Salience of social security contributions and employment

Social security contributions in most countries are split between employers and employees. According to standard incidence analysis, social security contributions affect employment negatively, but it is irrelevant how they are divided between employers and employees. This paper considers the possibility that (i) workers perceive a linkage between current contributions and future benefits, and (ii) they value employer’s contributions less than own contributions, as the former are less “salient.” Under these assumptions, I find that employers’ contributions have a stronger (negative) effect on employment than employees’ contributions. Furthermore, a change in how contributions are divided, which reduces the share of employers, is beneficial for employment. Finally, making employers’ contributions more visible to workers also has a positive effect on employment.Financial support from Instituto Valenciano de Investigaciones Económicas, Generalitat Valenciana (Prometeo/2013/037) and Ministerio de Economía y Competitividad (ECO2012-34928) are gratefully acknowledged

Revisiting German labour market reform effects—a panel data analysis for occupational labour markets

There is an ongoing discussion that centres on the German labour market reforms (2003- 2005) and the role of these reforms in boosting the German economy. Considering that one of the main objectives of the reforms was to improve the matching process on the labour market, I use rich, high-frequency, and recent administrative panel data to present new details regarding the development of job-matching performance before and after the reform years. The results show that matching productivity increased during all reform stages and slightly deteriorated in 2009 (the year of the financial crisis), even after controlling for the recession. Furthermore, increases in matching productivity have become smaller in recent years. Beyond these findings, the results show detailed differences in the changes in matching productivity on occupational labour markets.Über einen etwaigen Beitrag der deutschen Arbeitsmarktreformen (2003-2005) zur Stabilisierung der deutschen Wirtschaft wird sowohl in Wissenschaft als auch Politik nach wie vor debattiert. Dabei war die Verbesserung der Effizienz des Arbeitsmarktausgleichs eines der erklärten Hauptziele der Reformen. Zur Frage, ob dieses Ziel erreicht wurde, stelle ich präzise und neue detaillierte Befunde auf der Basis von umfangreichen administrativen Daten vor, die auch die Zeit der Wirtschafts- und Finanzkrise (2008/2009) einschließen. Die Effizienz des Arbeitsmarktausgleichs erhöhte sich während und nach den Reformjahren deutlich. Dies lässt sich nun auch für die Einführung der letzten Reformstufe im Jahr 2005 belegen. Jedoch waren die Arbeitsmarktausgleichsprozesse nicht vollständig immun gegen die Wirtschafts- und Finanzkrise; die positive Entwicklung wurde hier unterbrochen und setzte sich danach nicht in dem gleichen Maße fort. Darüber hinaus zeigen die Analysen eine unterschiedliche Entwicklung der Matchingeffizienz in beruflichen Teilarbeitsmärkten auf

Labor Force Status Dynamics in the German Labor Market - Individual Heterogeneity and Cyclical Sensitivity

The aggregate average unemployment rate in a given country is essentially the result of individual workers' transitions between the three core labor force states, employment, unemployment, and inactivity. The dynamics of these transitions depend both, on individual duration in a particular state and the transition probabilities between states. Individual transitions, in turn, depend on observable and unobserved factors. Simultaneously, person-specific dynamics may be influenced by swings of the business cycle. This paper analyzes these labor force status dynamics for the East and West German labor market, separately using comprehensive data on monthly transitions from the SOEP. The results show that the experience of high unemployment rates is more sensitive to cyclical behavior for certain demographic groups, specifically unskilled and young workers. Heterogeneity in unemployment and transition rates differ between East and West Germany, as well as between the sexes. In East Germany, all demographic cells are almost entirely detached from the cycle. Women are less influenced by the cycle in their re-employment rate from unemployment to employment

A Dynamic Model of Unemployment with Migration and Delayed Policy Intervention

The purpose of this paper is to build and analyse a model of unemployment, where jobs search is open to both natives and migrant workers. Markets and government intervention respond jointly to unemployment when creating new jobs. Full employment of resources is the focal point of policy action, stimulating vacancy creation. We acknowledge that policy is implemented with delays, and capture labour market outcomes by building a non-linear dynamic system. We observe jobs separation and matching, and extend our model to an open economy with migration and delayed policy intervention meant to reduce unemployment. We analyse the stability behaviour of the resulting equilibrium for our dynamic system, including models with Dirac and weak kernels. We simulate our model with alternative scenarios, where policy action towards jobs creation considers both migration and unemployment, or just unemployment

State education as high-yield investment: human capital theory in European policy discourse

Human Capital Theory has been an increasingly important phenomenon in economic thought over the last 50 years. The central role it affords to education has become even more marked in recent years as the concept of the ‘knowledge economy’ has become a global concern. In this paper, the prevalence of Human Capital Theory within European educational policy discourse is explored. The paper examines a selection of policy documents from a number of disparate European national contexts and considers the extent to which the ideas of Human Capital Theory can be seen to be influential. In the second part of the paper, the implications of Human Capital Theory for education are considered, with a particular focus on the possible ramifications at a time of economic austerity. The paper argues that Human Capital Theory risks offering a diminished view of the person, a diminished view of education, but that with its sole focus on economic goals leaves room for educationists and others to argue for the educational, social, and moral values it ignores, and for the conception of the good life and good society it fails to mention

Compensation for Commuting in Imperfect Urban Markets

We develop an urban equilibrium job search model with employed and unemployed individuals where residential mobility of the unemployed is restricted. We assume a standard mono-centric model (firms are located in one location), but allow for imperfect labour markets. In contrast to models with perfect labour markets, the model predicts that the employed are only partially compensated for commuting costs in the form of wages. As a result, rent gradients are less steep than predicted by standard urban theories that assume perfectly competitive labour markets. © 2007 the author(s). Journal compilation © 2007 RSAI