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We examine the relationship between unemployment benefits and unemployment using Swedish regional data. To estimate the effect of an increase in unemployment insurance (UI) on unemployment we exploit the ceiling on UI benefits. The benefit ceiling, coupled with the fact that there are regional wage differentials, implies that the generosity of UI varies regionally. More importantly, the actual generosity of UI varies within region over time due to variations in the benefit ceiling. We find fairly robust evidence suggesting that the actual generosity of UI does matter for regional unemployment. Increases in the actual replacement rate contribute to higher unemployment as suggested by theory. We also show that removing the wage cap in UI benefit receipt would reduce the dispersion of regional unemployment. This result is due to the fact that low unemployment regions tend to be high wage regions where the benefit ceiling has a greater bite. Removing the benefit ceiling thus implies that the actual generosity of UI increases more in low unemployment regions.

In this paper, we investigate the causes and consequences of “unclaimed” unemployment insurance (UI) benefits. A search model is developed where the costs to collecting UI benefits include both a traditional “fixed” administrative cost and an endogenous cost arising from worker and firm interactions. Experience rated taxes give firms an incentive to challenge a worker's UI claim, and these challenges are costly for the worker. Exploiting data on improper denials of UI benefits across states in the U.S. system, a two‐way fixed effects analysis shows a statistically significant negative relationship between the improper denials and the UI take‐up rate, providing empirical support for our model. We calibrate the model to elasticities implied by the two‐way fixed effects regression to quantify the relative size of these UI collection costs. The results imply that on average the costs associated with firm challenges of UI claims account for 41% of the total costs of collecting, with improper denials accounting for 8% of the total cost. The endogenous collection costs imply the unemployment rate responds much slower to changes in UI benefits relative to a model with fixed collection costs. Finally, removing all eligibility requirements and allowing workers to collect UI benefits without cost shows these costs to be 4.5% of expected output net of vacancy costs. Moreover, this change has minimal impact on the unemployment rate. Unemployment insurance take‐up rate experience rating matching frictions search E61 J32 J64 J65

Monitoring the job-search activities of unemployed workers is a common government intervention. Typically, a caseworker reviews the unemployed worker's employment contacts at some frequency, and applies sanctions if certain requirements are not met. I model monitoring in the optimal unemployment insurance framework of Hopenhayn and Nicolini (1997), where job-search effort is private information for the unemployed worker. In the model, monitoring provides costly information upon which the government conditions the unemployment benefits. In the optimal monitoring scheme, endogenous sanctions and rewards, together with random monitoring, create effective job-search incentives for the unemployed worker. I calibrate the model to the US economy and find that the addition of optimal monitoring to the optimal unemployment insurance scheme decreases the variance of consumption by about two thirds and eliminates roughly half of the government's cost. I also find that compared with the optimal monitoring scheme, US states monitor too much and impose the sanctions over too short a time span. For the US on average, shifting to the optimal monitoring policy would generate savings of about $500 per unemployment spell.

To understand which firms take-up short-time work and which workers they enroll in this program, we provide a model which shows that short-time work may save jobs in firms hit by strong negative revenue shocks, but not in less severely-hit firms, where hours worked are reduced, without saving jobs. Using detailed data on the administration of the program covering the universe of French establishments in the 2008-2009 Great Recession, we find that short-time work did indeed save jobs and increase hours of work in firms faced with large negative shocks. These firms have been able to recover rapidly in the aftermath of the Recession thanks to short-time work. We also provide evidence of large windfall effects which significantly increased the cost of the policy per job saved; yet we also find that short-time work remains more cost-efficient at saving jobs than wage subsidies.

A tractable incomplete-market model with unemployment, sticky prices, and a fiscal side is used to quantify the macroeconomic effects of lockdown policies and the miti-gating effects of raising government spending and implementing UI benefit extensions. We find that the effects of lockdown policies, although we are relatively conservative about the size of the lockdown, are huge: unemployment doubles on impact and al-most triples even for relatively short lockdown durations. Output falls dramatically and debt-output ratios increase by several tens of percentage points. In addition, the surge in unemployment risk triggers a rise in precautionary savings that make such shocks Keynesian supply shocks: aggregate demand falls by more than aggregate supply, and lockdown policies are deflationary. Unfortunately, we find that raising public spending and extending UI benefits stimulate aggregate demand or improve risk-sharing but has little effects on output and unemployment, although they do alleviate the welfare losses of lockdown policies for the households.

A tractable incomplete-market model with endogenous unemployment risk, sticky prices, real wage rigidity and a fiscal side is calibrated to Euro Area countries and used to analyze the macroeconomic effects of lockdown policies. Modeling them as a shock to the extensive margin of labor adjustment – a rise in separations – produces large and persistent negative effects on output, unemployment and welfare, raises precautionary savings and lowers inflation, in line with early evidence about inflation dynamics. Modeling lockdowns as a shock to the intensive margin – a fall in labor utilization – produces small and short-lived macroeconomic and welfare effects, and implies a counterfactual rise in inflation. Conditional on a lockdown (separation) shock, raising public spending or extending UI benefits by large amounts is much more effective in stimulating the economy than during normal times. Quantitatively however, the ability of such policies to flatten the output and unemployment curves remains limited, even though these policies can alleviate a reasonable share of the aggregate welfare losses from the lockdown., Highlights • We propose a model with uninsured unemployment risk to analyze lockdown shocks and policy responses. • Lockdowns have very different implications whether they affect the intensive or the extensive margin of labor. • When affecting the extensive margin, lockdowns are Keynesian supply shocks. • Government policies stimulate the economy more during lockdowns than during normal times.

We provide new evidence on the effect of the unemployment insurance (UI) weekly benefit amount on unemployment insurance spells based on administrative data from the state of Missouri covering the period 2003-2013. Identification comes from a regression kink design that exploits the quasi-experimental variation around the kink in the UI benefit schedule. We find that UI durations are more responsive to benefit levels during the recession and its aftermath, with an elasticity between 0.65 and 0.9 as compared to about 0.35 pre-recession.

This paper studies the effect of firm closures for prime-age and older workers. Administrative data on the Dutch labour force are used to follow a sample of Dutch workers who lost their jobs due to firm closures in the period 2000 - 2009. Applying difference-in-difference techniques and using a control group created by exact matching, we find that involuntary job loss has a severe impact on older workers' labour market prospects. Finding a new job is relatively difficult, and wage cuts are more substantial once they find a new job. The differences between prime-age and older workers are partly mediated by tenure and industry effects. Not only do older workers on average have longer job tenures than prime-age workers, older workers with longer job tenures experience more negative effects of displacement as well. For prime-age workers tenure in the job before displacement makes less of a difference for their outcomes after displacement. Likewise, displaced older workers are more sensitive to the situation in the local labour market in the industry from which they are displaced. Moreover, older workers experience stronger negative effects of changing industries after displacement on their post-displacement wages.

The goal of this paper is to detect the degree to which court decisions control the stringency of employment protection and investigate how such judicial discretion affects labor market performance. However, Identification difficulty arises because court decisions are volatile against economic and social conditions. This paper overcomes the endogeneity problem by exploiting the triennial judge transfer system in Japan, or the exogenous allocation of judges to prefectures. Specifically, I estimated the judge-specific effects from litigation records and instrumented them to the judgment indicator in the original model. A key finding in this paper is that prefecture employment rate is reduced by approximately 1.5% if a prefecture receives more pro-worker judgments than pro-employer ones in a given year. Interestingly, the result is robust to the instrumental variable estimates only if the sample includes observations of the Tokyo and Osaka Prefectures. Thus, judges assigned to these prefectures have played leading roles in exogenously establishing the doctrine of abusive adjustment dismissals, whereas the rest of the variation in judgments is reversely explained by local labor market performance.

We investigate the determinants of employment and wage insurance that firms offer to their employees against industry-level and idiosyncratic shocks. Using data on firms from 41 countries, we find that family firms provide more employment protection but less wage stability than non-family ones. Employment protection is priced: family firms pay a 5% lower average wage, controlling for country, industry and time effects. The additional protection offered by family firms is stronger, and the wage discount larger, the less generous the unemployment insurance system, indicating that firm-provided and government-provided employment insurance are substitutes. State-owned firms provide more employment stability than privately owned ones, and the same applies to business groups relative to standalone companies. The cross-country evidence is broadly confirmed by Italian employee-employer matched data, which additionally show that family firms adjust to shocks mostly through the hiring margin, while separations are not responsive to shocks. The matched data also reveal that the real wage discount featured by family firms tend to disappear if one controls for workers unobserved characteristics though workers fixed effects, suggesting that the wage discount observed in family firms is at least in part due to lower unobserved workers’ skills in family firms.

We study the effects of employment protection taking into account that firms can – as a second best response – invest in R&D or buy new technologies in order to restore their productivity. To do so we develop an equilibrium matching model with an imperfect labor and innovation market. If employment protection is introduced, firms’ willingness to pay for product or process innovations increases. This shifts economic activity towards firms specializing in process and product innovation and triggers entry of new start-ups. We calibrate our model to match aggregate US labor and product market statistics and show that our model generates the negative impact of wrongful dismissal laws in the US on productivity and the positive effect on the number of innovations and firms found by the literature.

This paper shows that the reforms which expanded short-time work in France after the great 2008-2009 recession were largely to the benefit of large firms which are recurrent short-time work users. We argue that this expansion of short-time work is an inefficient way to provide insurance to workers, as it entails cross-subsidies which reduce aggregate production. An efficient policy should provide unemployment insurance benefits funded by experience rated employers’ contributions instead of short-time work benefits. We find that short-time work entails significant production losses compared to an unemployment insurance scheme with experience rating.

ABOUT THE AUTHORNathalie HavetOFCE, Sciences Po, ParisEmail Address: nathalie.havet@univ-lyon1.frXavier Joutard Aix-Marseille Université, LEST–UMR7317 CNRS, OFCEEmail Address: xavier.joutard@univ-amu.frAlexis PenotUniversité de Lyon, ENS Lyon, GATE–UMR5824 CNRSEmail Address: penot@gate.cnrs.frRESUMELe dispositif des activités réduites vise à atténuer les effets désincitatifs du système d’allocation chômage en permettant aux demandeurs d’emploi de combiner activité rémunérée et recherche d’emploi tout en cumulant, au moins partiellement, la rémunération de son activité et ses allocations chômage. Notre revue de la littérature théorique et empirique cherche à savoir si ce dispositif, avec des incitations nécessairement limitées à l’exercice d’une activité temporaire ou à temps partiel, peut favoriser une insertion durable sur le marché du travail. Elle montre que les effets théoriques attendus sur les trajectoires professionnelles des demandeurs d’emploi et sur la qualité des emplois potentiellement retrouvés sont ambigus et méritent d’être tranchés empiriquement. Les études empiriques nationales et internationales mettent alors en évidence qu’il est nécessaire de distinguer les effets à court terme des effets à long terme et qu’il existe une forte hétérogénéité des impacts entre demandeurs d’emploi. Néanmoins, en France, l'activité réduite semble globalement un accélérateur de l'accès à l'emploi durable mais avec des effets relativement modestes. En outre, elle ne semble pas améliorer ni dégrader la qualité de l'emploi retrouvé.ABSTRACTThe use of reduced activities in France and its impact on professional trajectories: a review of the literature:The reduced-activity system aims to diminish the disincentive effects of unemployment benefits by allowing unemployed people to combine paid activity and job seeking, and at the same time to gain at least partialunemployment benefits as well as the wage for this activity. Our review of the theoretical and empirical literature aims to determine whether this system (which only concerns temporary or part-time jobs) allows a sustainable inclusion in the job market. It shows that the expected theoretical effects on the career trajectories of the unemployed and on the quality of new jobs are ambiguous and require empirical investigations. The national and international empirical papers show the need of distinguishing short-and long-term effects and a strong heterogeneity of impacts among job seekers. Nevertheless, in France, reduced activities seem to boost access to long-term jobs, but with mild effects. However, they seem neither to improve nor to damage the quality of the subsequent job, Le dispositif des activités réduites vise à atténuer les effets désincitatifs du système d’allocation chômage en permettant aux demandeurs d’emploi de combiner activité rémunérée et recherche d’emploi tout en cumulant, au moins partiellement, la rémunération de son activité et ses allocations chômage. Notre revue de la littérature théorique et empirique cherche à savoir si ce dispositif, avec des incitations nécessairement limitées à l’exercice d’une activité temporaire ou à temps partiel, peut favoriser une insertion durable sur le marché du travail. Elle montre que les effets théoriques attendus sur les trajectoires professionnelles des demandeurs d’emploi et sur la qualité des emplois potentiellement retrouvés sont ambigus et méritent d’être tranchés empiriquement. Les études empiriques nationales et internationales mettent alors en évidence qu’il est nécessaire de distinguer les effets à court terme des effets à long terme et qu’il existe une forte hétérogénéité des impacts entre demandeurs d’emploi. Néanmoins, en France, l'activité réduite semble globalement un accélérateur de l'accès à l'emploi durable mais avec des effets relativement modestes. En outre, elle ne semble pas améliorer ni dégrader la qualité de l'emploi retrouvé.

First published online: 14 March 2016 We investigate the development of household labor income, financial wealth, and asset holdings over a 9-year period around job loss, using unique administrative panel data from Norway. Consistent with predictions from theory, the data show additional saving and a shift toward safer assets in the years leading up to unemployment, and depletion of savings after job loss. In the years after job loss, the households' after-tax labor income is reduced by about USD 12,500. Over the same time period, households deplete USD 3,000 of their financial assets, of which one third is accumulated prior to the job loss. This suggests that at least some households can foresee and prepare for the upcoming unemployment, which indicates that private savings can, to some extent, serve as a substitute for publicly provided unemployment insurance. Article is the published version of a chapter (2) of the author's EUI PhD thesis, 2011

We study how optimal unemployment insurance (UI) benefits vary over the business cycle by estimating how the moral hazard cost and the consumption smoothing benefit of UI vary with the unemployment rate. We find that the moral hazard cost is procyclical, greater when the unemployment rate is relatively low. By contrast, our evidence suggests that the consumption smoothing benefit of UI is acyclical. Using these estimates to calibrate our job search model, we find that a one standard deviation increase in the unemployment rate leads to a roughly 14 to 27 percentage point increase in the optimal wage replacement rate. We also conduct a model-based estimation of the structural parameters of the model, and we find that virtually all of the cyclical variation in the moral hazard cost and consumption smoothing benefit of UI is due to variation in the responsiveness of search effort as opposed to reservation wages.

Disability insurance (DI) applications and awards are countercyclical. One potential explanation is that unemployed individuals who exhaust their Unemployment Insurance (UI) benefits use DI as a form of extended benefits. We exploit the haphazard pattern of UI benefit extensions in the Great Recession to identify the effect of UI exhaustion on DI application, using both aggregate data at the state-month and state-week levels and microdata on unemployed individuals in the Current Population Survey. We find no indication that expiration of UI benefits causes DI applications. Our estimates are sufficiently precise to rule out effects of meaningful magnitude.

We study the optimal provision of unemployment insurance (UI) in a framework that distinguishes between consumption and expenditure. We derive a “sufficient statistics” formula for optimal UI that is expressed in terms of observable variables and can therefore be used in applied work. Recent research has shown that unemployed households pay less per unit of consumption than employed households. This finding has two counteracting effects on the optimal level of UI. On the one hand, consumption smoothing benefits identified from expenditure data overestimate the true marginal benefits of UI. On the other hand, UI benefits become more valuable because they buy more consumption when unemployed. In an optimal design, which effect dominates depends on the curvature of the utility function. We show that for relative risk aversion larger than one the first effect dominates, leading to lower levels of optimal UI.

We examine the economic and social determinants of suicide mortality in a panel of 25 OECD countries over the period 1970 – 2011 and explicitly analyze the effects of unemployment and labor market institutions on suicide rates. In line with a large body of literature, our results suggest that unemployment and social factors are important determinants of suicide mortality. The results also indicate that unemployment benefits decrease suicides of males, while relatively strict employment protection regulations increase suicide mortality. These findings indicate that labor market institutions may influence job satisfaction and the quality of life in industrial countries. We suggest taking into account the role of labor market institutions when analyzing the effects of institutional and economic determinants on health.

In response to the Great Recession and sustained labor market downturn, the availability of unemployment insurance (UI) benefits was extended to new historical highs in the United States, up to 99 weeks as of late 2009 into 2012. We exploit variation in the timing and size of UI benefit extensions across states to estimate the overall impact of these extensions on unemployment duration, comparing the experience with the prior extension of benefits (up to 72 weeks) during the much milder downturn in the early 2000s. Using monthly matched individual data from the U.S. Current Population Survey (CPS) for the periods 2000-2005 and 2007-2012, we estimate the effects of UI extensions on unemployment transitions and duration. We rely on individual variation in benefit availability based on the duration of unemployment spells and the length of UI benefits available in the state and month, conditional on state economic conditions and individual characteristics. We find a small but statistically significant reduction in the unemployment exit rate and a small increase in the expected duration of unemployment arising from both sets of UI extensions. The effect on exits and duration is primarily due to a reduction in exits from the labor force rather than a decrease in exits to employment (the job finding rate). The magnitude of the overall effect on exits and duration is similar across the two episodes of benefit extensions. Although the overall effect of UI extensions on exits from unemployment is small, it implies a substantial effect of extended benefits on the steady-state share of unemployment in the cross-section that is long-term.

This paper examines how unemployment late in workers' careers affects the timing of their retirement. Using data from the Survey of Income and Program Participation from 1996 to 2011, we document that unemployed workers permanently leave the labor force at a significantly higher rate than employed workers. This effect is stronger once workers become eligible for social security benefits and it is significantly dampened by the eligibility for unemployment insurance benefits. Unemployed workers, particularly those workers in households with below median wealth, also have a significantly higher social security uptake rate shortly after turning 62 than employed workers. We find little evidence for housing or stock market effects on the timing of retirement.

Martin Stuart ("Marty") Feldstein, currently George F. Baker Professor of Economics at Harvard University and President Emeritus of the National Bureau of Economic Research, Inc. (NBER), is an American economist who has made important contributions to public finance, macroeconomics, international economics, social insurance, health economics, the economics of national security, and many other fields of economics, trained a large number of prominent economists, served as President of the National Bureau of Economic Research for some thirty years, and served as President Ronald Reagan's chief economic advisor.

We argue that US welfare would rise if unemployment insurance were to be increased for young workers and decreased for old. This is because young workers have little means to smooth consumption during unemployment, and want jobs to accumulate high-return human capital. So unemployment insurance is highly valuable to them while the induced moral hazard problem is mild. We consider a life cycle model with unemployment risk and endogenous search eort, that we calibrate to match US labor market institutions. We nd that allowing unemployment replacement rates and other government transfers to decline with age yields sizeable welfare gains which amount to around two thirds of the gains attained under the constrained optimal scheme for unemployment insurance over the life cycle.

Este artículo presenta cómo funciona un sistema de prestaciones por desempleo de “experience rating” en el que se recurre a un impuesto sobre los despidos para financiar dichas prestaciones y el tipo de cotización de cada empresa depende de su historial reciente de despidos. Se analizan algunas de sus ventajas e inconvenientes, enmarcándolo en el tema más general del reparto de los costes asociados a la rotación en el mercado de trabajo. También se examinan más en detalle dos problemas asociados al “experience rating” parcial o incompleto: el exceso de despidos temporales y la existencia de subsidios cruzados entre regiones, sectores y empresas. a partir de los datos de la Muestra Continua de Vidas laborales (MCVL), se cuantifican ambos problemas para el caso español. Los resultados pueden ofrecer indicios de los beneficios que se podrían obtener si el sistema incluyese elementos de “experience rating” en su diseño y financiación.

The trend towards labor market flexibility in Europe has typically involved introducing legislation that makes it easier for firms to issue temporary contracts with low firing costs, while not changing the level of protection that is in place for permanent jobs. This has created a strong “dualism” in some European labor markets, which might affect turnover, wage setting, and human capital accumulation. In view of this, some economists propose replacing the existing system of temporary and permanent contracts by a single open-ended contract for new hires, with severance pay smoothly increasing with tenure on the job.

The authors use a simple model to study the optimal design of unemployment insurance and employment protection. Workers are risk averse and face the possibility of unemployment. Firms are risk neutral and face random shocks to productivity. Workers can participate in a shadow economy, or informal sector. The model yields several lessons. First, countries should encourage formal employment to address the issue of informal employment. In extreme cases, such encouragement translates into high severance payments and negative payroll taxes. Along these same lines, unemployment payments cannot be too large. In fact, when the risk of informality is extreme, the authors find that unemployment benefits should be negative, which is (in effect) a positive tax on the lack of formal employment.

Les contrats courts sont utiles au bon fonctionnement de l’économie, mais en France leur développement combiné à leur raccourcissement induit d’importants coûts économiques et sociaux, qui pèsent lourdement sur l’ensemble des agents économiques, mais relativement peu sur la minorité d’entreprises qui en font un usage intensif. L’expérience montre qu’une réglementation plus stricte influe peu sur l’incitation à utiliser les contrats courts ; c’est plutôt sur l’équation économique des entreprises utilisatrices qu’il faut chercher à peser. La théorie économique incline d’ailleurs à moduler le prix des différents contrats de travail en fonction des externalités qu’ils engendrent. L’État pourrait taxer les contrats courts, mais l’assurance chômage y a un intérêt encore plus fort et immédiat. En effet, l’assurance chômage est en première ligne face à ces transformations de l’usage des contrats de travail, et ses règles ont beaucoup évolué pour s’y adapter. Mais elle est confrontée à un paradoxe : bien assurer les contrats courts crée des subventions croisées qui incitent à leur développement. Une modulation du prix des contrats de travail peut s’appuyer sur différents moyens. Mais tous ne se valent pas : l’objectif doit être clair, et l’instrument approprié pour y parvenir. Et tous ne sont pas adaptés aux problèmes français, qui appellent une règle lisible, légère à administrer, applicable à tous les contrats de travail et tous les secteurs (sans exception y compris public), incitant les employeurs à faire des choix économes des deniers de l’assurance ; la tarification doit être contemporaine de ces comportements, mais ni punitive ni symbolique, n’augmentant pas le coût du travail, et ne visant pas à renflouer l’Unedic. Nous décrivons les différents instruments de modulation du prix des contrats de travail. Étant bien entendu que l’absence de taxe est toujours préférable à une mauvaise taxe, la cotisation dégressive en fonction de la durée du contrat de travail, assortie d’un forfait et d’une franchise, apparaît la plus adaptée pour assurer la survie de l’assurance chômage dans un marché du travail marqué par l’usage croissant de contrats de travail toujours plus courts. Nos simulations illustrent que des paramètres finement négociés peuvent conduire à un équilibre raisonnable..

The interaction of incomplete markets and sticky nominal wages is shown to magnify business cycles even though these two features—in isolation—dampen them. During recessions, fears of unemployment stir up precautionary sentiments that induce agents to save more. The additional savings may be used as investments in both a productive asset (equity) and an unproductive nominal liquid asset. The desire to hold the nominal liquid asset puts deflationary pressure on the economy which, provided that nominal wages are sticky, increases labor costs, and reduces firm profits. Lower profits repress the desire to save in equity, which increases (the fear of) unemployment, and so on. This mechanism causes the model to behave differently from its complete markets version and is quantitatively important even if monetary policy counteracts the desire to hold more of the liquid asset by lowering the interest rate. The deflationary pressure yields a mean-reverting reduction in the price level, which implies an increase in expected inflation and a decrease in the expected real interest rate even if the policy rate does not adjust. Thus, our mechanism is different from the typical zero lower bound argument. Due to the deflationary spiral, our model also behaves differently from its incomplete market version without aggregate uncertainty, especially in terms of the impact of unemployment insurance on average employment levels.

La dégressivité des allocations chômage est une réforme structurelle populaire et prisée par les organisations internationales dans leurs programmes d’ajustement structurel. Il s’agit de stimuler la reprise d’emploi en réduisant l’aléa moral des chômeurs indemnisés afin de diminuer les dépenses d'assurance chômage. Nous effectuons une revue de la littérature consacrée d’une part au profil optimal des allocations chômage et d’autre part aux formes d’aléa moral que des allocations chômage dégressives visent à éliminer. Ces travaux montrent que les indicateurs observés pour diagnostiquer la présence d’aléa moral lié à des allocations chômage constantes amplifient cet effet et sont imprécis sur son origine. Par ailleurs, les effets positifs prêtés à la dégressivité des allocations chômage ne sont pas attestés par la littérature, même sous des hypothèses très restrictives; ce profil n’est que rarement optimal car il doit être associé à une générosité élevée et qu’il induit des effets indésirables. Les travaux empiriques montrent que la dégressivité ralentirait les sorties du chômage, et que cette taxe sur le chômage de longue durée a au mieux de faibles effets agrégés sur les dépenses de l’assurance chômage. Ainsi la littérature conclut majoritairement à l'optimalité de droits constants, ou même progressifs. Pour limiter l’apparition d’aléa moral tout en renforçant l’optimalité des règles, des instruments bien plus précis peuvent être utilisés: un contrôle ciblé des chômeurs susceptibles d’aléa moral, l’adaptation automatique de la durée des droits potentiels à la conjoncture de l’emploi, ou encore l’utilisation à la marge de comptes individuels.

In talent-intensive jobs, workers’ quality is revealed by their performance. This enhances productivity and earnings, but also increases layoff risk. Firms cannot insure workers against this risk if they compete fiercely for talent. In this case, the more risk-averse workers will choose less quality-revealing jobs. This lowers expected productivity and salaries. Public unemployment insurance corrects this inefficiency, enhancing employment in talent-sensitive industries, consistently with international evidence. Unemployment insurance dominates legal restrictions on firms’ dismissals, which penalize more talent-sensitive firms and thus depress expected productivity. Finally, unemployment insurance fosters education, by encouraging investment in risky human capital that enhances talent discovery.

Unemployment insurance is usually found to show negative effects in the transition from unemployment to a new job. However, the extent to which workers’ careers might improve or deteriorate as a result of the unemployment insurance system is not immediately clear. This paper addresses the effects of certain aspects of this system on employment stability by jointly accounting for benefits endogeneity, dynamic selection issues and occurrence dependence. The analysis is undertaken for a dual labour market, such as the market in Spain, where temporary and permanent workers differ with respect to numerous individual and labour market characteristics. We find that non-insured unemployed workers experience a greater rate of transition to employment than insured workers. But we also find that benefits encourage job stability for temporary workers not only by increasing subsequent job tenure but also by increasing the probability of entering into a permanent contract. Finally, we get that shortening the duration of the benefit entitlement period does not seem to lead to significant gains in overall employment stability, which increases at most by 4.3%. .

Summary Arent and Nagl (2013) use the BA Employment panel 1998-2007 to identify effects of the German Hartz reform and find that it caused a considerable reduction of wages. Our replication study suggests that their clear and strong conclusions are based on implausible assumptions regarding the error structure of their regression models and on a too coarse modelling of the time effects. They become blurred and weak once better estimates of the standard errors are obtained and the development of wages is investigated at a finer time grid. Furthermore, Arent and Nagl’s reform effects shrink considerably when a more appropriate price index is used to deflate the wages and when the censoring of wages is treated correctly. Methodological considerations suggest that their conclusions depend on several further daring and untested assumptions.

Following the Great Recession, the unemployment insurance (UI) trust funds in most states became insolvent, requiring the states to borrow from the U.S. Department of the Treasury to finance benefit payments. This article describes the basics of UI financing and reviews the origins of the financial crisis facing the federal-state UI system. It then examines the main components of the UI payroll tax — the taxable wage base and the experience-rated payroll tax — and considers how these might be modified to avoid future widespread insolvency. We conclude with some speculative remarks on the future of UI financing.

Most conceptualisations of the bottom billion assume that "the poor" are a minority group in a state of continuous dependency, identifiable by region and demographic. Using a flow analysis (inflow and outflow) of poverty, rather than a stock analysis, we explain why poverty is more appropriately understood as a dynamic, with the majority of people flowing in and out of poverty for short durations. Distinguishing between structural and transitory poverty gives rise to a focus on the identification of multiple constituencies in the wider population including the permanently poor; sometimes poor; and non-poor. External shocks, including economic and environmental shifts, and risks such as ill-health, can affect any individual, household, or population in a non-predictable way, and can lead to loss of livelihood and a descent into poverty for various durations. At any point in time the bottom billion is made up of a blend of both transitory and structural elements with the former reflecting poverty as a risk for a much wider population than is often assumed. Using this analysis, the total stock of poverty potentially entails up to 5.1 billion people who do not have access to comprehensive social protection systems and are therefore vulnerable to spells in poverty. To protect against shared risks and mutual vulnerabilities, this paper argues that global insurance instruments, regulated through domestic institutions, would provide an efficient solution to transitory poverty. Further, it argues that these instruments could provide a foundation for investment in more equitable and extensive social protection measures that could target the multiple dimensions of structural poverty thereby seeking to ensure that no one is left behind.

Unemployment insurance recipients in the Netherlands were for a long time exempted from the requirement to actively search for a job when they reached the age of 57.5. We study how this exemption affected the job finding rates of the recipients involved. We find evidence that the job finding rate of unemployed workers who were getting close to the age of 57.5 is reduced in anticipation of the removal of the search requirement. In addition we find a large negative effect on job finding rates of the actual removal of the search requirement. Apparently, even for persons with seemingly poor job prospects search requirements have a positive effect on finding rates.

En este documento se estima la duración del desempleo en Lima Metropolitana y se estudian sus principales determinantes. Se encuentra que la duración del desempleo es aproximadamente 3 meses, indicador que reporta una tendencia decreciente consistente con la mayor generación de empleo y el crecimiento económico registrados en el Perú en el periodo en consideración. Se sugiere que la informalidad laboral, el autoempleo y la inactividad son los principales elementos detrás de la reducida duración del desempleo, ya que estos sectores son de fácil acceso ante la ausencia de mecanismos formales y masivos de seguro que financian periodos largos de desempleo. Finalmente, la baja duración del desempleo en el Perú es consistente con la existencia de una relación positiva entre la tasa de riesgo de dejar el desempleo y la duración del desempleo para desempleados recientes.

Let $(mathcal{E}_t, tgeq0)$ be a geometric Brownian motion. In this paper, we compute the law of a generalization of Dufresne’s translated perpetuity (following the terminology of Salminen-Yor) : $$ int_0^{+infty} frac{mathcal{E}_s^2}{(mathcal{E}_s^2+2 amathcal{E}_s +b)^2} ds,$$ and show that, in some cases, this perpetuity is identical in law with the first hitting time of a three-dimensional Bessel process with drift.We also study the law of the following pair of annuities $$left(int_0^{t}left(mathcal{E}_s-1 right)^+ ds , quad int_0^{t}left(mathcal{E}_s-1 right)^-ds right)$$ via a Feynman-Kac approach, and discuss some particular cases for which we are able to recover the associated perpetuities.

In the context of globalization, any company require well-trained workforce to ensure its economic development. In occupational structure analysis must take into account the prevailing conditions in the labor market not only by educational level. It turned out that employment opportunities are higher for educated population and not coincidentally between employment guidelines included in the Europe 2020 Strategy can be found guidance on the development of a well-qualified workforce, which responding to labor market needs.

The purpose of this paper is to present the influence of the tax burden on employment rate of labor starting from the comparison made between the 28 member states of the European Union.

We estimate the effects of conditioning benefits on program participation among older long-term unemployed workers. We exploit a Swedish reform which reduced UI duration from 90 to 60 weeks for a group of older unemployed workers in a setting where workers who ex-hausted their benefits received unchanged transfers if they agreed to participate in a work practice program. Our results show that job finding increased as a result of the shorter duration of passive benefits. The time profile of the job-finding effects suggests that the effects are due to deterrence effects during the program-entry phase. We find no evidence of wage reductions, suggesting that the increased job-finding rate was driven by increased search intensity rather than lower reservation wages.

Using a large administrative dataset for Germany, this paper compares employment developments in exiting and surviving establishments. For both West and East Germany we find a clear 'shadow of death' effect reflecting lingering illness: establishments shrink dramatically already several years before closure, employment growth rates differ strongly between exiting and surviving establishments, and this difference becomes stronger as exit approaches. We further show that prior to exit the workforce becomes on average more skilled, more female and older in exiting compared to surviving establishments. These effects are more clearly visible in West than in East Germany. Our results also hold when applying a matching approach.

Social vulnerability is often defined as a life-situation characterized by a multi-dimensional combination of disadvantage and advantage, of inclusion and exclusion factors. Its distinctive characteristic is that the weak and unstable integration in the main mechanisms of resources distribution in contemporary society places the people in a situation of uncertainty and high exposure to the risk of poverty and, eventually, of social exclusion. Because of its often temporary nature, vulnerability is difficult to capture. The present paper presents various aspects of social vulnerability and the structuring of the main elements of which it is constituted.The analysis focuses across the family structure, exposure to poverty (temporary or permanent), housing conditions, the family/work system (the presence of unemployed and temporary workers in the household), the ways in which work and childcare are reconciled, and the presence of dependent persons in households in economically compressed situations.

In this paper, we study the interaction between self insurance and public insurance. In particular, we provide evidence on a negative correlation between unemployment insurance benefits and home production using the American Time Use Survey (ATUS) and the state-level unemployment insurance data of the U.S. The empirical results suggest that moving to a two times more generous state would decrease time spent on home production about 22% for the unemployed. Then, we pursue a quantitative assessment of this empirical finding using a dynamic competitive equilibrium model in which households do home production as well as market production. The model is able to generate the empirical facts regarding the unemployment benefits and home production. The fact that unemployment insurance benefits crowd out home production is interpreted as a substitution between the two insurance mechanisms against loss of earnings during unemployment spells.

We propose a new measure of allocative efficiency based on unrealized increases in aggregate productivity growth. We show that the difference in the value of the marginal product of an input and its marginal cost at any plant - the plant-input "gap" - is exactly equal to the change in aggregate output that would occur if that plant changed that input's use by one unit. The mean absolute gap across plants for any input can then be interpreted as an approximation to the gain to society that would occur if every plant had a one-unit change in that input in the efficient direction, holding everything else constant. We show how to estimate this average gap using plant-level data for 1982-1994 from Chilean manufacturing, a sector largely viewed as being one of South America's least distorted. We find the gaps for blue and white collar labor are quite large in absolute value and imply that a one-unit move in the correct direction for blue collar would increase aggregate value added by almost 0.5%. We also find that the gaps for blue and white collar workers are increasing over time while the gaps for materials and electricity are not. The timing of the two separate increases in firing costs and the sharpest increases in the labor gaps is suggestive that the increases in average within-firm labor gaps may be related to the increases in severance pay.

We introduce search and matching unemployment into a model of trade with differentiated goods and heterogeneous firms. Countries may differ with respect to size, geographical location, and labor market institutions. Contrary to the literature, our single-sector perspective pays special attention to the role of income effects and shows that bad institutions in one country worsen labor market outcomes not only in that country but also in its trading partners. This spill-over effect is conditioned by trade costs and country size: smaller and/or more centrally located nations suffer less from inefficient policies at home and are more heavily affected from spill-overs abroad than larger and/or peripheral ones. We offer empirical evidence for a panel of 20 rich OECD countries. Carefully controlling for institutional features and for business cycle comovements between countries, we confirm our qualitative theoretical predictions. However, the magnitude of spill-over effects is larger in the data than in the theoretical model. We show that introducing real wage rigidity can remedy this problem.

A job loss has considerable negative consequences for those hit by unemployment. This is all the more relevant if families are affected. It not only relates to a family's financial situation: a mother losing her job can also impact on child development. A study conducted by DIW Berlin using data from the German Socio-Economic Panel Study (SOEP) shows that this is indeed the case as far as non-cognitive skills such as social behavior are concerned: pre-school children whose mothers have involuntarily lost their job have more socio-emotional problems than children whose mothers have not faced this situation. The same applies to adolescents: if their mother becomes unemployed, young people have less confidence in their ability to determine the course of their own lives. Der Verlust des Arbeitsplatzes ist für Arbeitnehmer meist mit erheblichen negativen Folgen verbunden - dies gilt umso mehr, wenn von den Auswirkungen Familien betroffen sind. Dabei ist nicht nur die finanzielle Situation von Bedeutung: Auch die Entwicklung der Kinder kann beeinflusst werden, wenn die Mutter ihren Job verliert. Eine Untersuchung des DIW Berlin auf Basis von Daten des Sozio-oekonomischen Panels (SOEP) zeigt, dass dies hinsichtlich nicht-kognitiver Fähigkeiten wie dem Sozialverhalten tatsächlich der Fall ist: Vorschulkinder, deren Mütter unfreiwillig ihren Arbeitsplatz verloren haben, sind sozio-emotional auffälliger als Kinder, deren Müttern dies nicht widerfahren ist. Ähnliches trifft auf Jugendliche zu: Wird die Mutter arbeitslos, glauben Jugendliche weniger daran, dass sie ihr Leben selbst bestimmen können.

Integration processes in Europe resulted in intensification of migration flows. Immigrants account now for a large share of population in many European countries. A point of view that immigrants take jobs form natives is quite widespread. The European Monitoring Centre on Racism and Xenophobia published a special analysis of the attitudes towards minorities in EU countries Eurobarometer 2000. They found that one in two EU citizens worry about competing with immigrants for the same vacancies and afraid of losing their jobs because of presence of foreign workers. Different measures and institutions which protect native workers have nevertheless an ambiguous effect. On the one hand labor protective institutions such as minimal wage, replacement rate or firing restrictions will protect existing workers and reduce a firing rate. On the other hand, firms will take into consideration these additional costs of firing and will be less likely to employ new workers. At the same time, it is argued that immigrants are probably less likely to be covered by these institutions. These facts imply that protective institutions cover mostly natives and therefore make immigration labor force comparatively less costly. Labor market protection may therefore amplify a negative effect of immigrants on native employment if it exists.This paper attempts to evaluate the effect of immigration in flow on employment level of natives and reveal whether this effect changes in different institutional environments using EU-countries data. In addition to static specification it uses a dynamic specification to draw conclusions about long-term and short-term effects separately. The results show no long-run effect of immigration inflow. Short-term effect of is found to be positive. Protective labor market institutions fulfill their function of protecting existing workers.The results are also different for men and women.

Severance pay, a fixed-sum payment to workers at job separation, has been the focus of intense policy concern for the last several decades, but much of this concern is unearned. The design of the ideal separation package is outlined and severance pay emerges as a natural component of job displacement insurance packages, serving both as scheduled reemployment wage insurance and, if search moral hazard is a problem, as scheduled UI. Like any firm-financed separation expenditure, severance pay can induce excessive job retention, but such distortions do not appear to be of practical significance at benefit levels typically mandated in the industrialized world. Moreover there is no evidence that firms attempt to avoid these firing cost distortions by substituting severance savings plans, which have zero firing costs. Indeed severance insurance plans similar to those mandated are often offered voluntarily in the U.S. The appropriate role of government in the market for severance pay is briefly considered.

"In Germany, older unemployed people aged 58 or more years have been exempt from a fundamental principle of activating labour market policy until 2007: They have been entitled to unemployment benefit payments until taking up retirement pension without having to seek new employment (Section 428 of Social Code III). In light of the political goal of an increased labour market participation of older workers this paper deals with the reasons why the majority of older long-term unemployed people left the labour force by making use of the Facilitated Receipt of Benefits (FRB). Surveying the labour-market behaviour of this group against the background of the FRB diminishes a common methodological problem: unemployed benefit payment recipients usually must be available for employment; therefore questions about their inclination to work, their readiness to compromise and their job-search behaviour will probably lead to socially desirable answers. These distortions can be expected to be less relevant with FRB payment recipients, who are legally entitled to cease seeking employment. The empirical analysis based on a survey of recipients of the Unemployment Benefit II shows that low or no propensity to work was rarely the motive for leaving the labour market; in particular, those anticipating a low retirement income actually wanted to be re-employed. The vast majority gave three reasons for the decision to retire: an inability to cope with requirements of available jobs, a lack of job opportunities, and an absence of proper support from the public employment agency. Thus the withdrawal of older long-term unemployed people into pre-retirement cannot be attributed to a utility-maximising decision in favour of leisure and against gainful employment, but is the primary result of lacking re-employment prospects particularly for women in East Germany." (Author's abstract, IAB-Doku) ((en)) Additional Information Hier finden Sie eine kurze Zusammenfassung.

In this article we study the joint decision process of changing the structure of jobs and laying off individual workers in a firm that downsizes its workforce. A hierarchical decision model is proposed and estimated using personnel data from a firm in demise comparing the characteristics of the individual workers and the structure of the firm's labour force before and after its reorganization. Our results show that workers in jobs in the top levels of each skill group's hierarchy are better protected against downsizing due to larger productivity shocks and larger firing costs.

Recent research has demonstrated that some households cut back on expenditures in an unemployment spell. Moreover, some of these households respond to variation in the transitory income provided by unemployment insurance benefits. This suggests that these households are constrained in the sense that they respond to variations in current income even if these do not have any permanent impact. In this paper we take up the question of how households in temporarily straitened circumstances cut back and how they spend marginal dollars of transfer income. Our theoretical and empirical analysis emphasises the importance of allowing for the fact that households buy durable as well as non-durable goods. The theoretical analysis shows that in the short run households can significantly cut back on total expenditures without a significant fall in welfare if they concentrate their budget reductions on durables. We present an empirical analysis based on a Canadian survey of workers who experienced a job separation. Exploiting changes in the unemployment insurance system over our sample period we show that cuts in UI benefits lead to reductions in total expenditure with a stronger impact on clothing than on food expenditures. These effects are particularly strong for households with no liquid assets and/or households in which the lost income was ‘important’ for the household.