Labour Market Performance Research Articles

The effect of shocks to labour market flows on unemployment and participation rates

This article presents an analysis of labour market dynamics, in particular of flows in the labour market and how they interact and affect the evolution of unemployment rates and participation rates, the two main indicators of labour market performance. Our analysis has two special features. First, apart from the two labour market states – employment and unemployment – we consider a third state – out of the labour force. Second, we study net rather than gross flows, where net refers to the balance of flows between any two labour market states. Distinguishing a third state is important because the labour market flows to and from that state are quantitatively important. Focusing on net flows simplifies the complexity of interactions between the flows and allows us to perform a dynamic analysis in a structural vector-autoregression framework. We find that a shock to the net flow from unemployment to employment drives the unemployment rate and the participation rate in opposite directions while a shock to the net flow from not in the labour force to unemployment drives the rates in the same direction.

The occupational attainment of migrants and natives in Barcelona, 1930

Very few empirical studies have analysed the labour market performance of migrants in European countries in the nineteenth and early twentieth centuries. This article uses a rich new micro‐dataset to examine the occupational attainment of migrants, mostly internal migrants, in the city of Barcelona, a key destination from the late nineteenth century onwards, adding to the literature on internal migrations in Spain during the period of industrialization. The study shows that the occupational outcomes achieved by early migrants tended to match those of natives, the reference group. However, some groups of migrants who arrived at the end of the period covered by the study show poorer outcomes than natives. The relative underachievement of these groups is explained by changes in the type of migrants and in the characteristics of the labour market. Our estimates also suggest that Spanish migrants did not experience upward occupational mobility after settling in Barcelona.

Labour Market Performance in EU Member States: A Panel Regression Approach

 Abstract—This paper deals with labour market institutions and their influence on labour market performance in the EU Member States. We perform an econometric analysis to estimating the impact of various institutional aspects on the employment rate, the unemployment rate and the long-term unemployment rate. Our econometric analysis suggests that two institutional factors significantly influence unemployment and long-term unemployment: total tax wedge on labour and active labor market policies. While higher tax burden significantly increases the unemployment rate, active labor market policies work in the opposite direction and may offset the negative effect of high taxation of labour.

Sophie's Choice: Social Attitudes to Welfare State Retrenchment in Bailed-Out Portugal

This article examines social attitudes towards social rights in Portugal. It utilizes original survey data from 2013 to study the distribution of welfare attitudes in a context of economic austerity and welfare retrenchment. The main argument is that there are at least two sources of preference-formation regarding public social provision: one is universalistic (or needs-based), the other is contributory. These two logics frame choices concerning the future of the welfare state in Portugal. We explore the determinants of this choice through three hypotheses: dualization between insiders and outsiders (H1); the type of welfare regime (H2), and social rights consciousness (H3). Our findings suggest that choice between universalistic and contributory models is not impervious to macro-institutional factors and labour market performance. The paper’s main contribution, however, is to empirically demonstrate that this choice is significantly shaped by pre-existing understandings of social rights in Portugal, namely its politically contested character.

Youth sports and the accumulation of human capital

In response to declining budgets, many school districts in the US have reduced funding for sports. In Europe, parents may respond to difficult economic times by spending less on sports clubs for their children. Such cuts are unwise if participating in sports is an investment good as well as a consumption good and adds to students' human capital. The value of sports is hard to measure because people who already possess the skills needed to succeed in school and beyond might be more likely to participate in sports. Most studies that account for this endogeneity find that participation in youth sports improves academic and labor market performance.

Educational Attainment and Labor Market Performance: An Analysis of Immigrants in France

Using a recent survey of immigrants to France, we provide a detailed analysis of the educational attainment and labor market performance of various sub-population groups in France. Our results indicate that immigrants to France are less educated than the native born and that these differences can be tracked down to differences in socioeconomic background for most groups of immigrants. Similarly, there is a significant wage gap between immigrant and native-born workers regardless of gender, but this is reduced and sometimes disappears after correcting for selection into employment. In most cases the remaining differences in education and labor market outcomes seem related to the area of origin of the immigrant as well as where the education of the immigrant is obtained.

Duration dependence and exits from youth unemployment in Spain and the Czech Republic

We estimate the impact of unemployment duration on exits from unemployment, along with a set of individual and other explanatory variables. The analysis is based on EU-SILC longitudinal data for the period 2007–2010 and involves Spain and the Czech Republic as examples of the two EU countries with remarkably different labour market performance but similar in their totalitarian past, post-transition economies and recent EU entry. Survival functions estimates point uniformly to prolonged unemployment duration and increasing long-term unemployment. However, both these tendencies apply relatively more to the young unemployed. Estimations of hazard models indicate that shorter unemployment spells are more likely to be terminated by finding a job in comparison with spells lasting for more than one year. The hazard ratios are usually higher for prime age unemployed. Finally, we examine education, gender, household size, etc., as determinants of exits from unemployment, with uniform evidence found for university graduates only.

The Labour Market Performance of Young Return Migrants after the Crisis in CEE Countries: The Case of Estonia

This paper extends the earlier literature on the effects of return migration by studying selection and labour market performance in terms of the wages of young returnees in particular. The topic is motivated by young people’s various labour market issues and their high exposure to the consequences of the recent financial crisis. We use the Estonian Labour Force Survey data and the Estonian Population and Housing Census 2011 data in combination with the Estonian Tax and Customs Office data on individual payroll taxes. The econometric analysis focuses on the selection to temporary migration and estimation of wage premium to return, along with the decomposition of the returnee-stayer wage gap using the Oaxaca-Blinder approach and an investigation of wage premium dynamics over time after the return. The results generally show higher returns from temporary labour migration for young people relative to older people, and among youth the share of the unexplained fraction of the wage premium is also higher. These results imply a stronger role of experience gained abroad on earnings for youth.

Challenges of International Migration in a Globalized World: Implications for Europe

The research conducted aims to identify and assess the interdependencies between international migration and labour market outcomes, focusing both on emigration and immigration effects on sending, and destination countries, as well as on economic (labour force) and non-economic (humanitarian, refugees) migration. International migration as one of the most important frontiers of globalization represents a major challenge globally, with significant economic consequences, especially for Europe, where large migrant flows have emerged in the context of European integration. Moreover, recently there is an increased waves of refugees and asylum seekers targeting Germany, Austria, Sweden or Turkey as main destination countries coming through Eastern and Central Mediterranean or Western Balkans routes. The analysis is based on developing various double-log fixed and random effects models, as well as dynamic models, using a panel structure that covers five main EU destination countries (Germany, Austria, Sweden, Italy and Spain) and three New EU Member States since 2007 and 2013 (Romania, Bulgaria, Croatia). We used a complex set of indicators (national accounts – GDP total, per capita, per person, employed; labour market – employment, unemployment, wages, secondary and tertiary education; migration specific data – immigration flows and stocks, asylum seekers and refugees, emigrant stocks), compiled during 2000-2014. Moreover, we used a SEM model (Structural Equations Modelling) to better capture the labour market impacts of international migration for the selected EU countries. The models are processed through OLS, GLS, and MLE methods, as well as by using panel corrected standard errors, and are completed within and out-of-sample predictions. The results show that immigration flows have important economic consequences leading to significant changes in labour market performances (slight decrease in employment rates and wage levels), which largely vary from one country to another. On the long-run, the negative effects of immigration tend to predominate. From the emigration perspective, the findings show some positive effects of labour emigration on sending countries, by enabling to upgrade the living standards for those remaining, mainly through remittances. Still, there is a negative impact generated on the size and structure of internal labour force and, on the long run, this is proving to be extremely negative (slow GDP per capita growth rates).

Early Smoking, Education, and Labor Market Performance

Early Smoking, Education, and Labor Market Performance

The Impact of Multilingualism on Spanish Language Acquisition Among Immigrants in Spain

This article uses micro-data from the Spanish National Immigrant Survey to analyze the acquisition of Spanish language skills for immigrants in Spain. The motivation of the paper is threefold. Language skills are important for an individual's labour market performance, Spain offers an important non-English speaking country instance and the main novelty of our paper is to explore the impact of speaking multiple foreign languages on host language learning for immigrants. The results reveal a strong positive association between multilingualism and the probability of reporting good or very good Spanish language proficiency for immigrants in Spain.

Bubble Economics and Structural Change: The Cases of Spain and France Compared

This paper delves into the recent events that led to the formation of the housing bubble in Spain and the resulting structural change that is arguably needed to put the economy back into the right track. For this purpose we calibrate a model with different equilibria descriptive of the labor markets in Spain and France, where the unemployment rates went from the same initial spot to very different levels. In addition to this, we run two counterfactual analyses that throw some more light on the performance of the Spanish labor market and the Spanish housing bubble. Our results suggest that the unemployment rate in Spain has jumped to much higher levels while switching between equilibria or, what is the same, because of structural change. Moreover, our counterfactuals indicate that, first, the Spanish flexibilization reform has fallen short of its own goals and, second, there has been an important misdirection of resources into the construction industry mainly fueled by excessively low real interest rates.

A Statistical Analysis of Heterogeneity on Labour Markets and Unemployment Rates in Colombia

In this paper, we study the structural factors that determine the differences in unemployment rates and in labour market performance for Colombian cities. Using cross-sectional data for 23 metropolitan areas, we apply an extension of a principal axes method—Multiple Factor Analysis for Multiple Contingency Tables (MFACT)—in order to identify unobservable factors that are relevant when disentangling the heterogeneity observed among groups of variables considered explanatory of regional unemployment differentials. Our findings suggest that differences in qualified labour supply levels, participation incentives and age structure are important when it comes to understanding regional heterogeneity in terms of labour markets and unemployment rates in Colombia. In addition, clustering methods reveal that cities that display high unemployment rates do not necessarily share the same structural characteristics; that is, labour market frictions that give rise to unemployment are not the same across Colombian cities.

The Effect of Linguistic Proximity on the Occupational Assimilation of Immigrant Men in Canada

This paper contributes to the analysis of the integration of immigrants in the Canadian labour market by focusing in two relatively new dimensions. We combine the large samples of the restricted version of the Canadian Census (1991-2006) with both a new measure of linguistic proximity of the immigrant’s mother tongue to that of the destination country, and with information of the occupational skills embodied in the jobs immigrants hold. This allows us to assess the role that language plays in the labour market performance of immigrants and to better study their career progression relative to the native born. Weekly wage differences between immigrants and the native born are driven mostly by penalties associated with immigrants’ lower returns to social skills, but not to analytical or manual skills. Interestingly, low linguistic proximity between origin and destination language imposes larger wage penalties to the university-educated, and significantly affects the status of the jobs they hold. The influence of linguistic proximity on the skill content of jobs immigrants hold over time also varies by the educational level of the migrant. We also show that immigrants settling in Quebec and whose mother tongue is close to French have similar or better labour market outcomes (relative to native-born residents in Quebec) than immigrants with close linguistic proximity to English settling outside Quebec (relative to native born residents in the rest of Canada). However, since wages in Quebec are lower than elsewhere, immigrants in Quebec earn less in absolute terms than those residing elsewhere.

The Impact of Immigrants on Public Finances: A Forecast Analysis for Denmark

All over Europe, ageing populations threaten nations' financial sustainability. In this paper we examine the potential of immigration to strengthen financial sustainability. We look at a particularly challenging case, namely that of Denmark, which has extensive tax-financed welfare programmes that provide a high social safety net. The analysis is based on a forecast for the entire Danish economy made using a dynamic computable general equilibrium model with overlapping generations. Net contributions to the public purse are presented both as cross-sectional figures for a long time horizon and as average individual life-cycle contributions. The main conclusion is that immigrants from richer countries have a positive fiscal impact, while immigrants from poorer countries have a large negative one. The negative effect is caused by both a weak labour market performance and early retirement in combination with the universal Danish welfare schemes.

UK labour market policy then and now

This article considers the evolution of UK labour market policy during the last 30 years. It does this through the lens of the ‘social model’. The social model encompasses the employment relations system, the social welfare system, and the education and training system. It was changed dramatically by the Thatcher and Major governments. The succeeding Labour and Coalition governments largely embraced this new model and, in some ways, increased the pace of change. The consequences for labour market performance—employment, unemployment, productivity, and inequality—are explored.

‘All in it Together’? Ethnoreligious Labour-Market Penalties and the Post-2008 Recession in the UK

The existence of ethnic penalties in the operations of the UK labour market is well established, although many studies have focused upon only unemployment and income as measures of labour-market performance. Few have looked at changes in those penalties over time, especially during a period including a major recent recession, and whether they were experienced widely throughout the population—whether people were ‘all in it together’ according to the government's rhetoric defending its post-2010 austerity programme. This paper evaluates that claim's validity by exploring differences among eighteen separate ethnoreligious groups across a wider range of labour-market performance measures: it assesses not only whether there were ethnic penalties throughout the period but also whether they were exacerbated during the recession that began in 2008. Statistical modelling shows that many were indeed exacerbated—in the percentage employed part-time rather than full-time, the percentage overqualified for their chosen jobs, the percentage of older adults who become economically inactive prematurely, and income levels—but not unemployment levels. Muslim groups, especially those from Asia, suffered the most extensive penalties, and the greatest exacerbation of them during the recession.

Trade-off between Employment and Job Quality: Ethnic Penalty in Italian Regional Labour Markets

In just a few decades, South Europe has become one of the most important destination areas for migratory flows coming from high emigration countries. The immigrant labour market integration in this area, however, differs significantly compared to the experience of older Centre-North European receiving countries. Although many cross-national studies have examined the role of some macroinstitutional variables that may affect the process of immigrant integration, the main reason for these differences seems to be due to the characteristics of the labour market. Italy may prove an important case study to explore this issue in greater depth, given that within the same institutional context, the labour market performances, structure and informal regulation differ significantly at a territorial level, with many Northern regions more comparable to Centre-North European countries, while those of South highlighting Mediterranean characteristics. Indeed, the aim of this study is to verify if, and to what extent, the differentiation of the labour market characteristics influence the modalities of immigrant socio-economic insertion also at a regional level within the same country. In particular, it focuses on the relationship with native labour forces and the so-called ethnic penalty, namely the differences between immigrants and natives emerging in the labour market performances when as many individual characteristics as possible are taken into account. The results of the multivariate analysis carried out confirm the existence of a trade-off among the Italian regions similarly to what is found in the comparison between South and Centre-North Europe: immigrants have better employment entry chance where the size of the secondary labour market is bigger, but at their expense in terms of job quality. However, gender specificities emerge too, making some clarifications necessary.

Two Decades of Change: The Australian Labour Market, 1993-2013

This article provides a statistical review of the Australian labour market over the two decades to 2013. It examines changes in: the nature of labour supply and participation; labour utilisation; patterns of employment growth across states; the characteristics of jobs; and earnings. The period can reasonably be characterised as one of strong labour market performance: participation, employment and earnings all increased over most of the period, while measures of job insecurity and work intensity moderated and in some cases reversed. However, earnings inequality increased substantially, at least in part reflecting changes in labour demand favouring the most skilled and educated.

Youth labour market performances in the Russian and Italian regions

The focus of this paper is on youth unemployment in Italy and Russia: in both countries, youth unemployment rates (YURs) are higher than adult (or total) ones. Despite these general trends, there are significant regional differences in YURs and above-average YUR regions tend to cluster close to each other. Moreover, a distinction between “North” and “South” regions seems appropriate for both countries. The purpose of this study is to identify key determinants of YURs in the Russian and Italian regions, for the period 2000–2009. We also search for the existence of distance spatial effects. In particular, we estimate a modified Arellano–Bond model for the regional YUR, including some explanatory and control variables (e.g. regional GDP in PPP, regional population density, regional total unemployment rate), together with year dummies and North/South dummies. The use of distance matrixes enables important analysis to be conducted on the role played by spatial effects, which turn out to be significant. Also the negative impact of the 2008–2009 crisis is statistically confirmed (at least in the case of Italy). The relevant policy implications are highlighted in the conclusions.