The Impact of Unemployment on Individual Well-Being in the EU. CEPS ENEPRI Working Papers No. 29, 1 July 2004

Among the working-age population, one of the most damaging individual experiences is unemployment. Many previous studies have confirmed the devastating effects of unemployment on individual well-being, both pecuniary and non-pecuniary. Using the data from the European Community Household Panel survey, this paper examines the factors that affect unemployed workers’ well-being with respect to their situations in their main vocational activity, income, housing, leisure time and health in Europe. The research finds that unemployment substantially reduces an individual’s satisfaction levels with his or her main vocational activity and finance, while it greatly increases his or her satisfaction levels with leisure time. With respect to health, it has a small negative effect. Unemployment duration also has a small, negative impact on individual well-being, suggesting that unemployment has a lasting and aggravating effect throughout the spells of unemployment, contradicting the theory of adaptation

The Role of the Minimum Wage in the Welfare State : An Appraisal

In order to offer a balanced assessment of the role of minimum wages in the Welfare State, seven basic questions need to be answered: (i) Why is the minimum wage a useful redistributive tool?; (ii) How binding are minimum wage floors in different countries?; (iii) To what extent do minimum wages have the adverse consequences that standard analysis predict?; (iv) Are there strong theoretical grounds underlying the revisionist results?; (v) Who supports minimum wages?; (vi) Under which conditions is the minimum wage a better tool than other policy instruments to achieve income redistribution?; and, finally, (vii) What is the overall cross-country time-series evidence regarding the employment effect of the minima? The aim in this paper is to provide an appraisal on the available evidence for each of the above-mentioned issues.Publicad

Female Employment and Occupational Changes in the 1990s: How is the EU Performing Relative to the US?

This paper provides a comparison of the incidence and composition of female employment both in the EU and in the US. Despite a significant increase in female labour market participation in the EU, about 50% of the difference between the employment rates in the US and the EU can still be attributed to differences in the educational attainments and the employment rates of women aged 25?54. We highlight the main features of female employment in both areas, paying particular attention to the differences across age cohorts and educational levels. Our main findings are as follows: (i) the educational level of the EU female population is slowly converging to that of the US across age cohorts, (ii) the employment rates of less educated women are much lower in the EU than in the US (with the exceptions of the Scandinavian countries) even for women aged 25?34, and (iii) occupational segregation is lower for the younger highly educated women who seem to be entering more typically male occupations and less typically female occupations, although at a higher rate in the US than in the EU.Publicad

Where do Women Work? : Analysing Patterns in Occupational Segregation by Gender

Our goal in this paper is twofold. First, to examine the role of education and other socio-economic factors in explaining differences between the EU and the US in occupational segregation by gender. And, secondly, to analyse its relationship with job characteristics, remuneration and promotion opportunities of female employees.Publicad

Does immigration affect the Phillips curve? Some evidence for Spain

The Phillips curve has flattened in Spain over 1995?2006: Unemployment has fallen by 15 percentage points, with roughly constant inflation. This change has been much more pronounced than elsewhere. We argue that this stems from the immigration boom in Spain over this period. We show that the New Keynesian Phillips curve is shifted by immigration if natives? and immigrants? labor supply elasticities and bargaining power differ. Estimation of this curve for Spain indicates that the fall in unemployment since 1995 would have led to an annual increase in inflation of 2.5 percentage points if it had not been largely offset by immigration.Publicad

The fall in consumption from being unemployed in Portugal and Spain

In Portugal real wage flexibility, at the macroeconomic level, is noticeably higher while unemploymem duration is lower when compared to Spain. This suggests that the hardship of being unemployed is higher in Portugal. Unemployment benefits and family insurance, which are the main buffer against unemployment and have played difterent role in both countries, can explain this disparity. In this chapter we present some estimates of the loss of consumption suffered by unemployed workers relative to employed workers in Portugal and Spain. The estimates come form comparable data sets (cross-sections of the Household Budget Surveys). Our resuits confirm our prior: this loss is much more sizeable in Portugal

A tale of two neighbour economies: labour market dynamics in Portugal and Spain

Portugal and Spain are two neighbour economies which share many characteristics. However, Spanish unemployment more than doubles Portuguese unemployment. In this chapter we resort to structural VAR techniques to ascertain which shocks and what propagation mechanism underlie the functioning of the labours markets in both countries. Our results show that price adjustment is more sticky and that real wage flexibility is higher in Portugal. In line with this evidence, we find that, although shocks hitting both economies since the beginning of the eighties were not too dissimilar, their effects on unemployment were much more long-lasting in Spain than in Portugal

A Positive Analysis of Targeted Employment Protection Legislation

In many countries, Employment Protection Legislation (EPL) establishes less strict dismissal procedures for specific groups of workers. This paper builds a simple matching model with heterogeneous workers in order to analyze this feature of EPL. We use the model to analyze the effects of reforms targeted at lowering the firing costs of a particular group of workers, and compare the results with those stemming from a comprehensive reform that reduces firing costs for all workers. The model is calibrated for the Spanish economy, where an important reform of this kind took place in 1997. Overall, our results point out that EPL reforms achieve the largest reduction in unemployment when they are targeted to workers with lower and more volatile productivity.Publicad

Reforming an Insider-Outsider Labor Market: The Spanish Experience

This paper presents a case study on reforming a very dysfunctional labor market with a deep insider-outsider divide, namely the Spanish case. We show how a dual market, with permanent and temporary employees makes real reform much harder, and leads to purely marginal changes that do not alter the fundamental features of labor market institutions. While the Great Recession and the start of the sovereign debt crisis triggered two labor reforms, the political economy equilibrium has not allowed them to be transformational enough.temporary contracts, dualism, labor market reform, political economy, Great Recession

Does Immigration Affect the Phillips Curve? Some Evidence for Spain

The Phillips curve has flattened in Spain over 1995-2006: unemployment has fallen by 15 percentage points, with roughly constant inflation. This change has been more pronounced than elsewhere. We argue that this stems from the immigration boom in Spain over this period. We show that the New Keynesian Phillips curve is shifted by immigration if natives’ and immigrants’ labor supply or bargaining power differ. Estimation of the curve for Spain indicates that the fall in unemployment since 1995 would have led to an annual increase in inflation of 2.5 percentage points if it had not been largely offset by immigration.Phillips curve, immigration