Labor Force Participation Decisions Research Articles

Worker mobility and UI extensions

We develop an equilibrium search model with a labor force participation decision, job-to-job transitions, and endogenous separations. The calibrated model perfectly matches the observed labor market flows in US data. We use the model to simulate the effects of an extension of unemployment insurance benefits to 99 weeks. The reform leads to a decrease in employment, an increase in the labor force participation and unemployment rate, while it leaves labor productivity roughly constant. Using a model-based decomposition, as well as comparisons with alternative simplified models, we show that modeling workers’ participation decisions, job-to-job transitions, and endogenous separations together is crucial for a complete and accurate analysis of UI reforms.

Labour market implications of thyroid dysfunctions

This paper aims to shed some light on the labour market implications of thyroid disease. Undetected hypothyroidism has adverse effects on wages for female workers,thus widening the existing gender wage gap. However, once female individuals are diagnosed (and therefore assumed to be treated) with hypothyroidism, they experience wage gains and have a higher employment probability. In relation to other labour market outcomes, thyroid disease does not appear to play a significant role on individuals’ labour force participation decision and their working hours. Results suggest that productivity gains may drive the improvement in wages.

Social Pension and Labor Participation among Elderly Urban Residents in China

China is facing the problem of an aging population. So, the impact of social pension income on labor supply is of great importance for the development of the society's economy.This article uses data from the 2017 China Household Finance Survey (CHFS) and employs probit regression to investigate the effect of pension income on the labor force participation decision of urban elderly people. The regression analysis results indicate that social security pension income has a significant negative effect on the labor force participation decision.

The independent woman—locus of control and female labor force participation

This paper contributes to the research on heterogeneity in labor force participation decisions between women. This is done by discussing the role of the personality trait locus of control (LOC), a measure of an individual’s belief about the causal relationship between behavior and life outcomes, for differences in participation probabilities. The association between LOC and participation decisions is tested using German survey data, finding that internal women are on average 13 percent more likely to participate in the labor force. These findings are also found to translate into higher employment probabilities at the extensive and intensive margin as well as in a lifetime perspective. Additional analyses identify a strong heterogeneity of the relationship with respect to underlying monetary constraints and social working norms. In line with the existing literature, an important role of LOC for independence preferences as well as subjective beliefs about returns to investments are proposed as theoretical explanations for the findings.

Factors Affecting Labor Force Participation Decision in Bangladesh: An Empirical Study Using Microdata

Labor force participation rate is often used to keep an eye on the progress in the labor market. Using the labor force survey-2016, this study tries to identify the socioeconomic factors affecting a person’s decision to join the labor force. A probit model has been used to understand the significance and respective marginal effects of each of the factors. The study has found higher chances of joining the labor force among the rural population. Attainment of higher education and training facilities can play vital roles in labor force participation decisions. The presence of elderly members and a high dependency ratio decreases the probability of participating in the labor force. Based on the findings, this study argues that prompt comprehensive actions are needed to reap off the benefit of demographic dividend.

Las remesas internacionales y la participación en la fuerza laboral en Costa Rica: Explicando Resultados Contradictorios

The purpose of this article is to investigate the effects of remittances on labor force participation and labor supply decision of women in Costa Rica based on an analysis of data from the Costa Rica national survey, Encuesta de Hogares de Propositos Multiples (Household Survey for Multiple Purposes) in 2007. The labor force participation decision is analyzed with a Probit model. The determinants of total number of hours worked is investigated with the Heckman selection model. The labor force participation decision on female household heads is found to be affected by remittances and the frequency, reduce labor force participation rates as much as 20 percent. The effect of remittances on the number of hours supplied is found to be weaker. Those households, which receive no remittances or only receive remittances infrequently, supply 3.5 hours more per week. However, we fail to find that frequent remittance receiving household heads supply fewer hours. We find evidence that the number of hours supplied is affected by the frequency of remittances for the poor, but not the extremely poor.

Minimum Wage Effects on Reservation Wages

Reservation wages are part of the transmission mechanism between minimum wages and unemployment via the labour force participation decision. The limited available empirical evidence on the relationship between reservation wages and legal minimum wages suggest that individuals use minimum wages as benchmarks against which their reservation wages are set. This has a profound behavioural effect that may encourage individuals to either enter the labour force or price themselves out of potential employment. We employ a fuzzy regression discontinuity design to explore the influence of minimum wages on reservation wages. Our findings suggest that the behavioural response is too small to be extracted from the variability of the reservation wage data. For policy makers this finding is important. While minimum wages raise earnings and living standards, they can push some workers out of the labour force by increasing their reservation wage beyond the minimum. We do not find any evidence of such a response of the reservation wage of jobseekers to the minimum wage in the UK.

Should I Go to Graduate School? The Role of Preference for Children and Human Capital Accumulation

We propose a selection mechanism with preference heterogeneity to study the impact of children on women’s decision to attend graduate school. We show that the net return to education decreases with women’s preferences for children and that only women with preferences below a certain threshold find it optimal to go to graduate school. We embed the selection mechanism into a dynamic life-cycle model of schooling, fertility, and labor force participation decisions and find that changes in returns to experience are quantitatively relevant to account for the observed changes in behavior of women born in 1945 or 1965.

Woman labor force participation in off-farm activities and its determinants in Afar Regional State, Northeast Ethiopia

Women have driven economic development around the globe through higher returns on human capital and education. However, woman’s involvement in labor market was weak over time, generally in Ethiopia and particularly in Afar region. Therefore, this study intended to identify and analyze the determinants of woman’s participation decisions in off-farm activities. The data was collected from 473 sampled women using a multistage sampling technique. Both descriptive and logistic regression model was employed to analyze the determinants of woman participated decision in off-farm activities. Descriptive statistics revealed that, from the total sample, 270 (57.08%) of woman have participated in an off-farm activity, while, 203 (42.92%) of them do not participate. Whereas, the binary logit regression result that woman level of education and dependency ratio was positively and significantly determine woman labor force participation decision; however, a woman who had children less than five years aged, nonfarm training, distance to the market, woman marital status, access to credit, ownership of livestock and safety net adversely affected the participation decision of woman on off-farm activities. This study was recommended that: special attention for woman educational development, adopted family planning and parental benefits, provide and properly follow up nonfarm training, developed marketplace nearby, provide credit for only productive activities, create awareness about off-farm activities in addition to livestock husbandry (mixed-farming), and provide safety net for only eligible woman.

Family Formation, Gender and Labor Force Participation Decision in Developing Countries

Family Formation, Gender and Labor Force Participation Decision in Developing Countries

Chronic Diseases and Labor Force Participation Among Presenile and Senile Chinese.

Background: The incidence of chronic diseases has increased dramatically due to rapid aging and lifestyle changes of China in recent decades. The population aged more than 45 years is an important participant in the labor force market, and the health status directly affects their labor force participation decision. This study aims to explore the relationship between chronic diseases and the labor force participation among the elderly Chinese population aged more than 45 years.Method: We employ a multivariate probit (MVP) model to construct five structural equations for an analysis. The advantage of this model is that it can deal with the endogeneity of chronic diseases.Results: Firstly, compared with the elderly, younger people are more likely to participate in the labor force market; the influence of chronic diseases is the largest for presenile women in the decision-making of labor force participation; the impact of psychological problems on labor force participation cannot be ignored, especially for men aged more than 45 years. In addition, sociodemographic factors such as geographical location and marital status also have direct effects on the probability of labor force participation while the impact of both family wealth and family number is much smaller. Finally, unhealthy lifestyles through chronic diseases have negative and indirect marginal effects on labor force participation.Conclusions: This article proves that chronic diseases have a negative impact on the labor force participation for Chinese aged more than 45 years. The public should give more tolerance and opportunities to these groups. The population aged more than 45 years are more vulnerable and face more psychological problems, which will lead to a decline in labor force participation. Psychological health counseling and services are urgently needed. As the urban areas enjoy more social welfare, Chinese welfare policy needs to be tilted toward the rural elderly. For individuals, maintaining healthy lifestyles can help you stay away from chronic diseases and stay in the labor force market.

Labor force participation, job search effort and unemployment insurance in the laboratory

How the provision of unemployment benefits affects employment is a debated issue. We aim at complementing theoretical and empirical contributions to this debate with a laboratory experiment. We simulate a job market with search effort and labor force participation decisions while varying the maximum length of unemployment benefit eligibility. Our results reveal two separable, opposing effects. Individuals within the labor force search with lower effort when unemployment benefits are more generous. However, individuals are more likely to participate in the labor force and to actively search for a job.

Labour Participation Decision and Preferences towards Different Employment Status in Response to Remittances: Evidence from the Provincial Capital of Punjab and Khyber Pakhtunkhawa (KPK), Pakistan

This study has examined the effect of remittances on the labour force participation decisions and preferences of the individuals towards different employment status and work categories. The data from the rural and urban areas of the two provincial capitals of Pakistan has been collected to cover the main range of the topic. The study adds in existing literature the three major implications of labour market outcomes in response to remittances. First, the estimates of the Logit and Probit model suggest that remittances significantly increase the likelihood to not participate in the labour force. In addition, the differential effect of remittances depicts that as monthly remittances increase from 10,000 rupees to 500,000 rupees, the likelihood to participate in labour market decreases from 0.84 to 0.30 respectively. Second, estimates of the multinomial logit model reveal that among different employment categories, remittances increase the likelihood to participate in non-employment. While in case of participation in labour market, they are more likely to prefer full-time self-employment status. Third, estimates of the multinomial logit model depict that among different work professions, remittances increase the likelihood to participate in self-employment and employer profession. The results of the study suggest policy implication on the reallocation of labour from non-employment to self-employment or employer can generate productive outcomes. Furthermore, incentives in the adoption of self-employment and improvement in ease of doing business are essential to spill over the effect of remittances as job creators.

Widow, deserted, and destitute women allowances and rural female labor force participation in Bangladesh: Linking social protection to the Sustainable Development Goals

In developing countries, often a major segment of the population is characterized as poor. Thus, social protection programs play a crucial role in facilitating the attainment of the Sustainable Development Goals (SDG) agenda across these nations. Among the several socioeconomic benefits associated with the social safety net programs, the impacts on female labor force participation are vital from the perspectives of enhancing women empowerment and welfare. Against this backdrop, this paper aims to evaluate the impacts of social transfers under the “allowances for the widow, deserted, and destitute women” social protection program on the rural female labor force participation responses in Bangladesh. The overall results from the probit, IV‐probit, and propensity score matching techniques provide statistical evidence regarding the cash transfers acting as a “mini‐push” to nudge greater participation of the beneficiary women in the labor force. Moreover, the cash transfers are also found to positively influence the labor force participation decisions of the other female members within the households of the program beneficiaries. Besides, the female labor force participation decisions are evidenced to be heterogeneous across the age cohorts, marital statuses, and the gender of the household head. In line with the major findings from the analyses, some key policy interventions are recommended.

Trade liberalization and gender gaps in local labor market outcomes: Dimensions of adjustment in the United States

We provide empirical results that trade liberalization with China reduced gender gaps in local U.S. labor markets. In MSAs with higher exposure to trade liberalization, the simple wage gender gap decreased, while the residual wage gap increased, indicating important selection effects in labor force participation decisions. The reduction in the gender labor force participation gap was driven by higher entry of women, in particular more educated women, and exit of the less educated men. This results in intrahousehold adjustments in work dynamics, with women entering the labor force to offset the lost income of male partners who left the labor force. We show that trade liberalization increased female workers’ unemployment rate and reliance on part-time jobs.

Gender Gaps in Latin American Labor Markets: Implications from an Estimated Search Model

We develop and estimate a search model that captures the specific characteristics of Latin America and Caribbean (LAC) labor markets and the crucial differences between men and women. Labor force participation decisions are integrated in the labor market dynamics, taking into account sample selection over unobservables. The model is estimated on four LAC countries (Argentina, Chile, Colombia and Mexico) and on three education levels (Primary, Secondary and Tertiary). We use the estimated model to study changes in gender gaps and in output implied by policies that increase the labor force participation of women. We focus on four policies: an increase in the provision of child care, an increase in average female productivity, a gender-based contribution rate for formal employees, and changes in formality and informality costs. We find that the impact on the extensive margin of the female labor supply is the main channel responsible for the policy-induced increase in output.

Kadınların İşgücüne Katılımında Gelir Etkisi: Türkiye Örneği

Bu çalışmada, TÜİK hane halkı bütçe anketlerinden yararlanılarak kadınların işgücüne katılımını belirleyen faktörler araştırılmaktadır. Bebek sahipliği, eğitim durumu, yaş ve hane geliri değişkenleri kullanılarak probit model tahmincileri elde edilmektedir. İktisat teorisinden bilindiği gibi, işgücüne katılım-boş zaman arasındaki bireysel tercihler gelir ve ikame etkisi üzerinden belirlenmektedir. Gelir etkisini tahmininde, “toplam hanenin geliri” değişkeninin kullanılması, ekonometrik açıdan içsellik problemine yol açmaktadır. Bu çerçevede çalışmada geleneksel probit modellerine ek olarak, araç değişken tekniği üzerinden kurulan probit modeli tahmincileri elde edilmektedir. Kadınların işgücüne katılımı üzerinde; bebek sahipliği, yaş ve hane gelirin etkisi negatif iken üniversite mezuniyetinin etkisi pozitiftir.

Spillover effects of fiscal policy in a monetary union: Why do fiscal instruments matter?

AbstractUsing a two‐country DSGE model, we analyse the spillover effects of fiscal policy in a monetary union. Based on a non‐Walrasian labour market with a labour force participation decision and involuntary unemployment and a detailed fiscal sector, we focus on the relative cross‐border effects of different kinds of fiscal shocks (government expenditure and tax shocks). Among the major lessons from this analysis, five general and striking results are worth highlighting : (1) spillover effects differ widely according to the fiscal instrument, (2) all fiscal instruments produce positive spillover effects on foreign GDP except a rise in government consumption, (3) the response of unemployment is not always negatively correlated with the response of output (4) the different fiscal shocks trigger different effects on foreign inflation and the term of trade, which implies heterogeneous interest‐rate and trade channels, and (5) a more accommodative monetary policy and a scenario of ‘fiscal dominance’ alter greatly the effects of fiscal policy shocks.

Expected and Unexpected Consequences of Russian Pension Increase in 2010

This paper studies the effects of the pension increase in Russia in 2010 on the labour force participation decisions and living arrangements of senior people and their family members. There is not much research on the effects of pension rises in Russia. In particular, researchers have not yet analysed the influence of pension increases in Russia on nonelderly people nor the heterogeneity of this influence. The increase in pensions in 2010 is of particular interest due to its unique magnitude, its relative independence from economic trends in Russia at that time, and its plausible exogeneity for pensioners. This study provides evidence that this jump in pension caused an approximately 5 percentage point increase in the relative number of seniors who chose to retire. The effect was stronger in the two biggest cities of Russia, namely Moscow and Saint Petersburg, where before 2010 a substantial number of people continued to work after reaching the pension age. One out of four employed pensioners living in these cities left the labour force in 2010. In addition, this paper shows a relatively unexpected external effect on younger individuals. The labour force participation decisions of younger people who lived with pension receivers were influenced considerably. The non-seniors who lived with pensioners, compared with their peers, were less likely to work or to look for jobs. The change in pensions also affected living arrangements. The rate of pension receivers living with their children and grandchildren went up significantly. Thus, the evidence from the 2010 pension increase highlights the fact that policies might have an impact not only on the target group of population, but on the family members of this group as well.

Investigating the Macroeconomic Factors That Determine a Female Worker to Participate in the Labor Force: Evidence from the South Asian Countries

Over the last four decades female labor force participation rate increases significantly in the South Asian countries, while it remains stagnant or sometime declines into the developed countries. The study is for investigating the macroeconomic determinants that play the vital role in decision making whether a female will participate in the labor force or not. Data are taken from five south Asian countries named Bangladesh, India, Sri-Lanka, Nepal, and Pakistan over the period of 1990-2015. Breusch-Pagan, Honda, King-Wu, Standardized Honda and Standardized King-Wu Lagrange Multiplier test confirm there exists cross-section effects. Hausman test confirms that fixed effect model is appropriate for empirical analysis for this study. But Breusch-Pagan LM test, Pesaran scaled LM test and Baltagi, Feng, and Kao bias-corrected scaled LM test confirm that there exist cross-sectional dependence in residuals. Therefore, Panel Corrected Standard Error (PCSE) model has been employed to get the unbiased estimators. Empirical results of PCSE model confirm that per capita GNI, Square of per capita GNI, Education, and Fertility rate have statistically significant impact on fertility rate in the south Asian countries. Empirical results also reveal the validity of inverted U shaped hypothesis of female labor force participation decision.