Unemployment Flows Research Articles

Marginal Jobs, Heterogeneous Firms, and Unemployment Flows

This paper introduces a notion of firm size into a search and matching model with endogenous job destruction. The outcome is a rich, yet analytically tractable framework that can be used to analyze a broad set of features of both the cross-section and aggregate dynamics of the labor market. The model provides a coherent account of the distributions of employer size and employment growth across establishments, the amplitude and propagation of cyclical fluctuations in worker flows, the negative comovement of unemployment and vacancies, and the dynamics of the distribution of employer size over the business cycle. (JEL E24, E32, J63, J64)

On Unemployment Inflow and Outflow in Urban China

Wu Z. and Yao S. (2006) On unemployment inflow and outflow in urban China, Regional Studies 40, 811–822. As the largest transitional economy in the world, China's labour market has a number of characteristics distinctively different from that of the developed economies such as the UK or the USA. This paper aims to identify the determinants of unemployment inflow and outflow in urban China. With empirical data for 29 provinces over 1989–99, it is found that rural–urban migration, ownership diversification, industrial structural change, international trade, international competitiveness, product wages, and age structure are key determinants of unemployment flows. The results suggest that due to market imperfections, unemployment inflow and outflow are two asymmetric processes with respect to the concerned predetermined variables. Wu Z. et Yao S. (2006) Sur l'afflux et la fuite du chômage dans la Chine urbaine, Regional Studies 40, 811–822. En tant que l'économie en voie de transition la plus grande du monde, la main-d'oeuvre chinoise présente un nombre de caractéristiques bien différentes par rapport à celles des économies développées, comme le R-U et les E-U. Cet article cherche à identifier les déterminants de l'afflux et de la fuite du chômage dans la Chine urbaine. A partir des données empiriques auprès de 29 provinces sur la période de 1989 à 1999, il s'avère que la migration ruralo–urbaine, la diversification de la propriété, l'évolution structuralo-industrielle, le commerce international, les salaires, et la structure par âge sont les déterminants clés des flux du chômage. Les résultats laissent supposer que l'afflux et la fuite du chômage sont deux processus asymétriques par rapport aux variables déterminées à cause des imperfections du marché. Chômage régional Propriété Chine Wu Z. und Yao S. (2006) Erwerbslosenzustrom und -Abgang in den Städten Chinas, Regional Studies 40, 811–822. Als größte Übergangswirtschaft der Welt weist der Arbeitsmarkt Chinas eine Anzahl von Eigenschaften auf, die ihn unverkennbar von hoch entwickelten, wie denen des UK und der USA, unterscheiden. In diesem Aufsatz sollen, die bestimmenden Faktoren des Erwerbslosenzustroms und -abgangs in chinesischen Städten herausgearbeitet werden Gestützt auf empirische Daten von 29 Provinzen im Zeitraum 1989–99 wird festgestellt, daß Wanderung vom Lande in die Stadt, Besitzveränderung, Strukturwandel der Industrie, internationaler Handel, internationaler Wettbewerb, Produktionslöhne und Altersstruktur Hauptfaktoren der Erwerbslosigkeitsströme darstellen. Die Ergebnisse legen nahe, daß infolge Mängeln des Marktes Erwerbslosenzustrom und -abgang zwei asymmetrische Vorgänge in Hinsicht jeweilig betroffener unbestimmter Variablen bilden. Regionale Erwerbslosigkeit Eigentun China Wu Z. y Yao S. (2006) Sobre la entrada y salida del desempleo en zonas urbanas de China, Regional Studies 40, 811–822. Siendo la economía transicional más importante en el mundo, el mercado laboral de China presenta ciertas características distintivas que son diferentes a otras economías desarrolladas como la del Reino Unido o Estados Unidos. En este ensayo pretendo identificar los determinantes de entrada y salida del desempleo en la China urbana. Basándome en datos empíricos de 29 provincias durante el periodo 1989–99, se observa que la migración rural–urbana, la diversificación de la propiedad, el cambio estructural de la industria, el comercio internacional, la competitividad internacional, los salarios según productos, y la estructura de edades son determinantes clave de los flujos de desempleo. Los resultados indican que debido a las imperfecciones del mercado, la entrada y salida del desempleo son dos procesos asimétricos con respecto a las variables predeterminadas. Desempleo regional Propiedad China

Regionale Arbeitslosigkeit und Arbeitsplatzwechsel in Deutschland – Eine Analyse auf Kreisebene

Dieser Beitrag untersucht den Einfluss regionaler Arbeitslosenquoten auf regionale Arbeitsplatzwechsel und Betriebswechsel. Dazu haben wir einen einzigartigen Datensatz herangezogen, der sowohl detaillierte personliche Informationen als auch Regionalinformationen uber den Betriebsstandort enthalt. Diesen Datensatz haben wir mit Arbeitslosigkeitsinformation der Bundesagentur fur Arbeit auf Kreisebene verknupft. Wahrend fruhere Untersuchungen oft keinen gesicherten Einfluss bezuglich der Rolle der regionalen Arbeitslosigkeit feststellen konnten, zeigen wir, dass die unterschiedlichen Motive fur einen Regionalwechsel mit berucksichtigt werden mussen. Betrachtet man aus welchem Grund der alte Arbeitsplatz aufgegeben wurde, kann man deutliche Einflusse in zwei verschiedene Richtungen feststellen: bei steigender regionaler Arbeitslosigkeit sinken freiwillige Arbeitsplatzwechsel und unfreiwillige Arbeitsplatzwechsel steigen an. Offensichtlich fallt die Entscheidung fur regionale Mobilitat insbesondere dann positiv aus, wenn die Nichtmobilitat zu einer extrem schlechteren Situation wie langerer Arbeitslosigkeit fuhren wurde. Folglich tragt regionale Mobilitat, wenn auch in geringem Mase, dazu bei, die regionalen Arbeitslosenquoten untereinander anzugleichen.

Unemployment Dynamics in Britain

We examine the inter-related dynamics of the unemployment flows and stock. Our model allows them to be linked through the standard accounting identity, but also through behavioural relationships. We find that, for the UK, the bulk of the correlation between duration and the unemployment stock arises from the dependence of duration on unemployment, taking careful account of the inter-temporal identity. Outflow shocks have contributed little to the evolution of unemployment since the late 1960s. Given that the correlation of duration and unemployment arises from the behavioural relationship, we show that unemployment dynamics arise mostly from shocks to the inflow. Unemployment remains one of Europe’s more pressing economic and social problems, as highlighted in the EU’s Lisbon Declaration of 2000. A dynamic approach to unemployment starts from the recognition that unemployment is a stock and changes through shocks to the outflow and inflow. The research and policy focus has generally been on the outflow process, or equivalently, unemployment duration. A glance at Figure 1 shows why this might be so: it reveals a very strong co-movement of the unemployment rate and the proportion of the unemployed out of work for a year or more. Analysts have used data like this to argue that the source of unemployment fluctuations has been changes in the outflow process. 1 Possibly as a consequence of this, most policies directed at reducing unemployment focus on improving the search effectiveness and employability of the currently unemployed. The unemployment flows and stock are related in quite complex ways, and in this paper we focus on these inter-related dynamics. The model we use allows them to be linked in two ways. First there is the simple accounting relationship, whereby shocks to the flows accumulate in the stock. Second, search and matching models suggest behavioural relationships of the flows depending on unemployment. The presence of the nonlinear accounting identity in the model makes the analysis of the joint system problematic, so we proceed sequentially, investigating first one link and then the other. We find that, for the UK, the bulk of the correlation between duration and the unemployment stock displayed in Figure 1 arises from the dependence of the former on the latter. We find a strong dependence of the outflow rate on unemployment, taking careful account of the inter-temporal identity. On the other hand, outflow shocks have contributed little to the evolution of unem

SEARCH UNEMPLOYMENT WITH ADVANCE NOTICE

This paper proposes and solves a search unemployment model in which job separation requires mandatory notice. When jobs are subject to idiosyncratic uncertainty, firms would issue advance notice even with good business conditions. We show that such precautionary policy is not pursued if it entails sufficiently high productivity losses. If workers can search on the job, an increase in advance notice increases job-to-job movements, reduces unemployment flows, and has ambiguous effects on equilibrium unemployment. Results are consistent with the fact the North American and European labor markets, despite their differences in job security provisions, experience similar turnover rates and dissimilar unemployment flows.

SEARCH UNEMPLOYMENT WITH ADVANCE NOTICE

This paper studies the effects of employment protection legislation when job separation requires a mandatory advance notice or a firm's costly closure. In a tight labor market, firms use mandatory notice since job-to-job transitions reduce the expected firing costs. In a world without the lengthy procedure imposed by advance notice, job turnover is mainly accommodated by unemployment inflows. As notice length increases, the fraction of job turnover accounted for by job-to-job movements increases. These results are consistent with the fact that the North American and European markets, despite their difference in employment protection legislation, have different unemployment flows but similar job flows.

The cyclical pattern of regional unemployment flows in Poland

Using male unemployment benefit data across Polish regions during 1994–1996, we find that unemployment flows are pro-cyclical and increase with job reallocation, controlling for other factors. At the national level we observe that job reallocation and output are associated with stagnant unemployment flows, low inflows and long duration. This has heretofore been attributed to workers by-passing the unemployment benefit system as they move job to job. We show this to be a fallacy of aggregation. The cyclical behaviour of regional unemployment flows and their response to job reallocation suggests that workers use unemployment benefit system to facilitate transition.

Housing Markets And Regional Unemployment Flows In Great Britain

Over the past 20 years, there has been a great deal of interest from academic economists and policymakers in the UK in the contribution of the housing market to regional disparities in unemployment. However, despite a considerable body of research, there remains a great deal of uncertainty concerning the role played by different features of the housing market in shaping the regional pattern of unemployment. In this study, we aim to gain a deeper understanding of this issue by examining the relationship between housing market variables and the flows into and out of regional unemployment. Our findings indicate that both the level of regional house prices and the housing tenure mix have significant effects on the rate of flows into and out of regional unemployment and hence upon the equilibrium rate of unemployment in a region. In particular, we find that regions with a relatively high level of house prices and/or a low proportion of social rented housing will tend to have a relatively low equilibrium rate of unemployment, other things equal.

Gross worker and job flows in a transition economy: an analysis of Estonia

In this paper, we study the labor market flows of one of the rapid reformers among the transition economies: Estonia. Using a unique dataset that permits measurement of job, worker and unemployment flows, we document and analyze the pace of job and worker reallocation over the period of the most dramatic market reforms. In 1989, the job and unemployment flow rates were essentially zero and the rate of worker reallocation was positive, but primarily reflected workers shuffling among an existing allocation of jobs. By the mid-1990s, roughly one in 10 jobs was being created every year and one in 10 jobs was being destroyed every year with large accompanying increases in worker and unemployment flows. This surge in reallocation began in an unbalanced manner with job destruction (disproportionately from large, state businesses) far outpacing job creation. The unbalanced restructuring led to a rapid rise in unemployment. However, by the mid-1990s, very high rates of job creation (disproportionately from small, private businesses) yielded a roughly balanced pattern of restructuring. Direct job-to-job flows increased dramatically as well. The surge in labor market flows in Estonia contrasts sharply with the experience of other transition economies that pursued more gradual reforms.

Mapping the New Deal: local disparities in the performance of Welfare‐to‐Work

In recent years, following the lead of the US, several OECD countries have introduced ‘workfare’ policies that link receipt of unemployment and related social benefits to compulsory participation on state‐administered work and training schemes. The UK’s New Deal (Welfare‐to‐Work) for Young People is one of the largest and most developed of these workfare programmes. Official evaluations of the UK’s New Deal for Young People claim that it has been a national success, but overlook local variations in its results. This paper uses the Government’s own performance measures, data on local unemployment flows, numbers of New Deal participants recycled through the scheme as second starts, and interviews with both local policy managers and participants, to demonstrate that these local variations have been substantial. These different indicators suggest that the programme has been noticeably less effective in many inner urban and depressed industrial labour markets. In such areas the ‘recycling and churning’ of participants through the programme are more significant, and suggest that local labour market structures play a significant role in shaping policy outcomes. The paper argues that recent additions to the New Deal to improve job search and matching fail to address this local variation, and that a longer‐term approach is required that seeks to improve not only the employability of individuals, but also the local employment opportunities open to them. One key implication is clear: that local labour market conditions can exert a significant influence on the outcomes of national workfare type policies, not only in terms of geographical variations in the problem to be solved, but also in shaping and constraining the local nature of policy outcomes.

Regional Unemployment and Industrial Restructuring in Poland

This paper studies regional unemployment inequality in Poland. We find that higher unemployment regions are those experiencing greater change in industrial structure. We also find high unemployment regions are those with higher inflow rates to unemployment rather than longer spells of unemployment. These findings suggest that regional unemployment varies importantly with job destruction in Poland. Econometric analysis of the determinants of employment to unemployment flows reinforces this impression. We use our estimates to assess the extent to which regional unemployment variation is due to economic restructuring. We show that this is cannot be done unambiguously and offer reasons why many previous attempts to separate out the effects of restructuring on unemployment have been unsuccessful.

Time Series Evidence of Unemployment Flows: The Sample Period Matters

The dynamic behavior of the unemployment rate is determined by the worker flows into and out of unemployment. The literature on the dynamics of unemployment flows typically emphasizes the following features: they simultaneously occur over the business cycle, and their size is positively linked to the unemployment rate. Unemployment flows are highly volatile, persistent and countercyclical. Inflows lead outflows over the business cycle, and inflows are more volatile than outflows. This paper investigates possible changes in the dynamics of net U.S. unemployment flows and the unemployment rate between 1948 and 1996 by subjecting all three series to rigorous diagnostic tests. These tests are designed to discover structural instabilities due to time-varying parameters in projectional relationships, one-time breaks, or shifts in the mean. Also, the variables' volatility, cyclicality, and persistence is reported for subperiods suggested by the test results. Diagnosing and documenting changes in the dynamic behavior of unemployment flows and the unemployment rate is important because it helps discriminate between constant and time-varying features, and also between statistically significant and insignificant features of the data. It is a necessary first step for identifying causes for possible changes. Diagnosing and documenting changes also has important implications for the relevance of forecasts involving the unemployment rate and unemployment flows. The test results indicate that structural breaks in bivariate projectional relationships involving inflows, outflows, and the unemployment rate are likely to have occurred around 1958 and again around 1970. The results also show that breaks are more likely to have occurred in relationships involving outflows and the unemployment rate than in those involving inflows. All variables have become more persistent. The volatility of both flows has decreased, but the reduction in volatility has been relatively larger for inflows than for outflows. Outflows have become more strongly countercyclical over time.

Unemployment Flow Regimes and Regional Unemployment Disparities

Almost all studies of regional and local unemployment are concerned with unemployment stock rates. In this paper, attention is focused on the unemployment flows behind these stocks. By using data for the British regions over the 1980s and 1990s, we show that regional unemployment-rate disparities are a direct reflection of different underlying regional unemployment ‘flow regimes’; that is, different patterns of inflows into, and outflows from, unemployment. In the 1980s these differences in regional flow regime were marked, but since the beginning of the 1990s they have narrowed. In addition, there appear to have been distinct ‘switches’ in regime in particular regions. These trends and shifts are considered alongside the debates surrounding the end of the ‘north—south’ unemployment divide in Britain; the claim that the British labour market is moving towards a US-style flexible, high-unemployment-turnover model; and the effects of various changes to the unemployment benefit system designed to restrict the numbers of claimants on that system.

Time Series Evidence of Unemployment Flows: The Sample Period Matters

Worker flows to and from unemployment occur at all stages of the U.S. business cycle. The flows' dynamics affect the dynamics of the unemployment rate. This article studies the dynamics of unemployment flows and the unemployment rate and explores and documents changes over time. Rigorous diagnostic tests are used to investigate the structural stability of projectional relationships involving flows and the unemployment rate.

Heterogeneous job-matches and the cyclical behavior of labor turnover

Worker flows to and from unemployment simultaneously occur over the US business cycle, and the size of the flows is positively linked to the unemployment rate. Unemployment flows and the unemployment rate are highly volatile, persistent and countercyclical. Inflows lead the unemployment rate, and the unemployment rate leads outflows over the business cycle. The one-sector stochastic growth model is augmented by matching frictions in the labor market and match-specific productivity shocks that introduce ex post heterogeneous job-matches. Matching frictions help generate the lead–lag relationship between unemployment flows and the unemployment rate. Combined with heterogeneous job-matches they generate endogenous unemployment flows and an unemployment rate whose dynamic characteristics match observed data.

Unemployment in the Lodz voivodship for 1994–96: Taxonomic analysis

This paper presents the application of taxonomic methods to the spatial variations in Polish unemployment for 1994–96 exposing the Lodz voivodship phenomenon level from the national background. Two major research hypotheses undergo the empirical verification. They are time stability of the Lodz voivodship (in relation to other regions' levels of unemployment) and compatibility of results of independent investigations into the unemployment stock and unemployment flows (the factors shaping it) in the Lodz voivodship compared to all the other 48 regions in Poland. This paper concentrates on the Lodz voivodship, but a careful reader will independently analyze the spatial unemployment variations in all Polish voivodships for 1994–96.

Labour market transitions and unemployment duration: Evidence from Bulgarian and Polish micro‐data1

AbstractThe segmentation of the labour market is one of the most striking characteristics of the transition process in Central and Eastern European countries. Not only do the young, unskilled workers and women face a high risk of unemployment, but joblessness also varies significantly geographically. This paper sheds some light on labour market segmentation in transition countries by analysing individual records of individuals registered at the labour offices of two Polish regions (Warsaw and Ciechanov and two Bulgarian regions (Sofia and Botevgrad) over the initial three to four years of the transition to a market economy. The empirical results confirm the existence of highly selective firing and hiring processes in the Polish and Bulgarian labour markets. Overall, unskilled or poorly educated workers have the highest probability of becoming unemployed and remaining without a job for a long period of time. We also analysed the determinants of unemployment duration across regions and over time using a piece‐wise constant hazard model with multiple destinations, i.e. employment and exit from the labour force. The results suggest that the unemployed with a high education and previous experience in the private sector have a higher probability of getting a new job, especially in the more dynamic labour markets, while those without previous work experience tend to stay unemployed for a longer period of time and often leave the labour market. The econometric results also suggest that the reforms of the unemployment benefit systems have produced important effects on unemployment flows.

Search Unemployment with Advance Notice

This paper proposes and solves a search model in which job separation requires mandatory notice. When jobs are subject to idiosyncratic uncertainty, firms would issue advance notice even with good business conditions. We show that such precautionary policy is not pursued if it entails sufficiently high productivity losses. If workers can search on the job, an increase in advance notice increases job to job movements, reduces unemployment flows, and has ambiguous effects on unemployment. Results are consistent with the fact that North American and European labor markets, despite their differences in job security provisions, experience similar turnover rates and dissimilar unemployment flows.

Search Unemployment with Advance Notice

This paper proposes and solves a search model in which job separation requires mandatory notice. When jobs are subject to idiosyncratic uncertainty, firms would issue advance notice even with good business conditions. We show that such precautionary policy is not pursued if it entails sufficiently high productivity losses. If workers can search on the job, an increase in advance notice increases job to job movements, reduces unemployment flows, and has ambiguous effects on unemployment. Results are consistent with the fact that North American and European labor markets, despite their differences in job security provisions, experience similar turnover rates and dissimilar unemployment flows.

Institutions and labor reallocation

Despite stringent dismissal restrictions in most European countries, rates of job creation and destruction are remarkably similar across European and North American labor markets. This paper shows that relative-wage compression is conducive to higher employer-initiated job turnover, and argues that wagesetting institutions and job-security provisions differ across countries in ways that are both consistent with rough uniformity of job turnover statistics and readily explained by intuitive theoretical considerations. When viewed as a component of the mix of institutional differences in Europe and North America, European dismissal restrictions are essential to a proper interpretation of both similar patterns in job turnover and marked differences in unemployment flows.