Long-term Labor Market Outcomes Research Articles

Education legislations that equalize: a study of compulsory schooling law reforms in post-WWII United States

Compulsory schooling laws are commonly believed to be effective measures in ensuring individuals benefit from education. However, their implications for racial equality are less-apparent. Exploiting timing and geographic variation in legislation reforms among Southern U.S. states, this study evaluates the differential impact of minimum school-leaving age requirements on short- and long-term labor market outcomes between Black and White men. Results show that each additional year of compulsory schooling produces about 7.3–8.2% increase in adulthood weekly income. While there exists a substantial gap in returns to education between Black and White men at early career stages, this gap is reduced by 37 percentage points at mid-late career. Findings imply that mandating compulsory school attendance motivates both Black and White men to stay in school longer, and thus reducing racial gaps in returns to education.

Dynamic work trajectories and their interplay with family over the life course.

This review examines major bodies of literature, interrelated but usually considered separately, focused on work trajectories and their intersections with family dynamics through the life course. It begins with a consideration of the life course paradigm, which draws attention to the temporal dimensions of human lives, and recently developed analytic techniques that are well-suited to empirical investigation of life course transitions and trajectories over time. The review proceeds to examine empirical research on work career mobility (including both inter- and intra-generational mobility) measured as either trajectories of continuous outcomes or sequences of categorical outcomes, and their long-term consequences for socioeconomic attainment. Work-family trajectories are then addressed, focusing on the impacts of family on work, notably expressed in the motherhood wage penalty, and how family structure and processes affect long-term labor market outcomes. Research documents considerable heterogeneity in work-family dynamics over the life course across social groups with unequal resources. The review concludes with an assessment of the interplay of work and family trajectories studied longitudinally and makes recommendations for future research. It is argued that while extant studies of the work-family interface are compatible with, and sometimes deliberately reflect, a life course perspective, these bodies of research would benefit from more fully incorporating the life course principles of "agency" and "time and place".

The impact of Vietnam’s 2013 extension of paid maternity leave on women’s labour force participation

ABSTRACT In 2013, Vietnam expanded its paid maternity leave from four to six months. This study evaluated whether the expansion of Vietnam’s paid maternity leave policy was associated with improved long-term labour market outcomes for Vietnamese women. We used a regression discontinuity design to evaluate the impact of this policy on the probability of women holding a job and a formal labour contract three to five years after giving birth. Implementation of the policy was not associated with an overall increase in the probability of holding a paid job (RD = −1.9 percentage-points, 95% CI = −4.0, 0.1) or paid job with labour contract (RD = −2.6 percentage-points, 95% CI = −5.3, 0.1). Expansion of the policy was associated with a decreased probability of holding a formal labour contract among women with an upper secondary school education (RD = −3.6 percentage-points; 95% CI −6.4, −0.8) and without other young children (RD = −4.6 percentage-points; 95% CI = −7.9, −1.4). Our analyses suggest that Vietnam’s implementation of an expanded paid maternity leave policy has not translated to an increase in the probability of holding a paid job or formal paid job three to five years after giving birth.

Educational tracking and social inequalities in long-term labor market outcomes: Six countries in comparison

In this country-comparative study, we ask to what extent differentiation in secondary education accounts for the association between social origins and social destinations in adult age. We go beyond the widely applied formal definitions of educational tracking and particularly pay attention to country-specific approaches to educational differentiation. Our main expectation is that once we factor in these particularities, the degree to which educational differentiation accounts for social reproduction is quite similar across countries. Our analyses are based on national individual-level life-course data from six European countries that span from secondary education to occupational maturity. Our findings show that educational differentiation mediates the association between social origins and social destinations to a substantial degree in all countries. However, we still find some differences between countries in the extent to which educational differentiation accounts for social reproduction.

What Determines Unemployment in the Long Run? Band Spectrum Regression on Ten Countries 1913-2016

This paper presents an empirical analysis of the relation between unemployment and macroeconomic performance. A strong correlation has been pointed out before, but a crucial question is over what time-horizon this holds. To the best of our knowledge, no previous cross-country study has shown that there is a long-run relationship between unemployment and macroeconomic performance over a time-period that stretches before the 1960s. To address this issue, we use wavelet analysis to decompose the time series into short, medium and long-run variations, and band spectrum regressions on the relation between unemployment, GDP, investment, long-term interest rate and TFP, covering ten countries 1913-2016. This methodology has several advantages compared to standard econometrical methods and other tools for decomposition. Our results show that unemployment correlates negatively with the long-run components of investment. This suggests that aggregate demand and capital formation inuence long-term labor market outcomes. According to our estimates ca 17-percent of overall variations in unemployment and 29 percent of the long-run variations may be explained by long-run variations in capital formation.

Temporary and persistent overweight and long-term labor market outcomes.

We study how the duration of being overweight earlier in life is related to subsequent long-term labor market outcomes. Our data on fraternal and identical twins born and raised in the same household contain weight measurements of the twins during their early adulthood measured in 1975, 1981, and 1990 and is linked to register-based administrative data on the earnings and employment from 1990 to 2009. When combined, these data enable an empirical strategy that controls for the family environment and genes shared by twins. We find that being persistently overweight during early adulthood is negatively associated with long-term earnings for both women and men. We find that for women, the association is driven by a decrease in labor market-attachment, whereas for men, the association is driven by lower annual earnings.

The economic costs of child maltreatment in UK.

Child maltreatment is a major public health problem with significant consequences for individual victims and for society. In this paper, we quantify for the first time the economic costs of fatal and nonfatal child maltreatment in the UK in relation to several short-, medium-, and long-term outcomes ranging from physical and mental health problems to labor market outcomes and welfare use. We combine novel regression analysis of rich data from the National Child Development Study and the English Longitudinal Study of Aging with secondary evidence to produce an incidence-based estimate of the lifetime costs of child maltreatment from a societal perspective. The discounted average lifetime incidence cost of nonfatal child maltreatment by a primary caregiver is estimated at £89,390 (95% uncertainty interval £44,896 to £145,508); the largest contributors to this are costs from social care, short-term health, and long-term labor market outcomes. The discounted lifetime cost per death from child maltreatment is estimated at £940,758, comprising health care and lost productivity costs. Our estimates provide the first comprehensive benchmark to quantify the costs of child maltreatment in the UK and the benefits of interventions aimed at reducing or preventing it.

Female long-term labour market outcomes: the role of early-life abilities and education

ABSTRACT We study how early-life cognitive skills, non-cognitive abilities, and family characteristics influence educational choices and affect later employment outcomes and wages. The analysis was carried out on a cohort of UK females observed at different life stages by adopting the British National Child Development Study database. Our findings provide evidence of how early-life abilities and family characteristics affect both the educational attainment and later labour market outcomes of female workers. However, we found that educational levels interact with early-life abilities, productive characteristics in general, and other characteristics, giving rise to different employment outcomes and income prospects conditioned on educational attainment. Occupational outcomes and wages of low-educated women are more sensitive to factors that are not strictly linked to productivity.

The effect of parental smoking on children’s cognitive and non-cognitive skills

Economic research emphasises the importance of cognitive and non-cognitive skills in children for long-term labour market, health and social outcomes. In contrast to previous studies that focus on the effects of maternal smoking during pregnancy, we contribute to the literature by examining whether parental current smoking impacts on children’s cognitive and non-cognitive development. We exploit data from the Longitudinal Study of Australian Children and address potential endogeneity and self-selectivity bias using robust estimation methods. Overall, we find evidence that parental smoking results in worse development outcomes in children. Specifically, our fixed-effects estimates indicate that children living with parents who are smokers exhibit lower cognitive outcomes ranging between 0.09 and 0.17 standard deviation, while the impacts on non-cognitive outcomes range between 0.06 and 0.80 standard deviation. We also provide insights on some of the mechanisms of transmission. Our findings suggest that campaigns, programs and policies that reduce tobacco consumption may have positive externalities in terms of improving children’s cognitive and non-cognitive development, and long-term labour market outcomes.

Personality and Public Sector Employment

Using a representative survey combined with register data on long-term labour market outcomes, this paper examines how personality traits predict sorting into public and private sector employment among prime working-age individuals. To gain deeper insights into the dynamic dimensions of the sorting process, we also study the role of personality traits in the decisions to enter or exit public sector work. Our robust results show that public sector workers are more social, while private sector workers exhibit more orderly behaviour. The link between orderliness and sectoral sorting is partly explained by the reduced entry of individuals with high levels of orderliness into public sector employment. High sociability is also financially better rewarded in the public sector, which may implicitly indicate a good fit between this trait and job performance in that sector.

Childhood physical activity as a labor market investment

This study examined the role of physical activity and changes in physical activity levels during childhood in long-term labor market outcomes. To address this important but under-researched theme, the study utilized data drawn from longitudinal research, the Cardiovascular Risk in Young Finns Study (YFS), and from registries compiled by Statistics Finland. The study consisted of children aged 9 (n=1565) and 15 (n=2445) at the time their physical activity was measured. Labor market outcomes, including employment status, average employment months, and average unemployment months, were calculated from 1997 to 2010, when the participants were aged 20 to 48years. Regression models were used to assess the relationship between physical activity and labor market outcomes. The results show that the consequences of childhood physical activity may be far-reaching, as higher childhood physical activity was positively related to the probability of being employed and employment months and was negatively related to unemployment months. On average, a one-unit increase in physical activity index was related to a 1% higher probability of being employed, 0.10 more months of yearly employment, and 0.05 fewer months of yearly unemployment. The results also imply that persistently active individuals had the highest level of employment and the lowest level of unemployment compared with other activity groups. In conclusion, investments in childhood physical activity may not only promote health and well-being but may also correlate with better labor market outcomes later in life, providing both personal and societal benefits.

Catching up or lagging behind? The long-term business and innovation potential of subsidized start-ups out of unemployment

From an active labor market policy perspective, start-up subsidies for unemployed individuals are very effective in improving long-term labor market outcomes for participants. From a business perspective, however, the assessment of these public programs is less clear since they might attract individuals with low entrepreneurial abilities and produce businesses with low survival rates and little contribution to job creation, economic growth, and innovation. In this paper, we use a rich data set to compare participants of a German start-up subsidy program for unemployed individuals to a group of regular founders who started from non-unemployment and did not receive the subsidy. The data allows us to analyze their business performance up until 40 months after business formation. We find that formerly subsidized founders lag behind not only in survival and job creation, but especially also in innovation activities. The gaps in these business outcomes are relatively constant or even widening over time. Hence, we do not see any indication of catching up in the longer run. While the gap in survival can be entirely explained by initial differences in observable start-up characteristics, the gap in business development remains and seems to be the result of restricted access to capital as well as differential business strategies and dynamics. Considering these conflicting results for the assessment of the subsidy program from an ALMP and business perspective, policy makers need to carefully weigh the costs and benefits of such a strategy to find the right policy mix.

A longitudinal evaluation of government-sponsored job skills training and basic employment services among U.S. baby boomers with economic disadvantages

Job skills training is a cost-effective strategy for improving employment among individuals who have low income and employment barriers, but few U.S. government-sponsored employment program participants have received such training. To better understand long-term gains from job skills training, this study compared employment and earnings trajectories between program participants who received job skills training and those who received basic services only. Using data from the National Longitudinal Survey of Youth 1979, we estimated 33-year employment and earnings trajectories among U.S. baby-boomer cohorts while accounting for baseline group heterogeneity using inverse propensity score weighting. We found increases in employment rates over the life course, especially among Black women. Job skills training also increased earnings by up to 69.6 % compared to basic services only. Despite the long-term gains in employment and earnings, job skills training participation is not sufficient to address gender as well as racial and ethnic gaps in full-time employment. Findings reinforce the importance of incorporating job skills training as an essential service element of government-sponsored employment programs to improve long-term labor market outcomes among Americans with economic disadvantages.

Does early childbearing matter? New approach using Danish register data

It is widely expected that career interruptions related to childbearing affect mothers’ wages directly through changes in the formation of human capital. Research proposes that this effect is exceptionally strong for early childbearing women who are about to start their working careers. This study investigates whether the poor long-term labor market outcomes experienced by women who first gave birth before turning 25 reflect previously existing disadvantages or are a consequence of the timing of childbearing. The purpose is also to observe whether a new combination of the best identification practices from earlier studies serves as an improved estimation method. This is done by applying a within-family estimator while treating miscarriages as an exogenous variation, thereby addressing family and individual heterogeneity, which might have biased earlier results based on either of the two identification strategies alone. The results show that early childbearing has no long-term effects on women's earnings.

Civil War and Labor-Market Outcomes in Sierra Leone

This paper provides evidences of the lasting effects conflict exposure during different stages of life on the long-term labor-market outcomes of civilians in Sierra Leone. We took advantage of variations in time and location of the conflict and used a combination of data from the Sierra Leone Integrated Household Survey (2011) and various other data related to human-rights violations and loss of assets during war. Our results suggest a negative effect of conflict exposure during primary school age on long-term labor-market participation and employment. More precisely, exposure during this stage of life can reduce participation in the labor market or employment by up to 3%. The study also established the negative impact of conflict exposure from utero stage through primary-school age on hourly wages.

Overview of Vocational Rehabilitation Data about People with Visual Impairments: Demographics, Services, and Long-Run Labor Market Trends

Introduction: This study describes the characteristics of, services received by, and labor market outcomes of applicants with visual impairments to three state vocational rehabilitation programs. Our objective is to both document cross-state variation in vocational rehabilitation clientele and services and provide new insights on the longitudinal labor market outcomes of clients with visual impairments (i.e., blindness or low vision). This analysis is a first step in assessing the returns to vocational rehabilitation services for this population. Methods: We first created a unique longitudinal data set by matching administrative records on applicants who are visually impaired in state fiscal year 2007 from three vocational rehabilitation agencies to 8 years of employment data from state Unemployment Insurance programs. Using these data, we examined cross-state variation in the descriptive statistics for important client explanatory variables and vocational rehabilitation service categories. We then compared the long-term labor market outcomes of clients receiving services (treated) to untreated individuals. Results: We documented two important findings. First, there were substantial differences in client characteristics, services provided, and costs across the three states. Second, the long-run labor market analysis was consistent with vocational rehabilitation services having no employment effect but a positive earnings effect. Discussion: Labor market results indicate vocational rehabilitation services provided persistent earnings benefits. Yet the substantial cross-state heterogeneity suggests these labor market results might not be generalizable and should be interpreted with caution. We explain what was missing from this analysis and why the results should not be thought of as causal. Implications for Practitioners: This article gives practitioners a sense of a unique new data set on vocational rehabilitation and labor market variables for applicants with visual impairments. We highlight the importance of cross-state variation and linking vocational rehabilitation data to long-term employment measures. The question of how best to inform the efficacy of different vocational rehabilitation strategies for clients with visual impairments is left for future researchers to consider.

Types of Education, Achievement and Labour Market Integration over the Life Course

Over the last 15 years, research on the effects of different types of education on labour market integration and labour market outcomes has evolved. Whereas much of the early work analysed school-to-work transition outcomes, the focus of more recent studies has shifted to the relationship between educational achievement and mid- and long-term labour market outcomes. The overarching question of this body of research asks whether the allocation to different types of education leads to different skill sets, to different employment opportunities and to jobs offering unequal wages, job autonomy or job security. However, pivotal issues related to the comparison of vocational and general types of education or upper-secondary and tertiary-level qualification remain ambiguous and are hampered by a lack of suitable data and methodological problems. The aim of this issue is to further this debate and to provide more insights into the relationship between individual and contextual factors, allocation within the educational system, educational achievement and labour market outcomes over the life course. The 12 articles collected in this issue highlight the importance of focussing on the specific features and functions of different education tracks and programs, of applying data and methods suitable for such analyses and of considering the interplay of different determinants of education outcomes, such as social origin, gender or ethnicity.

The Vertical Transfer Penalty among Bachelor’s Degree Graduates

ABSTRACTNumerous studies have investigated the consequences of vertical transfer on students’ higher education outcomes in comparison to “native 4-year students”—those who went straight from high school into a bachelor’s program. However, the long-term labor market outcomes for vertical transfer students are understudied. Using nationally-representative data from the National Survey of College Graduates 2015, we estimate the relationship between starting in a community college (vs. at a 4-year college) and postcollege earnings and employment, in ways that correct for selection bias and overdispersion. We estimate a roughly 14% earnings disadvantage for baccalaureates who started at a 2-year rather than 4-year institution, regardless of college major. No effect was found on graduates’ employment chances.

Catching Up or Lagging Behind? The Long-Term Business and Innovation Potential of Subsidized Start-Ups Out of Unemployment

From an active labor market policy perspective, start-up subsidies for unemployed individuals are very effective in improving long-term labor market outcomes for participants. From a business perspective, however, the assessment of these public programs is less clear since they might attract individuals with low entrepreneurial abilities and produce businesses with low survival rates and little contribution to job creation, economic growth, and innovation. In this paper, we use a rich data set to compare participants of a German start-up subsidy program for unemployed individuals to a group of regular founders who started from non-unemployment and did not receive the subsidy. The data allows us to analyze their business performance up until 40 months after business formation. We find that formerly subsidized founders lag behind not only in survival and job creation, but especially also in innovation activities. The gaps in these business outcomes are relatively constant or even widening over time. Hence, we do not see any indication of catching up in the longer run. While the gap in survival can be entirely explained by initial differences in observable start-up characteristics, the gap in business development remains and seems to be the result of restricted access to capital as well as differential business strategies and dynamics. Considering these conflicting results for the assessment of the subsidy program from an ALMP and business perspective, policy makers need to carefully weigh the costs and benefits of such a strategy to find the right policy mix.

The effects of cash assistance on refugee outcomes

The United States receives tens of thousands of refugees per year, many of whom arrive with few resources. The federal refugee resettlement program aims to rapidly move refugees into employment and self-sufficiency. This causes refugees to undergo a search and matching process upon arrival that may be affected by cash assistance generosity. This paper exploits variation in cash benefit levels for welfare programs available to refugees after resettlement to identify the effects of welfare generosity on long-term labor market outcomes. I find that an additional $100 in TANF maximum monthly benefits is associated with a 5–8% increase in wages, but no significant change in the probability of employment. The effects are the largest among the highly educated.