Growth,unemployment and labour market institutions: evidence from a cross-section of EU regions

The responsiveness of unemployment to growth is an issue of ongoing political and academic interest. Economic growth is supposed to be the key to increase labour demand and reduce unemployment. Departing from Okun's law, most research on the unemployment intensity of growth has focused on national disparities and the role of labour market institutions. Empirical evidence at the regional level is scarce. We investigate differences in regional labour market responsiveness and their potential determinants for a cross section of European regions. The data set covers the NUTS 2 regions in the EU15 for the period 1980 to 2002. Following a spatial modelling approach interaction among neighbouring labour markets is taken into account. Our findings point to substantial differences in labour market effects of output growth among European countries and regions. Both national labour market institutions and regional characteristics, such as structural change explain a significant part of these disparities.     

Unemployment durations and local labour market conditions

ABSTRACT

Unemployment durations vary across local authority districts in the UK. We explore the extent to which this variation is explained by differences in local labour demand as opposed to composition, business cycle and regional effects. We use seventeen waves of the British Household Panel Survey to identify the determinants of the duration of unemployment spells. Once we adjust for individual-level, business cycle and regional controls, we do not find evidence that living in a local authority district with relatively high unemployment is associated with longer spells of unemployment. This indicates that differences in labour demand operate at larger geographic scales, such as between large regions. Our findings have implications for the design of policies to help high unemployment districts.     

On Regional Unemployment: An Empirical Examination of the Determinants of Geographical Differentials in the UK

In this paper we consider the determinants of regional disparities in unemployment rates for the UK regions at NUTS‐II level. We use a mixture panel data model to describe unemployment differentials between heterogeneous groups of regions. The results indicate the existence of two clusters of regions in the UK economy, characterized by high and low unemployment rates, respectively. A major source of heterogeneity appears to be caused by the varying effect (between the two clusters) of the share of employment in the service sector, and we trace its origin to the fact that the high unemployment cluster is characterized by a higher degree of urbanization.     

Inter-Regional Migration in Transition Economies: The Case of Poland

In this paper, we modify the Harris–Todaro model of migration to incorporate the impact of human capital, housing stock, and the availability of publicly provided goods such as healthcare and road provision in order to analyze the determinants of migration in different regions of Poland. We apply the Seemingly Unrelated Regression Equation (SURE) model to investigate the data. Our results show that GDP per capita, unemployment, and distance have a strong effect on regional migration in Poland. Human capital is also an important explanatory factor as is the provision of key publicly provided facilities such as roads. The lack of housing in Poland is important in explaining the low levels of internal migration.     

Efficiency frontier and matching process on the labour market: Evidence from Tunisia

The purpose of this paper is to study the determinants of the inefficient functioning of the Tunisian labour market. The study takes advantage of the recent development in the stochastic frontier techniques and estimates, the matching function for Tunisia using disaggregated data. We include control variables as determinants of matching efficiency and regional disparities. We confirm that the persistently high rate of unemployment is the result of not only excess labour supply but is also related to a shortfall between supply and demand (sector, location, and qualification).     

The Impact of Vocational Training on the Unemployment Duration

In this study, we estimate a semiparametric hazard model to assess the impact of vocational training on the duration of unemployment spells. Our research work is based on the data obtained from the District Labor Office in Słupsk, Poland from 1999 to 2007. We employ matching methods to take into account the potential sample selection problem, i.e., finding an adequate control group for the group of trainees. Therefore, we estimate a random-effects probit model for the likelihood of participation in a training program. The main question of this paper is whether the training significantly raises the transition rate from unemployment to employment in the short and the long run.     

Deriving natural rates of unemployment for sub-national regions: the case of Canadian provinces

In order to pursue informed stabilization policies, it is vital for policy-markers to have estimates of how much of the total unemployment rate can be classified as cyclical rather than natural unemployment. This paper describes a method for generating regional natural-rate estimates and applies this method to the case of Canadian provinces. Results indicate that unemployment insurance generosity and relative minimum wages play an important role in determining natural unemployment rates in Canadian provinces. One of the enduring characteristics of the Canadian labour market has been substantial and peresistent unemployment rate disparities across provinces. The results of this study indicate that these disparities are primarily explained by differences in provincial values of structural variables such as unemployment generosity and by differences in provincial sensitivities to these structural variables. A furher result is that variation in cyclical unemployment rates is substantially less in the traditionally high unemployment region of Atlantic Canada than it is in the traditionally low unemployment province of Ontario. This result implies that the most appropriate policies to reduce unemployment in Atlantic Canada are not regionally-applied expenditure policies but rather policies designed to reduce structural distortions in the provincial labour markets.     

Trade between Euro zone and Arab countries: a panel study

We present empirical evidence regarding unemployment dynamics for women and men in eight OECD countries. Unit-root tests are used to examine the unemployment dynamics of women and men. Failure to reject the unit-root hypothesis is consistent with unemployment hysteresis. Rejection of the unit-root hypothesis indicates that unemployment dynamics are best explained by the natural rate of unemployment or the structuralist view. We find evidence of gender differences in unemployment dynamics in Canada, Germany and the US, but not in other countries. While there are some differences in the extent of persistence across gender and across countries, the degree of persistence for both female and male unemployment rates is fairly low in all countries. Our results, therefore, contrast with substantial empirical evidence of high levels of unemployment persistence in European countries.     

Regional characteristics and the location of foreign firms within Poland

This article investigates the location determinants of firms with foreign capital participation within Poland using the regional data set from 1993 to 1998. It is found that the concentration of foreign economic activity is positively related to industry and service agglomeration and the road network and negatively to the unemployment rate. Traditional regional characteristics such as GDP, wage rate and education, often regarded as important location determinants, are not robust with respect to the specification of the estimating equation. The special economic zone variable is not found to be statistically significant in any specification estimated. Geographic location dummies confirm that foreign firms prefer Central and South–Western regions over Eastern parts of Poland having controlled for their characteristics.     

The ins and outs of unemployment in Canada, 1976–2008

Abstract This paper studies the flows into and out of unemployment in Canada at an aggregate and a number of disaggregated levels. I find that inflows into unemployment are countercyclical and outflows are procyclical. At an aggregate level, changes in the rate at which individuals leave unemployment account for most of the changes in unemployment rates in Canada between 1976 and 2008. However, flows into unemployment matter more at some disaggregated levels. There are also some differences in the contributions of flows into and out of unemployment to changes in unemployment rates across the 1981–82 and 1990–92 recessions.     

How do Migrants Choose Their Destination Country? An Analysis of Institutional Determinants

We analyze the effects of socio‐economic and institutional determinants, especially labor‐market institutions and features of social protection systems, on migrants’ location choices. Based on micro‐data for France, Germany, the UK, and the USA, we study migration to one of these four countries using a multinomial choice framework. Our estimates confirm conventional results regarding wages, networks, and unemployment rates. In addition, we find that there are indications of “insider–outsider effects” for union coverage and unemployment benefits, while employment protection does not have a clear‐cut impact on migration. Good education and health systems tend to attract migrants, while generous pension systems deter them.     

INTERACTIONS BETWEEN WELFARE CASELOADS AND LOCAL LABOR MARKETS

This paper provides an empirical examination of interactions between welfare caseloads and local labor markets using data on caseload stocks, entries, and exits. Granger‐causality tests show that unemployment rates Granger‐cause caseload activity but caseload activity does not Granger‐cause unemployment rates. The results also reveal differential dynamics between caseloads and labor market conditions for rural versus metropolitan markets. Several models of one‐way association between caseload activity and unemployment rates are presented. The results show that higher unemployment rates are positively associated with welfare caseloads and entries and negatively related to exits. (JEL I38, R23)     

Do downturns cause desperation? The effect of economic conditions on suicide rates in Canada

There is conflicting evidence concerning the impact of macroeconomic conditions on suicide rates. To help resolve this pertinent question, we present evidence using Canadian data. We estimate feasible generalized least squares models of annual gender-specific suicide rates in the working age population (aged 25–64) using data from each of the 10 Canadian provinces over the period 1982 to 2007. We allow for heteroscedasticity across provinces and first-order autocorrelation common to all provinces. We posit that suicide rates in this population are a function of macroeconomic conditions (current and lagged unemployment rates and real per capita GDP) and other determinants that might be correlated with macro conditions, such as physician supply. We find that different factors affect suicide rates across genders and that some of the results are sensitive to the specification of the model we use and the regressors included. Generally, economic conditions affect men more than women; suicide rates are counter-cyclical and a higher supply of psychiatrists in a province is correlated with lower suicide rates.     

The determinants of variations in exit rates

A conceptual model of the determinants of exit across spatial areas is presented and empirically tested. The relative merits of two different methods of calculating exit rates are discussed, and results compared. In the empirical estimation, entry is found to be the dominant determinant of exit. However, other factors also have a systematic effect: among these are local income, the rate of change of unemployment, relevant managerial skills, and population density. Making allowance for variations in industrial structure across areas has some effect on the results, but does not eliminate the effect of variables other than entry.     

BUSINESS CYCLES AND ADMISSIONS TO SUBSTANCE ABUSE TREATMENT

We study the effect of business cycles on admissions to specialty substance abuse treatment using administrative data between 1992 and 2015. We proxy business cycles with the state unemployment rate and apply a panel fixed‐effects model. While previous economic research has shown that substance abuse is counter‐cyclical, we observe no change in the total number of admissions across the business cycle. However, focusing on average effects misses important heterogeneity. In substance‐specific regressions we find statistically significant evidence that heroin‐related admissions are counter‐cyclical while stimulant‐related admissions are procyclical. Our findings add to the literature on business cycles and health. (JEL I1, J2)     

HYSTERESIS IN UNEMPLOYMENT REVISITED: EVIDENCE FROM PANEL LM UNIT ROOT TESTS WITH HETEROGENEOUS STRUCTURAL BREAKS

This paper applies the panel LM unit root tests with heterogeneous structural breaks in level by Im  et al. ( Oxford Bulletin of Economics and Statistics , 67 (2005), pp. 393–419) to re-examine the validity of hysteresis in the unemployment rates of 19 OECD countries. Our empirical findings are favourable to the stationarity of the unemployment rates, i.e., the unemployment hysteresis hypothesis is strongly rejected. Our results suggest that shocks to unemployment rates are temporary and soon converge when we control for breaks. A major policy implication of the study is that a fiscal or monetary stabilization policy would not have permanent effects on the unemployment rates of the 19 OECD countries.     

Economic geography and wages in Brazil: Evidence from micro-data

This paper estimates the impact of market and supplier access on wage disparities across Brazilian states, incorporating the control for individual characteristics into the new economic geography methodology. We estimate market and supplier access disaggregated by industry, and we compute access to local, national and international markets separately. We find a strong correlation between market access and wage differentials, even after controlling for individual characteristics, market access level (international, national or local), and using instrumental variables.     

New jobs or recalls?

This study demonstrates the importance of explicitly accounting for the possibility of recalls in the analysis of unemployment composition and the determinants of unemployment spell durations. Using Austrian administrative data we estimate that recalls accounted for nearly one half of the employment to unemployment to re-employment transitions in 1985 with the probability of recall being mainly dependent on industry and job characteristics related to seasonal work. We then analyse unemployment spell durations in a competing risks framework and, indeed, find significantly different duration patterns across new jobs and recalls.This paper draws on research in which the first author has collaborated with Georg Fischer. We would like to thank seminar participants at the ZEW, Mannheim, the Institute for Advanced Studies Vienna, participants of the European Economic Association congress, Dublin, and two referees of this journal for valuable comments and criticisms.     

The determinants of federal and state enforcement of workplace safety regulations: OSHA inspections 1990–2010

We explore the determinants of inspection outcomes across 1.6 million Occupational Safety and Health Agency (OSHA) audits from 1990 through 2010. We find that discretion in enforcement differs in state and federally conducted inspections. State agencies are more sensitive to local economic conditions, finding fewer standard violations and fewer serious violations as unemployment increases. Larger companies receive greater lenience in multiple dimensions. Inspector issued fines and final fines, after negotiated reductions, are both smaller during Republican presidencies. Quantile regression analysis reveals that Presidential and Congressional party affiliations have their greatest impact on the largest negotiated reductions in fines.     

Measuring Search Frictions Using Japanese Microdata

This paper estimates individual‐level matching functions to measure search frictions in the Japanese labour market and presents the determinants of search duration. We employ administrative microdata that track the job search process of job seekers who left or lost their job in August 2005 and subsequently registered at their local public employment service. Our finding is that the matching function exhibits decreasing rather than constant returns‐to‐scale for job seekers and vacancies. We also find that after controlling for the benefits period, job seekers who lost their job involuntarily were more likely than those quitting voluntarily to exit from unemployment.