherlands has been broken, and a social obligations ideology is presently asserting itself.

Unemployment Dynamics and Duration Dependence in France, the Netherlands and the United Kingdom

This paper analyses unemployment dynamics in the French, Dutch and UK labour market. It presents a method to distinguish between the effects of duration dependence and unobserved heterogeneity on the exit rate out of unemployment. It turns out that for British male unemployed there is strong genuine negative duration dependence. For French unemployed there is no strong duration dependence during the first year of unemployment, while for Dutch unemployed there is non-monotonic duration dependence. For all groups of French and Dutch individuals significant unobserved heterogeneity is found. For UK male unemployed, heterogeneity seems to be empirically unimportant.

Equity and efficiency in unemployment insurance

This paper is concerned with equity and efficiency in unemployment insurance. It examines the rationales for unemployment insurance, or more generally, social security. It stresses that social security is a second-best solution, since, in practice, taxes that do not distort economic decisions and benefits without moral hazard are impossible. The paper determines a relation between the feasible levels of equity and efficiency,i.e., the output possibilities curve. Three typical views on equity are confronted with this output possibilities curve: the extreme liberal view, the moderate liberal view and the egalitarian view. We construct two output possibilities curves for unemployment insurance in The Netherlands: one curve, assuming that the Dutch labour market is characterized by excess supply and another curve, assuming that the Dutch labour market is instantaneously cleared by flexible wages. The equilibrium model yields substantially higher efficiency costs of Dutch unemployment insurance than the disequilibrium model. Finally, we calculate the output gains of a mini-system of unemployment insurance. Again, the results indicate that much depends on what is in the eye of the beholder.

Labour hoarding in a disequilibrium model of the Dutch labour market

This paper presents a method to integrate labour hoarding into a disequilibrium model of the labour market. Disequilibrium indicators for the labour market that include labour hoarding are constructed. These indicators, being important determinants of policy multipliers with respect to employment, are found to be less volatile than the corresponding disequilibrium indicators for the goods market which are available from business surveys. The lower volatility reflects the role of labour hoarding as a buffer between actual and efficient employment levels. Our results indicate that labour hoarding in Dutch enterprises ranges from a minimum of 0.5 per cent of employment in early 1985 to a maximum of 7.0 per cent in 1975. Furthermore, the paper pays special attention to the modelling of mismatch unemployment and to the simulation results of an empirical disequilibrium macromodel of the Dutch economy.

The impact of employers' recruitment behaviour on the allocation of vacant jobs to unemployed job seekers

This paper is focused on the allocation of vacant jobs to job seekers from a demand side perspective by studying the recruitment behaviour of employers. A model is developed to analyze the role of search and selection methods of employers as determinants of the probability that an unemployed person will be hired for a certain type of job. In an empirical application for the Dutch labour market, we have examined the effect of employer's recruitment behaviour on the allocation of vacant jobs to employed, unemployed and school-leaving job seekers.

Immigrant wages in The Netherlands: The valuation of pre- and postimmigration human capital

This article presents an empirical analysis of the wages of male immigrants from The Netherlands Antilles, Surinam, Turkey and Morocco living in The Netherlands. The principal findings of the study are the following. Educational attainment before and after immigration is equally productive for the Antilleans and the Surinamese only. Among Mediterraneans, only Dutch school years of Moroccans exert significant wage effects. The Dutch labour market rewards experience accumulated after immigration at a higher rate than foreign experience. Of the differences in observed characteristics, that in the number of Dutch school years is most important in explaining wage inequality across immigrant groups.

The productivity of the Dutch labour market in matching unemployment and vacancies: A comment

The productivity of the Dutch labour market in matching unemployment and vacancies: A comment

The duration of unemployment on the Dutch labour market: A proportional hazard model

In this paper the effect of age, educational level, occupational group and regional labour market conditions on the probability of leaving the state of unemployment is estimated. We use a proportional hazard model based on grouped data of incomplete spells of unemployment for males in the Netherlands. The regional effect on the probability to leave the state of unemployment is estimated by including either regional dummy variables or the regional vacancy-unemployment ratio in the hazard model. Special attention is paid to the effects of unobserved heterogeneity, duration dependence and non-stationary inflow rates on the probability of leaving the state of unemployment. The conclusion is that the subgroups - identified with respect to age, education, occupation and region - show very different patterns of duration of unemployment. Model specification tests lead to the conclusion that there is unobserved heterogeneity but no duration dependence in our data set. The estimation results do not change if the effects of a non-constant probability of becoming unemployed are incorporated.

The efficiency of the dutch labour market in matching unemployment and vacancies

A matching function specifies the relationship between the flow of filled job vacancies and the stocks of unemployed and job vacancies. This paper specifies and estimates the matching function of the Dutch labour market. It appears that this matching function is best described by a Cobb-Douglas function with constant returns to scale and coefficients of 0.4 on unemployment and 0.6 on vacancies. The matching function shifted at the end of the sixties and remained quite stable afterwards. This indicates that with a higher level of unemployment and lower level of job vacancies the Dutch labour market today is as efficient in generating a flow of filled vacancies as it was in the seventies.

Transition intensities in the Dutch labour market 1980–85

Using data from a set of retrospective questions from a Dutch national sample on individual labour market experiences in the period 1980–85, a three-state hazard model is estimated. Transitions are analysed between three labour market states: employment, unemployment and the out-of-the labour force, as well as between jobs (job mobility). Allowance is made for time-varying exogenous variables and for duration dependence. The estimated transition rates allow us to predict individual probabilities of participation in the labour force, of unemployment and employment, and to calculate expected lengths of stay in each of these labour market states as a function of personal characteristics and relevant demand conditions.

Minimum wage rates and unemployment in The Netherlands

A static limited dependent variable model is formulated to analyse the Dutch labour market from an individual's viewpoint. Results suggest that high minimum labour costs are an important source of unemployment. Secondly, the reduced-form participation equation is replaced by a neoclassical labour supply equation. Thus, also the effect of high minimum wage rates on employment through labour supply is taken into account. Supply appears to be forward bending and participation is insensitive with respect to unemployment benefits. Simulations suggest that the effect of lowering the ‘productivity threshold’ by reducing before-tax minimum wages dominates supply effects.