Part-time work, school success and school leaving

In this paper, we analyse part-time employment of teenagers still in full-time education, their academic performance, and their school leaving decisions. Our estimation strategy takes account of the possible interdependencies of these events and distinguishes between two alternative states to full time education: entering the labour force full time and going on to further training. We model this decision in a flexible way. Our analysis is based on data from the UK National Child Development Study, which has an unusually rich set of variables on school and parental characteristics. Our main finding is that working part time while in full-time education has only small adverse effects on exam performance for females, and no effects for males. The effect of part-time work on the decision to stay on at school is also negative, but small, and marginally significant for males, but not for females. Other important determinants of exam success as well as the continuation decision are parental ambitions about the child’s future academic career.     

Impact of Low Birth Weight Child on Maternal Labour Force Participation: Evidence from Taiwan

This paper examines the impact of having a low birth weight child on maternal labour force participation. We use the instrumental variable technique, the sister fixed‐effects model and the propensity score matching method to control for the endogeneity of child health. Using a unique national merged parent–child data set from Taiwan, the within‐sister estimates indicate that having a low birth weight child reduces female employment during the first 3 years after the birth, by 1–2 percentage points. Furthermore, the adverse employment effect is found to be particularly strong for those mothers who have an illegitimate child with low birth weight.     

Optimal speed of transition with a shrinking labour force and under uncertainty*

In the 1990s – during the restructuring of large state enterprises – Central European economies experienced high unemployment. Social policy expenditures, particularly targeted to the non‐employed, grew faster than expected due to the need to finance the out‐of‐the‐labour categories. In 1992, after the Passive Labour Market Policies’ reforms, the pace of transition decelerated. Unemployment dynamics, speed of transition and non‐employment policies are modelled based on the assumption that the labour force is shrinking over time. Dismissed workers have the opportunity to choose an outside‐option alternative to labour force participation. Individual uncertainty is assumed in a first phase of transition, while aggregate uncertainty – generating opposition to restructuring – is modelled in a second phase. The model predicts a slowdown in the speed of transition.     

Earnings,social security legislation and retirement decisions: the Austrian experience

This paper analyses the labour supply behaviour of elderly males in Austria and asks how far it is determined by the characteristics of the Austrian Social Security System. This is of particular interest because old age insurance in Austria is dominated by the public pension plan, so that private pension plans are of minor importance. I argue that from a theoretical point of view the actuarial unfairness of the insurance plan creates a strong incentive to withdraw from the labour force at the minimum retirement age. Secondly, the rising earnings replacement ratio might be responsible for the decreasing average retirement age. These hypotheses are tested empirically. A pooled time-series cross-sections labour force participation model is estimated for single birth year cohorts of elderly males. I find strong evidence for the proposition, that the age-participation pattern might be determined by the incentives created by social security and that the decrease in labour force participation rates over time may be due to the rising earnings replacement ratio. Remaining differences in labour force participation of elderly males may be attributable to cohort population size and to a long run trend.     

The effects of local labour market conditions on welfare programme participation

A fractional imputation method is applied to Iowa administrative data to deal with a problem of missing data. The effects of local labour market conditions and mobility of household heads on Family Investment Program (FIP) participation are evaluated. Results show that mobility increases the opportunity for employment and decreases the FIP participation rate for low-income families. An increase in predicted unemployment rates decreases labour force participation and increases programme participation; an increase in unpredicted unemployment rates increases labour force participation and decreases programme participation. Overall, the effects are relatively larger in rural areas than in nonrural areas in Iowa.     

Looking for the workforce: the elderly,discouraged workers,minorities, and students in the Baltic labour markets

This paper looks at the evolution of the labour markets in Estonia, Latvia, and Lithuania since the beginning of transition until 2003, with a particular focus on labour force participation. How did labour supply in the Baltic countries respond to changes in minimum wages, unemployment benefits and retirement regulation? Do the marked differences in labour market policies between the countries result in different patterns of participation? What are the obstacles to and driving forces of participation? We find that relative contribution of participation and demographic trends to the dynamics of the labour force varied substantially both over the years and across the three countries. Participation, in turn, has been shaped by sometimes complicated interactions between schooling decisions of the youth, retirement, policy changes, and external shocks. Resulting differences in trends and patterns are quite substantial, indicating that there is a room for increasing participation in each of the countries. Panel data analysis of determinants of participation and discouragement based on labour force survey data suggests that increasing after-tax real minimum wage has significant positive effects on participation and reduces discouragement in Lithuania. In Estonia, by contrast, a positive effect of minimum wage on participation is found only for teenagers of both genders and for young males. We do not find any evidence that partner’s wage has a negative effect on participation. Ethnic minorities, especially females, in all three Baltic countries are less likely to be in the labour force, other things equal.     

EMPLOYMENT EFFECTS OF HEALTH SHOCKS: THE ROLE OF FRINGE BENEFITS

This paper examines whether health shocks influence labour supply. Estimates rely on detailed health measures that not only are more homogeneous than commonly‐used self‐reported health measures, but they also can be interpreted as plausibly exogenous with respect to labour supply. Further, this paper investigates the unique role that certain fringe benefits, namely health insurance and paid sick leave, play in the link between health shocks and subsequent employment activity. Results show that, compared to commonly‐used self‐reported measures of health, health problems defined by the US government as ‘priority’ conditions correlate with smaller labour supply shifts, but non‐work‐related injuries lead to larger shifts. Second, the arrival of a health shock appears to reduce the probability of remaining employed full time, while also increasing the likelihood of quitting work. Relatively few full‐time workers who acquire health problems switch to part‐time employment. Third, in the event of a health shock, sick leave appears to facilitate reductions in employment activities, while employer‐provided insurance appears to hinder such adjustments.     

EFFECTS OF HEALTH AND CHRONIC DISEASES ON LABOUR FORCE PARTICIPATION OF OLDER WORKING‐AGE AUSTRALIANS*

This study examines the effects of general health and chronic diseases on the labour force participation of older working‐age Australians. To account for potential endogeneity of health status, a simultaneous equation model is estimated and chronic diseases are used as instrumental variables. The effects of chronic diseases on labour force participation are assessed indirectly using the parameters estimated from the simultaneous equation model. The results show that both health status and chronic diseases have significant effects on labour force participation. It also appears that the effects of chronic diseases are more accurately estimated from the simultaneous equation model than from a single equation labour force participation model.     

Employment, The Labour Force and Unemployment in Australia: A Disagregegated Approach

This article presents statistical analysis of the distributional aspects of labour market developments in the Australian economy from 1966 to 1985. The focus is on the adjustment of the labour force to changes in employment opportunities. Two sets of data for selected age/sex/marital groups are utilised in the analysis: regressions to test for differences in the sensitivity of labour force participation to employment opportunities and a series of tables documenting population adjusted changes in employment and the labour force. The aggregate relationship between employment changes and labour force changes (and hence changes in unemployment) is explained by the disaggregated data.     

The evolution of female labour force participation in urban China

Starting from the late 1980s, despite rapid economic growth, female labour force participation in urban China has shown a general declining trend. Using repeated cross‐sections from the Chinese Household Income Project Series (CHIP), this paper attempts to systematically relate the decrease in the labour force participation of married women to the socio‐economic changes happening in urban China during the same period of time. Adopting both linear and nonlinear decomposition techniques, the results indicate that the changes in married women's labour force participation during the periods 1995–2002 and 2007–2013 can be explained by the concurrent changes in the distribution of socio‐economic variables, while the changes during the periods 1988–1995 and 2002–2007 are mostly driven by the leftward shift of married women's participation function.     

ARE LABOUR FORCE PARTICIPATION RATES NON‐STATIONARY? EVIDENCE FROM 130 YEARS FOR G7 COUNTRIES*

This paper applies a unit root test with a non‐linear threshold to examine whether labour force participation rates are mean reverting for G7 countries using annual data over a 130 year period. We find some evidence of mean reversion for just over half the sample; however, this result is sensitive to regime shifts. We also examine whether the labour force participation rate is trend reverting through employing a lagrange multiplier (LM) unit root test with one and two structural breaks in the intercept and slope. The LM unit root test provides no additional evidence in support of stationarity. On the basis of the unit root tests for mean reversion we conclude that there is at best mixed evidence that long‐term changes in unemployment rates translate into long‐term changes in employment rates and that the unemployment rate is a useful indicator of joblessness.     

Self‐employment Dynamics in Australia and the Importance of State Dependence

Using Australian labour force data, both cross‐sectional and longitudinal, this study examines the dynamics of self‐employment with a particular focus on workers transitioning between self‐employment and salaried employment, and the extent to which self‐employment is the result of workers’ observed and unobserved characteristics or is instead determined by their prior employment experience itself. Probability models of self‐employment using both pooled‐panel probit and dynamic random‐effects panel probit methods are estimated, and the results are found to be extremely sensitive to the differences in the econometric methods. Once unobserved heterogeneity and initial conditions are controlled for in the dynamic model, the importance of observed characteristics in determining self‐employment is greatly diminished. Instead, workers’ past experience in self‐employment (as opposed to salaried employment) is found to have a large favourable effect on their future self‐employment prospects. The influence of this state dependence is also considerably more important in determining self‐employment outcomes than salaried ones. Despite establishing the importance of state dependence, however, what this effect implies about why individuals choose to become self‐employed or the role that self‐employment plays in the labour market remains unresolved.     

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.     

Fertility and the puzzle of female employment in the Middle East and North Africa

Female labour force participation rates across the Middle East and North Africa (MENA) region have remained low for over four decades even though, in the same period, women's education rapidly increased and fertility rates substantially decreased. This study provides a better understanding of this surprising phenomenon by testing whether the number of children affects the mother's labour supply (using twins at first birth as an instrumental variable.) Despite a strong first stage, it does not find statistically significant effects in the second stage, even in the combined sample of over 100,000 observations. This non‐result, however, does not rule out that fertility affects women's employment in these countries. But it rejects impacts larger than 0.09. Similar twin‐studies in the United States found effects between 0.12 and 0.31. The paper discusses the implications of this result in understanding the puzzle of female participation in MENA and in designing policies to increase women's employment.     

EFFECTS OF A CHILD'S DISABILITY ON AFFECTED FEMALE'S LABOUR SUPPLY IN AUSTRALIA

Australia has experienced a growing rate of child disability, with the rate of 3.7 per cent in 1998 increasing to 4.3 per cent in 2003 for children aged under four years and from 9.5 per cent to 10 per cent for children aged five to 14 years in the same period. However, surprisingly no study has examined the economic effects of child disability in the Australian context. This paper attempts to quantify the link between a child's disability and the work behaviour of the female in the affected family. Our findings provide empirical justifications for the current policy linking the severity level of child disability to the assessment of eligibility for Carer Payment (Child). We also found that child disability has different impacts on the labour market activities of married women and non‐married women. It appears that child disability imposes a greater hardship on non‐married women than on married women in terms of work choice decision. Once non‐married women manage to enter the labour force, they may have to stay on to work as usual even if they have a disabled child, because they may not have other family members to turn to for help as married women do.     

Family ties and employment behavior: The role of financial intermediaries

We study the interaction effect of financial intermediaries and family ties on labor participation and employment type in China. Although existing studies examine these effects separately, we investigate the effects of both factors in one model. We give empirical evidence to support earlier arguments that family ties negatively affect labor force participation and positively affect self‐/family‐employment behavior and that financial development positively affects labor force participation. Departing from the extant literature, our results overall indicate a compensating effect of financial intermediaries for family ties in labor participation and employment type. We further argue that there are gender, urban/rural, and age differences in the role of financial intermediaries. The effect of financial intermediaries on the strength of family ties is more relevant for female, rural, and younger people compared to male, urban, and older people.     

For better or for worse: the long-term effects of postwar mobilization on family formation

This article estimates the long-term legacies of female labour force mobilization on women’s family formation outcomes such as marriage, age at first marriage and divorce. We identify the long-term marriage effects of female labour force mobilization by exploring postwar mandatory employment in Germany. Using difference-in-differences analysis, we find that participation in postwar reconstruction efforts increased women’s probability of being currently married, ever married and marrying at younger ages. We also find that postwar employment had no differential effect on divorce rates of the affected cohorts of women. These results persist after accounting for the potential changes in the composition of the population, demand for female labour, war relief payments and postwar state-specific policies.     

Does a lower (higher) labour force participation rate imply greater (lower) income tax evasion? An exploratory empirical inquiry for the U.S.

This exploratory study seeks to add to the income tax evasion literature by investigating a heretofore ignored potential determinant of aggregate federal personal income tax evasion in the U.S., namely, the labour force participation rate. It is hypothesized that the higher (lower) the labour force participation rate, the lower (greater) the degree of tax evasion. The empirical estimation supports this hypothesis, finding that a one unit (one percentage point) increase (decrease) in the labour force participation rate leads to a 9.1% decrease (increase) in income tax evasion. Thus, the declining labour force participation in recent years implies increased tax evasion problems for the U.S.     

Unemployment Risk, Labour Force Participation and Savings

This paper analyses labour force participation and precautionary savings in the presence of risks of being fired or failing to secure a job offer when out of the labour market. We use a finite horizon framework with two employment states and a stage utility function which is CARA in consumption but non-separable in leisure. The results are that there is precautionary labour force participation: employment risk lowers the reservation wage; generally it also reduces consumption. However due to the non-separability assumption, precautionary savings, as usually defined, may not be positive. We characterize the reservation wage and contrast the results with those in which the stage utility is additive in leisure and consumption. We extend the analysis to study the effects of cyclical variation in employment risk, of stochastic future wage rates, and of adding a third employment state of search.     

HYSTERESIS HYPOTHESIS IN UNEMPLOYMENT AND LABOUR FORCE PARTICIPATION RATES: EVIDENCE FROM AUSTRALIAN STATES AND TERRITORIES *

This article simultaneously investigates the hysteresis hypothesis of unemployment and labour force participation using regional level data in Australia. The conventional univariate and panel unit root tests indicate that the hysteresis hypothesis cannot be rejected for most of the regions in Australia. To further confirm if the hysteresis finding in unemployment and labour force participation results from not considering structural breaks. We employ a panel stationarity test recently developed by Carrion‐i‐Silvestre et al. (2005 ), which considers multiple structural breaks and cross‐sectional dependence. The test results lend support for unemployment hysteresis and participation regime‐wise stationarity. Accordingly, the findings imply that a temporary shock may have permanent effects on the unemployment rate but not on labour force participation in Australia and thus call for policies aimed at improving the adjustment mechanism in unemployment.