The Pitfalls of Work Requirements in Welfare-to-Work Policies: Experimental Evidence on Human Capital Accumulation in the Self-Sufficiency Project

This paper investigates whether policies that encourage recipients to exit welfare for full-time employment influence participation in educational activity. The Self-Sufficiency Project ('SSP') was a demonstration project where long-term welfare recipients randomly assigned to the treatment group were offered a generous earnings supplement if they exited welfare for full-time employment. We find that treatment group members were less likely to upgrade their education along all dimensions: high-school completion, enrolling in a community college or trade school, and enrolling in university. Thus, 'work-first'; policies that encourage full-time employment may reduce educational activity and may have adverse consequences on the long-run earnings capacity of welfare recipients. We also find that there was a substantial amount of educational upgrading in this population. For instance, among high-school dropouts at the baseline, 19% completed their diploma by the end of the demonstration. Finally, we simulate the consequences of the earnings supplement in the absence of adverse effects on educational upgrading. Doing so alters the interpretation of the lessons from the SSP demonstration.welfare policy, human capital, experimental methods, earnings supplementation

Measuring Unemployment and Structural Unemployment

This paper surveys recent research on how to measure labour market activities such as unemployment and labour force participation. The conventional approach to distinguishing between unemployment and non-participation is to use a priori reasoning and self-reported survey responses about current activities, specifically availability for work and job search. In contrast, the research surveyed here employs evidence on the subsequent consequences of current activities, in particular on transitions among labour force states. This general approach appears to be a promising method for bringing evidence to bear on these difficult measurement issues.

Economic Change and Worker Displacement in Canada: Consequences and Policy Responses

Change is an enduring feature of the economy and the labour market, even in normal times. The importance of adjusting to change, and of policies that promote adjustment, has been a recurring theme throughout David Dodge’s distinguished career. This paper deals with “displaced workers,†those who permanently lose their jobs because of changing economic circumstances. I examine what we know about displacement and its consequences, and assess policies designed to assist workers adversely affected by economic change. A central finding of research on displacement is that long tenure displaced workers -- those who have held their jobs for an extended period of time -- suffer much more from losing their jobs than do others. Canada’s Employment Insurance does not take into account this salient feature of the consequences of job loss. The paper discusses ways of addressing this deficiency in our primary social insurance program for job losers.labour market adjustment, job displacement, unemployment, unemployment insurance, adjustment assistance policies, wage insurance

The Impact of Education on Unemployment Incidence and Re-employment Success: Evidence from the U.S. Labour Market

This study investigates the causal effects of education on individuals’ transitions between employment and unemployment, with particular focus on the extent to which education improves re-employment outcomes among unemployed workers. Given that positive correlations between education and labour force transitions are likely to be confounded by the endogeneity of education, we make use of data on compulsory schooling laws and child labour laws as well as conscription risk in the Vietnam War period to create instrumental variables to identify the causal relationships. Results indicate that education significantly increases re-employment rates of the unemployed. Particularly large impacts are found in the neighborhoods of 12 and 16 years of schooling. Evidence on the impact of formal schooling on unemployment incidence is mixed.child labour laws, compulsory schooling laws, causal effects, unemployment, labour market transitions, education, Vietnam War draft

The Role of Education in Technology Use and Adoption: Evidence from the Canadian Workplace and Employee Survey

Adoption of innovations by firms and workers is an important part of the process of technological change. Many prior studies find that highly educated workers tend to adopt new technologies faster than those with less education. Such positive correlations between the level of education and the rate of technology adoption, however, do not necessarily reflect the true causal effect of education on technology adoption. Relying on data from the Workplace and Employee Survey, this study assesses the causal effects of education on technology use and adoption by using instrumental variables for schooling derived from Canadian compulsory school attendance laws. We find that education increases the probability of using computers in the job and that employees with more education have longer work experiences in using computers than those with less education. However, education does not influence the use of computer-controlled and computer-assisted devices or other technological devices such as cash registers and sales terminals. Our estimates are consistent with the view that formal education increases the use of technologies that require or enable workers to carry out higher order tasks, but not those that routinize workplace tasks.Technology use and adoption, education, causal effects, compulsory schooling laws, heterogeneity in technology

Unemployment Insurance Savings Accounts in Latin America: Overview and Assessment

The unemployment protection systems that exist in most Latin American economies are generally considered inadequate in terms of providing insurance to workers. They may also encourage stratified labor markets and impose barriers to the employee’s mobility and the firm's adjustment to changing labor market conditions. In addition, some of these systems involve high administrative and monitoring costs and may create additional adverse effects that induce higher unemployment rates and longer duration of unemployment and promote informal labor markets. Recently, research effort and policy interest has turned to Unemployment Insurance Savings Accounts (UISAs) as an alternative to traditional systems of unemployment insurance. UISAs are schemes of individual mandatory savings. Therefore, they smooth income over an individual's life cycle rather than pooling unemployment risk over the total working population at a point in time. This form of unemployment insurance diminishes the moral hazard problems associated with traditional insurance methods. However, it presents problems of its own. First, it is questionable that these systems provide adequate protection against unemployment risk. Additionally, their effects on the promotion of informal labor markets and their administrative costs are yet to be determined. Finally, the effectiveness as a form of unemployment insurance depends critically upon the performance and credibility of the financial institutions managing the funds. This paper examines the experience of Latin American countries that use UISAs, with the hope of highlighting the problems of the system and identifying areas for future theoretical and empirical work. The overall effect of UISAs depends on a vast array of specific country characteristics and program parameters. The way the system is implemented, existing labor regulation, the extent of the informal economy and the scope for collusive behavior greatly influence the success of these programs. This calls for a more extensive research effort in the area.unemployment insurance, moral hazard, severance pay, Latin America, labor markets

Education, Job Search and Re-employment Outcomes among the Unemployed

This study assesses the effects of education on both job search intensity and re-employment success for unemployed workers. Given that the positive correlation between education and job search intensity or re-employment success is likely to be confounded by the endogeneity of education, we make use of data on compulsory schooling laws to create instrumental variables to assess the causal effects of education. Based on data from the Labour Force Survey and the Canadian Census, we find that education both significantly increases job search intensity and significantly improves re-employment success for the unemployed. The evidence on job search intensity provides insights into one potential mechanism through which education may increase the probability of re-employment following unemployment.education, adaptability, unemployment, job search, causal effects, compulsory schooling laws