Employment Spells Research Articles

Do temporary help agencies help? Employment transitions for low-skilled workers

We investigate the impact of working for a temporary help agency (THA) compared to being directly hired on the employment transitions of low-skilled male temporary workers aged 20 to 45. Using data from Spanish administrative records, we employ competing risk discrete-time duration models to analyze multiple temporary employment spells. Our analysis reveals the importance of accounting for short-duration dependence and workers’ unobserved heterogeneity. We find that, across all durations, agency workers are more likely to transition either to unemployment or to a new THA contract than their direct-hire counterparts. Transitions to permanent positions, although infrequent in our sample, are also more likely for agency workers. Our qualitative findings hold when unobserved heterogeneity is not controlled for. However, this model underestimates the effect of agency contracts on the risk of entering unemployment and overestimates the impact on the probability of re-entering THA. This suggests that positive self-selection plays a relevant role in explaining the higher persistence of THA employment, but not the associated higher risk of unemployment.

Prediction algorithms in matching platforms

We follow the future trajectory of more targeted wage formation in labor matching platforms, such as freelancing, crowd-sourcing, home-delivery, and ride-hailing, where local job search is coordinated by improving prediction algorithms. A labor matching platform is modelled as a directed search and matching market. We observe that targeted wage setting promotes efficient matching and longer employment spells. However, because a higher employment rate accentuates any disparities between available workers and vacancies, the effects of targeted wage setting on firm competition depend on prevailing market tightness. The impact of targeted wage formation on workers is positive when the vacancy-to-worker ratio is intermediate but turns negative at both extremes. Our results suggest that targeted wage setting may benefit occasional workers while potentially posing drawbacks for full-time platform workers.

The unemployed on sickness allowance: segmenting 3-year labour market pathways with sequence analysis

Abstract Background Understanding how the combination of unemployment and work disability affects future labour market pathways is important. We followed labour market pathways among those who were unemployed at the start of a sickness allowance spell. Methods Register data covered disability pensions (DP), rehabilitation spells, sickness allowance spells, unemployment spells and employment spells, retrieved for unemployed Finnish 18-58 years old persons who had a new sickness allowance spell in 2016. Sequence analysis and clustering were used to identify latent homogenous subgroups. Using multinomial regressions, demographic, socioeconomic, and disability-related covariates were examined. Results Preliminary analyses revealed six clusters with unique pathways and identities. 1) Unemployment; 2) Employment; 3) Rehabilitation spells, recurring disability and unemployment; 4) Unknown sources of income; 5) Permanent disability pension; and 6) Temporary disability pensions. Compared to the cluster with emphasis on return-to-work, other clusters were associated with less pre-LTSA employment days, having a pre-LTSA chronic illness, and a mental disorder. Conclusions Unemployed persons starting an LTSA have very different labour market pathways. For many, there are low chances for employment or regained work ability in the following years. Persons with poor health, long history outside employment, older age, low educational level and a mental disorder could benefit from targeted support. Key messages • Despite heterogeneous pathways found, for most of the unemployed, sickness allowance spells are followed by recurring unemployment, recurring sickness allowance, or disability retirement. • Since the unemployed with work disability rarely regain work ability in the following years, supporting their work ability is crucial in preventing permanent exclusion from working life.

Sufficient statistics for frictional wage dispersion and growth

This paper develops a sufficient statistics approach for estimating the role of search frictions in wage dispersion and life‐cycle wage growth. We show how the wage dynamics of displaced workers are directly informative of both for a large class of search models. Specifically, the correlation between pre‐ and post‐displacement wages is informative of frictional wage dispersion. Furthermore, the fraction of displaced workers who suffer a wage loss is informative of frictional wage growth and job‐to‐job mobility, independent of the job‐offer distribution and other labor‐market parameters. Applying our methodology to US data, we find that search frictions account for less than 20% of wage dispersion. In addition, we estimate that between 40 to 80% of workers experience no frictional wage growth during an employment spell. Our approach allows us to estimate how frictions change over time. We find that frictional wage dispersion has declined substantially since 1980 and that frictional wage growth, while low, is more important toward the end of expansionary periods. We finish by estimating two versions of a random search model to show how at least two different mechanisms—involuntary job transitions or compensating differentials—can reconcile our results with the job‐to‐job mobility seen in the data. Regardless of the mechanism, the estimated models show that frictional wage growth accounts for about 15% of life‐cycle wage growth.

Jobs against poverty: a fixed-effects analysis on the link between gaining employment and exiting poverty in Europe

ABSTRACT This article analyses the role of gaining employment in escaping poverty at the individual level by using EU-SILC pooled panel data for 2010–2017 for 30 European countries. We assess this in a dynamic research setting using individual fixed effects that take into account unobserved time-invariant heterogeneity between individuals. We focus on the type and intensity of employment and the role of gender, education, and age. Overall, gaining employment increased the chances of exiting poverty by 33 percentage points among men and 30 percentage points among women. Shorter employment spells and part-time employment were less effective routes out of poverty. The results also suggest that poor individuals with higher education were more likely to benefit from employment to exit poverty. We found substantial cross-country variation. However, the unemployment rate, prevalence of precarious employment or spending on active labour market policies did not moderate the association between gaining employment and exiting poverty. Further analysis is needed on the institutional factors supporting poor people’s employment and its effectiveness in significantly improving income level.

Couples' early career trajectories and later life housing consequences in Germany: Investigating cumulative disadvantages.

Using data on couples from the German Socio-Economic Panel (1995-2018), this study investigates how couples' early career trajectories affect housing outcomes in early adulthood and how this effect is mediated by couples' joint cumulative income. We apply a life course perspective by identifying dynamic treatments consisting of couples' consecutive employment statuses and examining their longer-term effects on homeownership and income shares spent on rent. Using multichannel sequence and regression analysis, we find that couples in which both partners have insecure employment trajectories, characterized by frequent spells of fixed-term employment and unemployment, are 25 percentage points less likely to own a home in early adulthood compared to couples with more secure career trajectories. Surprisingly, the couples' cumulative income does not remarkably mediate this effect, explaining less than one-fifth of the total effect. For couples who do not own their home but rent, we find that couples with insecure careers spend between 2 and 5 percentage points more of their joint income on rent compared to couples where both partners have secure career trajectories. Cumulative income disadvantages mediate the effects on shares of income spent on rent and reduce the effect sizes by 30-40%. Our findings indicate that inequalities caused by early career patterns can accumulate not only over time but also within couples and transfer to other areas of life, exacerbating housing and wealth inequalities in the longer run.

Assessing dissimilarity of employment history information from survey and administrative data using sequence analysis techniques

Life course data is frequently gathered either using retrospective surveys or linking records with administrative data. Yet, each strategy has specific advantages and disadvantages. We study the consistency between both types of data sources and reasons for mismatch using the linked data set SHARE-RV, which combines retrospective life history data from the Survey of Health, Ageing and Retirement in Europe (SHARE) with respondents’ administrative data from German pension insurance records (N = 1679). Utilizing sequence analysis techniques with Hamming distance, Optimal Matching and OMspell as matching algorithms, we examine mismatches between survey and administrative data covering detailed, 30-year employment histories, and analyze how inconsistencies are associated with life-course characteristics, demographic and socio-economic factors. Our results show that life-course complexity and spells of atypical employment are associated with more mismatches. Furthermore, gender differences are pronounced and appear to be sensitive to the applied matching algorithm.

Declining Worker Turnover: The Role of Short-Duration Employment Spells

Using the Quarterly Workforce Indicators database, we document that a significant amount of the decline in labor market turnover during the last two decades is accounted for by the decline in employment spells that last just one or two quarters. This phenomenon is pervasive: short-term employment spells have declined across industries, firm size categories, demographic groups, and geographic regions. Using a search-and-matching model in the Diamond-Mortensen-Pissarides tradition that incorporates noisy signals about the quality of a worker-firm match, we argue that improved screening by workers and firms can account for much of the decline in short-lived employment spells. (JEL E24, J23, J41, J63, M51)

Do the determinants of employment duration vary across employment spells?

ABSTRACT This paper looks at employment spells beyond the first, to check if multiple employment separations improve the matching of skills between workers and firms. We investigate whether the factors that are relevant for the first spell remain relevant for later spells. The results point to a range of outcomes. Certain variables such as the unemployment rate gap or part-time employment remain strong consistent predictors of the separation hazard across spells. In contrast, the coefficients of some variables such as the education or family status of the worker change sign and significance as the number of spells increases. This pattern is explained using a theoretical model that connects the cross-spell impact of a variable to its impact on the underlying distribution of the tendency to separate across workers. Variables associated with either a very low or a very high tendency to separate have an inconsistent effect across spells, because workers with a low tendency to separate do not appear in subsequent spells. Additionally, we find that the results vary across genders and generations. Classification codes: J00, C14, C12, C41.

Workplace Heterogeneity and the Returns to Versatility

Abstract In the canonical random on-the-job search model with continuous firm heterogeneity, I show that a mean-preserving spread of the firm-productivity distribution raises the returns to mobility, i.e., the inter-firm mobility of workers as measured by the number of outside contacts per employment spell. Both sorting and rent-share mechanisms play a role. In a further contribution, I distinguish frictional and structural impediments to mobility in order to establish a link between mobility and skills via the concept of versatility. Versatility enhances a person’s mobility since a mismatch between job requirements and the person’s skill set is less likely to occur. I provide some statistics in support of the discussed mechanisms. The findings are particularly intriguing in light of the concurrent rise in the productivity dispersion across firms and in the skill premium in many countries.

Working to get fired? Unemployment benefits and employment duration

In many countries, jobseekers are entitled to unemployment benefits (UBs) only if they have previously worked a minimum period of time. This institutional feature creates a sharp change in the disutility from unemployment at UB eligibility and may distort the duration of jobs. In this paper, we evaluate this eligibility effect using a regression discontinuity approach. Our evidence is based on longitudinal social security data from Portugal, where jobseekers are required to work a relatively long period to collect UBs. We find that monthly transitions from employment to unemployment increase by 10% as soon as the eligibility condition is met. This result is driven entirely by transitions to subsidised unemployment, which increase by 20%, as non-subsidised unemployment is not affected. The effects are even larger for the unemployed with high UB replacement ratios or those who meet the eligibility condition from multiple short employment spells. These transitions deserve greater attention from UB agencies and public employment services.

Skill Demand and Wages. Evidence from Linked Vacancy Data

This study provides new evidence on skill requirements in the labor market and shows to what extent skill demand is associated with wages and vacancy duration. Using more than 1.5 million job postings administered by the Austrian public employment service, I identify the most common skill requirements mentioned in job descriptions. Because employers in Austria are legally required to state the minimum remuneration for advertised positions, it is possible to relate the skill content of jobs to wage postings. Moreover, I estimate skill associations with starting wages for a subset of vacancies which can be matched to administrative data on employment spells of eventual hires. Accounting for education, work experience, and firm and occupation fixed-effects, there exists a robust association between the number of skill requirements and wages. In particular, jobs with many skill requirements pay substantially higher wages. While I estimate large effects for managerial and analytical skills, associations with most soft skills are small. Employers also need longer to fill vacancies with many skill requirements. Robustness tests show that measurement error is unlikely to explain these results and that the estimates can be replicated using vacancy postings from another job board.

The Search for Good Jobs: Evidence from a Six-year Field Experiment in Uganda

We present evidence from a six-year field experiment with young job seekers in urban labor markets in Uganda. We study how standard labor market interventions impact their search behavior, long run labor market outcomes, and how these long run outcomes are mediated through search behavior. The interventions we consider are the offer of vocational training, vocational training combined with job assistance, and job assistance only. Training is offered in sectors with high wage firms. Job assistance comprises a light touch offer to match workers for job interviews with such high wage firms. At baseline, youth are unskilled yet overly optimistic about their job prospects. Relative to controls, those offered vocational training become even more optimistic, search more intensively and direct their search towards higher quality firms. However, for youth additionally offered job assistance, expectations and search effort are revised downwards as call back rates from firms the workers are matched to, are far lower than their prior expectation. These differential search strategies impact long run outcomes: vocational trainees without job assistance have higher employment rates, longer employment spells, and end up in higher quality jobs and firms than workers additionally offered job assistance. Our analysis highlights how the potential for labor market entrants to be exuberant or discouraged both matter for long run outcomes through job search behavior. We discuss implications for the design and targeting of labor market interventions meant to help young people find good jobs.

Joint Modeling of Multivariate Survival Data With an Application to Retirement

The Cox proportional hazards model has been pervasively used in many social science areas to examine the effects of covariates on timing to an event. The standard Cox model is intended to study univariate survival data where there is a singular event of interest, which can only be experienced once. However, we may additionally wish to explore a number of other complexities that are prevalent in survival data. For example, an individual may experience events of the same type more than once or may experience multiple types of events. This study introduces innovations in recurrent (repeatable) event analysis, jointly modeling several endogenous survival processes. As an example and an application, we simultaneously model two types of recurrent events in the presence of a dependent terminal event. This model not only correctly handles different types of recurrent events but also explicitly estimates the direction and magnitude of relationships between recurrences and survival. This article concludes with an example of the model to examine how the timing of retirement is associated with the risks of multiple spells of employment and childbearing. The theoretical discussions and empirical analyses suggest that the multivariate joint models have much to offer to a wide variety of substantive research areas.

National Football League head coach race, performance, retention, and dismissal

The authors tested for evidence of racial discrimination in the employment retention of National Football League head coaches. A robust data set spanning the modern history of the sport (1985–2018) was generated to examine managerial employment tenure, dismissal, and subsequent organizational performance. After controlling for performance differences and heterogeneity between head coaches, the authors uncover statistically significant evidence that Non-White head coaches experience longer employment spells relative to White head coaches in the Rooney Rule era. No statistically significant evidence of racial differences in the rate at which head coaches are fired is found. Both employment tenure and dismissal are largely driven by raw performance, and to a lesser degree, relative performance. Finally, the relationship between head coach race and organizational performance is examined, but no statistically significant differences by race are uncovered.

Sufficient Statistics for Frictional Wage Dispersion and Growth

This paper develops a sufficient statistics approach for estimating the role of search frictions in wage dispersion and lifecycle wage growth. We show how the wage dynamics of displaced workers are directly informative of both for a large class of search models. Specifically, the correlation between pre- and post-displacement wages is informative of frictional wage dispersion. Furthermore, the fraction of displaced workers who suffer a wage loss is informative of frictional wage growth and job-to-job mobility, independent of the job-offer distribution and other labor-market parameters. Applying our methodology to US data, we find that search frictions account for less than 20 percent of wage dispersion. In addition, we estimate that between 40 to 80 percent of workers experience no frictional wage growth during an employment spell. Our approach allows us to estimate how frictions change over time. We find that frictional wage dispersion has declined substantially since 1980 and that frictional wage growth, while low, is more important towards the end of expansionary periods. We finish by estimating two versions of a random search model to show how at least two different mechanisms—involuntary job transitions or compensating differentials—can reconcile our results with the job-to-job mobility seen in the data. Regardless of the mechanism, the estimated models show that frictional wage growth accounts for about 15 percent of lifecycle wage growth.

Take Your Time to Grow: A Field Experiment on the Hiring of Youths

Abstract We investigate the effect of spells of no formal employment of young Germans on their chances of entering the labor market through an apprenticeship. We also study whether the potential negative effects of such spells can be mitigated by publicly provided training measures. In a field experiment, the fictitious applications of three young women were sent to firms advertising apprenticeships for the position of office manager. One application was from a fresh school-leaver and two from applicants who had been out of school for two years, where one of them had participated in a training measure. We find that applicants who have been out of school for two years and have participated in the training are more successful than older applicants without additional training. We do not find a significant difference between older applicants with or without training and fresh school leavers. Our findings show that training measures increase the attractiveness of applicants and that the potential stigma of spells of no formal employment after school are compensated by informal work experience or age or a combination of both.

Double Jeopardy: How Refugees Fare in One European Labor Market

Abstract This paper examines the labor market trajectories of refugees who arrived in Belgium between 1999 and 2009. Belgium offers a relatively easy formal labor market access to refugees and other types of migrants but they face many other barriers in this strongly regulated and institutionalized labor market. Based on a longitudinal dataset that links respondents’ information from the Belgian Labor Force Survey with comprehensive social security data on their work histories, we estimate discrete-time hazard models to analyze refugees’ entry into and exit out of the first employment spell, contrasting their outcomes with family and labor migrants of the same arrival cohort. The analysis shows that refugees take significantly longer to enter their first employment spell as compared with other migrant groups. They also run a greater risk of exiting out of their first employment spell (back) into social assistance and into unemployment. The low employment rates of refugees are thus not only due to a slow integration process upon arrival, but also reflect a disproportional risk of exiting the labor market after a period in work. Our findings indicate that helping refugees into a first job is not sufficient to ensure labor market participation in the long run, because these jobs may be short-lived. Instead, our results provide clear arguments in favor of policies that support sustainable labor market integration.

Bounds on Average and Quantile Treatment Effects on Duration Outcomes Under Censoring, Selection, and Noncompliance

We consider the problem of assessing the effects of a treatment on duration outcomes using data from a randomized evaluation with noncompliance. For such settings, we derive nonparametric sharp bounds for average and quantile treatment effects addressing three pervasive problems simultaneously: self-selection into the spell of interest, endogenous censoring of the duration outcome, and noncompliance with the assigned treatment. Ignoring any of these issues could yield biased estimates of the effects. Notably, the proposed bounds do not impose the independent censoring assumption—which is commonly used to address censoring but is likely to fail in important settings—or exclusion restrictions to address endogeneity of censoring and selection. Instead, they employ monotonicity and stochastic dominance assumptions. To illustrate the use of these bounds we assess the effects of the Job Corps (JC) training program on its participants’ last complete employment spell duration. Our estimated bounds suggest that JC participation may increase the average duration of the last complete employment spell before week 208 after randomization by at least 5.6 log points (5.8%) for individuals who comply with their treatment assignment and experience a complete employment spell whether or not they enrolled in JC. The estimated quantile treatment effects suggest the impacts may be heterogeneous, and strengthen our conclusions based on the estimated average effects.

Sufficient Statistics for Frictional Wage Dispersion and Growth

This paper develops a sufficient statistics approach for estimating the role of search frictions in wage dispersion and lifecycle wage growth. We show how the wage dynamics of displaced workers are directly informative of both for a large class of search models. Specifically, the correlation between pre- and post-displacement wages is informative of frictional wage dispersion. Furthermore, the fraction of displaced workers who suffer a wage loss is informative of frictional wage growth and job-to-job mobility, independent of the job-offer distribution and other labor-market parameters. Applying our methodology to US data, we find that search frictions account for less than 20 percent of wage dispersion. In addition, we estimate that between 40 to 80 percent of workers experience no frictional wage growth during an employment spell. Our approach allows us to estimate how frictions change over time. We find that frictional wage dispersion has declined substantially since 1980 and that frictional wage growth, while low, is more important towards the end of expansionary periods. We finish by estimating two versions of a random search model to show how at least two different mechanisms—involuntary job transitions or compensating differentials—can reconcile our results with the job-to-job mobility seen in the data. Regardless of the mechanism, the estimated models show that frictional wage growth accounts for about 15 percent of lifecycle wage growth.