Hysteresis versus natural rate in Taiwan's unemployment: Evidence from the educational attainment categories

This study examines the hysteresis hypothesis in unemployment for Taiwan's educational attainment categories. Both nonlinear dynamics and structural breaks in unemployment are applied in our examinations. The empirical results without structural changes show that the unemployment hysteresis hypothesis cannot be rejected in all educational attainment categories. After simultaneously incorporating nonlinear processes and smooth structural changes, we find that only the unemployment rate of junior college graduates reveals a mean reverting to the natural rate in the long-run, whereas all other series still support the hysteresis hypothesis. The results indicate that: i) the shocks have only temporary effects on the unemployment rate of the junior college graduates; ii) the labor or macroeconomic stabilization policies could have long lasting effects on unemployment rates of the other educational attainment categories; iii) the unemployment rates of low-skill labor are susceptible to the changes of economic or fiscal policies; and iv) practical and occupational training mechanisms should be implemented and strengthened in the higher education system to alleviate the increasingly serious problem of unemployment.     

AN ON‐THE‐JOB SEARCH MODEL OF CRIME,INEQUALITY, AND UNEMPLOYMENT*

We extend simple search models of crime, unemployment, and inequality to incorporate on‐the‐job search. This is valuable because, although simple models are useful, on‐the‐job search models are more interesting theoretically and more relevant empirically. We characterize the wage distribution, unemployment rate, and crime rate theoretically, and use quantitative methods to illustrate key results. For example, we find that increasing the unemployment insurance replacement rate from 53 to 65 percent increases unemployment and crime rates from 10 and 2.7 percent to 14 and 5.2 percent. We show multiple equilibria arise for some fairly reasonable parameters; in one case, unemployment can be 6 or 23 percent, and crime 0 or 10 percent, depending on the equilibrium.     

Unemployment and Crime: Is There a Connection?

A panel of Swedish counties over the years 1988–1999 is used to study the effects of unemployment on property crime rates. The period under study is characterized by turbulence in the labor market—the variation in unemployment rates was unprecedented in the latter part of the century. Hence, the data provide a unique opportunity to examine unemployment effects. According to the theory of economics of crime, increased unemployment rates lead to higher property crime rates. A fixed‐effects model is estimated to investigate this hypothesis. The model includes time‐ and county‐specific effects and a number of economic and socio‐demographic variables to control for unobservables and covariates. The results show that unemployment had a positive and significant effect on some property crimes (burglary, car theft and bike theft).     

Special issue on forecasting,use of survey data on expectations,and panel data applications: editors’ introduction

This study reinvestigates the relationship between unemployment and crime, but is the first to focus explicitly on the effects of long-term unemployment on crime. A unique finding is that long-term unemployment shows a strong association with violent crime, an effect which is greater than that of total unemployment on property crime in this and most previous studies. Long-term unemployment thus identifies a marginal group for committing crime (particularly violent crime) better than total unemployment, with the duration of unemployment plausibly increasing the strain that fosters violent behaviour.     

Labor Force Participation and Educational Attainment in the United States

The objectives of this paper are twofold. Aggregate labor force participation rates in the United States are described focusing on educational attainment. A model is developed for decomposing aggregate labor force participation rates for men and women from 1994 to 2014 from a unique perspective by focusing on changes in educational attainment and on changes in the labor force behavior. The findings presented here indicate that men’s aggregate labor force participation rates declined during the 20-year period at all levels of educational attainment, due primarily to changes in population shares. A different picture emerges regarding women. For women with high school or some college or associate degree, it was changes in labor force behavior that dominated changing aggregate labor force participation rates. For women with the lowest and highest levels of educational attainment, less than high school or at least a baccalaureate degree, it was changes in their population shares that drove changes in aggregate labor force participation rates.     

Modeling crime in Japan

This study aims at identifying the factors of aggregate and disaggregate crime categories in Japan over the period 1964–2009. All crime categories are related to police outlays, police numbers, unemployment, divorce and urbanization rates. Bounds testing approach to cointegration is implemented to test the existence of a long-run relationship amongst the variables. Cointegration analysis yields that the main deterrent effect on crime is the police presence and this factor is further confirmed by the real police outlays. As for the essential cause of crime, urbanization stands as the leading factor which is followed by divorce and unemployment rates. Policy implications are discussed.     

MISMATCH IN HUMAN CAPITAL ACCUMULATION

This article studies the allocation of heterogeneous agents to levels of educational attainment. The goal is to understand the magnitudes and sources of mismatch in this assignment, both in theory and in the data. The article presents evidence of substantial mismatch between ability and educational attainment across 21 OECD countries, with a main focus on Germany, Italy, Japan, and the United States. Model parameters are estimated using a simulated method of moments approach. The main empirical finding is that measured mismatch arises largely from noise in test scores and does not reflect borrowing constraints. Taste shocks play a minor role in explaining mismatch.     

An Evaluation of Inertia Models of Unemployment

Two approaches have been used to model unemployment. The first, conventional, approach involves linking the unemployment outcome to observed indices of productivity, structural factors and discrimination such as educational attainment, location and birthplace. The second approach, the inertia model, involves using a person's labour market history as a way of including in unemployment models information on the 'unobservables' that influence employability. This paper evaluates the performance of both models of unemployment. The results provide unambiguous support for the inertia model when modelling unemployment. The inertia model has higher explanatory power, higher within-sample prediction rate success and fewer out-of-sample forecasting errors than the conventional model. The estimates from the inertia model can be used to provide quite accurate predictions of the risk of becoming unemployed. This is important if individuals at high risk of becoming unemployed are to be targeted for labour market assistance.     

Crime during the business cycle: urban–rural differences

Despite the abundant literature on how crime evolves over the business cycle, no consensus has arisen whether crime increases or decreases during recessions. The literature provides both positive and negative associations between the crime rate and the unemployment rate, a commonly used proxy for the business cycle. This study revisits this issue and uses county-level data from 1990 to 2013. It allows for differences as to how unemployment relates to both property crime and violent crime depending on the size of the counties. We find evidence of a positive association between unemployment and property crime that strengthens with county size. The results show the same pattern for violent crime but are statistically weaker. Our findings suggest that the positive association between property crime and unemployment that others have found is largely driven by more populous areas.     

INACTIVITY AND LABOUR MARKET ATTACHMENT IN BRITAIN

This paper examines the transitions between the labour market and inactivity in Britain between 1995 and 2004. A substantial degree of behavioural heterogeneity exists between inactive individuals, and the social security system appears to influence both the timing and probability of moving between labour market states. The results presented here suggest that policy makers should not be misled by the term ‘hidden unemployment’, into thinking that substantial spare capacity exists on the periphery of the labour force. In light of recent proposals to reduce the number of Incapacity Benefit claimants, it is important to note a high degree of detachment among the long‐term sick and disabled, reinforced by duration dependence and poorer educational attainment.     

Education and the duration of job search and unemployment in urban India: An empirical analysis based on a survey of Delhi jobseekers

This paper investigates why educated jobseekers tend to experience longer search and unemployment durations than their less educated counterparts. The empirical analysis based upon a survey of Delhi jobseekers indicates that while the duration of search is mainly determined by educational level, the duration of unemployment is more closely related to personal and family characteristics normally associated with education. Earnings function results are consistent with the proposition that the educated search longer because their returns are higher.     

Compulsory schooling laws and school crime

Extensive literature demonstrates that compulsory schooling laws improve educational attainment, well-being, civic involvement, and labour market outcomes. However, at-risk youth incapacitated to schools may impact the learning environment and school safety. The purpose of this article is to study whether raising the minimum dropout age (MDA) requirement above 16 increases crime committed within US public high schools. A difference-in-difference estimation exploits changes in state-level MDA laws over time and indicates that schools in states that raise their MDA requirement to 18 incur more overall crime relative to schools in states that do not, while no effect on overall crime is identified when the MDA requirement is raised to 17. Furthermore, these effects persist for 4 years after passage and more intensely in metropolitan areas. Coupling this research with existing literature suggests that when the MDA requirement is raised to 18, only a small portion of the observed reduction in juvenile crime is displaced to schools. Analysis by category of crime reveals schools incur more physical attacks, no change in illegal drug and property crimes, and fewer violent crimes in states that raise their MDA requirement to 18, while illegal drug crimes increase in states that raise their MDA requirement to 17.     

A Poverty Trap of Crime and Unemployment

We present an overlapping generation growth model with an imperfect labor market where the links among crime, growth and unemployment are jointly considered, both in an endogenous and exogenous set‐up. We test the major implications of our theory and verify the two model specifications through the Italian regional data, using the Pooled Mean Group estimator proposed by Pesaran, Shin and Smith (1999 ). The empirical results are in favor of the exogenous version of the model and suggest that crime and unemployment have long‐run income level effects.     

A POSITIVE THEORY OF GEOGRAPHIC MOBILITY AND SOCIAL INSURANCE*

This article presents a tractable dynamic general equilibrium model explaining cross‐country data on geographical mobility, unemployment, and labor market institutions. Rational forward‐looking agents vote on unemployment insurance (UI). Agents with higher moving costs (larger attachment to their location) prefer more generous UI. Attachment is assumed to increase with the duration of residence. UI mitigates incentives for moving and increases, therefore, the fraction of attached agents and the political support for UI. This self‐reinforcing mechanism can yield two steady‐states: one “European” and one “American.” The former (latter) features high (low) unemployment, low (high) geographical mobility, and high (low) UI.     

The impact of sustained attention on labor market outcomes: The case of Ghana

In this paper, we go beyond traditional measures of cognitive abilities (IQ) in explaining labor market and social outcomes in developing countries. We exploit a rich dataset from Ghana that provides information on demographics, labor market outcomes, and a direct measure of cognitive ability along with other test scores to construct a measure of sustained attention. Our work is therefore related to the broader literature in psychology on the importance of executive function on individual behavior and outcomes. We find that, at least for the case of Ghana, after controlling for IQ and other covariates, higher levels of sustained attention are associated with higher educational attainment and a higher likelihood of being employed in a white‐collar job.     

The Effect of Education on the Timing of Marriage and First Birth in Pakistan

A rapid rise in women’s education levels, an increase in the age at marriage and an increase in the age at which they have their first child are key features of demographic transition in any country. Education is considered to be an essential component in this process because increases in educational attainment are likely to significantly affect both age at marriage and the duration between marriage and first birth - in particular increasing both the age at marriage and the time to first child. This paper uses individual level unit record data from Pakistan to examine the effect of education on the age at marriage and on the duration between marriage and first birth. We jointly estimate educational attainment, age at marriage and duration between marriage and first birth allowing for household level unobserved heterogeneity. We find that educational attainment increases the age at marriage but does not have a statistically significant effect on the duration between marriage and first birth. However, there is a threshold level of education that must be attained before educational attainment starts having an effect on the hazard of marriage.

     

Strong and weak ties in employment and crime

This paper analyzes the interplay between social structure and information exchange in two competing activities, crime and labor. We consider a dynamic model in which individuals belong to mutually exclusive two-person groups, referred to as dyads. There are multiple equilibria. If jobs are badly paid and/or crime is profitable, unemployment benefits have to be low enough to prevent workers for staying too long in the unemployment status because they are vulnerable to crime activities. If, instead, jobs are well paid and/or crime is not profitable, unemployment benefits have to be high enough to induce workers to stay unemployed rather to commit crime because they are less vulnerable to crime activities. Also, in segregated neighborhoods characterized by high interactions between peers, a policy only based on punishment and arrest will not be efficient in reducing crime. It has to be accompanied by other types of policies that take into account social interactions.     

MIGRATION, UNEMPLOYMENT, AND WAGES: THE CASE OF THE CALIFORNIA SAN JOAQUIN VALLEY

The California San Joaquin Valley labor market appears to be at odds with basic economic principles in the sense that despite higher unemployment rates and lower wages, it has continually attracted an influx of in‐migrants, domestic and international. By examining county‐level data for the last two decades, the analysis in this paper is built around two main questions. First, in what proportion does local employment growth reduce local unemployment, increase labor force participation and attract outsiders who will likely take the newly created jobs? Second, to what extent regional migration rates respond to regional relative wages and unemployment differentials? Both questions aim to gain a better understanding of the San Joanquin Valley labor market and the migrants’ decisions to move there, which might shed light in the design and implementation of development policies aimed at reducing unemployment. Results provide evidence that market forces alone are insufficient to correct regional unemployment disparities. Three main findings are offered. First, in‐migrants workers fill most of the newly created jobs. Second, migration seems unresponsive to the unemployment level but responsive to changes in farm income. Third, migration is sensitive to government‐based benefits, property crime rates and housing prices. (JEL R11, R23, R58)     

Information and College Access: Evidence from a Randomized Field Experiment*

High‐school students from disadvantaged high schools in Toronto were invited to take two surveys, about three weeks apart. Half of the students taking the first survey were also shown a three‐minute video about the benefits of post‐secondary education (PSE) and were invited to try out a financial‐aid calculator. Most students’ perceived returns to PSE were high, even among those not expecting to continue. Those exposed to the video, especially those initially unsure about their own educational attainment, reported significantly higher expected returns and lower concerns about costs, and expressed a greater likelihood of PSE attainment.     

THE EVOLUTION OF EDUCATION: A MACROECONOMIC ANALYSIS

Between 1940 and 2000 there was a substantial increase in educational attainment in the United States. What caused this trend? We develop a model of human capital accumulation that features a nondegenerate distribution of educational attainment in the population. We use this framework to assess the quantitative contribution of technological progress and changes in life expectancy in explaining the evolution of educational attainment. The model implies an increase in average years of schooling of 24%, which is the increase observed in the data. We find that technological variables and in particular skill‐biased technical change represent the most important factors in accounting for the increase in educational attainment. The strong response of schooling to changes in income is informative about the potential role of educational policy and the impact of other trends affecting lifetime income.