The economic and social consequences of unemployment and long-term unemployment

Abstract

This thesis studies the economic and social consequences of unemployment and long-term (or repeated) unemployment. The first two chapters are concerned with economic consequences. They study how unemployment affects the working of the labour market. The last two chapters are interested in social consequences. They look at whether future generations' outcomes are altered by their parents' unemployment. Chapter two uses data on UK regions over a period of 23 years to test the hypothesis that the composition of unemployment alters the dampening effect of unemployment on wages. Several specifications are estimated using dynamic panel data methods and are tested to check the robustness of the results. The hypothesis is verified for manual or unskilled workers, but not for non-manual or skilled workers. The next three chapters use the British National Child Development Study (NCDS). The third chapter studies the job search behaviour of individuals who declared themselves unemployed and looking for work when aged 23 years old. We define job search as the combination of three decisions: whether they have considered applying for a job which would mean moving house, which would have a lower pay than their previous job, or which would require a lower qualification. We find that using a model that incorporates the dependence of these decisions improves efficiency. Young people who have been unemployed before are found to accept mobility but not to alter their expectations on wages and skill content. In the fourth chapter, we want to determine whether the labour market situation of the parents influences in any way the social behaviour of children. The findings show that, controlling for - persistent - financial difficulties, the unemployment of the father during childhood seems to have a detrimental effect on his children's outcomes. There is some evidence that those who have a non-working mother during early childhood are better off than others, except in cases where the mother is single. The last chapter draws on the previous one and studies whether these effects can be translated into unfavourable outcomes in adult life, in particular social exclusion. A new index of social exclusion is constructed. We find that anti-social behaviour and social difficulties during childhood are associated with later risks of social exclusion