Despite intense policy debate over labour market dualization, research on cross-country differences in the ‘outsider penalty’ is still in its infancy. In this article, we assess two explanations for cross-national variation in the disadvantages affecting temporary workers (‘outsiders’), measured by the chances of regular employment and risk of unemployment: their socio-economic composition and the effect of labour market institutions (employment protection regulation and the strength of unions). Our findings suggest that variation in the outsider penalty is not caused by the socio-economic composition of the outsider group, but rather by the institutional setting of a country. Outsiders are more disadvantaged in countries with strong employment protection legislation. In contrast, strong unions do not reinforce but mitigate insider/outsider divides in at least some dimensions, a finding that adds to recent research about unions’ reorientation towards mobilizing outsiders.
Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. www.econstor.eu The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent nonprofit organization supported by Deutsche Post Foundation. The center is associated with the University of Bonn and offers a stimulating research environment through its international network, workshops and conferences, data service, project support, research visits and doctoral program. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research results and concepts to the interested public. Terms of use: Documents in D I S C U S S I O N P A P E R S E R I E SIZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author. This paper analyses the effect of unemployment insurance generosity and active labour market policy on reemployment stability in Europe. Using EU-SILC and OECD data, we conduct discrete time survival analyses with shared frailty specification to identify policy effects at the micro and macro level. Empirical evidence suggests that unemployment benefit receipt is associated with longer reemployment duration at the individual level. Furthermore, countries with more generous unemployment insurance and higher ALMP spending show a more sustainable reintegration record of previously unemployed workers. These results point to a policy trade-off between the well-confirmed disincentive and locking-in effect of unemployment benefits and ALMP programmes on the one hand, and their positive effect on reemployment stability on the other hand.JEL Classification: J64, J65, J68
Unemployment has severe consequences that persist over the life course, including higher risk of future unemployment and worse employment conditions. While the existence of scarring effects has become conventional wisdom, labour market sociologists have pointed out that their magnitude differs between institutional contexts. Recently, the focus of the discussion has shifted towards the role of activation policies, which are suspected to speed up labour market integration but worsen reemployment quality, hereby deepening the scarring effects of unemployment. To contribute to this discussion, this article provides an analysis of the impact of a large-scale counselling and monitoring scheme on unemployed workers by means of matching/weighting analyses. In contrast to sanctions, the counselling and monitoring programme fosters labour market integration without impairing job quality. Apparently, activation programmes pose a danger of impairing job quality, but this negative effect can be avoided for programmes based on more emphatic governance principles.
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