Effects Of Labor Market Policies Research Articles

A Model of TFP

This paper proposes an aggregative model of total factor productivity (TFP) in the spirit of Houthakker (1955—1956). It considers a frictional labor market where production units are subject to idiosyncratic shocks and jobs are created and destroyed as in Mortensen and Pissarides (1994). An aggregate production function is derived by aggregating across micro production units in equilibrium. The level of TFP is explicitly shown to depend on the underlying distribution of shocks as well as on all the characteristics of the labor market as summarized by the job-destruction decision. The model is also used to study the effects of labor-market policies on the level of measured TFP.

Labour and globalization: locating the Northeast Asian newly industrializing countries

ABSTRACT Globalization is closely associated with the turn towards neo-liberal economic strategies. One defining feature of neo-liberalism is labour market liberalization. The experiences of labour market reform in the Northeast Asian Newly Industrializing Countries of South Korea (hereafter Korea) and Taiwan exhibit differences from both the neo-liberal and alternative capitalist patterns commonly identified in the political economy literature. Using a comparative framework based on the criteria of labour market reform, political configurations, corporatist institutions, and the feedback effects of labour market policies, this article will reveal and explain the distinctiveness of the Northeast Asian pattern. Variations between Korea and Taiwan will also be explained using this framework. The findings here will contribute to the debate about how local institutions and politics interact with globalizing forces to produce divergent outcomes.

The Effects of Labor Market Policies in an Economy with an Informal Sector

In many economies, there is substantial economic activity in the informal sector, beyond the reach of government policy. Labor market policies, which by definition apply only to the formal sector, can have important spillover effects on the informal sector. The relative sizes of the informal and formal sectors adjust, the skill composition of the workforce in the two sectors changes, etc. In this paper, we build an equilibrium search and matching model to analyze the effects of labor market policies in an economy with an informal sector. Our model extends Mortensen and Pissarides (1994) by allowing for ex ante worker heterogeneity with respect to formal-sector productivity. We analyze the effects of labor market policy on informal- and formal-sector output, on the division of the workforce into unemployment, informal-sector employment and formal-sector employment, and on wages. Finally, our model allows us to examine the distributional implications of labor market policy; specifically, we analyze how labor market policy affects the distributions of wages and productivities across formal-sector matches.

The Post-Unification German Labor Market

This study surveys the development of the East German labor market after the unification of Germany. We explain that in the last decade, East Germans were faced with very high levels of joblessness that considering labor market exits and active labor market policy, are only partly reported as unemployment. A review of the evidence on the effectiveness of labor market policies suggests that job creation and training programs did not substantially promote reemployment, though they may have alleviated social burdens from unemployment. Discussing what causes the high unemployment in the east, we claim that effects of wage policy have been overrated. Differences in unemployment rates are also the result of more ample labor supply. We show that employment levels in the east have almost converged on western standards. The structure of employment, however, differs. Shortage of part-time work, service jobs and independent employment indicates that East Germany has failed to develop a service economy. We argue that unqualified adaptation to western procedures aggravated the investment and employment problem in the east.

Unemployment Flows in Finland, 1969–95: A Time Series Analysis

We adopt a flow approach to analyse Finnish unemployment experience during the last three decades. In addition to data on short‐term and total outflow and inflow rates from a relatively long period beginning in 1969, we also have data on duration‐specific outflow rates for the period 1984 I–96 II which encompasses the spectacular increase in unemployment in the early nineties. The empirical study shows that both the inflow and the outflow is mainly driven by variation in job opportunities. For a given vacancy‐unemployment ratio, the outflow rate has fallen because of changes in unemployment compensation, demographic structure and emigration. The outflow has been only marginally affected by long‐term unemployment. The results indicate that the beneficial effects of labour market policies on long‐term unemployment are to some extent counteracted by substitution effects.

An evaluation of active and passive labour market policy

This paper reports results of an empirical study on the effectiveness of labour market policy. Data from Austria, France, Germany, Great Britain, Sweden and the United States are used to apply a simultaneous equation model with wages and employment being the endogenous variables. In order to explain employment, the amount of unemployment benefits per unemployed (passive labour market policy) and payment for wage subsidies and training per employed and unemployed person (active labour market policy) are used in addition to real wages and output. Wages and output have their expected impact on total employment. It turns out that passive labour market policy has a negative, and active labour market measures a positive, effect on the number of persons employed.

Some Evidence of the Effects of Labour Market Policies on Workers' Attitudes toward Change in Canada and Sweden

Some Evidence of the Effects of Labour Market Policies on Workers' Attitudes toward Change in Canada and Sweden