Should Local Public Employment Services be Merged with the Local Social Benefit Administrations?

The German Federal government has allowed some regions (Approved Local Providers) to be solely responsible for the care of long-term unemployed. The remaining regions had to form Joint Local Agencies, where the local social benefit administrations work together with the local public employment services. We find that despite positive self-selection Approved Local Providers do not perform better than Joint Local Agencies. Even more interestingly, using a unique data set on organisational characteristics we are able to show that the organisational features implemented primarily by Approved Local Providers are positively correlated with the job finding probability of the long-term unemployed. Thus, regions that self-selected into Approved Local Providers seem to have implemented a better organisational structure. However, their relatively poor performance overall compared to Joint Local Agencies suggests that they underestimated the benefits of having the local public employment service merged with the local social benefit administration.organisation, labour market integration, evaluation

Search Equilibrium, Production Parameters and Social Returns to Education: Theory and Estimation

We introduce different skill groups and production functions into the Burdett-Mortensen equilibrium search model. Supermodularity in the production process leads to a positive intrafirm wage correlation between skill groups. Theory implies that increasing returns to scale can lead to a unimodal earnings density with a decreasing right tail even in the absence of productivity dispersion. Our empirical results indicate economy-wide increasing returns to scale. We use the structural estimates of the production parameters to investigate whether private returns toeducation equal social returns. Our estimates suggest a positive welfare effect from increasing the share of medium-skilled agents in the workforce. --Search,wage correlation,social returns to education

Simultaneous Search and Network Efficiency

When workers send applications to vacancies they create a network. Frictions arise because workers typically do not know where other workers apply to and firms do not know which candidates other firms consider. The first coordination friction affects network formation, while the second coordination friction affects network clearing. We show that those frictions and the wage mechanism are in general not independent. The wage mechanism determines both the distribution of networks that can arise and the number of matches on a given network. Equilibria that exhibit wage dispersion are inefficient in terms of network formation. Under complete recall (firms can go back and forth between all their candidates) only wage mechanisms that allow for ex post Bertrand competition generate the maximum matching on a realized network.random bipartite network formation, network clearing, efficiency, simultaneous search

Capacity Constraining Labor Market Frictions in a Global Economy

Convex vacancy creation costs shape firms’ responses to trade liberalization. They induce capacity constraints by increasing firms’ cost of production, leading a profit maximizing firm not to fully meet the increased foreign demand. Hence, firms will only serve a few export markets. More productive firms will export to more countries and charge higher or similar prices compared to less productive firms. Trade liberalization also affects labor market outcomes. Increased profits by exporting firms triggers firm entry, reduces unemployment and increases wage dispersion in the on-the-job search model with monopolistic competition.on-the-job search, capacity constraints, international trade, heterogeneous firms, monopolistic competition

Simultaneous Search and Network Efficiency

When workers send applications to vacancies they create a network. Frictions arise if workers do not know where other workers apply to (this affects network creation) and firms do not know which candidates other firms consider (this affects network clearing). We show that those frictions and the wage mechanism are in general not independent. Equilibria that exhibit wage dispersion is inefficient in terms of network formation. Under complete recall (firms can go back and forth between all their candidates) only wage mechanisms that allow for ex post Bertrand competition generate the maximum matching on a realized network.efficiency, network clearing, random bipartite network formation, simultaneous search

Time Limits in a Two-tier Unemployment Benefit Scheme under Involuntary Unemployment

The consequences of introducing or tightening time limits on receiving high unemploymentbenefits are studied in a shirking model. Stricter time limits have an ambiguousimpact on the net wage, and changes of utility levels of employed workers and recipientsof high unemployment benefits have the same sign as the variation in the netwage. The utility differential between the two groups of unemployed shrinks. The relativeincome position of skilled workers moves in the same direction as the net wage ofunskilled workers. When access to high benefits is denied for caught shirkers, strictertime limits may decrease employment.Unemployment benefits, welfare benefits, time limits, efficiency wages.

Time Limits on Welfare Use under Involuntary Unemployment

The impacts of introducing or tightening time limits on welfare use are studied in an efficiency wage model. Those losing access to regular benefits receive some smaller benefit, which can be interpreted as food stamps. Stricter time limits raise both employment and profits and generally reduce the tax rate. The impact on the net wage is ambiguous. Changes of utility levels of employed workers and recipients of regular social assistance have the same sign as the variation in the net wage. The utility differential between social assistance recipients and food stamp participants shrinks.welfare benefits, time limits, efficiency wages

Workfare, Monitoring, and Efficiency Wages

The impact of a stronger work requirement for welfare recipients in a workfare program is studied in an efficiency wage model where a representative firm chooses its level of monitoring activities. A stricter workfare policy raises employment and monitoring activities. It typically increases profits and reduces the tax rate. The impact on the net wage isambiguous. Utility levels of employed workers and welfare recipients may increase even if the net wage declines. The utility differential between these two groups of workers shrinks.workfare, welfare, efficiency wages, monitoring

Hartz IV [vier] fördert Minijobs und krankt an der ungenügenden Durchsetzbarkeit der Zumutbarkeitsregeln (Hartz IV: Förderung von Minijobs und Schwäche bei Zumutbarkeitsregeln) : Themenschwerpunkt Arbeitslosengeld II [zwei]

Ziel der Hartz-IV-Reform ist es, die Erwerbsfähigen durch eine bessere Betreuung und geeignete Anreize wieder in den Arbeitsmarkt zu integrieren. In diesem Beitrag werden die Neuerungen von Hartz vorgestellt und auf ihre Wirksamkeit hin geprüft. Hartz IV krankt vor allem an zwei Stellen. Zum einen können die vorgesehenen Sanktionsmechanismen unter Hartz IV die effektive Durchsetzbarkeit der Zumutbarkeitsregeln nicht sicherstellen. Zum anderen verhindern die finanziellen Anreize der Hartz-IV-Reform das Entstehen von Vollzeitarbeitsplätzen, während sie Minijobs über Gebühr fördern. Basierend auf dem ifo Reformvorschlag der Aktivierenden Sozialhilfe werden geeignete Lösungsvorschläge diskutiert.Ungeschützte Beschäftigung; Arbeitslosigkeit; Sozialhilfe; Deutschland

Education and Asymmetric Information in the Labor Market

Search Theory; Skill Structure; General Training; Asymmetric Information