Using Norwegian individual register data of young workers, from the period 1986-2008, we analyse whether there are large and persistent negative relationships between unemployment and the risk of repeated unemployment and being out of labour force. A nearest-neighbour propensity score matching method is applied to make the treatment group (the unemployed) and the control group (the employed) as similar as possible. By tracking workers over a 10-year follow-up period, we find that unemployment has a negative effect on later labour market attachment. This is consistent with existing findings in the literature. The negative effects decrease over time. Using the bounding approach proposed by Rosenbaum (2002) to analyse the importance of unobserved variables, our results indicate that a relatively high level of unobserved selection bias could be present in the data before changing the inference. Thus, unemployment leaves young workers with long-term scars.JEL Codes: J64, J65, C23
Using rich administrative data from Norway, we evaluate a 1998 work-encouraging reform targeted at single parents. We especially focus on educational performances for children of the involved single mothers. For all children of single mothers, the effect on school grades at completion of junior high school at age 16 is near zero and insignificant. If one concentrates on younger single mothers, those most likely to be affected by the reform, the grade point average of their children drops significantly by 7% of a standard deviation. We isolate groups of mothers who are affected by the reform either primarily by having less time at home, or by reduced income. The children of both groups of mothers experience drops in school grades. We conclude that the mechanisms behind these grade-drops must involve both reduced available parental time and reduced income.
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Policy-makers have confronted welfare dependence and poverty among single mothers by imposing work requirements and time limits on the receipt of welfare benefits. Reforms with such features have generally reduced programme case-loads and increased the employment and earnings of single mothers. There is little evidence, however, on the amount of benefit substitution associated with such reforms. In this paper, we test whether reductions in welfare dependence may be offset by increased participation in other benefit programmes. Evaluating the restrictive reforms of the welfare programme for single mothers in Norway, we find evidence of considerable benefit substitution. Hence, decreases in programme case-loads do not reflect equal reductions in welfare dependence. JEL Codes: H55, I38.
We analyse the economic effects of nationwide Norwegian reforms on the state benefit programme targeting single mothers. Our results show that for each reduction of 100 Norwegian kroner (NOK) in benefit payments from the programme, single mothers replaced 65 NOK through benefit substitution. Their labour supply and disposable income also increased in the short term. However, the reforms doubled the poverty rate among single mothers in the long term. The reforms led to a total net gain to public expenditure of 3.6 billion NOK (449 million euros) during the 1998–2008 period, corresponding to a 14 percent decrease in total benefit payments to single mothers.
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