Asymmetry and Non-linearity in Discouraged and Added Worker Effects

Congregado, Emilio; Gałecka‐Burdziak, Ewa; Golpe, Antonio A.; Pater, Robert

doi:10.1080/00128775.2019.1710215

Cited by 6 publications

(7 citation statements)

References 11 publications

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“…The results show that there were distinct reactions to shocks by particular labour market cohorts. These results present more detailed evidence of the labour force participation heterogeneity that was previously analysed for Poland in Congregado et al (2020). This narrowed the error bands of the results, especially for prime-age workers.…”

Section: Discussionsupporting

confidence: 74%

“…The AWE was shown to be considerably stronger in recessions than in economic expansions. Congregado et al (2020) found that the labour force participation rates were non-linear; and that the changes between the DWE and the AWE were rapid, and were connected to the stable value of the cyclical unemployment rate. Moreover, they showed that an unemployment rate higher than 13% led to a discouraged worker effect.…”

Section: Literature Reviewmentioning

confidence: 98%

“…Altavilla et al (2005) tested for non-linearity in the relationship between the female labour force participation rate and the female employment rate using a VEC model and a multivariate Markov-switching model. Congregado et al (2011Congregado et al ( , 2014Congregado et al ( , 2020Congregado et al ( , 2021 applied a series of nonlinear models, testing different hypotheses of effects asymmetry. Evans (2018) estimated a SVAR model, and showed the effects of a business cycle (output) shock on the labour market participation rate.…”

Section: Literature Reviewmentioning

confidence: 99%

“…As most of these studies examined the cyclicality of the labour force participation rates, only one of the effects could have prevailed. Thus, the net effect could have been identified from an aggregate perspective (see Congregado et al, 2020 for a literature review).…”

Section: Introductionmentioning

confidence: 99%

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Separating aggregate discouraged and added worker effects: the case of a former transition country

Congregado

Gałecka‐Burdziak

Golpe

et al. 2021

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Research background: We analyse the added worker effect (AWE) and the discouraged worker effect (DWE) from an aggregate perspective. The first effect refers to an increase in labour force participation in response to a decrease in the wage rate. The second effect refers to the decision by workers who have been unsuccessful in their job search to leave the labour market or to decrease their labour force participation. For our analysis, we use the case of Poland, a country with a persistently low labour force participation rate. Purpose of the article: While previous studies focused on the net of the two effects, we aim to analyse the two effects both separately and simultaneously. We propose a new approach for analysing the two effects. We generalise and model them as resulting from different shocks: (i) the AWE as the result of a negative wage income shock, and (ii) the DWE as the result of a positive job search time shock. The underlying assumption is that both shocks have at least a transitory effect on the labour force participation rate. However, we also track the potential long-lasting effects of these shocks, and we analyse the reactions of gender and age groups to them. While this approach demonstrates the robustness of our results, it also provides the range of the sensitivity, as it shows that there are large differences in the magnitude of the AWE and the DWE for different labour market cohorts. Methods: We use the multivariate unobserved component model to extract the AWE and the DWE, and we then use VAR models, applying sign and exclusion restrictions to model the underlying shocks. We use quarterly data for Poland in 1995?2019. Most of these data come from the Labour Force Survey, while the rest come from Statistics Poland. Findings & value added: In contrast to previous literature, which analysed only the net effect of the two effects, we model the AWE and the DWE separately. Contrary to the findings of previous research, our approach seems to confirm that both effects are simultaneously present in the labour market, and both effects influence the labour force participation rate. Thus, we find that both effects are significant. Specifically, we show that the AWE is stronger, but transitory; while the DWE is weaker, but long-lasting.

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Section: Discussionsupporting

confidence: 74%

Section: Literature Reviewmentioning

confidence: 98%

Section: Literature Reviewmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Separating aggregate discouraged and added worker effects: the case of a former transition country

Congregado

Gałecka‐Burdziak

Golpe

et al. 2021

Self Cite

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show abstract

“…Aunque la hipótesis del trabajador desanimado parece haber recibido más respaldo empírico, los resultados no son definitivos y, en algunos casos, se ha constatado el efecto del trabajador añadido para algunos segmentos de la población, especialmente mujeres y personas de edad avanzada (Benati 2001;Euwals, Knoef y van Vuuren 2011). En cualquier caso, habría que admitir comportamientos heterogéneos en la población a lo largo del ciclo económico (Gałecka-Burdziak y Pater, 2016) y que existen acciones públicas que pueden estimular la incorporación al mercado de trabajo aumentando las probabilidades de conseguir un empleo (Congregado et al, 2020).…”

Section: Incentivos Y Oferta De Trabajounclassified

Política de empleo: posibilidades y limitaciones

Benítez-Aurioles¹

2021

ECONOMIC POLICY

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El objetivo de este artículo es analizar las posibilidades y limitaciones de la política de empleo. Después de algunas consideraciones sobre su contenido y alcance, se aborda, en primer lugar, las políticas que afectan a la oferta de trabajo y, más concretamente, las destinadas a establecer controles o incentivos para regular la población activa. Posteriormente, se discuten las políticas sobre la demanda de trabajo y, en particular, los efectos de las bonificaciones a la contratación y la pertinencia de establecer normas que protejan a los empleos existentes. Por último, respecto a la política que afecta a la formación de salarios, se estudian las consecuencias del salario mínimo y las circunstancias en las que se enmarca la negociación colectiva. A lo largo de la exposición se argumentará que la eficacia de la política de empleo está condicionada, entre otros factores, por la lógica económica y por las restricciones que imponen los marcos institucionales en los que se desarrollan.

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Beyond the added-worker and the discouraged-worker effects: the entitled-worker effect

Román¹

2022

Economic Modelling

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Asymmetry and Non-linearity in Discouraged and Added Worker Effects

Cited by 6 publications

References 11 publications

Separating aggregate discouraged and added worker effects: the case of a former transition country

Separating aggregate discouraged and added worker effects: the case of a former transition country

Política de empleo: posibilidades y limitaciones

Beyond the added-worker and the discouraged-worker effects: the entitled-worker effect

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