The Impacts of Labor Market Policies on Job Search Behavior and Post-Unemployment Job Quality

We examine empirically the impacts of labor market policies – in terms of unemployment insurance (UI) and active labor market programs (ALMP) – on the duration and outcome of job search and on the quality of a subsequent job. We find that time invested in job search tends to pay off in the form of higher earnings once a job match is formed. More generous UI raises expected unemployment duration, while improving the quality of the resultant job. Participation in ALMP raises the probability of finding a job and the level of expected earnings, but at the cost of lengthening job search.multivariate hazards, job search, job quality, timing-of-events, NPMLE, MMPH

Informal Care and Labor Supply

Based on Norwegian register data we show that having a lone parent in the terminal phase of life significantly affects the offspring's labor market activity. The employment propensity declines by around 1 percentage point among sons and 2 percentage points among daughters during the years just prior to the parent's death, ceteris paribus. Long-term sickness absence increases sharply. The probability of being a long-term social security claimant (defined as being a claimant for at least three months during a year) rises with as much as 4 percentage points for sons and 2 percentage points for daughters. After the parent's demise, earnings tend to rise for those still in employment while the employment propensity continues to decline. The higher rate of social security dependency persists for several years.elderly care, labor supply, ageing, inheritance

When Minority Labor Migrants Meet the Welfare State

The lifecycle employment profiles of minority labor migrants who came to Norway in the early 1970s diverge significantly from those of native comparison persons. During the early years, employment in the migrant group was nearly complete and exceeded that of natives. But, about ten years upon arrival, immigrant employment started a sharp and steady decline, and by 2000 their employment rate was 50 percent, compared to 87 percent for the native comparison group. We find that immigrant employment is particularly sensitive to the business cycle, and that the economic downturns of the 1980s and 1990s accelerated their exit from the labor market. We trace part of the decline to the migrants initially being overrepresented in shrinking industries and occupations. But we also identify considerable disincentives embedded in the social security system that contribute to poor lifecycle employment performance of immigrants with many dependent family members.

The Anatomy of Absenteeism

Based on comprehensive administrative register data from Norway, we examine the determinants of sickness absence behavior; in terms of employee characteristics workplace characteristics, panel doctor characteristics, and economic conditions. The analysis is based on a novel concept of a worker's steady state sickness absence propensity, computed from a multivariate hazard rate model designed to predict the incidence and the duration of sickness absence for all workers. Key conclusions are i) that most of the cross-sectional variation in absenteeism is caused by genuine employee heterogeneity; ii) that the identity of a person's panel doctor has a significant impact on absence propensity; iii) that sickness absence insurance is frequently certified for reasons other than sickness; and iv) that the recovery rate rises enormously just prior to the exhaustion of sickness insurance benefits.sickness absence, multivariate hazards, MMPH, NPMLE

Entrepreneurship: Origins and Returns

We examine the origins and outcome of entrepreneurship on the basis of exceptionally comprehensive Norwegian matched worker-firm-owner data. In contrast to most existing studies, our notion of entrepreneurship not only comprises self-employment, but also employment in partly self-owned limited liability firms. Based on this extended entrepreneurship concept, we find that entrepreneurship tends to be profitable. It also raises income uncertainty, but the most successful quartile gains much more than the least successful quartile loses. Key determinants of the decision to become an entrepreneur are occupational qualifications, family resources, gender, and work environments. Individual unemployment encourages, while aggregate unemployment discourages entrepreneurship.entrepreneurship, self-employment, spin-offs

Egalitarian Wage Policies and Long-Term Unemployment.

How does a centrally imposed egalitarian wage policy affect unemployment when workers differ with respect to productivity? The effect on total unemployment is found to be ambiguous. Egalitarian wages encourage job creation because increased profits derived from the most productive workers more than outweigh reduced profits derived from the least productive workers. Short-term unemployment is reduced. On the other hand, firms respond by raising their reservation productivity. Some workers are left almost completely unemployable. Long-term unemployment rises. Less inequality in the wage distribution is obtained at the expense of more inequality in the distribution of unemployment. Copyright 1998 by The editors of the Scandinavian Journal of Economics.

A note on the macroeconomic modelling of unemployment hysteresis

In macroeconomics, unemployment hysteresis typically arises as a special case of an otherwise stationary model. Imposing hysteresis is often equivalent to imposing a random walk, i.e. a situation in which the permanent fraction of a shock is equal to unity. This paper develops a more general linear model of unemployment hysteresis in which permanency is viewed as a continuous, rather than a discrete, phenomenon. Stationarity arises as a special case.