Incidence Of Long-term Unemployment Research Articles

Mitigating Long-term Unemployment in Europe

Abstract While unemployment rates in Europe declined after the global financial crisis until 2018/2019, the incidence of long-term unemployment, the share of people who have been unemployed for >1 year to the total unemployed, remained high. Moreover, the COVID-19 pandemic could aggravate the long-term unemployment. This paper explores the factors associated with long-term unemployment in European countries using a panel of 25 European countries over the period 2000–2018. We find that skill mismatches, labor market matching efficiency, and labor market policies are associated with the incidence of long-term unemployment. Among the different types of active labor market policies, training and startup incentives are found to be effective in reducing long-term unemployment.

Mitigating Long-term Unemployment in Europe

While unemployment rates in Europe declined after the global financial crisis until 2018/19, the incidence of long-term unemployment, the share of people who have been unemployed for more than one year to the total unemployed, remained high. Moreover, the COVID-19 pandemic could aggravate the long-term unemployment. This paper explores factors associated with long-term unemployment in European countries, using panel of 25 European countries over the period 2000–18. We find that skill mismatches, labor market matching efficiency, and labor market policies are associated with the incidence of long-term unemployment. Among different types of active labor market policies, training and start-up incentives are found to be effective in reducing long-term unemployment.

Mitigating Long-Term Unemployment in Europe

While unemployment rates in Europe declined after the global financial crisis until 2018/19, the incidence of long-term unemployment, the share of people who have been unemployed for more than one year to the total unemployed, remained high. Moreover, the COVID-19 pandemic could aggravate the long-term unemployment. This paper explores factors associated with long-term unemployment in European countries, using panel of 25 European countries over the period 2000-18. We find that skill mismatches, labor market matching efficiency, and labor market policies are associated with the incidence of long-term unemployment. Among different types of active labor market policies, training and start-up incentives are found to be effective in reducing long-term unemployment.

Are the Spanish long-term unemployed unemployable?

Long-term unemployment reached unprecedented levels in Spain in the wake of the Great Recession and it still affects around 57% of the unemployed. We document the sources that contributed to the rise in long-term unemployment and analyze its persistence using state-of-the-art duration models. We find pervasive evidence of negative duration dependence, while personal characteristics such as mature age, lack of experience, and entitlement to unemployment benefits are key to understand the cross-sectional differences in the incidence of long-term unemployment. The negative impact of low levels of skill and education is muted by the large share of temporary contracts, but once we restrict attention to employment spells lasting at least 1 month these factors also contribute to a higher risk of long-term unemployment. Surprisingly, workers from the construction sector do not fare worse than similar workers from other sectors. Finally, self-reported reservation wages are found to respond strongly to the cycle, but much less to individual unemployment duration. In view of these findings, we argue that active labor market policies should play a more prominent role in the fight against long-term unemployment while early activation should be used to curb inflows.

Are the Spanish Long-Term Unemployed Unemployable?

Long-term unemployment reached unprecedented levels in Spain in the wake of the Great Recession and it still affects around 57% of the unemployed. We document the sources that contributed to the rise in long-term unemployment and analyze its persistence using state-of-the-art duration models. We find pervasive evidence of negative duration dependence, while personal characteristics such as mature age, lack of experience, and entitlement to unemployment benefits are key to understand the cross-sectional differences in the incidence of long-term unemployment. The negative impact of low levels of skill and education is muted by the large share of temporary contracts, but once we restrict attention to employment spells lasting at least one month these factors also contribute to a higher risk of long-term unemployment. Surprisingly, workers from the construction sector do not fare worse than similar workers from other sectors. Finally, self-reported reservation wages are found to respond strongly to the cycle, but much less to individual unemployment duration. In view of these findings, we argue that active labour market policies should play a more prominent role in the fight against long-term unemployment while early activation should be used to curb inflows.

Long-Term Unemployment and the Great Recession: The Role of Composition, Duration Dependence, and Nonparticipation

We explore the role of composition, duration dependence, and labor force nonparticipation in accounting for the sharp increase in the incidence of long-term unemployment (LTU) during the Great Recession. We show that compositional shifts account for very little of the observed increase in LTU. Using panel data from the Current Population Survey for 2002–7, we calibrate a matching model that allows for duration dependence in unemployment and transitions between employment, unemployment, and nonparticipation. The calibrated model accounts for almost all of the increase in LTU and much of the observed outward shift in the Beveridge curve between 2008 and 2013.

How Segmented are Skilled and Unskilled Labour Markets: the Case of Beveridge Curves

This paper tests whether there is evidence that two distinct Beveridge curves for the skilled and unskilled aggregate markets exist. The results support the hypothesis and specifically find that the unskilled labour segment is less efficient at matching workers with jobs, primarily due to higher labour turnover rates. Higher turnover rates can be indicative of a poor match between employers’ and jobseekers’ expectations. The results also indicate that other shift variables, such as the replacement rate, the incidence of long‐term unemployment, the immigration rate and the market circumstances in the skilled segment were only important for the unskilled segment.

A logit model of the incidence of long-term unemployment

A logit model of the incidence of long-term unemployment is estimated using a random sample of completed unemployment spells in New Zealand over the period 1988–97. The regressions results are sensible, but the predictive power of the model seems to depend on the share of long-term unemployed in total unemployment. In particular, if one-third or less of annual observations are made up of long-term unemployment spells, the model is incapable of predicting any such spells, unless it is constrained to do so.

The Effect of Labour Market Programs on Wage Inflation

One explanation for concurrent levels of high unemployment and inflation during the 1980s and early 1990s has been the high incidence of long-term unemploy ment. It has been argued that employers regard the long-term unemployed as de-skilled and accordingly not as viable alternatives to more experienced workers. Therefore they become more likely to grant tbe latter pay increases rather than hire more workers when under pressure from demand or supply. Labour market programs are recom mended as policies to reverse this de-skilling effect. If employers come to consider tbe unemployed as substitutes for their incumbent workforce they will be less inclined voluntarily to grant wage increases. This paper aims to test whether the suite of Working Nation labour market programs affected Australian wage inflation between 1989 and 1997, by estimating a general bargaining model using panel data tech niques. We find that a doubling of labour market program participants per employee lends, at most, to a 1 per cent reduction in nominal wages.

Structural Imbalances in Canadian Labor Markets

The nature of structural imbalances in the Canadian Labor market is identified by analyzing the relationship between unemployment and job vacancies. Three potential sources of imbalances are examined: (1) the regional nature of the Canadian economy; (2) the rise in the incidence of long-term unemployment (of 12 months or more); and (3) differences in the rate of growth of unemployment across industrial sectors. The major findings are: growing structural imbalances; an increase in long-term unemployment was the major cause of the shift in most cases; both inter-and intraregional effects played a significant role, but interregional disparities were the dominant factor; and the dispersion in employment growth rates across industrial sectors did not seem to play a role.