Durations in Panel Data Subject to Attrition: A Note on Estimation in the Case of a Stock Sample1

In the empirical analysis of unemployment durations or 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. As a consequence, spells that are incomplete due to attrition can be treated as spells that are subjected to independent right censoring. However, if the assumption of independence is violated, i.e. if for example the probability of dropping out of the panel is related to the rate at which a job is found, then attrition may have to be modelled and estimated jointly with the unemployment duration distribution to avoid biased estimates of the rate at which individuals become employed. A way to model the joint dependence is by means of stochastically related unobserved determinants. We discuss some properties of these kinds of models and state conditions needed to estimate such models in the case of stock sampled duration data.     

Can media and text analytics provide insights into labour market conditions in China?

The official Chinese labour market indicators have been seen as problematic given their small cyclical movement and their only partial capture of the labour force. In our paper, we build a monthly Chinese labour market conditions index (LMCI) using text analytics applied to Mainland Chinese-language newspapers over the period from 2003 to 2017. We use a supervised machine learning approach by training a support vector machine classification model. The information content and the forecast ability of our LMCI are tested against official labour market activity measures in wage and credit growth estimations. Surprisingly, one of our findings is that the much-maligned official labour market indicators do contain information. However, their information content is not robust and, in many cases, our LMCI can provide forecasts that are significantly superior. Moreover, regional disaggregation of the LMCI illustrates that labour conditions in the export-oriented coastal region are sensitive to export growth, while those in inland regions are not. This suggests that text analytics can, indeed, be used to extract useful labour market information from Chinese newspaper articles.     

Equilibrium unemployment with outsourcing under labour market imperfections

We study the effects of international outsourcing on equilibrium unemployment in a high-wage economy with labour market imperfections. We demonstrate, consistent with empirical results, that the wage elasticity of labour demand is increasing as a function of outsourcing. Furthermore, we show that a production mode with more outsourcing reduces the negotiated wage in a high-wage country with labour market imperfections if the relative bargaining power of the labour union is sufficiently high. Under such circumstances outsourcing reduces equilibrium unemployment. Finally, we characterize the optimal production mode showing that stronger labour market imperfections induce a production mode with more outsourcing.     

Overeducation, wages and promotions within the firm

We analyse data from personnel records of a large firm producing energy and telecommunication and test for the effect of deviations between required and attained education of workers. Required education is measured as hiring standards set by the firm. We find the usual effects of over- and undereducation in a wage regression, thus rejecting the argument that such effects are exclusively due to firm fixed effects. Distinguishing, within the firm, between a sheltered internal labour market and an exposed external labour market, we find that at the internal labour market over- and undereducation significantly affect career development, in particular at younger ages, but that such effects are mostly absent at the firm's external labour market.     

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.     

Labour market oligopsonistic competition: The effect of worker immobility on wages

We suggest that firms in a local labour market may be able to exploit worker mobility costs and offer immobile workers wages that are lower than their marginal product. If so, the ability of employers to exploit worker immobility in setting wages would decline in the competitiveness of the local labour market. We test this intuition using a measure of individual mobility costs and measures of local labour market competition. Our findings suggest that worker immobility causes substantial wage variation across workers in small, weakly competitive markets, and in occupations where wages are individually bargained.     

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.     

Shifts in the Demand and Supply of Skills in the OECD: A Single‐Index Model with a Continuous Distribution of Skills*

This paper proposes a one‐dimensional index for the gap between the demand and supply of skills; this index can be estimated based on the labour market performance of groups defined with characteristics (e.g. education) that are only imperfectly correlated with labour market skills. Using data from five European countries and the US, we find that the relative demand for skills has increased more than the relative supply in the US and UK during the 1980s but not in other European countries. However, the gap between relative demand and supply increased in Italy and the Netherlands from the early 1990s.     

Do Apprenticeships Pay? Evidence for England

The importance of apprenticeships for early labour market transitions varies across countries and over time. In recent times, there has been a policy drive to increase the number of people undertaking apprenticeships in England. This is regarded as important for addressing poor productivity. We investigate whether there is a positive return to undertaking an apprenticeship for young people. We use detailed administrative data to track recent cohorts of young school leavers as they transition to the labour market. Our results suggest that apprenticeships lead to a positive average earnings return (at least in the short run), although there is stark variation between sectors. This is an important driver of the gender gap in earnings.     

Reducing income transfers to refugee immigrants: Does start-help help you start?

We estimate the effect of lowering income transfers to refugee immigrants in Denmark – labeled start-help – using a competing risk framework. Refugee immigrants obtaining residence permit before July 2002 received larger income transfers than those who obtained their residence permit later. Exploiting this ‘quasi-natural’ experiment, we find that the lower income transfer has a positive effect on the job-finding rate after two years in Denmark. We also find that the exit rate from the labour force is positively affected by start-help during the early phases of the integration process. Finally, we find that those with the poorest labour market prospects are the least responsive to the improvement in economic incentives.     

Distortionary Taxation and Labour Market Performance

Quarterly estimates of consumption, capital and labour tax rates are provided for six major OECD countries. We then use the 'stylized facts' methodology to evaluate the strength, sign and phase of cyclical comovements between tax rates and labour market variables. Labour taxes distort labour market de-cisions and help explain why the unemployment rate is so high in continental Europe. However, labour taxes cannot be the only determinant of diverging unemployment rates since the labour force is also reduced by higher taxes. Finally, we offer some preliminary structural evidence showing employment growth in particular to be negatively related to the taxation of labour.     

The impact of employment equity regulations on psychological contracts in South Africa

This article will show the impact of employment equity legislation on the psychological employment contracts of the three main employee groupings in South African society. This study is important in that it fills the gap in the literature that identifies labour market regulations as an important shaping influence on the psychological contract. More than 500 managers from across South African industry and from all ethnic groups were surveyed to identify differences in psychological contracts and attitudes towards the social transformation regulations. We found that the legislation has impacted differentially on the three groupings mainly in terms of their loyalty to stay with their organizations, the focus on their career development in terms of the external labour market and the degree to which they felt they had been affected by the legislation. Additionally we find that the perceived linkage between job satisfaction and labour turnover is significantly weakened by labour market legislation in the case of the beneficiaries of the legislation, but that this may not be the case for those negatively affected by the legislation. The findings have significant implications for the HRM practices of multinationals operating in societies with significant labour market regulatory interventions.     

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.     

Household Shocks and Education Investments in Madagascar

This paper investigates the impact of exogenous shocks to household income, assets and labour supply on children's school attendance in Madagascar. The analysis uses a unique data set with 10 years of recall data on school attendance and household shocks. We find that the probability of a child dropping out of school increases significantly when the household experiences an illness, death or asset shock. We propose a test to distinguish whether the impact of shocks on school attendance can be attributed to credit constraints, labour market rigidities, or a combination of the two. The results suggest that credit constraints, rather than labour market rigidities, explain the inability of households in Madagascar to keep their children in school during times of economic stress.     

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.     

Unemployment duration and the interactions between unemployment insurance and social assistance

Existing studies suggest that reforms that reduce the generosity of the unemployment benefits should lower unemployment. Despite the large number of such reforms implemented in Europe in the past decades, evidence from various data sources shows very little correlation with the evolution of unemployment. This paper suggests that the scant success of these labour market reforms can be explained by the interactions between unemployment insurance and other social assistance programmes. Evidence from the European Community Household Panel shows that recipients of unemployment insurance who are also eligible for other welfare schemes are indeed less sensitive to changes in the level and the duration of their benefits.     

Mobility,poverty and well-being among the informally employed in Bosnia and Herzegovina

We analyse informal sector employment in Bosnia and Herzegovina (BH), using panel data from the living standards measurement studies. We derive four main conclusions. First, there is significant labour market mobility in BH. Second, those in informal jobs are much more likely to suffer from poverty than formally employed people are. Third, earnings inequality is more pronounced in the informal sector than elsewhere. Fourth, the informally employed report lower levels of life satisfaction compared to most other labour market states. We conclude that, while the informal sector helps people cope, the formal sector provides better prospects for prosperity and well-being.     

Interregional Migration and Thresholds: Evidence from Spain

We analyse the effects of labour market factors on interregional migration in Spain for the period 1988–2010. A basic theoretical framework is developed, suggesting that the effect of labour market variables on migration varies, depending on a certain threshold. The model implications are tested using a new approach based on the presence of endogenous thresholds. We show that Spanish interregional migration can be explained by labour market variables when the labour market conditions at the source region are unfavourable relative to those of the host region. We test the results for several migrant characteristics, such as citizenship, the age range, and return migration.

Migration inter-régionale et seuils - résultats de la recherche en Espagne     

Estimating the probability of a match using microeconomic data for the youth labour market

In this paper, we estimate the probability of a match for contacts between job seekers and vacancies. We relate the determinants of a match to the characteristics of the job seeker, the vacancy, and labour market conditions. Our main results are: ethnic minorities are discriminated against, but women are not; employers ‘cream’ the market and job seekers are ranked by their labour market state; high wage offers have a lower probability of a match; the probability of filling a job vacancy falls with vacancy duration, the higher stock of unemployed youths in a labour market, and the larger Careers Service; the probability of a match increases with job seeker duration.     

THE ECONOMICS OF COMMUTING AND THE URBAN LABOUR MARKET

ABSTRACT. The spatial distribution of households and firms, or urban spatial structure, is a core element of the study of urban economics and the crucial determinant of commuting patterns. This paper examines developments in the analysis of urban spatial structure and commuting are related to the urban labour market—that is the analysis of labour supply and labour demand in a spatial context. These developments have been overlooked in the traditional approach to urban structure and commuting where most attention has been devoted to the markets for land and housing rather than the market for labour. Yet a little reflection suggests that the labour market might have a great deal to do with the location decisions of households and firms, and hence with commuting patterns. We argue that much criticism of the economic analysis of urban structure and commuting can be addressed by explicit incorporation of the labour market into the conventional model of urban location. This criticism includes findings that the theory cannot explain the tendency for richer households to live farther from the central business district and commute farther to work (Wheaton, 1977) and findings of substantial unexplained or 'wasteful' commuting according to conventional theory (Hamilton, 1982). The paper begins by outlining the basic model of residential location and commuting (Section 2). We then consider extensions that involve the introduction of labour supply decisions and which determine the value of commuting time (Section 3). More recent extensions involve the introduction of decentralized workplaces (Section 4) and, logically, the issues of job search and migration (Section 5). We conclude with a summary of the progress in incorporating labour market behaviour into the analysis of urban structure and commuting and our suggestions for further research in this area.