Re-employment Probabilities Research Articles

Was kann die Aktive Arbeitsmarktpolitik in Deutschland aus der Evaluationsforschung in anderen europäischen Ländern lernen?

AbstractMost evaluation studies for Germany's active labor market policy (ALMP) indicate that subsidized employment programs in the public sector (public works programs, „Arbeitsbeschaffungsmaûnahmen“) and publicly funded training programs have, on average, no or even negative effects on individual re-employment probabilities. This paper provides possible explanations for the ineffectiveness of these programs, where we focus on heterogeneous treatment effects, which are not accounted for in the German evaluation studies due to lack of data, and locking-in effects, in particular related to the relatively high level of income support for participants in these programs. Since there is very little direct evidence on these effects for Germany to date, we draw on results from evaluation studies for other European countries. We argue that the success of ALMP is to a large extent determined by design features like the targeting of particular groups and the incentives from the coordination with unemployment insurance as well as the incentives of program administrators and local governments.

Reemployment Probabilities and Returns to Matching

The assumption of constant returns in the matching function, embodied in most bilateral search models, is crucial to ensure the uniqueness of the unemployment rate along a steady‐state growth path. This article explores the empirical viability of this assumption by estimating individual reemployment probabilities on a sample of unemployment entrants. I apply hazard models to survey data on both completed and uncompleted unemployment durations. The hypothesis of constant returns to matching is not rejected, on the basis of the evidence that the job‐finding hazard depends only on local labor market tightness and is independent of its size.

Unemployment Persistence in the West German Labour Market: Negative Duration Dependence or Sorting?

The paper tests for negative duration dependence in West German unemployment in the presence of unobserved population heterogeneity. The analysis is based of a microeconometric model estimated on the German Socio-Economic Panel covering the period 1983 to 1995. I find that, after controlling for observed and unobserved population heterogeneity, individual re-employment probabilities are constant or even increase slightly with duration and, thus, reject the hypothesis that the high and increasing share of long-term unemployment in West Germany can be explained by structural negative duration dependence. Copyright 2001 by Blackwell Publishing Ltd

The Influence of Different Compensation Levels of Unemployment Benefits on Job Chances among Unemployed Youth: A Comparative Study of the Nordic Countries

Comparative surveys of unemployed youth were carried out in 1995-96 in the five Nordic countries. Representative samples of 1,500 to 3,000 registered unemployed, aged 18 to 24 years old, were drawn from the national unemployment registers in each country in the spring of 1995, and respondents were interviewed 6 to 12 months later. The article examines the influence of receiving unemployment benefits upon job chances of the previously unemployed. Danish youth (with compensation levels of 90 per cent) reported fewer financial problems than youth in the other countries with much lower compensation levels. The results document a decrease in the probability of re-employment for unemployed youth receiving unemployment benefits, even controlling for age, educational level, work commitment, job-seeking and duration of unemployment. The effect was significantly stronger in Denmark than in the other countries with lower compensation levels. However, in the other countries, receiving social assistance and having financial problems had an equally negative impact on re- employment.

Explaining the transitions out of unemployment in Spain: the effect of unemployment insurance

A multinomial logit model and matched files from the Spanish Active Population Survey (EPA) are used to study transitions out of unemployment among men aged 20-59. In addition to demographic characteristics, other explanatory variables included in the regressions pertain to previous job characteristics and the spell of unemployment. In this article, special attention is paid to the impact of unemployment insurance benefits on the re-employment probability. Consistent with previous work, it is found that receipt of unemployment insurance is associated with lower probabilities of re-employment and of withdrawal from the labour force. More importantly, a differential effect of benefit receipt is obtained when comparing time periods before and after 1992. Indeed, in April of that year the labour authority made eligibility requirements for unemployment insurance more restrictive and curtailed benefit amounts.

Employment Effects of Publicly Financed Training Programs – The East German Experience / Beschäftigungseffekte von Fortbildungs- und Umschulungsmaßnahmen in Ostdeutschland

Summary We analyze the effectiveness of publicly financed training and retraining programs in east Germany as measured by their effects on individual re-employment probabilities after training. These are estimated by discrete hazard rate models on the basis of individual-level panel data. We account for unobserved individual heterogeneity in both the training participation and outcome equation. The latter differentiates between transitions into “stable” and “unstable” employment after the completion of a training program. Our findings are that in the first phase of the east German transition process, when the institutions delivering the training programs were being set up, there are no positive effects of training on the probability to find stable employment. For the period of September 1992 to November 1994, when the institutional structure for the programs was in place, we find positive effects of both on-the-job and off-the-job training for women, and positive effects of off-the-job training for men.

Evaluating Retraining Programs in OECD Countries: Lessons Learned

Are retraining programs for the unemployed more effective than job search assistance? Governments of the member countries of the Organization for Economic Co-operation and Development have considerable experience with retraining programs in a variety of industrial settings. Evaluations of these programs show that the results are disappointing, however. This article discusses the factors associated with retraining programs for two types of workers: those laid off en masse and the long-term unemployed. Evaluations indicate poor results for both groups: retraining programs are generally no more effective than job search assistance in increasing either reemployment probabilities or post intervention earnings, and they are between two and four times more expensive than job search assistance.

Nominal wage contracts and the persistent effects of monetary policy

We consider an efficiency wage model where wages affect turnover and firms choose optimal labor contracts under uncertainty about demand and productivity. We show that there may be an equilibrium with nominal wage contracts where monetary shocks affect output. Furthermore, monetary shocks have persistent effects on output because the previous state of the labor market affects the reemployment probability of quitting workers. Persistence increases if workers have bargaining power. With endogenous policy, a credibility problem arises naturally in the model. Equilibrium inflation increases with persistence but decreases with the natural rate of unemployment for given persistence.

Appropriate indicators of demand for labour markets segmented by gender

This paper examines indicators of labor demand which are used in empirical work using micro data. The paper tests whether using alternative indicators of labor demand affects the conclusions in situations where the labor market is segmented, in this case, by gender. Alternative indicators were used in a model of probability of reemployment after being long-term unemployed. Total unemployment rates and men's unemployment rates suggested that demand effects were significant on men's reemployment probabilities, but that demand effects were insignificant on women's reemployment. In the same model, measures of women's labor market conditions were mainly significant, whereas men's measures were not significant. Copyright 1998 by Oxford University Press.

9. Dynamic Discrete-Time Duration Models: Estimation Viamarkov Chain Monte Carlo

Discrete-time or grouped duration data, with one or multiple types of terminating events, are often observed in social sciences or economics. In this paper we suggest and discuss dynamic models for flexible Bayesian nonparametric analysis of such data. These models allow simultaneous incorporation and estimation of baseline hazards and time-varying covariate effects, with out imposing particular parametric forms. Methods for exploring the possibility of time-varying effects, as for example the impact of nationality or unemployment insurance benefits on the probability of reemployment, have recently gained increasing interest. Our modeling and estimation approach is fully Bayesian and makes use of Markov Chain Monte Carlo (MCMC) simulation techniques. A detailed analysis of unemployment duration data, with full-time job, part-time job and other causes as terminating events, illustrates our methods and shows how they can be used to obtain refined results and interpretations.

Education and unemployment duration

This paper studies the relationship between the level of education and the probability of reemployment. Search theoretical models predict that on the lowest levels additional education increases the probability of re-employment, but on the highest levels the relationship turns negative. Using Finnish microeconomic data on unemployed workers, it is shown that unemployed persons who have about 13–14 years of education have the highest re-employment probability.

Unemployment Insurance Rules, Joblessness, and Part-Time Work

developed and under general conditions an increase in the disregard is shown to increase both the part-time and overall re-employment hazards. Data from the Current Population Survey's Displaced Worker Supplements are used to test these predictions. Estimates from a competing risks model with correlated risks and time-varying coefficients shows that increasing the disregard significantly increases the conditional probability of part-time re-employment during the first three months of joblessness.

Are Displaced Manufacturing Workers Unemployable? An Analysis of Sectorally Based Adjustment Costs in France

Despite the richness of the literature on the adjustment costs of displaced workers, the impact of the former sector of employment on a displaced worker's jobless durations has received little attention. This is curious given the policy responses in several countries. Although the literature indicates the importance of individual characteristics, such as educational attainment and demographic traits, a non-trivial portion of government assistance is based on a collective attribute of the affected workforces, namely the sector in which they formerly worked. Governments often target assistance to specific sectors in the forms of operating subsidies, financial 'bailout' packages, and trade protection. Examples include steelworkers and shipyard workers in France, coal miners in the United Kingdom, and fishery and shipyard workers in Canada. Gray (1995) demonstrates that taxpayer funded early retirement benefits in France are heavily weighted toward workers in manufacturing industries. In Canada, similar benefits are currently being received by the early retirees of Algoma Steel, and the steelworkers' union has requested a package for older, laid off Stelco employees. The rationale commonly given by government officials and workers' unions is that workers in the affected sectors have virtually no alternative employment opportunities. Possible reasons for the perception that workers displaced from certain sectors have low re-employment probabilities have received little attention in the economics literature. The thrust of the conjecture posited by policy makers in France is that there is an ethos, described in Houseman (1988), according to which workers in sectors such as heavy manufacturing are covered by an implicit contract which has conditioned them to expect guaranteed permanent employment. The organizational characteristics of the internal labour market cause them to lack the cognitive skills required to

Effects of Manpower Policies on Duration Dependence in Re-employment Rates: The Example of Sweden

In contrast to the evidence from other countries, Swedish studies of the transition from unemployment to employment have consistently reported a non-negative duration dependenice in the hazard. This study examines the extent to which this results from large scale labour market programmes, a limited duration of unemployment benefits, or differences among available jobs. The labour market programmes are here found to be the primary factor behiind the earlier Swedish results. The programmes thus pick up those with the worst employment prospects, thereby postponing a decrease in the re-employment probability among job searchers. This in turn generates an on 'average' constant duration dependence.

Firm failure and managerial labor markets evidence from Texas banking

We study the managerial labor market's ability to discriminate between good and bad managerial performance. Using a sample of failed and nonfailed Texas banks, we find that the context of job loss affects the manager's ability to regain comparable employment. Managers associated with banks that failed for reasons arguably beyond the managers' control were twice as likely to regain comparable banking posts as managers at other failed banks. We also detect a relation between the probability of post-failure reemployment and a manager's rank within the firm and to proxies for managerial self-dealing and competence.

Experimental estimates of the impact of wage subsidies

The effects of a wage subsidy program on the duration of insured unemployment are investigated using experimental data. Participation in the experiment was voluntary and about one third of the subjects refused to take the subsidy voucher offered to them. Because subsidies appear to have stigmatic effects which tend to lower participation rates by high-skilled workers, experimental participants have longer average durations of unemployment than nonparticipants. However, correcting for self-selection, we find that wage subsidies can substantially increase a participant's probability of reemployment. Subsidies are also compared to a search bonus proposal which is also cost-effective, but, due to differences in participation patterns, has rather different effects.

Barriers to employment: Entry and re-entry possibilities of unemployed job seekers in The Netherlands

In this paper, the barriers to re-employment for unemployed job seekers are studied by means of duration models. The determinants included in the duration models are derived from an economic model of the different stages in the job search process. The empirical analysis of unemployment duration is based on both a reduced form and a structural approach. The reduced form model used is a proportional hazard model with a flexible base-line hazard. In the estimation procedure, special attention is paid to the problems of unobserved heterogeneity and attrition bias. The estimation results show that age and non-labour income have a significantly negative impact on the reemployment probability of unemployed job seekers. In addition, the hazard rate appears to be negative-duration-dependent. In the structural model, the rate at which unemployed job seekers find a job is decomposed into the application rate and the probability of receiving an actual job offer if an application is made. We find that the low probability of becoming (re-)employed is mainly caused by the low probability of receiving an actual offer. Furthermore, differences in the application intensity of unemployed job seekers can be explained by various personal characteristics, regional labour market conditions, elapsed duration of unemployment and search methods, whereas the outcome of the selection process is mainly influenced by the qualifications of unemployed job seekers.

Duration of Unemployment among Men in Northern Ireland: Regional Inequality or Denominational Discrimination?

Male unemployment in Northern Ireland from 1926 to 1973 is examined by using aggregate time series and individual life-history data. County-specific and sector-specific unemployment rates are derived from various published statistics by using an entropy-maximising procedure. These aggregate data show a systematic relative improvement in male unemployment in the predominantly Protestant eastern counties and a corresponding deterioration in the more Catholic western counties. A model for investigating the factors affecting the duration of unemployment of individuals is presented. It is applied to the lifetime unemployment histories of a sample of men in Northern Ireland who were aged between eighteen and sixty-five during August 1973. With controls for other factors, it was found that the probability of reemployment was generally lower for Catholics than Methodists and members of the Church of Ireland, but it was not markedly lower than for Presbyterians. These differentials are also modified by several other interacting factors.

Information Externalities in the Labour Market and the Duration of Unemployment

A matching model is analysed in which firms imperfectly test workers prior to hiring them. If (some) firms hire only workers who pass the test, there is an informational externality; unemployment duration is a signal of productivity. In equilibrium, if it is profitable for a firm to test, it is also profitable for it to condition its hiring decision on duration, hiring those whose duration is less than a critical value. This testing equilibrium is inefficient, with too much testing and too low a critical duration value. Sensitivity analysis of the latter suggests explanations for the dependence of re-employment probabilities on duration and the instability of the U- V curve.

The Impact of Job Training Programs on the Reemployment Probability of Dislocated Workers

The Job Training Partnership Act (JTPA) of 1982 was enacted with the purpose of helping dislocated workers become reemployed through the provision of job training programs. Using data from the 1984 CPS Displaced Worker Survey, this study analyzes the impact of job training programs on the reemployment probability of dislocated workers. The results suggest that dislocated workers who received classroom training or on‐the‐job training were more likely to be reemployed. Dislocated workers who received only job search assistance, however, did not benefit from the assistance in terms of higher reemployment probability. In light of the legislative intent of JTPA Title 111 for increasing dislocated workers’ human capital, the results suggest that state JTPA agencies should place more emphasis on the classroom training, which provides basic and job skills to dislocated workers.