Unemployment Spells Research Articles

Heterogeneous job ladders

We investigate different wage growth rates over the life cycle for poor and rich workers, and how they relate to the frequency and quality of job-to-job transitions. Using the universe of labor market histories for Austrian workers born in 1960–62 to, we show that workers who are the bottom of the earnings distribution have higher employer-to-employer transition rates than richer workers throughout their life. Nevertheless, they work for worse- and worse-paying firms as they age and are more likely to undergo unemployment spells at all ages. We propose a structural framework with learning by doing and heterogeneity along five dimensions: initial level of human capital, learning ability, and job separation propensity on the worker side, and productivity level and quality of offered learning opportunities on the employer side. Our model replicates the wage gap and the difference in the frequency of labor market transitions we document in the data, and allows us to investigate several dimensions of heterogeneity in the quality of labor market transitions. We find that poor workers’ lackluster wage growth stems from a combination of deteriorating human capital, employment in low-productivity jobs, and scarce on-the-job learning opportunities. We then evaluate a policy which matches low-wage workers to high-learning employers. We find that ameliorating the learning opportunities early in a worker’s career has a non-negligible impact on lifetime earnings. The gains from matching with a better employer greatly increase with job stability, as lower separation rates limit human capital depreciation and improve the odds of matching with high-productivity employers in the future.

How Insured Are Workers Against Unemployment? Unemployment Insurance and the Distribution of Liquid Wealth

In this Economic Commentary, we analyze the relationship between unemployment insurance (UI) recipiency and insurance by examining the wealth distribution of workers who have been through an unemployment spell. We focus on the net liquid wealth gap between recipients and nonrecipients of UI along the income distribution of the unemployed. Using recent data from the Survey of Income and Program Participation at the individual level, we estimate that UI recipients at the bottom half of the income distribution tend to have higher median net liquid wealth than nonrecipients, putting nonrecipients in a potentially vulnerable economic position during periods of unemployment. Replication codes for this paper are available at https://github.com/avdluduvice/LuduviceTruss-Williams_UI.

Supporting the right workplace experience: a dynamic evaluation of three activation programmes for young job seekers in Slovakia

This paper investigates three alternative active labour market policy programmes available to young job seekers in Slovakia who were registered in 2011. All of the programmes facilitate gaining work experience and share a comparable design; however, they differ mainly in the collected workplace experience and the composition of participants. Using administrative data, we first explore the selection into each programme; second, we estimate the treatment effects on job seekers’ postparticipation absence from the registry of the unemployed. For this we argue that we have sufficiently rich data to control for selection into programs. We use a dynamic estimator and report the average treatment effects of participation in different periods between the sixth and fifteenth month after starting unemployment. For participation in earlier stages of unemployment, we confirm differences in the programmes impacts, with patterns described by previous literature; workplace experience collected in either the private sector or in a regular workplace appears to improve the chances of absence from registered unemployment of young job seekers relatively more than does participation in a public works type of programme. When compared later in the unemployment spell, the between-programme differences level out. Despite its ambivalent average impact, the public works type of programme positively impacts specific subgroups of participants.

Transitioning from the University to the Workplace: A Duration Model with Grouped Data

Labor market surveys usually measure unemployment duration in time intervals. In these cases, traditional duration models such as Cox regression and parametric survival models are not suitable for studying the duration of unemployment spells. In order to deal with this above issue, we use Han and Hausman’s ordered logit model for grouped durations, which has more flexibility than standard specifications. In particular, its flexibility arises from the fact that we do not need to specify any functional form for the baseline hazard function—it also circumvents problems associated with heterogeneity. The focus of interest is on the first unemployment duration of higher education graduates. The analysis is accomplished by using a large dataset from a graduate survey of Spanish university graduates. The results show that the university-to-work transition of higher education graduates is significantly associated with the graduate’s age, participation in internship programs, field of study, type of university, and gender. Specifically, graduates who participated in internship programs, engineering graduates, and graduates from private universities experience a smooth transition.

A cycle or a tunnel? A study on unemployment and low-pay dynamics in Italy

We study the extent of persistence in unemployment and low-pay employment in Italy in the period 2014-2017, using the Italian component of the EU-SILC survey merged with administrative data. We model persistence in unemployment and low-pay employment using different dynamic random-effects models accounting for observed and latent individual heterogeneity as well as endogeneity of the initial conditions. We find evidence of true state dependence in place for both unemployment and low-pay employment. Moreover, past unemployment spells increase the probability of being low-paid, conditional on being employed, while the opposite effect is limited. For both processes the degree of reliance on the previous state is considerably greater than the magnitude of cross-effects. Thus, evidence is presented that these processes shape almost independent no-pay/low-pay tunnels leading individuals into two different traps, rather than a cycle between the two states.

Cumulative effect of unemployment on suicide mortality in South Korean workers (2018-2019).

While unemployment is known to increase the risk of suicide, its cumulative effect remains underexplored. This study investigates how unemployment affects suicide mortality and whether the effect varies based on the number of unemployment spells using two years of nationwide data. Using the data from the National Statistical Office and Employment Insurance Database for 2018 and 2019, we identified an average of 2365 cases of suicide over two years among 7.76 million workers aged 25-64 years who had been employed within one year before their suicide. The number of unemployment spells was counted using the employment history of the past five years. We calculated crude suicide mortality rates per 100 000 population, age- and sex- standardized mortality rates (SMRs), and proportionate mortality rates (PMRs) for suicide. Over the two years, the crude suicide rate was 30.0 per 100 000 among the general population and 30.5 among workers. Workers with no unemployment spells in the past five years had a significantly lower SMR (0.44; 0.42-0.46), while those with four or more unemployment spells had a significantly higher SMR (3.13; 2.92-3.35) than the general population. These findings were consistent across all sex and age groups. Additionally, workers with four or more unemployment spells had a significantly higher PMR than the general population. The impact of unemployment on suicide mortality intensifies as the number of unemployment spells increases. These results underscore the necessity for additional social and psychological support along with economic assistance for individuals facing recurrent unemployment.

Labour market trajectories and unemployment of older workers in Europe after the Great Recession

AbstractMany European countries want to overcome the early exit from labour market which was widespread since the 1970s through pension reform and labour policies. The extension of working life is hindered by factors that the literature overlooks. This article focuses on the discontinuity of the late‐career caused by unemployment. The aim is to investigate whether older workers are at risk of unemployment and what are the transitions after spells of unemployment. The labour market trajectories of workers over 50s in 11 European countries from 2006 to 2019 were analysed, specifically after the Great Recession and before the Covid‐19 epidemic. It is based on longitudinal survey data from the generated Survey of Health, Ageing and Retirement in Europe Job Episodes Panel. Event history analysis and sequence analysis were performed. Older employees are unlikely to face unemployment. The transition rate highlights the difficulty for older workers into re‐employment. A low education level increases the risk of unemployment and remaining unemployed. Data by country confirm the trend towards overcoming the transition from unemployment to early exit. Divergences concern the higher risk of being trapped in unemployment in Southern European countries such as Greece and Italy.

Job search with commuting and unemployment insurance: A look at workers’ strategies in time

Unemployed workers search for jobs that ideally offer both high wages and short commutes. But would they accept jobs with lower wages or longer commutes or both as the unemployment spell lengthens? Using a unique panel of Austrian workers, we find that job seekers do indeed accept jobs with significantly lower wages. However, the majority group of job seekers who used to commute to jobs located outside their municipality of residence tend to increasingly accept jobs in their home municipality, and do not necessarily broaden geographically their search. Based on quasi-experimental variations in the duration of unemployment benefits, we find that this evolution of commuting patterns is not linked to the loss of benefits. We explain these findings through the lens of a job search model where flexible parameters such as search costs are allowed to vary across space and time. We estimate that search costs are substantial and increase differently over time for local and non-local jobs, accounting for the patterns found in the data. A counterfactual policy exercise suggests that unemployment insurance does not hinder geographical mobility. Competing mechanisms are discussed and their role is left to future research.

Homeownership, Labour Market Transitions and Earnings

ABSTRACT The paper investigates the links between homeownership, employment and earnings. The motivation stems from the lack of consensus in the literature linking these outcomes. Our analysis is cast within a dynamic setting and the endogeneity of each outcome is assessed through the estimation of a flexible panel multivariate model with random effects. The data we use are drawn from the French sample of the EU Survey on Income and Living Conditions for the years 2004–2019. Our results show that while homeowners have longer employment and unemployment spells, they must contend with lower earnings than tenants upon re-employment. Importantly, our results highlight the importance of distinguishing between outright and indebted homeowners. Indeed, the latter are found to behave more or less like tenants in the labour market. At the aggregate level, thus, the positive relationship between homeownership and unemployment rate, known as Oswald’s conjecture, might thus depend on the share of leveraged homeowners in the population.

Certifiably employable? Occupational regulation and unemployment duration

AbstractOccupational regulation is a labor market institution that has received a growing amount of attention. However, there is a gap in the literature regarding the relationship between occupational credentials and unemployment duration in the United States. Thus, we propose a random search model to explain differences in unemployment duration resulting from heterogeneous effects from licenses and certification. Our model predicts that an occupational credential with a stronger signaling/human capital effect results in a shorter individual unemployment duration. To estimate the relationship between occupational credentials and spells of unemployment, we perform a survival analysis using panel data from the Survey of Income and Program Participation (SIPP) for the years 2013–2019. We find that both licensing and certification are associated with reductions in unemployment spells for Black males that are similar in magnitude. Our results provide some suggestive guidance to policymakers since certification is less costly and not mandatory like occupational licensing.

Downward occupational mobility and job satisfaction: when does it hurt less?

Abstract Downward occupational mobility is a generally under-explored subject in career research. This study examines how job satisfaction evolves before, during, and after a downward career transition and how the pattern is moderated by individual and contextual factors. Drawing on the UK Household Longitudinal Study which followed respondents from 40,000 households over the last decade, our fixed-effects analysis shows that downward occupational mobility has negative effects on job satisfaction that last for several years following the transition. However, the detrimental impact of downward occupational mobility on job satisfaction is mitigated when the event is preceded by a spell of unemployment or when individuals reside in regions with high levels of unemployment. These results likely reflect individuals’ tendency to evaluate their careers in the context of their employment history as well as their peers’ labour market experiences. This study highlights the relativity of subjective well-being function by showing that self- and social comparisons feature prominently in how people judge their lives.

Unemployment benefits and unemployment

All developed economies have unemployment benefit programs to protect workers against major income losses during spells of unemployment. By enabling unemployed workers to meet basic consumption needs, the programs protect workers from having to sell their assets or accept jobs below their qualifications. The programs also help stabilize the economy during recessions. If benefits are too generous, however, the programs can lengthen unemployment and raise the unemployment rate. The policy challenge is to protect workers while minimizing undesirable side effects.

The unemployed on sickness allowance: segmenting 3-year labour market pathways with sequence analysis

Abstract Background Understanding how the combination of unemployment and work disability affects future labour market pathways is important. We followed labour market pathways among those who were unemployed at the start of a sickness allowance spell. Methods Register data covered disability pensions (DP), rehabilitation spells, sickness allowance spells, unemployment spells and employment spells, retrieved for unemployed Finnish 18-58 years old persons who had a new sickness allowance spell in 2016. Sequence analysis and clustering were used to identify latent homogenous subgroups. Using multinomial regressions, demographic, socioeconomic, and disability-related covariates were examined. Results Preliminary analyses revealed six clusters with unique pathways and identities. 1) Unemployment; 2) Employment; 3) Rehabilitation spells, recurring disability and unemployment; 4) Unknown sources of income; 5) Permanent disability pension; and 6) Temporary disability pensions. Compared to the cluster with emphasis on return-to-work, other clusters were associated with less pre-LTSA employment days, having a pre-LTSA chronic illness, and a mental disorder. Conclusions Unemployed persons starting an LTSA have very different labour market pathways. For many, there are low chances for employment or regained work ability in the following years. Persons with poor health, long history outside employment, older age, low educational level and a mental disorder could benefit from targeted support. Key messages • Despite heterogeneous pathways found, for most of the unemployed, sickness allowance spells are followed by recurring unemployment, recurring sickness allowance, or disability retirement. • Since the unemployed with work disability rarely regain work ability in the following years, supporting their work ability is crucial in preventing permanent exclusion from working life.

Characteristics of employment history and self-perceived barriers to healthcare access.

Research suggests that people in disadvantaged social positions are more likely to perceive barriers to accessing healthcare, especially to specialists and preventive services. In this study, we analyze if adversity during past employment histories (e.g. spells of unemployment) is linked to subsequent subjectively perceived barriers in healthcare access. Further, we investigate if the associations vary according to national healthcare access and quality indicators. We use data from the Survey of Health, Ageing and Retirement in Europe with a study sample of 31 616 men and women aged 52-80 from 25 countries. Data include retrospective information on employment histories allowing us to derive characteristics of past careers, including the number of unemployment periods, main occupational position and pension contributions. Barriers to healthcare access are measured by self-perceived forgone care due to costs and unavailability of services. We apply multilevel Poisson regression for binary outcomes and test for cross-level interactions between career characteristics and national healthcare system characteristics. Career characteristics are linked to later self-perceived healthcare access barriers, consistently in the case of cost barriers and less consistently for unavailability of services. Associations are similar for men and women, and persist after controlling for current income, wealth and subjective health. We find no cross-level interactions between career characteristics and country-level healthcare access and quality indicators. Self-perceived barriers to healthcare access are linked to people's past working lives. More in-depth investigation is needed to identify the reasons for the lingering effects of characteristics of employment history on reduced healthcare access.

Discretionary Extensions to Unemployment Insurance Compensation and Some Potential Costs for a McCall Worker

Unemployment insurance provides temporary cash benefits to eligible unemployed workers. Benefits are sometimes extended by discretion during economic slumps. In a model that features temporary benefits and sequential job opportunities, a worker’s reservation wages are studied when policymakers can make discretionary extensions to benefits. A worker’s optimal labor-supply choice is characterized by a sequence of reservation wages that increases with weeks of remaining benefits. The possibility of an extension raises the entire sequence of reservation wages, meaning a worker is more selective when accepting job offers throughout their spell of unemployment. The welfare consequences of misperceiving the probability and length of an extension are investigated. Properties of the model can help policymakers interpret data on reservation wages, which may be important if extended benefits are used more often in response to economic slumps, virus pandemics, extreme heat, and natural disasters.

Unemployment and health: A meta‐analysis

AbstractThis paper reports a meta‐analysis of the relationship between unemployment and health. Our meta‐dataset consisted of 327 study results taken from 65 articles published in peer‐reviewed journals between 1990 and 2021. We found that publication bias is important, but only for those study results obtained by means of difference‐in‐differences or instrumental variables estimators. On average, the effect of unemployment on health is negative, but quite small in terms of partial correlation coefficients. We investigated whether the findings were heterogeneous across several research dimensions. We found that unemployment has the strongest impact on the psychological domains of health and long‐term unemployment spells are more detrimental than short‐term ones. Furthermore, women are less affected, studies dealing with endogeneity issues find smaller effects and the health penalty is increasing with unemployment rate.

The impact of overweight and obesity on unemployment duration among young American workers

Obesity has a profound effect on the working careers of Americans. Prior studies pertaining to workers in other countries report that obese women experienced longer spells of unemployment than normal weight peers. However, the effect of obesity on unemployment duration has not been studied for American workers. To address this gap in the literature, we report estimates of the effects of overweight and obesity from a proportional hazards model of unemployment duration that controls for unobserved individual characteristics. Using a data sample of young workers drawn from the National Longitudinal Survey of Youth (1997), our findings indicate that, on average, overweight and obese job seekers experienced significantly longer spells of unemployment. The effects differed by race, sex, and ethnicity: Overweight and obese White and Black women experienced significantly longer spells than White women with normal body mass index (BMI) levels. Although overweight White and Black men had longer unemployment spells compared to White men with normal BMI levels, the magnitudes were smaller than those for White and Black women. In contrast, overweight Hispanic women had shorter duration of unemployment spells compared to White women with normal BMI levels.

Identifying labour market pathways after a 30-day-long sickness absence –a three-year sequence analysis study in Finland

BackgroundReturn-to-work (RTW) process often includes many phases. Still, multi-state analyses that follow relevant labour market states after a long-term sickness absence (LTSA), and include a comprehensive set of covariates, are scarce. The goal of this study was to follow employment, unemployment, sickness absence, rehabilitation, and disability pension spells using sequence analysis among all-cause LTSA absentees.MethodsRegister data covered full-time and partial sickness allowance, rehabilitation, employment, unemployment benefits, and permanent and temporary disability pension (DP), retrieved for a 30% representative random sample of Finnish 18–59 years old persons with a LTSA in 2016 (N = 25,194). LTSA was defined as a ≥ 30-day-long full-time sickness absence spell. Eight mutually exclusive states were constructed for each person and for 36 months after the LTSA. Sequence analysis and clustering were used to identify groups with different labour market pathways. In addition, demographic, socioeconomic, and disability-related covariates of these clusters were examined using multinomial regressions.ResultsWe identified five clusters with emphases on the different states: (1) rapid RTW cluster (62% of the sample); (2) rapid unemployment cluster (9%); (3) DP after a prolonged sickness absence cluster (11%); (4) immediate or late rehabilitation cluster (6%); (5) other states cluster (6%). Persons with a rapid RTW (cluster 1) had a more advantaged background than other clusters, such as a higher frequency of employment and less chronic diseases before LTSA. Cluster 2 associated especially with pre-LTSA unemployment and lower pre-LTSA earnings. Cluster 3 was associated especially with having a chronic illness before LTSA. Those in cluster 4 were on average younger and had a higher educational level than others. Especially clusters 3 and 4 were associated with a LTSA based on mental disorders.ConclusionsAmong long-term sickness absentees, clear groups can be identified with both differing labour market pathways after LTSA and differing backgrounds. Lower socioeconomic background, pre-LTSA chronic diseases and LTSA caused by mental disorders increase the likelihood for pathways dominated by long-term unemployment, disability pensioning and rehabilitation rather than rapid RTW. LTSA based on a mental disorder can especially increase the likelihood for entering rehabilitation or disability pension.

Doubly disadvantaged: Unemployment, young age, and electoral participation in the United Kingdom.

Previous studies examine how unemployment affects socio-political behaviour, but this literature has scarcely focused on the role of the life-course. Integrating the frameworks of unemployment scarring and political socialisation, we posit that unemployment experiences, or scars, undermine electoral participation, and that this is exacerbated at younger ages. We test these hypotheses relying on the British Household Panel Survey and Understanding Society datasets (1991-2020), employing panel data analysis approaches as Propensity Score Matching, Individual Fixed Effects, and Individual Fixed Effects with Individual Slopes. Results suggest that unemployment experiences depress electoral participation in the UK, with effect sizes around -5% of a Standard Deviation in turnout. However, this effect varies powerfully by age: the impact of unemployment on electoral participation is stronger at younger ages (-21% SD at age 20), and weaker to not significant after age 35. This is robust across the three main approaches and several robustness checks. Further analyses show that the first unemployment spell matters the most for electoral participation, and that for individuals under 35, there is a scar effect lasting up to 5years after the first unemployment spell. The life-course emerges as central to better understand the relationship between labour market hardships and socio-political behaviour.

Parental unemployment and children's educational attainment: How big is the role of aspirations?

Children exposed to parental unemployment have been found to lag behind in school, but research has struggled to pin down the underlying explanation. One hypothesis is that parental unemployment may dampen children's aspirations to do well and go far in school. Yet, few studies on parental unemployment have relied on actual measures of children's aspirations or devised a formal analysis of this mechanism. Using the UK Household Longitudinal Study (Waves 1-12, N=1067), I investigate the role of educational aspirations in children's General Certificate of Secondary Education (GCSE) attainment. I compare adolescents exposed to parental unemployment before or only after the typical age at which GCSE exams are taken. In adjusted models, children exposed to parental unemployment before their GCSEs are around 6 percentage points less likely to attain any GCSE qualification by age 17. On average, children have high educational aspirations, although intentions to enrol in college or university are relatively lower among children exposed to an early spell of parental unemployment. Nevertheless, a hypothetical intervention setting these aspirations to the same level for all children only accounts for a modest portion of the educational penalty tied to an early spell of parental unemployment. Several sensitivity and robustness tests support this conclusion. This note seeks to stimulate more research on the mechanisms underpinning the intergenerational effects of unemployment. Findings cast doubts on the idea that children's aspirations, the target of broader policy discourse and interventions, are a crucial part of the equation.