Essays on Unemployment Insurance

Can the potential availability of unemployment insurance (UI) affect the behavior of employed workers and the duration of their employment spells? After discussing few straightforward reasons why UI may affect employment duration, I apply a regression kink design (RKD) to address this question using linked employer-employee data from the Brazilian labor market. Exploiting the UI schedule, I find that potential benefit level significantly affects the duration of employment spells. This effect is local to low skilled workers and, surprisingly, indicates that a 1\% increase in unemployment benefits increases job duration by around 0.3\%. Such result is driven by the fact that higher UI decreases the probability of job quits, which are not covered by UI in Brazil. These estimates are robust to permutation tests and a number of falsification tests. I develop a reduced-form welfare formula to assess the economic relevance of this result. Based on that, I show that the positive effect on employment duration implies in a higher optimal benefit level. Moreover, the formula shows that the elasticity of employment duration impacts welfare just with the same weight as the well-known elasticity of unemployment duration to benefit level.

Benefits quality control state operations handbook.

"July 1, 1986."

Preliminary analysis of extended benefits /

WI docs no.: EMP 1.6/2:TEC/1961/2

Studies on Wage Differentials and Labour Market Transitions

This thesis consists of four studies. The first study examines wage differentials between women and men in the Finnish manufacturing sector. A matched employer-employee data set is used to decompose the overall gender wage gap into the contributions of sex differences in human capital, labour market segregation, and residual within-job wage differentials. The topic of the second study is the relationship between the extended unemployment benefits and labour market transitions of older workers. The analysis exploits a quasi-experimental setting caused by a change in the law that raised the eligibility age of workers benefiting from extended benefits. Roughly half of the unemployed workers with extended benefits are estimated to be effectively withdrawn from labour market search. The risk of unemployment declined and the re-employment probability increased among the age groups directly affected by the reform. The third study provides an empirical analysis of a structural equilibrium search model. Estimation results from various model specifications are compared and discussed. The last study is a methodological study where the difficulties of interpreting the results of competing risks hazard models are discussed and a solution for a particular class of models is proposed. It is argued that a common practice of reporting the results of qualitative response models in terms of marginal effects is also useful in the context of competing risks duration models.

Do Reservation Wages Really Decline? Some International Evidence on the Determinants of Reservation Wages

Using cross-country data, we investigate the determinants of reservation wages and their course over the jobless spell. Higher unemployment benefits lead to higher reservation wages. Further, again consistent with the basic search model, repeated observations on the same individual provide scant evidence of declining reservation wages.

Seguros de desempleo: revisión de literatura y propuesta para Colombia

En este artículo se estudia la posibilidad de introducir seguros de desempleo en Colombia. En una primera parte, se propone una revisión de literatura de los seguros de desempleo en la cual se exponen las ventajas generadas por una cobertura contra este riesgo, así como sus inconvenientes. En una segunda parte, se estudian varios escenarios para introducir seguros de desempleo en Colombia. Después de haber presentado el contexto del mercado laboral y de las normas que lo vigilan, se proponen varios diseños que abordan la gestión y la administración del riesgo de desempleo en Colombia. Igualmente se presentan algunas consideraciones teóricas para la valoración del costo del aseguramiento, las cuales incorporan los efectos del riesgo moral sobre la duración y la incidencia del desempleo.

Risks, costs and labour markets: explaining cross-national patterns of far right party success in European Parliament elections

What is the impact of the economy on cross national variation in far right-wing party support? This paper tests several hypotheses from existing literature on the results of the last three EP elections in all EU member states. We conceptualise the economy affects support because unemployment heightens the risks and costs that the population faces, but this is crucially mediated by labour market institutions. Findings from multiple regression analyses indicate that unemployment, real GDP growth, debt and deficits have no statistically significant effect on far right-wing party support at the national level. By contrast, labour markets influence costs and risks: where unemployment benefits and dismissal regulations are high, unemployment has no effect, but where either one of them is low, unemployment leads to higher far right-wing party support. This explains why unemployment has not led to far right-wing party support in some European countries that experienced the 2008 Eurozone crisis.

The mutual obligation policy in Australia : the rhetoric and reasoning of recent social security policy

Since 1997, the Australian Federal Liberal Government has introduced policies which have sought to reduce rates of unemployment, particularly long-term unemployment. The policy, known as Mutual Obligation, increased the expectations on unemployed people in return for their social security payment. At the same time, previous labour market programmes and government assistance schemes were scrapped or privatised. This article explores the justification of the term 'Mutual Obligation' by examining both the language and the underlying principles of the policy. By defining the problem of unemployment in terms of flaws in the previous social security system, the stage is set for the government to introduce policies which remedy those flaws by emphasising self- reliance in favour of government assistance. Further, by invoking notions of fairness and mutuality, the article argues that the term 'Mutual Obligation' masks both the extent and the strength of the obligations imposed on unemployed people.

Politiche attive del lavoro e ammortizzatori sociali in deroga: misure difensive o di promozione delle capacità?

Il tema generale del dottorato di ricerca è l'analisi delle politiche di attivazione in Italia durante la crisi economica. La combinazione di politiche attive e passive del lavoro viene interpretata ricorrendo al quadro teorico proposto da Amartya Sen e basato sul concetto di capability. Abbiamo considerato le misure nazionali e regionali nel quadro delle linee guida europee e analizzato le tendenze verso l'empowerment dei beneficiari di politiche del lavoro attraverso il concetto di capability proposto da Sen. La ricerca empirica ha utilizzato diversi strumenti per la raccolta dei dati: focus group, un questionario inviato ad un campione di 1.200 lavoratori, e interviste.

Stochastic foundations of dynamic trade and labor market models

This dissertation consists of three self-contained papers that are related to two main topics. In particular, the first and third studies focus on labor market modeling, whereas the second essay presents a dynamic international trade setup.rnrnIn Chapter "Expenses on Labor Market Reforms during Transitional Dynamics", we investigate the arising costs of a potential labor market reform from a government point of view. To analyze various effects of unemployment benefits system changes, this chapter develops a dynamic model with heterogeneous employed and unemployed workers.rn rnIn Chapter "Endogenous Markup Distributions", we study how markup distributions adjust when a closed economy opens up. In order to perform this analysis, we first present a closed-economy general-equilibrium industry dynamics model, where firms enter and exit markets, and then extend our analysis to the open-economy case.rn rnIn Chapter "Unemployment in the OECD - Pure Chance or Institutions?", we examine effects of aggregate shocks on the distribution of the unemployment rates in OECD member countries.rn rnIn all three chapters we model systems that behave randomly and operate on stochastic processes. We therefore exploit stochastic calculus that establishes clear methodological links between the chapters.

Poverty in Slovenia: A Conseqence of Economic Transition

Slovenia is considered to be one of the most successful Central and Eastern European countries undergoing the process of transition. It has a high GDP per capita (the highest in the Visegrad group) amounting to about 7200 US dollars (at the exchange rates pertaining during Ms. Stropnik's research). In 1994, a low rate of inflation, a low level of public debt and almost balanced public finances, were all positive elements. However, there is a darker side, for instance the dramatic increase in unemployment and (somewhat less dramatic) fall in production during the transition period. This analysis aimed to provide insights into what is actually happening at the household level, since households are the ultimate bearers of macroeconomic and social change. The final output totalled 166 pages in English and Slovenian, available also on disc. The income concept used by Ms. Stropnik is that of the disposable (monetary) household income, i.e. the cash income of all household members - including social security transfers and family benefits, and the net sum of taxes and social security contributions - plus the equivalent of domestic production, used in the household. Non-monetary income sources, such as household own production, benefits in kind, subsidies for goods and services, and fringe benefits, were not taken into account. The concept of relative and objective poverty was followed. Poverty means having less than others in society, it is a state of relative deprivation. Objective aspects of the situation, e.g. command over resources (i.e. the household income) and the relative position of the household in the income distribution, determine who is poor and who is not. Changes in household composition - an increase in the number of pensioners, unemployed and self-employed, concomitant with a large decrease in the number of employees - obviously played a part in the changing structure of household income sources during this period. The overall decrease in the share of wages and salaries from primary employment in 1993 is to be observed in all income deciles. On the other hand, the importance of salaries gained from secondary employment has increased in all deciles. The lower seven deciles experienced a sharp rise in the share of social benefits in the period 1988-1993, mostly because of the increase in the number of persons entitled to claim unemployment benefits. In Slovenia, income inequality has increased considerably during the 1988-1993 period. To make matters worse, the large increase in income inequality occurred in a period of falling real incomes. In 1983 the bottom decile disposed of 3.8 percent and the top decile disposed of 23.4 percent of total monetary income in Slovenia, whereas by 1993 the same statistics revealed 3.1 percent and 18.9 percent respectively. Unemployment greatly increases the risk of living in poverty. In 1993, 35 per cent of all unemployed persons in Slovenia were living in the lowest income quintile. Ms. Stropnik found certain features that were specific to Slovenia and not shared by most countries in transition. For example, the relative income position of pensioners has improved. Retirement did not increase the risk of poverty in 1993 as much as it did in 1983 and 1988. Also, it appears that children have not been particularly hard-hit by the transition upheavals. The incidence of poverty amongst children has not increased in the period 1983-1993. Children were also fairly evenly distributed across income quintiles. In 1983, 11.8 percent of households with children aged 18 or less were poor. In 1993, this figure was 8.4 per cent. On the other hand, poor households with children were, in comparison with other households of the same type, poorer in 1993 than in 1983. Ms. Stropnik also analysed the impact of social transfers. Her conclusion was that the level of social transfers prevented them from being successful in alleviating poverty. Family policy transfers (child allowances, child tax allowances, subsidised child care) did, however, contribute to the lowering of income inequality between families with and without children, and amongst families with different numbers of children. Ms. Stropnik is determined that the results of her research be used in the creation of social policy aimed at helping the poor. She quotes Piachaud approvingly: "If the term 'poverty' carries with it the implication and moral imperative that something should be done about it, then the study of poverty is only ultimately justifiable if it influences individual and social attitudes and actions."

Regional Trade Agreements and domestic labour market regulation

This chapter discusses the relationship between labour market regulation and regional trade agreements from both a legal and an economic angle. We examine empirically whether regional trade liberalisation is associated with deterioration (“race to the bottom”) of domestic labour standards beyond those reflected in the 1998 ILO Declaration on the Fundamental Principles and Rights at Work. Using a panel of 90 developed and developing countries, covering the years from 1980 to 2005, we find that after the entry into force of a regional trade agreement (RTA), labour standards applying to employment protection and unemployment benefits are significantly weakened. We show that such a lowering of protection levels tends to occur in high income countries and that this effect mainly stems from RTAs among such countries rather than with low or middle income countries. Concern about competitive pressure to weaken domestic labour regulation is reflected in a variety of undertakings in RTAs not to administer labour laws with a view to improving one’s competitive position in trade or foreign direct investment (FDI). The above-mentioned empirical findings indicate that such provisions could potentially become relevant, and that this is more likely to be the case for high income members of RTAs. Our analysis, from a legal point of view, of relevant institutional and procedural mechanisms indicates however that enforceability of the relevant provisions is weak for most of the existing legal texts.

Material relating to adjustment assistance for workers.

At head of title: 93d Congress, 1st session. Committee print. Briefing paper no. 5.

In the matter of United Steelworkers of America-CIO and various steel and iron ore companies : case no. D-18-C, appendix to a guaranteed wage plan for the workers in the steel industry /

"Union exhibit no. 11A"--Cover.

Wage bargaining, privatisation, ability to pay, and outside options:evidence from Hungary

This paper examines the determinants of short-term wage dynamics, using a sample of large Hungarian companies for the period of 1996-1999. We test the basic implications of an efficient contract model of bargaining between the incumbent employees and the managers, which we are unable to reject. In particular, there are structural differences between the ownership sectors consistent with our prior knowledge on relative bargaining strength and unionisation measures. Stronger bargaining position of workers leads to higher ability to pay elasticity of wages, and lower outside option elasticity. Our results indicate that while bargaining position of workers in domestic privatised firms may be weaker than in the state sector, the more robust difference relate to state sector workers versus the privatised firms with the majority foreign ownership. We examine several extensions. We augment the bargaining specification by controls related to workers' skills and find that the basic findings are robust to that. We take a closer look at the outside options of the workers. We find some interactive effects, where unemployment modify the impact of availability of rents on wages. We interpret our results as an indication that bargaining power of workers may be affected by changes in their outside options. We also experiment with one concise indicator of reservation wage which is closest to the theoretical model specification and combines sectoral wages, unemployment benefits and regional unemployment levels,. We found that measure performing well. Finally, we found that while responsiveness of wages towards ability to pay is higher in the state sector, variation in wage dynamics is lower. This may indicate some wage smoothing in the state sector, consistent with the preferences of employees.