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Article
Publication date: 1 December 2021

Oskar Jost

Assess and compare scarring effects of unemployment in Germany to other countries and to consider firm heterogeneity.

Abstract

Purpose

Assess and compare scarring effects of unemployment in Germany to other countries and to consider firm heterogeneity.

Design/methodology/approach

The author uses linked employer-employee data to analyze the effect of unemployment and its duration on future wages in Germany. Using administrative data on workers and firms in Germany and considering registered and unregistered unemployment episodes, the results show long-lasting wage losses caused by unemployment incidences. Furthermore, the estimations indicate that unemployment duration as well as selectivity into firms paying lower wages is of particular relevance for the explanation of wage penalties of re-employed workers.

Findings

Unemployment causes massive and persistent wage declines in the future, which depend on the unemployment duration. Furthermore, reduced options of unemployed workers and selectivity in firms contribute to a large part of unemployment scarring.

Practical implications

Findings are relevant for current debates on unemployment and can help design measures to avoid huge costs of unemployment.

Originality/value

This paper analyses long-term unemployment scarring by considering not only unemployment duration but also selectivity in firms and its effect on the scarring effect.

Details

International Journal of Manpower, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0143-7720

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Article
Publication date: 1 June 2002

Bernhard A. Weber

There is strong empirical evidence that unemployment rates decrease as the educational level rises. The present article attempts to take explicit account of this when…

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2699

Abstract

There is strong empirical evidence that unemployment rates decrease as the educational level rises. The present article attempts to take explicit account of this when estimating educational rates of return. Three models that differ with respect to their degree of simplicity and data requirements are developed herein and applied to the empirical data. The estimates for 14 European countries suggest that standard estimates that do not account for unemployment are substantially downward biased. Differences in unemployment probabilities at different educational levels, and youth unemployment, both appear to be important for a better understanding of the incentive structure behind educational decisions.

Details

Education + Training, vol. 44 no. 4/5
Type: Research Article
ISSN: 0040-0912

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Article
Publication date: 20 October 2021

Sajid Ali, Zulkornain Yusop, Shivee Ranjanee Kaliappan, Lee Chin and Muhammad Saeed Meo

This study examines the impact of trade openness, human capital, public expenditure and institutional performance on unemployment in various income groups of Organization…

Abstract

Purpose

This study examines the impact of trade openness, human capital, public expenditure and institutional performance on unemployment in various income groups of Organization of Islamic Cooperation (OIC) countries.

Design/methodology/approach

Traditional panel data methodologies neglect the issue of cross-sectional dependence and provide ambiguous outcomes. A novel approach, “dynamic common correlated effects (DCCE)”, is utilized in this study to tackle with aforementioned issue. Pooled mean group (PMG) estimation is also applied to verify the robustness of the findings.

Findings

The long-run estimates show that trade openness has a significant and negative relationship with the unemployment rate in overall and lower-income OIC economies and a positive correlation with unemployment in higher-income OIC countries. Public expenditure is negatively and significantly correlated with unemployment in higher-income and overall OIC economies. Moreover, human capital reduces unemployment in higher-income and overall OIC countries while increases unemployment in lower-income OIC economies.

Practical implications

The research tends to endorse the argument for continuous trade openness policy along with efficient use of public expenditure and improved institutional performance to reduce unemployment in OIC countries.

Originality/value

The DCCE approach in this research considers heterogeneity and cross-sectional dependence between cross-sectional units and thus gives robust outcomes.

Details

International Journal of Manpower, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0143-7720

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Article
Publication date: 4 May 2012

Firouz Fallahi, Hamed Pourtaghi and Gabriel Rodríguez

The paper aims to study the effect of the unemployment rate and its volatility on crime in the USA. It proposes that not only the unemployment rate, but also its…

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8009

Abstract

Purpose

The paper aims to study the effect of the unemployment rate and its volatility on crime in the USA. It proposes that not only the unemployment rate, but also its volatility affect the crime.

Design/methodology/approach

First, the volatility of the unemployment rate is calculated using ARCH models. Next, using the results from the first stage the ARDL approach to cointegration is used to examine the link between the unemployment rate and its volatility on the crime.

Findings

The cointegrated or long‐run relationships are found only for burglary and motor‐vehicle theft. The results indicate that the unemployment rate has a significant effect on burglary and motor‐vehicle theft only in the short run and the unemployment volatility has a negative effect on motor‐vehicle theft regardless of time span. However, it has a positive effect on burglary in the short run and no effect in the long run.

Originality/value

The effect of unemployment rate on crime is documented in the literature. However, to the best of our knowledge, this is the first paper that emphasizes the importance of unemployment rate volatility on the crime.

Details

International Journal of Social Economics, vol. 39 no. 6
Type: Research Article
ISSN: 0306-8293

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Article
Publication date: 25 January 2011

Jaakko Pehkonen, Hector Sala and Pablo F. Salvador

This paper aims to provide an account of the unemployment performance of two Nordic countries during their recent labour market booms and slumps.

Abstract

Purpose

This paper aims to provide an account of the unemployment performance of two Nordic countries during their recent labour market booms and slumps.

Design/methodology/approach

Based on the empirical models of Karanassou et al., we conduct dynamic simulation exercises and explore the determinants of unemployment.

Findings

The analysis yields two main findings. First, the capital stock was the most important determinant of the unemployment trajectory in both countries. This result appears in all periods considered: in the slump of the early 1990s and the boom of the late 1990s, as well as in the stabilisation period of the early 2000s. Second, the role of the foreign sector on the unemployment trajectory was significant in Finland, its quantitative impact being one‐third of the effect for the capital stock in the first and third periods, and half of the latter in the second period.

Originality/value

The results illustrate the importance of non‐standard labour market variables in examining unemployment trajectories. The findings call for a wider than usual perspective in trying to solve the unemployment problem.

Details

Journal of Economic Studies, vol. 38 no. 1
Type: Research Article
ISSN: 0144-3585

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Article
Publication date: 1 May 1996

Satya Paul

Estimates a three‐equation model to test various economic hypotheses regarding the relationship between unemployment rate and defence spending in 18 OECD countries during…

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2233

Abstract

Estimates a three‐equation model to test various economic hypotheses regarding the relationship between unemployment rate and defence spending in 18 OECD countries during the period 1962‐1988. Reveals that the relationship which exists between unemployment rate and defence spending is not uniform across countries. Defence spending has a favourable impact on unemployment rate in Germany and Australia, whereas in Denmark it worsens the employment situation. In Australia, Germany and Belgium, non‐defence spending and the unemployment rate are causally independent. Defence spending appears to act as a stablization tool in response to changes in the unemployment rate only in the UK. No significant causal relationship between unemployment rate and either type of spending is revealed in Japan, The Netherlands, Italy, Spain, Austria, New Zealand, Sweden, Canada and the USA. Observes a few cases of bi‐directional causality between unemployment rate and defence/non‐defence spending. Gives possible explanations for the observed cross‐country variability in causal relation.

Details

Journal of Economic Studies, vol. 23 no. 2
Type: Research Article
ISSN: 0144-3585

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Article
Publication date: 8 September 2021

Zheng-Zheng Li, Chi Wei Su and Ran Tao

This study aims to examine the unemployment hysteresis effects from the perspective of the heterogeneity of genders within Asian countries.

Abstract

Purpose

This study aims to examine the unemployment hysteresis effects from the perspective of the heterogeneity of genders within Asian countries.

Design/methodology/approach

The authors use the annual unemployment rate dataset of 12 Asian countries ranging from 1991–2020. Traditional unit root tests are initially employed to investigate the unemployment hysteresis effect. Considering the structural break and cross-section dependence problems, the sequential panel selection method (SPSM) and the Kapetanios–Snell–Shin (KSS) panel unit root test with Fourier functions have proven to be more applicable.

Findings

The empirical results indicate that the unemployment rate is stationary in most Asian regions for both females and males, which confirms the mean reversion process of the natural unemployment hypothesis. This suggests that these countries' unemployment rates are flexible to quickly revert to its long-run equilibrium determined by the labor markets. However, only the female unemployment rate in Pakistan and Nepal and adult female unemployment rates in these two economies present non-stationary series. In line with the unemployment hysteresis effect, it means shocks will leave a permanent impact on their labor market.

Practical implications

On the one hand, in most of the Asian countries, it can be inferred that the trade-off between inflation and unemployment is temporary because the natural unemployment hypothesis holds. Therefore, policymakers may consider using monetary policy as a tool to control inflation and stimulate growth during a recession. Such policy measures should not have a long-run impact on unemployment or cause a permanent shift in the natural unemployment rate. On the other hand, the government should implement active labor protective programs such as education or training schemes, job search assistance programs and maternity protection, especially for female adults, to reduce the negative shocks in the economic downturn, which is beneficial for them away from being long-term unemployed. It is also necessary to improve the labor unions to reduce the discrimination between female and male labors.

Originality/value

This paper innovatively concentrates on the heterogeneity performances between genders about the unemployment hysteresis effect within Asian countries. Furthermore, taking into account the age-specific characteristics, the youth and adult unemployment rates have been investigated. Additionally, the approximation of bootstrap distribution and the advanced panel KSS unit root test with a Fourier function are employed. Thereby, targeted policies for the government can be applied to reduce the discrimination and negative shocks on female adults in the labor market.

Details

International Journal of Manpower, vol. 42 no. 8
Type: Research Article
ISSN: 0143-7720

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Article
Publication date: 31 August 2021

Eleftherios Giovanis, Oznur Ozdamar and Burcu Özdaş

Unemployment can negatively affect individuals, their families and communities in various ways. When individuals are out of work may experience mental and physical health…

Abstract

Purpose

Unemployment can negatively affect individuals, their families and communities in various ways. When individuals are out of work may experience mental and physical health problems, material deprivation and poverty. This study aims to examine the impact of unemployment benefits on health and living standards in Turkey.

Design/methodology/approach

The authors employ a structural equation modelling (SEM) to consider the simultaneous relationships among the unemployment benefits and the latent variables of health and Standard of Living (SoL). We propose a fuzzy Regression Discontinuity Design (FRDD) and a Regression Kink Design (RKD) within the SEM framework to infer causality. For the empirical analysis, the authors employ the panel Income and Living Conditions Survey (ILCS) in 2007–2015.

Findings

The authors’ findings suggest that those who receive these benefits are more likely to report higher levels of health and improve their living standards compared to the non-recipients. Furthermore, unemployment benefits replacement rates are associated with improved levels in health and living standards. The authors’ results indicate a substantial heterogeneity on the impact of unemployment benefits since males, low educated individuals and those belonging to the lower levels of income are affected more in terms of their health status and living standards.

Originality/value

The majority of earlier studies have focused on the impact of unemployment benefits on labor outcomes. The originality of this study is that we implement the FRDD and RKD within the SEM framework to explore, simultaneously, the impact of unemployment insurance on health and living standards. Moreover, future research studies can implement this framework to infer causality and explore the impact of related policies and reforms.

Details

International Journal of Manpower, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0143-7720

Keywords

Content available
Article
Publication date: 2 September 2021

Amany Yashoa Gad

This paper aims to identify the level of contribution of different levels of education to remaining in unemployment as well as the transition from unemployment to…

Abstract

Purpose

This paper aims to identify the level of contribution of different levels of education to remaining in unemployment as well as the transition from unemployment to employment in Egypt.

Design/methodology/approach

In this paper, transition probabilities matrix differentiated by gender, age groups, educational levels, marital status and place of residence based on worker flows across employment, unemployment and out of labor force states during the period 2012–2018 using Egypt Labor Market Panel Survey of 2018. The results point to the highly static nature of the Egyptian labor market. Employment and the out of labor force states are the least mobile among labor market states. This is because employment state is very desirable and the out of labor force is the largest labor market states, especially for females. Also, this study examines the impact of different educational levels separately on remaining in unemployment and transition from unemployment to employment state using eight binary logistic regression models.

Findings

The main results of transitions from unemployment to employment are relatively large for males, elder-age, uneducated workers as well as workers who are not married and urban residents, and the results of the logistic regression models consistent with the transition probabilities matrix results, except for few cases. Based on the above findings, there is enough evidence to accept the null hypothesis that no education has a positive significant impact to transition unemployed individuals from unemployment to employment, while less than intermediate as well as higher education have a negative significant impact to transition unemployed individuals from unemployment to employment.

Originality/value

This paper proposes to address the problem of the unemployment among highly educated which is much higher compared with illiterates and try to understand the impact of different levels of education separately on the transition from unemployment to employment, to help the policymakers to eradicate the gap between education and the demand of the labor market in Egypt.

Details

Review of Economics and Political Science, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2356-9980

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Book part
Publication date: 29 November 2019

Magnus Andersson, Peter G. Håkansson and Inge Thorsen

This chapter examines observed regional inequalities and centralization tendencies in Norway. Small, rural, municipalities experienced a favourable population development…

Abstract

This chapter examines observed regional inequalities and centralization tendencies in Norway. Small, rural, municipalities experienced a favourable population development from 1970 to the mid-1980s. After this, the percentage population growth has been strongest in the largest municipalities/cities, and this tendency has accelerated during the last 10–15 years. Data post-1970 strongly support the reasonable hypothesis that population growth is positively related to centrality. The major source of changes lies within the labour market regions, whereas the changes between the regions are modest. Jobs have not become more centralized than households over the period.

A conceptual model is developed, offering a useful taxonomy of municipalities in three dimensions: the unemployment rate, the employment growth, and housing prices. This provides a classification that contributes to clarify the changes in the urban-rural divide. The discussion demonstrates that distinguishing between different categories is important, since different explanations of centralization and regional disparities call for different menus of policy instruments.

We study the relationship between population growth, unemployment rates, and employment growth in Norwegian municipalities, to distinguish between disequilibrium and equilibrium explanations of the situation in regional labour markets. At a national level our results indicate that neoclassical adjustments dominate weakly over amenity-based mechanisms. However, results from many regions support the hypothesis that amenity-based adjustments are dominant for municipalities within a labour market region. One possible explanation is that the diversity in job opportunities is considered as an amenity. A thicker labour market is better fit to meet the demand of workers with specific qualifications.

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