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We present a theory in which the interaction between limited sharing of idiosyncratic labor income risk and labor adjustment costs (that endogenously arise through search frictions) determines interest rate dynamics. In the general equilibrium, the interaction of these two ingredients relates bond risk premiums, cross-sectional skewness of income growth, and labor market tightness. Our model rationalizes an upward-sloping average yield curve and predicts a negative relation between labor market tightness and bond risk premiums. We provide evidence for our theory's mechanism and predictions. [ABSTRACT FROM AUTHOR]

AbstractThis article builds on the Empirical Monte Carlo simulation approach to study the estimation of Timing-of-Events (ToE) models. We exploit rich Swedish data of unemployed job seekers with information on participation in a training program to simulate placebo treatment durations. We first use these simulations to examine which covariates are key confounders to be included in dynamic selection models for training participation. The joint inclusion of specific short-term employment history indicators (notably, the share of time spent in employment), together with baseline socio-economic characteristics, regional and inflow timing information, is important to deal with selection bias. Next, we omit subsets of explanatory variables and estimate ToE models with discrete distributions for the ensuing systematic unobserved heterogeneity. In many cases, the ToE approach provides accurate effect estimates, especially if time-varying variation in the unemployment rate of the local labor market is taken into account. However, assuming too many or too few support points for unobserved heterogeneity may lead to large biases. Information criteria, in particular those penalizing parameter abundance, are useful to select the number of support points. A comparison with other duration models shows that a Stratified Cox model performs well with abundant multiple spells but less well when multiple spells are uncommon. The standard Cox regression model performs poorly in all configurations as it is unable to account for unobserved heterogeneity. [ABSTRACT FROM AUTHOR]

The challenge of reducing unemployment and underemployment is more relevant than ever in all developing countries. To identify the factors contributing to the improvement of the conditions of young people in the labour market, this paper aims to analyse the determinants of job search techniques in the labour market. Based on data from the Integrated Regional Survey on Employment and the Informal Sector, the estimation results of the multinomial logit model show that very few unemployed workers consider institutional intermediaries as their main job search technique. It is also important to note that work experience, mother's employment status, education level of the unemployed and the head of household, age, and length of time spent unemployed significantly influence the choice of the main job search technique in Benin. [ABSTRACT FROM AUTHOR]

The rising numbers of young people with disability pension concerns many advanced economies. We present results from a comparative analysis of the neighbouring countries Sweden and Norway on the impacts of differing policy mixes aimed at enhancing the employability of the work disabled. Using rich longitudinal data, we follow unemployed young adults (ages 25-29) with work-impairment up to four years after they became unemployed to investigate the effect of different types of labour market policies. Our results indicate that, despite differences in programme composition and strategies, there are surprisingly small country differences in treatment effect patterns and signs of estimated impacts. In line with previous studies, we find strong lock-in effects of both workplace-related programmes and training/educational programmes. After participation, workplace-related programmes about double the likelihood of entering regular employment or education. Participating in training courses also increases this likelihood, but effect sizes are smaller. [ABSTRACT FROM AUTHOR]

The high rate of unemployment is one of the socio-economic problems bedevilling the MENA region. Theoretical and empirical arguments remain divided regarding financial development's role in addressing unemployment. In light of this, this study investigates the effect of financial development on different components of unemployment (total (adult and youth) and gender (male and female)) in MENA. To capture financial development, we used the IMF composite financial development index. For robustness, we also computed an index of financial development from different measures of financial development made available by the World Bank. These measures of financial development include financial depth, financial efficiency, financial stability and financial access. By the panel quantile via the method of moment (Machado & Silva, 2019), our results show that financial development has a significant negative effect on unemployment across the quantiles, but the impact reduces as we move from the lower quantiles to the higher quantiles. Also, using heterogeneous panel causality (Dumitrescu and Hurlin (2012)), our findings are further highlighted as follows: First, in most cases, there is a unidirectional causality between financial development and unemployment, especially total and male unemployment for youths and adults. The direction of causality runs from financial development to unemployment. Therefore, given that financial development lessens the rate of unemployment, our policy implication is that relevant authorities or policymakers need to implement sound financial development initiatives to reduce the levels of unemployment. [ABSTRACT FROM AUTHOR]

This article characterizes the relation between the equilibrium unemployment insurance replacement rate and the frequency of its political choice. We first use a tractable analytical model to show how insurance, incentive, and redistribution effects interact at the equilibrium. We then examine a fully repeated choices equilibrium in a quantitative heterogeneous agents model and show that unemployment persistence, whether a policy is announced first or not, and the type of the political process are key determinants of the relation between the equilibrium replacement rate and the frequency of its choice. In a utilitarian welfare context, we find that the equilibrium replacement rate is higher if the policy is chosen more frequently but this relation is reversed in a median voter context. [ABSTRACT FROM AUTHOR]

This paper investigates whether parents' entry into unemployment affects investment in children's education through their decision to provide public or private education for their children. The empirical approach makes use of longitudinal data from the Continuous National Household Sample Survey (Pesquisa Nacional por Amostra de Domicílios Contínua–PNAD contínua) and propensity-score matching with difference-in-difference methods. According to estimates, parents' unemployment reduces the probability of children's enrollment in the private educational system, which usually has better quality but high costs, instead of in the public educational system, which is offered for free but typically has poor quality. Thus, evidence suggests that reductions in household income as a consequence of unemployment can have impacts on the quality of human capital accumulated by children. [ABSTRACT FROM AUTHOR]

Using data from British cohorts born in 1958 and 1970, we used quantile regression to investigate the impact of 'mild' and 'severe' teenage conduct problems on months spent in paid employment or paid employment, education, and training (EET) between ages 17 and 42. Those with conduct problems spent significantly less time in employment or EET by age 42. The penalty grows in one's 20s and tends to persist thereafter. Among men, the participation gap was greatest among those with 'severe' teenage conduct problems and among those in the lower half of the participation distribution. There was no participation penalty arising from teenage conduct problems among the older generation of men in the top quartile of the participation distribution. Among women, conduct problems were associated with less time in employment and EET across the whole distribution of the participation distribution, and these penalties were greatest for women in the younger 1970 cohort. [ABSTRACT FROM AUTHOR]

We examine how the decentralization of public employment services (PES) affects the behavior and service provision of PES offices and the labor market outcomes of job seekers. We use difference-in-differences, utilizing a Finnish temporary reform during which PES were decentralized for specific groups of job seekers in treated municipalities and remained centralized for others. The reform presented the treated municipalities with the possibility of shifting costs to the central government. We find no evidence of better labor market outcomes and find evidence consistent with municipalities being able to shift 10% of their unemployment benefit costs to the central government. [ABSTRACT FROM AUTHOR]

The current economy is subject to great uncertainty. Smooth labor reallocations are important. This calls for labor market policies that increase flexibility. Conventional wisdom suggests that such policies will increase general skills and reduce firm-specific skills. This study demonstrates that this conjecture is not a theoretical necessity. Indeed, increased labor market flexibility can depress both general and firm-specific skills. If flexibility increases in the experienced worker market, general and firm-specific skills increase or decrease simultaneously. The reason for this surprising outcome emerges from the model. [ABSTRACT FROM AUTHOR]

In a randomised controlled trial in Austria, lowering caseloads for caseworkers in a Public Employment Office led to more meetings with unemployed clients, more job offers, more programme assignments, and more sanctions for noncompliance with job search requirements. It shortened unemployment spells through faster job entry, but also through more exits from the labour force in the 2 years following treatment. The duration of unemployment was reduced for a number of subgroups of the unemployed, but not all benefited from increased employment. For women and foreigners, lower caseloads led to more time out of the labour force. The quality of jobs after unemployment, measured by wages, did not change. A cost–benefit analysis suggests that lower caseloads not only shorten unemployment but also save public costs. [ABSTRACT FROM AUTHOR]

This paper aims to identify the factors contributing to the unusually high prevalence of over-indebtedness and debt enforcement proceedings in the Czech Republic at the granular geographic level of extended-powers municipalities (ORP). The main reason for this level is simple, not to lose information about differences among the municipalities, since there is quite a sharp contrast even within the same regions. The dependent variable is the share of people with one or more debt enforcement proceedings outstanding against them. We employ a set of explanatory variables including long-term unemployment, socially excluded localities, regional GDP per capita, education level, and a proxy for distance to the local economic center. The results are estimated using panel data regression with random effects, due to the time-invariant nature of certain variables. Because of poor data availability for some variables at this highly localized level, we make several assumptions; for example, we transfer the regional GDP per capita values to all ORPs in the region. Similar problems arise with education level, where we use data from the 2011 national census. Even with these data restrictions, our set of explanatory variables is shown to be statistically significant with the expected coefficient signs. GDP per capita and higher education level have a negative impact on the prevalence of debt enforcement proceedings, while long-term unemployment, the number of socially excluded localities in the area, and the distance-to-center proxy have a positive effect.

This paper examines how changes in household-level risk sharing affect the marriage market. We use as our laboratory a German unemployment insurance (UI) reform that tightened means-testing based on the partner's income. The reduced generosity of UI increased the demand for household-level risk sharing, which lowered the attractiveness of individuals exposed to unemployment risk. Because unemployment risk correlates with non-German nationality, our main finding is that the UI reform led to a decrease in intermarriage. The 2004 expansion of the European Union had a comparable effect on intermarriage for the affected nationalities. Both reforms increased marital stability, which is consistent with better selection by couples. [ABSTRACT FROM AUTHOR]

Despite the magnitude and cyclicality of transitions into and out of the labour force, the literature generally considers unemployment as a sufficient statistic of labour market slack. We question this view by jointly estimating natural unemployment and participation rates through a Phillips curve informed by structural labour market flows. Focusing on Italy, a country where flows into and out of the labour force are particularly large, we find that the participation margin accounts for a significant share of total slack and explains one-third of the missing inflation that followed the 2011 Sovereign Debt Crisis. Exploiting a reform that sharply and unexpectedly increased the statutory retirement age and expanded labour supply without directly affecting unemployment, we confirm that neglecting the participation gap biases inflation forecasts. [ABSTRACT FROM AUTHOR]

Purpose: In this paper, the author aims to investigate the relationship between economic growth and unemployment in six Arab countries from Middle East and North Africa (MENA) zone including Tunisia, Egypt, Morocco, Lebanon, Jordan and Oman through the implementation of Okun's law using quarterly dataset covering the time period 2000: 1–2014: 4. Design/methodology/approach: In this paper, static and dynamic linear and nonlinear models are used to test the linkage between cyclical unemployment and cyclical growth rate. Findings: The empirical results from considered models confirm an inverse linkage between unemployment rate and economic growth, as the Okun's law suggests (except for Oman). In a nonlinear autoregressive dynamic linear (NARDL) framework and gap specification, statistically significant Okun's coefficients indicate that output growth can be translated into employment gains. Absolute effect of an economic contraction is significantly larger than that of an expansion in Tunisia, Egypt, Morocco and Lebanon. The opposite is true for Jordan and Oman. Practical implications: Empirical finding provides then an additional proof that Okun's law could exist in a developing countries such as Tunisia, Egypt, Morocco, Lebanon and Jordan. Hence, any attempt to increase gross domestic product (GDP) through some economic fiscal and/or monetary policies in these countries would reduce unemployment rate. Originality/value: Based on asymmetric specification, the author can conclude with precision that an economic upturn of 3.37, 2.98 and 2.5%, respectively, in Tunisia, Morocco and Egypt reduces unemployment by 1%, whilst the downturn of 5.03 and 2.43% (and about 12%), respectively, in Tunisia and Morocco (and Lebanon and Jordan) achieves the opposite. [ABSTRACT FROM AUTHOR]