Trade and unemployment: What do the data say?

This paper documents a robust empirical regularity: in the long-run, higher trade openness is associated with a lower structural rate of unemployment. We establish this fact using: (i) panel data from 20 OECD countries, (ii) cross-sectional data on a larger set of countries. The time structure of the panel data allows us to control for unobserved heterogeneity, whereas cross-sectional data make it possible to instrument openness by its geographical component. In both setups, we purge the data of business cycle effects, include a host of institutional and geographical variables, and control for within-country trade. Our main finding is robust to various definitions of unemployment rates and openness measures. Our benchmark specification suggests that a 10 percentage point increase in total trade openness reduces aggregate unemployment by about three quarters of one percentage point.     

Is unemployment good for the environment?

Environmental quality is a public good, potentially impacted by everybody. Individual level pro-environmental behavior affects environmental quality in the aggregate. Therefore, it is important to understand what causes individual’s pro-environmental behaviors to change. We quantify the causal effect of one determinant, unemployment, using an EU-27 population representative Eurobarometer survey. Drawing on results from the theory of the private provision of public goods, and recognizing that unemployment decreases income and the opportunity cost of time, we formulate testable predictions that unemployment will decrease the extent of pro-environmental behaviors that require monetary contributions and increase the extent of pro-environmental behaviors that mainly require time/effort. Instrumental variables regressions provide empirical evidence to support these hypotheses. Changes in the unemployment rate within a sub-national region provide the exogenous variation needed to identify the causal effect. Several supplemental questions on the survey provide evidence that environmental issues lose saliency and economic issues gain saliency when one becomes unemployed, suggesting that interested parties may wish to emphasize cost savings of pro-environmental behavior rather than environmental benefits during times of increased unemployment.     

Institutions and training inequality

We analyze how firm-provided training is affected by the interaction among important institutional variables in the labor market: firing costs, minimum wages and unemployment benefits. We find that the degree of complementarity and substitutability among these variables depends on employees' abilities. Thereby the institutional interactions influence skill inequality. We derive how the influence of one of the institutional variables above is affected by other institutional variables with respect to inequality in skills arising from firm-provided training. We derive several striking results, such as: (a) the minimum wage and unemployment benefits generate increasing skill inequality whereas firing costs generate skill equalization; (b) unemployment benefits and firing costs are complements in their effects on skill inequality, (c) firing costs and the minimum wage are substitutes in their effects on skill equalization, and (d) unemployment benefits and the minimum wage are substitutes in their effects on skill inequality.     

AN ECONOMIC INTERPRETATION OF SUICIDE CYCLES IN JAPAN

Suicide rates in Japan have increased dramatically in recent years, making Japan's male rate the highest among developed economies. This study revises the standard economic model of suicide to accommodate Japan's experience, focusing on the change in human capital for the unemployed. We then use the new model and detrended data to empirically investigate the relationship between the suicide cycle and the unemployment cycle. Unlike previous aggregate time series studies, we find that the relationship between the suicide rate and the unemployment rate is significantly and robustly positive for both men and women even after controlling for several social variables. ( JEL I12, J60, E30)     

Excess supply equilibria

This paper addresses a fundamental problem in economic theory: How can there be equilibria of the economic system where some commodity is in excess supply, yet that commodity's relative price shows no tendency to fall? Of course, the principal example of such a phenomenon is an economy experiencing a prolonged period of involuntary unemployment of the labor force during which there is no significant change in the real wage.In the following pages, I shall describe a two-commodity, general equilibrium model that has a continuum of unemployment equilibria, one for any given unemployment rate. The important feature of this model is that workers establish their wage rates in an attempt to maximize expected utility. The information upon which these wage setting decisions are based is provided by actual labor market transactions.Despite the voluntary nature of the wage setting decision, I shall argue that each equilibrium of this economy exhibits involuntary unemployment in the Keynesian sense. For there will always be another equilibrium with a lower real wage, a higher level of employment, and at which (at least when workers are risk neutral) each worker achieves a higher level of expected utility.     

Explaining Disagreement on Interest Rates in a Taylor‐Rule Setting

Most studies on disagreement focus on one specific variable, thereby neglecting the fact that disagreement can be co‐moving with disagreement on other variables. In this paper, we explore to what extent disagreement regarding the interest rate is driven by disagreement on inflation and unemployment. This relationship can be motivated by the theoretical concept of the Taylor rule. Using survey microdata for both professional forecasters and consumers, we provide evidence that disagreement on the interest rate is mainly driven by disagreement on inflation. We further show that disagreement is significantly influenced by central bank transparency, as well as news on money and credit conditions.     

Labour-market institutions, (un)employment,wages, and growth: theory and data

We analyse the implications of labour-market institutions on wage inequality in favour of skilled labour, on relative unemployment of unskilled labour, and on the economic growth rate in two clusters resulting from 27 OECD countries: Cluster 1, closely related with the Anglo-Saxon model, and Cluster 2, dominated by the Continental-European model. By linking the unskilled wage to the skilled one in Cluster 2, due to the indexation of social benefits to per-capita income, we accommodate the observed paths of the three variables in both clusters between 1991 and 2008: Cluster 1 presents a higher wage inequality in favour of skilled labour, a lower unemployment of the unskilled labour, and a better economic growth rate.     

Schooling, Literacy, Numeracy and Labour Market Success

The present paper uses data from the 1996 Australian Aspects of Literacy survey to examine the effects on labour market outcomes of literacy, numeracy and schooling. The survey includes a range of literacy and numeracy variables that are highly intercorrelated. A 'general to specific' approach identifies the most relevant literacy and numeracy variables. Including the others adds little explanatory power. Among males and females separately, approximately half of the total effect of schooling on labour force participation and on unemployment can be attributed to literacy and numeracy (the indirect effect) and approximately half to the direct effect of schooling. There is apparently no indirect effect of labour market experience through literacy and numeracy on participation or unemployment. The direct and total effects of experience are the same. Similarly, the direct and total effects of literacy and numeracy are reasonably similar to each other.     

Race and the Incidence of Unemployment in South Africa

South Africa's unemployment rate is one of the highest in the world, and it has important distributional implications. The paper examines both entry into and duration of unemployment using data for the mid‐1990s. A probit model of unemployment shows an important role for race, education, age, gender, home‐ownership, location, and numerous other variables, all of which have plausible explanations. The large race gap in unemployment is explored further by means of a decomposition analysis akin to that normally used to analyze wage discrimination. There remains a substantial residual which might represent unobserved characteristics, such as quality of education, or discrimination.     

UNEMPLOYMENT,LABOR MARKET TRANSITIONS,AND RESIDUAL WAGE DISPERSION

It is commonplace in the debate on Germany's labor market problems to argue that low wage dispersion is a major reason for the high unemployment rate. This paper analyzes the relationship between unemployment and residual wage dispersion for individuals with comparable attributes. In the conventional neoclassical point of view, wages are determined by the marginal product of the workers. Accordingly, increases in union minimum wages result in a decline of residual wage dispersion and higher unemployment. A competing view regards wage dispersion as the outcome of search frictions and the associated monopsony power of the firms. Accordingly, an increase in search frictions causes both higher unemployment and higher wage dispersion. The empirical analysis attempts to discriminate between the two hypotheses for West Germany analyzing the relationship between wage dispersion and both the level of unemployment as well as the transition rates between different labor market states. The findings are not completely consistent with either theory. However, as predicted by search theory, one robust result is that unemployment by cells is not negatively correlated with the within‐cell wage dispersion.     

Graduate employment: Does the type of higher education institution matter?

The paper analyses whether the type of institution from which students graduate has an impact on their unemployment propensity. It uses official data on the Portuguese higher education system, for 2018, at the program/institution level, which provides information on graduate unemployment, as well as demographic and socioeconomic background information. A fractional probit model on graduates’ propensity for unemployment is estimated. Results suggest that polytechnic graduates face higher unemployment propensity than university graduates, maintaining inequalities present in students’ previous trajectories. Policies targeting socioeconomic segregation need to address not only access to higher education but also the transition to the labor market.     

Censored quantile regressions and the length of unemployment periods in West Germany

In this paper, we estimate the effect of different macro and micro variables on the distribution of unemployment duration in West Germany using censored quantile regressions. We analyze unemployment periods of more than 91,000 observations from the years 1981 to 1997 drawn from the IAB employment subsample. The latter is an administrative data set that is representative with respect to the socially insured workforce. Surprisingly, we find that the educational degree and variables indicating the macroeconomic environment such as the unemployment rate have a weak effect only. On the other hand, variables reflecting the (un-)employment history of an individual such as the length of tenure, recall to the same employer in the past, recent unemployment, and the position in the population income distribution before unemployment have the strongest effects on unemployment duration. We conclude that work history variables are the ones most suitable in characterizing the unemployment duration of an individual. From a methodological point of view, it is interesting that some regression coefficients have a different sign depending on the quantiles of the unemployment duration distribution. This clearly is a violation of the classical proportional hazard assumption which is very common in unemployment duration analysis.     

企业用人导向下高校学生应具素质双向调查比较研究

随着大学生就业压力的加大,社会结构性失业比例的增加,将高校学生应具素质的研究视角从高校转向企业对于引导大学生成功就业具有重大意义。通过发放企业问卷和高校学生问卷,利用因子分析、综合评价法等统计学方法对调查数据进行比较研究,率先对企业用人导向下高校学生应具素质这一问题作出了回答。     

Students Cheat More: Comparing the Dishonesty of a Student Sample and a Representative Sample in the Laboratory*

Unethical behavior has been found in numerous experiments, yet mainly among university students. The use of student participants is potentially problematic for generalizability and the resulting policy recommendations. In this paper, I report on an experiment with potential dishonesty. The experiment was completed by a representative non-student sample and a student sample. The results show that cheating does exist, but also that students cheat systematically more. This suggests that focusing on students as participants tends to overestimate the magnitude of cheating. I further find that age is an important explanation for this difference in dishonesty. The older the participants are, the less they cheat.     

Exact Unemployment Rate Indices

Conventional unemployment rate measures tend to overestimate the degree of labor underutilization if unemployment disproportionately affects less educated and generally less productive workers. Based on index number theory as well as on econometric techniques, this article proposes a number of alternative measures that are exact for specific labor aggregator functions. The results for the United States show that the conventional, unweighted unemployment rate overestimates the true rate by about 0.6 of a percentage point, or by almost 14%.     

The effects of inflation targeting on Okun’s law

This article provides the first empirical evidence that the adoption of inflation targeting (IT) matters for the extent of tradeoff between unemployment and output, that is Okun’s law. Our full sample results indicate that IT leads to a more negative Okun’s coefficient, suggesting that, for a given reduction of output, the introduction of IT is associated with a higher unemployment rate. Subsample analyses reveal that the whole sample results are mainly driven by the industrial subsample outcomes, not the developing counterparts. Our findings point out that IT not only influences macroeconomic variables per se but also affects the relationship between/among macroeconomic variables.     

Strategic Responses: A Survey Experiment on Opposition to Pension Reforms*

The responses given in opinion polls on future policy reforms reflect both subjective expectations and preferences. We disentangle these factors using data from a controlled survey experiment conducted in Germany. At the time of the experiment, an increased retirement age had been proposed as part of a pension reform. Thus, the survey respondents faced an incentive to give biased responses. By understating their expected work ability at the age of retirement, they could make the increase of the retirement age a less attractive policy option. We find evidence for such strategic response behavior, and this strategic bias appears to be stronger in former communist East Germany.     

中国高等教育投资风险和收益的实证研究

With the expanding of higher education in China from 1999, more and more youngsters are able to invest in higher education, resulting a high unemployment rate for higher education graduates and more and more graduates employed in non-graduate position, while the analysis upon risk and return to each level of high education is absent due to the limitation of dataset. The paper employs college students sample survey to research the determinants of all levels of higher education beginning wages, the probability to find an appropriate job in order to conclude the risks and returns to each level of higher education based on the wages growth rate and economic development. The research finds the return to master degree is the highest, but the risk is the lowest in China.      

Testing sensitivity of student enrollment with respect to tuition at an institution of higher education

This study was conducted to measure the impact of H-University's (HU's) tuition increases on enrollment. Based on an internal survey, this study attempts to explain the sensitivity of student enrollment to tuition variations. In addition, this paper develops an aggregate enrollment model and uses the common economic variables such as tuition, income, wage rates, financial aids, and unemployment rates to explain the sensitivity of demand. The most significant finding of this study is that tuition consideration seems to have a relatively small effect on students' decisions. Actually, enrollment at HU (a private institution) have increased despite higher tuition rate. Possible justifications could be proposed, such as the necessity of higher education and the fact that higher education is a continued investment in human capital, in which the more relevant decision factor is the corresponding expected rate of return and not just the cost of investment. Presented at the International Atlantic Economic Society's Conference, Vienna, Austria, March 2003.     

Estimating the public's social preference function between inflation and unemployment using survey data: The survey research center versus Gallup

Economists often use Gallup Poll data on presidential performance to analyze the interaction between politics and the state of the macroeconomy. The household survey undertaken by the Survey Research Center (SRC) of the University of Michigan provides an alternative data base. The SRC asks respondents about the government's performance specifically with respect to inflation and unemployment. We compare whether the Gallup or SRC data are the more useful for estimating the public's social preference function between inflation and unemployment for the Carter, Reagan, Bush and Clinton presidencies. The estimates that use Gallup Poll data are unsatisfactory because for two of the periods the coefficients of inflation and unemployment are not well estimated and for one period there is serial correlation of the residuals. The estimates using the SRC data set are satisfactory and the results are consistent with economic theory. We conclude that a researcher using survey data to estimate the public's reaction to varying rates of inflation and unemployment should prefer the SRC series when it is available. First version received: October 1995/final version received: July 1998