Subsequent Labor Market Outcomes Research Articles

Monopsony, Job Tasks and Labour Market Concentration

Abstract This paper extends the monopsony literature by taking a task-based approach and estimating the causal effect of concentration on labour market outcomes. Using detailed employer–employee data from Norway, we find that our job task-based measure shows lower degrees of concentration than conventional industry- and occupation-based measures. Exploiting mass lay-offs as exogenous shocks to local labour demand, we show that workers who experience mass separations in more concentrated markets have substantially worse subsequent labour market outcomes than workers in less concentrated markets. Our results point to the existence of employer market power that is driven by the concentration of skill demand across firms.

The Scars of Civil War: The Long-Term Welfare Effects of the Salvadoran Armed Conflict

This paper estimates the long-term effects on human capital accumulation and subsequent labor market outcomes of in utero and early childhood exposure to the civil war in El Salvador (1980–92), the second longest and deadliest civil conflict in Central America. Identification is obtained from spatial and intertemporal variation in the intensity of the conflict drawn from historical archive data comprising records of human casualties, disappearances, and refugees. The results show that people born in highly violent areas during the civil war saw a reduction in their probability of being employed by 6 percentage points, and of getting a high-skilled job by 5 percentage points, 20 to 30 years hence. The civil war also reduced their education by 0.8 year, as well as their enrollment and literacy rates. Subgroup analysis indicates that exposed males and indigenous groups experienced the largest losses in human capital and had weaker performance in the labor market. JEL Classification Codes: D31, I00, J13

Labour market trajectories after part-time sickness absence: a nationwide cohort study from Finland

ObjectivesThe use of part-time sickness absence (pSA) enables return to part-time work from full sickness absence. However, subsequent labour market outcomes of pSA users depend on various individual and work-related...

Walking the line: Does crossing a high stakes exam threshold matter for labour market outcomes?

ObjectivesThis paper offers new insight into the link between success in high stakes exams and subsequent education and labour market outcomes. It is the first study to look holistically at the impact of crossing an important high stakes threshold on both academic and vocational education choices and ultimately labour market outcomes.
 MethodIt does so by comparing those either side of a formerly important threshold in the English education system at the end of compulsory schooling (achieving five general certificate of secondary education A* to C passes) which was commonly regarded as the minimum benchmark for continuing into post-compulsory education.
 ResultsI find that crossing this threshold led to an 6.3-6.7 percentage point increase in the proportion of men and women (respectively) going on to take academic qualifications, with little change in the proportion taking vocational qualifications, leading to a net increase in those staying on after compulsory schooling. Women's daily earnings in 2017-18 (11-13 years after leaving compulsory schooling) were 3.1 percentage points higher for those just crossing the threshold, but men's early labour market outcomes were unchanged.
 ConclusionThe results for men can be explained by low returns to academic qualifications for marginal learners. The findings for women do not disappear after accounting for subsequent education choices, suggesting that crossing the threshold may play a signalling role for employers as well as education institutions.

Lasting scars: The impact of depression in early adulthood on subsequent labor market outcomes.

A growing body of evidence indicates that poor health early in life can leave lasting scars on adult health and economic outcomes. While much of this literature focuses on childhood experiences, mechanisms generating these lasting effects-recurrence of illness and interruption of human capital accumulation-are not limited to childhood. In this study, we examine how an episode of depression experienced in early adulthood affects subsequent labor market outcomes. We find that, at age 50, people who had met diagnostic criteria for depression when surveyed at ages 27-35 earn 10% lower hourly wages (conditional on occupation), work 120-180 fewer hours annually, and earn 24% lower annual wage incomes. A portion of this income penalty (21%-39%) occurs because depression is often a chronic condition, recurring later in life. But a substantial share (25%-55%) occurs because depression in early adulthood disrupts human capital accumulation, by reducing work experience and by influencing selection into occupations with skill distributions that offer lower potential for wage growth. These lingering effects of early depression reinforce the importance of early and multifaceted intervention to address depression and its follow-on effects in the workplace.

School quality and the return to schooling in Britain: New evidence from a large-scale compulsory schooling reform

What is the causal effect of schooling on subsequent labor market outcomes? In this paper I contribute evidence on this question by re-examining a British compulsory schooling reform that yields large-scale and quasi-experimental variation in schooling. First, I note that this reform was introduced in 1947, when British students attended higher-track (for the “top” 20%) or lower-track (for the rest) secondary schools. The reform increased the minimum school leaving age from 14 to 15 and I show that the vast majority (over 95%) of affected students attended lower-track schools. Second, I show that the additional schooling induced by the reform had close to zero impact on a range of labor market outcomes. Third, I attribute these findings to the quality of these lower-track schools, which I argue was low along several dimensions.

Temporary work contracts and female labor market outcomes

How does initial placement in a temporary work contract affect workers’ subsequent labor market outcomes? We study a unique set of natural experiments: In the mid-1990s, the Japanese airline industry implemented a new hiring policy using temporary employment contracts. The policy was later reversed in the mid-2010s. Examining the universe of employment records from one of Japan’s major airlines as well as government surveys to compare outcomes for cohorts of flight attendants hired just before to those hired just after these changes in industry policy, we find that workers starting on temporary contracts were less likely to remain with the firm over time and are less likely to have children within 10 years after starting the job. These findings do not appear to be the result of selection on observables.

Lasting Scars: The Impact of Depression in Early Adulthood on Subsequent Labor Market Outcomes

Lasting Scars: The Impact of Depression in Early Adulthood on Subsequent Labor Market Outcomes

Chronic pain: Evidence from the national child development study.

Using data from all those born in a single week in 1958 in Britain we track associations between short pain and chronic pain in mid-life (age 44) and subsequent health, wellbeing and labor market outcomes in later life. We focus on data taken at age 50 in 2008, when the Great Recession hit and then five years later at age 55 in 2013 and again at age 62 in 2021 during the Covid pandemic. We find those suffering both short-term and chronic pain at age 44 continue to report pain and poor general health in their 50s and 60s. However, the associations are much stronger for those with chronic pain. Furthermore, chronic pain at age 44 is associated with a range of poor mental health outcomes, pessimism about the future and joblessness at age 55 whereas short-duration pain at age 44 is not. Pain has strong predictive power for pain later in life: pain in childhood predicts pain in mid-life, even when one controls for pain in early adulthood. Pain appears to reflect other vulnerabilities as we find that chronic pain at age 44 predicts whether or not a respondent has Covid nearly twenty years later.

10.Q. Workshop: Imbalance in use and impact of public psychotherapy – A Finnish working-age population register study

Abstract Mental disorders are globally among the leading causes of disability in the working-age population. Psychotherapies have proven to be effective in the improvement of mental health. The current evidence on the benefits of psychotherapies is mainly based on randomized control trials and patient-reported outcomes, whereas the potential impact of long-term psychological therapy on work disability and income is not so well known. This emphasizes the need for longitudinal studies on the effects of psychological therapies in a ‘real-world study setting’, and on the distribution of the availability and the use of psychological therapies in different populations. In Finland, rehabilitative psychotherapy is the major single form of publicly provided psychological therapy. It is targeted at those aged 16 to 67 who are at risk of disability or not being able to study because of mental health problems. It is granted an annual period (maximum three years), a maximum of 80 sessions per year and 200 sessions per 3 years. From 2011 on this psychotherapy has been statutorily granted to all at risk of work disability due mental health disorders. The number of annual users has increased from 15 757 (2010) to 56 682 (2020). This workshop presents the results from a research project investigating the use and real-world effects of long-term psychotherapy in the Finnish working-age population in the 2010s. It shows 1) whether the use of psychotherapy is associated with subsequent work disability and labour market outcomes (income, employment), 2) how the use of long-term psychotherapy differed between socio-demographic groups in the 2010s in Finland, and 3) the extent to which state-subsidized psychotherapy is linked to the distinctive profiles of mental health problems in the population. The five presentations offer new results from the Rise of Mental Vulnerability in Work Life Study drawn from the national registers. The presentations are mostly based on three randomly selected population cohorts which each included 33% of the 18-64-year-old permanent Finnish residents at the baseline. These data were sampled (sampling years: 2010, 2013, 2016) by and derived from the Population Register maintained by Statistics Finland and included information on various socio-demographic characteristics (e.g., gender, occupation class, region, income). These were linked to the national health registers. Information on reimbursed psychotherapy and mental health indicators (sickness absence, psychotropic drugs, disability benefits) were obtained from the Social Insurance Institution of Finland and complemented by the disability pension data from the Finnish Centre for Pensions. The data provide a unique opportunity to observe how the use of state-subsidized long-term psychotherapy was distributed across population groups in the 2010s, and to the extent to which disability trajectories and economic outcomes have developed in different groups during and after psychotherapeutic treatment. Key messages • Psychotherapy is likely to decrease the risk of work disability and improve labour market outcomes. • The provision of long-term psychotherapy is related to social inequality in the working population.

Privilege travels: migration and labour market outcomes of Southern Italian graduates

This paper contributes to the literature on social stratification by analysing the role of internal migration as a possible channel for the intergenerational transmission of inequality. While internal migration is associated with social mobility, it can also be used as a strategy of status maintenance among graduates from privileged backgrounds. The aim of this paper is to scrutinize whether internal migration for study or work, and subsequent labour market outcomes, are associated with social origins. Using a rich administrative and survey data set on a cohort of Italian graduates, findings show a substantive effect of social origins on graduates’ migration for study but not on migration for work. Finally, the results also more tentatively indicate that migration for study is one relevant path connecting social origins and income, thus emphasizing how privilege is not bound to place, but travels.

Effects of rehabilitative psychotherapy on labour market success: Evaluation of a nationwide programme.

Psychotherapy is a widely used treatment for mental disorders, but whether it also improves employment and other labour market outcomes remains inconclusive. This study examined the effectiveness of a nationwide subsidized psychotherapy programme using extensive register-based data. The sample consisted of individuals who applied for rehabilitative psychotherapy in Finland in 2009-2012 (n = 35,083). Prior to 2011, some applications were rejected due to the limited budget that the central government provided for the programme. From 2011, all eligible applicants were granted rehabilitation. We used propensity score matching to create balanced samples of those who received a negative decision in 2009-2010 (n = 2047) and those who were granted rehabilitative psychotherapy in 2011-2012 (n = 12,046) in terms of their sociodemographic background characteristics, prior labour market attachment and health status. We found that compared to the applicants who were not accepted to the programme, the granted applicants with similar background characteristics had, on average, a six-percentage-point higher employment rate, €2100 higher annual earnings and a six-percentage-point lower probability of becoming a disability benefit recipient five years after their first application. Further sensitivity analyses confirmed that these results were not biased, for example, by differences in macroeconomic conditions during the follow-up. Quasi-experimental research design showed that rehabilitative psychotherapy was significantly associated with better labour market outcomes. Although several relevant background factors were included in the matching analysis, it is possible that some unobserved factors explain both access to psychotherapy and subsequent labour market outcomes.

Skill Downgrading Among Refugees and Economic Immigrants in Germany: Evidence from the Syrian Refugee Crisis

Upon arrival to a new country, many immigrants face job downgrading, a phenomenon describing workers being in jobs below the ones they have based on the skills they possess. Moreover, in the presence of downgrading immigrants receiving lower wage returns to the same skills compared to natives. The level of downgrading could depend on the immigrant type and numerous other factors. This study examines the determinants of skill downgrading among two types of immigrants - refugees and economic immigrants - in the German labor markets between 1984 and 2018. We find that refugees downgrade more than economic immigrants, and this discrepancy between the two groups persists over time. We show that language skill improvements exert a strong influence on subsequent labor market outcomes of both groups.

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 IMPACTS OF DIFFERENT TYPES OF COLLEGE INSTRUCTORS ON STUDENTS’ ACADEMIC AND LABOR MARKET OUTCOMES

AbstractBased on a novel data set that links college administrative information with earnings records from a state college system for both public two‐year and four‐year colleges, this study quantifies the impacts of exposure to different types of instructors during students’ initial semester in college on their subsequent academic and labor market outcomes. To minimize bias from student sorting by type of instructor, we combine course‐set fixed effects with an instrumental variables approach that exploits term‐by‐term fluctuations in faculty composition in each department, therefore controlling for both between‐ and within‐course sorting. The findings suggest that two‐year students, particularly racial minority students, have substantially higher levels of exposure to adjuncts with temporary appointments than four‐year students. Two‐year students taking a heavy course schedule with temporary adjuncts are adversely affected in college persistence and subsequent credit accumulation, and the penalty is particularly pronounced among males and racial minority students with stronger academic potential. Such negative impacts on academic outcomes do not translate into poorer short‐ to medium‐term labor market performance. In the four‐year setting, no significant distinction is identified between different types of instructors on either student academic or labor market outcomes.

Grandparents, Moms, or Dads? Why Children of Teen Mothers Do Worse in Life

Women who give birth as teens have worse subsequent educational and labor market outcomes than women who have first births at older ages. However, previous research has attributed much of these effects to selection rather than a causal effect of teen childbearing. Despite this, there are still reasons to believe that children of teen mothers may do worse as their mothers may be less mature, have fewer financial resources when the child is young, and may partner with fathers of lower quality. Using Norwegian register data, we compare outcomes of children of sisters who have first births at different ages. Our evidence suggests that the causal effect of being a child of a teen mother is much smaller than that implied by the cross-sectional differences but that there are probably still significant long-term, adverse consequences, especially for children born to the youngest teen mothers. Unlike previous research, we have information on fathers and find that negative selection of fathers of children born to teen mothers plays an important role in producing inferior child outcomes. These effects are particularly large for mothers from higher socio- economic groups. Our data also enable us to examine the effect of age at first birth across a range of maternal ages. Importantly, while we find that child outcomes are worst for those born to teen mothers, outcomes improve with mothers' age at first birth until mothers are in their mid-20s and then flatten out.

Psychiatric hospital admission and later crime, mental health, and labor market outcomes.

Most OECD countries have downsized treatment capacity at psychiatric hospitals substantially. We investigate consequences of these reductions by studying how the decision whether to admit individuals in mental distress to a psychiatric hospital affects their subsequent crime, treatment trajectories, and labor market outcomes. To circumvent nonrandom selection into admission, we use a proxy of occupancy rates prior to a patient's first contact with a psychiatric hospital as an instrument. We find that admissions reduce criminal behavior, likely due to incapacitation, and predominantly for males and those with a criminal record. Furthermore, admission lowers patients' subsequent labor market attachment, likely because a psychiatric hospital admission is an eligibility criterion for welfare benefits.

Breadth of University Curriculum and Labor Market Outcomes

We explore whether the choice of broad versus specialized university curricula affects subsequent labor market outcomes, as measured by earnings, full-time permanent employment, and unemployment six months after university graduation. We exploit a unique episode in the history of the National University of Singapore, in which a university-wide revision in graduation requirements in 2007 prompted students in one of the largest faculties to read a narrower, more specialized, curriculum. Using a difference-in-differences strategy, we compare changes in the labor market outcomes of graduate cohorts from the affected faculty, before-and-after the curriculum revision, to changes in the labor market outcomes of graduate cohorts from the other faculties. We do not find evidence that curriculum breadth matters for these labor market outcomes. Similar conclusions are obtained using regression-control strategies and rich administrative data on student characteristics and academic ability for the broader population of undergraduates at NUS.

Breadth of university curriculum and labor market outcomes

We explore whether the choice of broad versus specialized university curricula affects subsequent labor market outcomes, as measured by earnings, full-time permanent employment, and unemployment six months after university graduation. We exploit a unique episode in the history of the National University of Singapore, in which a university-wide revision in graduation requirements in 2007 prompted students in one of the largest faculties to read a narrower, more specialized, curriculum. Using a difference-in-differences strategy, we compare changes in the labor market outcomes of graduate cohorts from the affected faculty, before-and-after the curriculum revision, to changes in the labor market outcomes of graduate cohorts from the other faculties. We do not find evidence that curriculum breadth matters for these labor market outcomes. Similar conclusions are obtained using regression-control strategies and rich administrative data on student characteristics and academic ability for the broader population of undergraduates at NUS.

The Effects of UI Benefits on Unemployment and Subsequent Outcomes: Evidence from a Kinked Benefit Rule

AbstractThis paper analyses the effects of unemployment insurance benefits on unemployment exits and subsequent labour market outcomes. We exploit a piecewise linear relationship between the previous wage and benefits in Finland to identify the causal effects of the benefit level by using a regression kink design. Although we only find weak evidence of an effect on the time to the next job, higher benefits decrease the time spent in part‐time unemployment and thus result in more full‐time unemployment. The re‐employment probability and post‐unemployment wage are also negatively affected. The results for the duration of the first post‐unemployment job are not conclusive, but in total both employment and earnings in the two years following the beginning of the unemployment spell decrease with higher benefits.