Incentives to work? The impact of a ‘Cash-for-Care’ benefit for immigrant and native mothers labour market participation

To what extent is labour market participation of mothers sensitive to economic incentives? We answer this question by studying the effect on labour market participation of a Norwegian family policy programme that clearly has affected the incentives to participate in the labour market of mothers with small children. From January 1999, all parents with one- and two-year-old children who did not use publicly subsidised day-care became entitled to a benefit, ‘Cash-for-Care’ (‘CFC’). The CFC reform has increased the price of publicly subsidised day-care relative to the price of own care. Economic theory of labour market participation postulates that the CFC reform would have a negative effect on labour market participation for the person most involved in childcare. The results show that the CFC reform has affected mothers' labour market participation negatively. The effects are much stronger for non-western immigrant mothers' than for native mothers. The results support the hypothesis that non-western immigrant mothers do react to changes in the relative prices of childcare and suggests that non-western female immigrants are quite responsive to changes in economic incentives.     

Dynamic labour supply effects of childcare subsidies: Evidence from a Canadian natural experiment on low-fee universal child care

This paper shows that a temporary incentive to join the labor market or to work more can also produce substantial life-cycle labour supply effects. On September 1997, a new childcare policy was initiated by the provincial government of Québec, the second most populous province in Canada. Licensed and regulated providers of childcare services began offering day care spaces at the subsidized fee of $5/day/child for children aged 4. In successive years, the government reduced the age requirement, created new childcare facilities and spaces, and paid for the additional costs entailed by this low-fee policy. No such important policy changes for preschool (including kindergarten) children were enacted in the nine other Canadian provinces over the years 1997–2004. Using annual data drawn from Statistics Canada's Survey on Labour and Income Dynamics and a difference-in-differences quasi-experimental methodology, the paper estimates the dynamic labour supply effects of the program. The results demonstrate that the policy had long-term labour supply effects on mothers who benefited from the program when their child was less than 6. A striking feature of the results is that they are driven by changes in the labour supply of less educated mothers.     

Land Market Restrictions,Women's Labour Force Participation and Wages in a Rural Economy

We analyse the effects of land market restrictions on the rural labour market outcomes for women. The existing literature emphasizes two mechanisms through which land restrictions can affect economic outcomes: collateral value of land, and (in)security of property rights. Our analysis focuses on an alternative mechanism where land restrictions increase costs of migration out of villages. Testable prediction of collateral channel is that wages remain unchanged, but the effects on labour force participation are ambiguous. Insecurity of property rights in land reduces labour force participation, but leaves wages undisturbed. In contrast, if land restrictions work primarily through higher migration costs, labour force participation increases, while wages decline. For identification, we exploit a natural experiment in Sri Lanka where historical malaria played a unique role in land policy. We provide robust evidence of a positive effect of land restrictions on women's labour force participation, but a negative effect on female wages. The empirical results thus contradict a collateral or insecure property rights effect, but supports migration costs as the primary mechanism.     

Nothing ventured,nothing gained! How and under which conditions employers provide employability-enhancing practices to their older workers

Employability-enhancing practices usually refer to training or courses, but also practices directed towards older workers to sustain their work capability can be embraced by this term. In the context of an ageing population and workforce, older workers' labour market participation gains an increasingly important role. Therefore, the importance of employability-enhancing practices is noted as a solution to sustain their employment. In this study, we focus on employer-provided employability practices for older workers. We answer the following research question: which practices do employers use to enhance their older workers' employability and under which conditions are these practices adopted. Analyses on Dutch corporate data (N = 860) show that employers mainly provide employability-enhancing practices that are easily implemented and not expensive. This finding replicates prior research and clarifies that job redesign should be considered as a possibility to keep older workers in the labour market. Furthermore, our study shows that both organizational and labour market characteristics affect employers' decisions whether to provide employability-enhancing practices for their older workers. This suggests that policy measures might be necessary to assimilate investments in employability-enhancing practices across organizations.     

The effect of disability pension incentives on early retirement decisions

I investigate the incentive effects of disability pensions on disability retirement entry as a special type of early retirement. The implicit tax rate on further work is included as a forward looking incentive measure. A substantial change of the disability pension legislation caused exogenous variation in disability benefits in Germany in 2001 and is used to obtain estimates of individual's responses to financial incentives. Benefit levels appear to have no effect on the labour market behaviour. At the same time, there is a sizable and significant disincentive effect of implicit taxes on labour market income, indicating that alleviating such disincentives would likely increase labour force participation. Since the response to financial incentives occurs mainly among those in good health, such a policy might on the other hand imperil the aim of providing insurance against a health‐induced loss of one's working capacity.     

Does the Order and Timing of Active Labour Market Programmes Matter?

This study extends the traditional focus of active labour market policy evaluation from a static comparison of participation in a programme versus non‐participation (or participation in another programme) to the evaluation of the effects of programme sequences, that is, multiple participation or timing of such programmes. Explicitly allowing for dynamic selection into different stages of such programme sequences we analyse multiple programmes, the timing of programmes, and the order of programmes. The analysis is based on comprehensive administrative data on the Austrian labour force. Our findings suggest that (i) active job search programmes are more effective after a qualification programme compared to the reverse order, (ii) multiple participation in qualification measures dominates single participation and (iii) the effectiveness of several labour market programmes deteriorates the later they start during an unemployment spell.     

Did working families' tax credit work? The impact of in-work support on labour supply in Great Britain

In-work benefits are promoted as a way to make low-income families better off without introducing adverse work incentives. In 1999, the structure of in-work benefits in the UK changed, and their generosity almost doubled, through the introduction of Working Families' Tax Credit (WFTC). With micro-data from before and after its introduction, a structural model of labour supply and programme participation estimates that, by 2002, WFTC had increased labour supply of lone mothers by around 5.1 percentage points, slightly reduced labour supply of mothers in couples by 0.6 percentage points, and increased the labour supply of fathers in couples by 0.8 percentage points, compared with the programme that preceded it. Other tax and benefit reforms contemporaneous with WFTC acted to reduce the labour supply of parents, though. Without any form of in-work benefit in the UK, labour force participation by lone mothers would be around 45 percent, rather than the 55 per cent we now observe. Participating in family credit, the UK's in-work programme before October 1999, conferred a utility loss as well as a utility gain from the extra income, but this utility cost of participation was lower in the final year of WFTC than under previous programmes for lone mothers, and no different for individuals in couples: this in itself induced more lone mothers to work.     

Do Labour Market Programmes Speed up the Return to Work?*

We evaluate the impact of labour market programmes on unemployment durations in Norway, by means of a distribution‐free mixed proportional competing risks hazard rate model. We find that programme participation, once completed, improves employment prospects, but that there is often an opportunity cost in the form of a lock‐in effect during participation. The average net effect of programme participation on the length of the job search period is found to be around zero. For participants with poor employment prospects, the favourable post‐programme effects outweigh the negative lock‐in effects.     

Compulsory work-focused interviews for inactive benefit claimants: an evaluation of the British ONE pilots

Using administrative panel data on individuals, we evaluate the effect of compulsory work-focused interviews (CWFI) on the probability of leaving social security benefit for the two main recipient groups of out-of-work benefits outside the unemployed: lone parents and the sick or disabled. CWFI for these groups were first introduced for new benefit claimants in Britain under the ONE programme in a limited number of benefit districts, enabling us to identify the policy effect. Using a difference-in-differences procedure, we find little evidence to suggest that CWFI increases labour market participation amongst inactive benefit claimants.     

Young people living as couples: How women's labour supply is adapting to the crisis. Spain as a case study

In this paper, we focus on the effects of the Great Recession on the decisions of young women regarding their labour supply. Considering the profound effect of the economic recession on the Spanish labour market, and in particular on the labour supply of young people, the focus of the empirical part of this paper is on Spain. Using EU-SILC 2007 and 2012 micro data for Spain, the labour supply models of women are estimated by age group, with a particular focus on the 20 to 29 and 30 to 39 age bands, in order to establish how young women living in couples exhibit different labour supply propensities according to their partner's labour market status. Correction is made for the non-random selection of women living in couples in the younger age groups. This first analytical step reveals a negative effect on the likelihood of forming a new household in the context of precarious employment conditions. Analytical results regarding the labour supply of women by age group confirmed a discouraging effect of young children on the labour supply of the youngest mothers, as well as a positive effect from being the owner of a house purchased under mortgage.The literature shows that different effects can be at work within the crisis: an added worker effect (AWE), which is countercyclical labour supply behaviour involving an increase in individual labour supply in response to transitory shocks in the partner's earnings, and a procyclical discouraged worker effect. The resulting estimations of the present study suggest an AWE in 2012 for young women living in couples. While in 2012 the discouragement effect was only prevalent for women over 40, in 2007 it was also prevalent among younger women. Women's higher propensity to enter the labour market when their partner becomes unemployed or is persistently unemployed, coupled with their likelihood to be inactive in the presence of young children, would suggest a need for labour market policies targeted towards young women. Childcare facilities could mitigate the latter effect and produce a more continuous work profile, avoiding the negative effects of work experience interruptions on labour supply during the female lifecycle.     

Maternal labour supply and child nutrition in West Africa

It is widely recognized that women in developing countries have dual roles as generators of household income and as primary caregivers to their children. Many policies directed at reducing poverty or malnutrition involve one or the other of these roles. Programs to reduce child malnutrition, for example, typically target mothers as caregivers. However, because of the time constraints women face, there are potential conflicts between women's different activities about which policy makers are rarely informed. Nutrition interventions have not usually considered the barriers to participation in such programs facing mothers who, either by choice or necessity, have entered the labour force (Leslie, 1988; Engle, 1994). Similarly, policies directed at improving female employment opportunities typically ignore women's important role in household activities related to children's healthy development.
  In this paper we address a potentially important implication of women's multiple roles and the time constraints they face: that female labour force participation, by reducing the time available for household activities related to child development, may place young children at nutritional risk.     

The relationship between health and labour force participation: Evidence from a panel data simultaneous equation model

A concern when estimating the effect of health on labour supply is that health might be endogenous, and in particular that people might use poor health to justify non-participation. This would result in the effect of health being overestimated if health were treated as exogenous. The paper employs a simultaneous equation model to explore the relationship between health and labour force status, allowing for the endogeneity of health. In addition, the paper takes advantage of panel data to control for unobserved heterogeneity so that more efficient estimation results can be obtained than using cross-sectional data. The results confirm the finding in the literature that health has a positive and significant effect on labour force participation for both males and females. As for the reverse effect, it is found that labour force participation has a negative effect on male health but a positive effect on female health, implying that the justification hypothesis is rejected for males but not for females. The exogeneity hypothesis on the health variable is rejected for both samples based on a joint test.     

Attrition in longitudinal panel data and the empirical analysis of dynamic labour market behaviour

In the empirical analysis of unemployment durations and job durations, it is generally assumed that the stochastic processes underlying labour market behaviour and the behaviour concerning participation in a panel survey are independent. However, there are reasons to believe that the probability of dropping out of the panel is related to the rate at which a (different) job is found. If there is such a relation, and if it is ignored, then the estimator of the rate at which individuals become employed or change jobs will generally be inconsistent. In this paper we analyse the relation between the duration spent in a particular labour market state and the duration of panel survey participation, by explicitly modelling and estimating the joint distribution of both durations. The emphasis will be on models allowing for stochastically related unobserved determinants of both types of duration. We estimate models both for unemployment durations and for job durations.     

How Social Structures Influence the Labour Market Participation of Individuals with Mental Illness: A Bourdieusian Perspective

Adopting a Bourdieusian perspective, this paper examines the social structures that influence the labour market participation of individuals with mental illness. We draw on 257 qualitative surveys completed by individuals with diagnosed mental health conditions in Europe, North America, Oceania, Africa, and Asia. We employed thematic analysis to analyse the data. The findings reveal that the interplay of capital endowments, symbolic violence, habitus and illusio shape the labour market participation of individuals with mental illness. Capital endowments of individuals with mental illness are afforded less value in the labour market and these individuals internalize, legitimize and normalize their disadvantaged position, blaming themselves rather than questioning the social structures leading to the challenges they encounter. We highlight that social structures condition the opinion these individuals have of themselves and how this affects how they navigate the labour market. In sum, we show that Bourdieu's concepts provide a useful lens to study inequalities in the labour market, as they reveal the social structures that produce, sustain and reinforce the social order that disadvantages individuals with mental illness.     

The caring hand that cripples? The effects of the European regional policy on local labour market participation in Southern Italy

The European Regional Policy supports the most disadvantaged regions of the EU, aiming to foster a long-run convergence process. Between 2007 and 2013, the EU devoted substantial resources to low-income convergence regions, covering about one quarter of the EU population. Like other disadvantaged areas, Southern Italy received conspicuous funding. This work attempts to evaluate the effect of the intensive funding on local labour market participation across the convergence regions of Southern Italy, using a Diff-in-Diff identification strategy in a Dynamic Spatial Framework. An element of strength in this study is represented by the NUTS-3 dataset employed, drawn from official records. Controlling for socio-economic covariates, autoregressive components and spatial spillovers, the results obtained show a negative impact of the intensive EU funding on labour market participation. Many reasons may account for this phenomenon, ranging from poor targeting and monitoring, to the distortionary effects of the funds, to the strategic behaviour of the national government.     

Impacts of Prime‐age Adult Mortality on Labour Supply: Evidence from Adolescents and Women in South Africa*

This paper examines the impact of prime‐age adult mortality on the transition made by adolescents from school to the labour market and on female adult labour force participation decisions in South Africa. We find, first, that deaths of prime‐age adults significantly increase both male and female adolescents’ labour force participation as they stop their schooling. Secondly, the death of prime‐age adults in general also decreases school enrolment ex ante. Thirdly, female adults tend to join the labour force following the death of prime‐age adult males. These findings imply that prime‐age adult mortality increases labour supply and disrupts human capital formation.     

Tax policy and returns to education

This paper considers how asymmetric tax treatment, where labour market earnings are taxed but household production is untaxed, affects educational choice and labour supply. We show that taxes on labour market earnings can generate a large (non-marginal) switch to home production and the ensuing deadweight losses are large. Using a cross-country panel, we find that gender differences in labour supply responses to tax policy can explain differences in aggregate labour supply and years of education across countries.     

Labour supply in Italy: an empirical analysis of joint household decisions,with taxes and quantity constraints

This study applies an econometric framework which allows for complex non-convex budget sets, highly non-linear labour supply curves and imperfect markets with institutional constraints. A married couple's version of the model is estimated on Italian microdata. The empirical results show that male labour supply is rather inelastic while labour supply among females, especially participation, is considerably more elastic. The elasticities depend strongly on household income. The largest elasticities are found for females living in poor households. The results of the tax simulations suggest that there are only modest labour supply responses from replacing the 1987 system by proportional taxes. Copyright © 1999 John Wiley & Sons, Ltd.     

The Sorting of Female Careers after First Birth: A Competing Risks Analysis of Maternity Leave Duration

A number of contributions have found evidence that motherhood is a critical life event for women's employment careers. This study presents a detailed analysis for the duration of maternity leave in which young mothers can make a transition into different types of employment, unemployment as well as the next birth. We provide a comprehensive picture of the sorting mechanisms that lead to the differentiation of women's employment careers after birth. Our empirical evidence is derived from large‐linked administrative individual labour market data from Germany for a period of three decades. We obtain unprecedented insights into how women's skills, the quality of the previous job match, firm level characteristics, labour market conditions and leave legislation are related to the length of maternity duration. Expansionary leave policies, e.g. are found to be a key factor for the rising share of women who have their second child out of inactivity.     

Changes in labour supply and their impacts on human resource management: the case of Japan ∗

The paper examines some important developments that are taking place on the supply side of the Japanese labour market. The major themes addressed include the impact of ageing on the structure of employment and the increasing participation of women in the labour force. The paper considers in some detail the various policy responses taken, by government through legal intervention and by firms employing specific human resource management strategies, to address these issues. It also observes that supply side needs will have a significant future impact on what might be termed traditional personnel practices in Japan.