European Community Household Panel Research Articles

Long Term Earnings Inequality, Earnings Instability and Temporary Employment in Spain: 1993–2000

This paper provides a longitudinal perspective on changes in Spanish male earnings inequality for the period 1993-2000, by decomposing the earnings covariance structure into its permanent and transitory parts. According to the Spanish sample of the European Community Household Panel, cross-sectional earnings inequality of male full-time employees falls over the second half of the Nineties. The longitudinal analysis shows that such decline was determined by a decrease in earnings instability and an increase of the permanent earnings component. Given the marked decline in temporary employment over the sample period, we also examine the effect of the type of contract on earnings variance components, and we find that workers with fixed-term contract have on average more instability than workers with permanent contract. This evidence suggests that the decline in temporary employment is responsible for the decreasing earnings instability.

Recent Investments in Human Capital and its Effect on the Chances of Escaping from Low-paid Jobs: The Spanish Case

General education and training are major forces determining earnings. According to the human capital model, wage differentials among individuals over the life-cycle are largely the result of different patterns of investment in human capital. This paper is intended to analyze the effects of recent investments in human capital — general education, vocational/training or language courses on workers’ relative earnings and on the probability of making an upwards transition in the earnings distribution. The analysis is done for Spain, using the European Community Household Panel (1995-2001). Our results reveal that having been recently in education or training (mainly vocational/training courses) significantly increases the probability of escaping from low pay to better paid jobs, while decreases the risk of falling into low-wage employment. Furthermore, this positive effect is significantly higher among those workers with a third level of general education completed. A separate analysis for females also reveals these positive returns of recent investments in human capital relative earnings, although in this case they appear to be none statistically significant.

Robust likelihood estimation of dynamic panel data models

We develop likelihood-based estimators for autoregressive panel data models that are consistent in the presence of time series heteroskedasticity. Bias-corrected conditional score estimators, random effects maximum likelihood in levels and first differences, and estimators that impose mean stationarity are considered for general autoregressive models with individual effects. We investigate identification under unit roots, and show that random effects estimation in levels may achieve substantial efficiency gains relative to estimation from data in differences. In an empirical application, we find evidence against unit roots in individual earnings processes from the Panel Study of Income Dynamics and the Spanish section of the European Community Household Panel.

The Transition to Self-Employment and Perceived Skill-Mismatches: Panel Data Evidence from Eleven EU Countries

Some studies using either objective or subjective indicators, find that self-employed individuals are less likely to be or to report being skill-mismatched in comparison with salaried employees. The aim of this paper is to analyze the impact of the transition from salaried employment to self-employment on self-reported skill mismatches. To do so, this article uses eight waves of the European Community Household Panel covering the period 1994–2001. The panel data nature of this rich dataset, allows us to track individuals over time and measure self-reported skill-mismatches before and after the transition for the same individuals, using as the comparison group those individuals who remain in salaried employment during the whole sample period. Our empirical findings indicate that those individuals who transit from salaried employment to self-employment reduce their probability to report being skill-mismatched after the transition. Interestingly, we also observe that this effect vanish if the transition is done from an unemployment status, and that the effect is quite heterogenous across countries.

The Impacts of Mental Health Problems on Wages Using the Instrumental Variable Approach, Case of Selected Countries in the European Community Household Panel (ECHP) Data Set

The study investigated the impacts of mental health problems or disorders on wages using the instrumental variable approach. The European Community Household Panel (ECHP) data set of some selected European Countries for two years (2000 and 2001) was used. The study was theoretically justified by the human capital theory propounded by Becker which encapsulates the conceptualization of health capital. The data set was managed and finally reduced to 51,746 observations. The econometric models used include the Ordinary Least Square (OLS), the Instrumental Variable Effect (IV), and the Heckman models. The Ordinary Least Square (OLS) result indicates that those with mental illness will have 6.7% fewer earnings relative to those with no such conditions. The instrumental variable result shows that those with mental health disorders will earn 14.8% less than those without such conditions. The study can conclude that the instrumental variable effect actually accounted for the indirect effect of mental health problems on wage and hence the issue of endogeneity problem in the Ordinary Least Square (OLS) estimate was carefully catered for. The study confirmed that mental health problems affect the hourly wage of individuals negatively via their impact on the daily activities including paid work of individuals. Thus, mental health problems exert negative impacts on the daily activities of individuals and with such, their hourly wage will fall relative to those without mental health problems. The results were further confirmed by the Heckman model where all the coefficients remain significant at 1% significant levels. The study recommends that measuring the effect of health disorders on labor market outcomes should be done with care to account for unobserved variables.

Measuring Income-Related Inequalities in Health in Multi-Country Analysis

Health inequalities remain a cause of concern for policymakers across the world. However, the measurement and monitoring of health inequalities over time and across countries remain a research challenge. The concentration index is one of the most popular measurement tools, however, it presents several drawbacks, especially for bounded variables, which are discussed in this study. Results from the European Community Household Panel dataset and the Statistics of Income and Living Conditions for Europe suggest that there is evidence of persistent socioeconomic inequalities in health in Europe. Further, results show the need of reporting both absolute and relative inequalities for appropriately monitoring and comparing trends in health inequalities across countries.

The Transition to Self-Employment and Perceived Skill-Mismatches: Panel Data Evidence from Eleven EU Countries

Some studies using either objective or subjective indicators, find that self-employed individuals are less likely to be or to report being skill-mismatched in comparison with salaried employees. The aim of this paper is to analyze the impact of the transition from salaried employment to self-employment on self-reported skill mismatches. To do so, this article uses eight waves of the European Community Household Panel covering the period 1994–2001. The panel data nature of this rich dataset, allows us to track individuals over time and measure self-reported skill-mismatches before and after the transition for the same individuals, using as the comparison group those individu-als who remain in salaried employment during the whole sample period. Our empirical findings indicate that those individuals who transit from salaried employment to self-employment reduce their probability to report being skill-mismatched after the transition. Interestingly, we also observe that this effect vanish if the transition is done from an unemployment status, and that the effect is quite heterogenous across countries.

Homeownership and job-match quality in France

Our empirical study stems from previous research on the inter-relations between residential status and microeconomic labor market outcomes. It focuses on employees and assesses the a priori ambiguous effect of homeownership on job-match quality. We use the French data set of the 1995–2001 European Community Household Panel to build a subjective measure of job downgrading. We estimate a recursive trivariate probit with partial observability that simultaneously models the residential status choice, its impact on the probability of being downgraded, and the selection into employment. Taking into account, the double selection process, into employment and into homeownership, and controlling unobserved individual heterogeneity, we find that private renters have between 30% and 40% higher probability of subjective downgrading than homeowners. Mortgage constraints increase the downgrading probability, but their effect is of a limited scope (around +2% percentage points for mortgagers compared with outright owners). We show that these results are robust to various specifications and instruments choice. Consequently, homeownership seems not to be associated to some harmful effects on the job-match quality. Our conclusions are consistent with recent microeconometric studies which call into question Oswald’s hypothesis.

Becoming self-employed from inactivity: an in-depth analysis of satisfaction

Inactive individuals represent a pool of potential labour whose activation entails economic and social advantages. Additionally, being active allows individuals to cover their basic psychological needs—autonomy, competence and relatedness—which leads to greater satisfaction through self-determination. We posit that self-employment may be an attractive alternative because its nonpecuniary aspects may suit their needs better. Using data from the European Community Household Panel, we applied propensity score matching techniques to analyse the change in satisfaction with main activity of inactive individuals becoming self-employed compared to those becoming employees and those remaining inactive. We further perform separate analyses for homemakers, retirees and students to account for heterogeneity within inactivity. We find that self-employment is associated with more satisfaction than remaining inactive in the case of retirees and homemakers, while students tend to experience a larger increase in satisfaction when entering self-employment compared to paid employment. The implications of these results for activation and entrepreneurship policies are discussed.

Health Status and Retirement Decisions for Older European Couples

In this paper we use data the European Community Household Panel (ECHP) to describe and analyse the dynamics of joint labour force behaviour of older couples for the EUI2 countries. We focus on three main issues: the relanvance of joint retirement across EUI2 countries, the existence of complementarities in leisure and/or assortative matting and the effects of health variables. Concerning the evidence, we first find that a working spouse is more likely to retire the more recently the other spouse has retired; this effect is stronger if the wife is the working spouse. Second, there is evidence of assortative mating and/or complementarities in leisure; the effects of all relevant factors on the retirement decision of one spouse depend strongly on whether the other one is working, unemployed, or retired. Third, besides the standard evidence that poor health increases the retirement probabiliby, we find that the husband's health affects the couple's retirement decisions much more strongly than the wife's health does. Additional asymmetric effects are detected with respect to income related variables.

Becoming self-employed from inactivity: An in-depth analysis of job satisfaction

Inactive individuals represent a large pool of potential labour force whose activation entails economic and social advantages. However, they are a heterogeneous group of people who face different barriers to enter paid employment. Self-employment may be an attractive alternative for them, because its nonpecuniary aspects might adapt better to their necessities. Using data from the European Community Household Panel, we applied propensity score matching techniques to estimate the causal effects of transitions to self-employment on the job satisfaction –with pecuniary and nonpecuniary aspects– of previously inactive people. We further perform separate analyses for students, homemakers, and retirees to account for heterogeneity. Our results show that, although self-employment generally brings higher satisfaction than remaining inactive, the effects of self- employment on job satisfaction compared to paid employment varies across subgroups. This suggests that their motivations to become self-employed are diff...

The shorter workweek and worker wellbeing: Evidence from Portugal and France

Using data from the European Community Household Panel, this paper evaluates the impact of the exogenous reductions in weekly working hours induced by reforms implemented in Portugal and France on worker wellbeing. Difference-in-differences estimation results suggest that reduced working hours generated significant and robust increases in job and leisure satisfaction of the workers affected in both countries (from 0.07 to 0.15 standard deviation increases), with the rise in the former mainly being explained by greater satisfaction with working hours and working conditions. Further results suggest that staff representative bodies are important for ensuring that working-time reductions lead to welfare gains.

Components of Gini, Bonferroni, and Zenga Inequality Indexes for EU Income Data

Abstract In this work we apply a new approach to assess contributions from factor components to income inequality. The new approach is based on the insight that most (synthetic) inequality indexes may be viewed as (weighted) averages of point inequality measures, which measure inequality between population subgroups identified by income. Assessing contributions of factor components to point inequality measures is usually an easy task, and based on these contributions it is straightforward to define contributions to the corresponding (synthetic) overall inequality indexes as well. As we shall show through an analysis of income data from Eurostat’s European Community Household Panel Survey (ECHP), the approach based on point inequality measures gives rise to readily interpretable results, which, we believe, is an advantage over other methods that have been proposed in literature.

Precarious employment among South Korean women: Insights from a comparison to France

ABSTRACTFamily responsibilities for women are often associated with precarious employment. This relation varies depending on whether women can reconcile family life and work or not. Based on the Korean Labor and Income Panel Study from 1998 to 2008 and on the French part of the European Community Household Panel between 1998 and 2001, a multiple correspondence analysis shows that precariousness in employment is correlated with family life and levels of education. The better conditions of work-family balance in France enable young mothers to combine family life with stable employment of good quality, which is not the case for South Korean women. The comparison of the two countries highlights the necessary reforms in favor of women’s better being.

Effect of having private health insurance on the use of health care services: the case of Spain

BackgroundSeveral stakeholders have undertaken initiatives to propose solutions towards a more sustainable health system and Spain, as an example of a European country affected by austerity measures, is looking for ways to cut healthcare budgets.MethodsThe aim of this paper is to study the effect of private health insurance on health care utilization using the latest micro-data from the European Community Household Panel (ECHP), the Spanish National Health Survey (SNHS) and the European Union Statistics on Income and Living Conditions (EU-SILC). We use matching techniques based on propensity score methods: single match, four matches, bias-adjustment and allowing for heteroskedasticity.ResultsThe results demonstrate that people with a private health insurance, use the public health system less than individuals without double health insurance coverage.ConclusionsOur conclusions are useful when policy makers design public-private partnership policies.

Are false own-account workers less job satisfied than true ones?

ABSTRACTThis article compares job satisfaction of true and false own-account workers. The latter group refers to own-account workers who are employed with the same tasks by the same employer for whom they previously worked as employees. To create a valid comparable group, the former workers are defined as paid employees who independently started a new business as own-account workers. Using data drawn from the European Community Household Panel for the EU-15 and controlling for possible self-selection issues, we observe that false own-account workers, compared with true ones, have less job satisfaction in terms of type of work, number of working hours, working times, and working conditions and environment. Our results are consistent with existing policies aimed to combat false self-employment developed by many OECD countries.

A Health \u2018Kuznets\u2019 Curve\u2019? Cross-Sectional and Longitudinal Evidence on Concentration Indices\u2019

The distribution of income related health inequalities appears to exhibit changing patterns when both developing countries and developed countries are examined. This paper tests for the existence of a health Kuznets’ curve; that is, an inverse U-shape pattern between economic developments (as measured by GDP per capita) and income-related health inequalities (as measured by concentration indices). We draw upon both cross sectional (the World Health Survey) and a long longitudinal (the European Community Household Panel survey) dataset. Our results suggest evidence of a health Kuznets’ curve on per capita income. We find a polynomial association where inequalities decline when GDP per capita reaches a magnitude ranging between $26,000 and $38,700. That is, income-related health inequalities rise with GDP per capita, but tail off once a threshold level of economic development has been attained.

Salaires et emploi dans les secteurs public et privé. Différences et interactions

Les différences de conditions salariales et d’emploi entre les secteurs public et privé n’existent pas seulement dans les comparaisons statiques mais aussi dans les dimensions dynamiques telles que la croissance des salaires avec l’expérience, la volatilité des salaires et la sécurité dans l’emploi. Nous documentons d’abord les différences intersectorielles statiques et dynamiques d’emplois et de salaires dans six pays européens pendant la période 19942001 à l’aide de la base de données fournie par le European Community Household Panel. Nous sommes ainsi en mesure de présenter une évaluation des primes du secteur à long terme dans ces pays. Nous proposons ensuite un modèle structurel permettant de quantifier une réponse de l’ensemble du marché du travail à différentes alternatives de choix politiques en termes d’emplois et de salaires dans le secteur public. Cette approche structurelle nous permet d’évaluer et de comparer l’impact potentiel de différentes politiques visant à réduire la masse salariale du secteur public.

Crisis, educación y precariedad-afluencia. El rol de la educación en las condiciones de vida de la población española

El objeto de este artículo es estudiar la influencia del nivel educativo (capital cultural) en los procesos de precariedad-afluencia de la población española entre los años posteriores a la crisis de inicio de la década de 1990 y los años más duros de la crisis de 2007. A partir de los datos de las encuestas PHOGUE y ECV del Instituto Nacional de Estadística (INE) se han construido cuatro indicadores para medir la precariedad laboral, de ingresos, de salud y de vivienda y su distribución según distintas variables demográficas. Se pretende contrastar la hipótesis de que más educación significa más protección frente a la precariedad, estudiando diferentes condiciones de las condiciones de vida y existencia en momentos tanto de crecimiento como de crisis económica. Mediante un análisis multivariable se intenta determinar el nivel de impacto del capital cultural, alcance, evolución y, sobre todo, si sus efectos positivos o negativos están en proceso de expansión o desaceleración. El resultado tiene una doble aportación: de un lado, metodológica, consistente en la construcción de los indicadores; de otro lado, los resultados, con los que se puede reevaluar algunas generalizaciones sobre la pérdida de importancia del rol de la educación en las sociedades contemporáneas.

Combining the dynamics of Poverty and Deprivation

This article analyses the evolution of poverty and deprivation. The study is focused on consistent poverty, defined as the combination of income and living conditions. In the literature, other papers on poverty show high exit and re-entry rates depending on temporary income shocks. These conclusions are tested in the case of deprivation and consistent poverty by using latent and mixed Markov models. This study is based on the European Community Household Panel (ECHP) data for Spain (1994-2001).