Discouraged or added worker effect: Which one prevails in the Polish labour market?

Gałecka‐Burdziak, Ewa; Pater, Robert

doi:10.1556/032.2016.66.3.6

Cited by 6 publications

(7 citation statements)

References 17 publications

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“…The cycles of the labour force participation rate were slightly longer than the GDP cycles, lasting an average of 4.9 years. These results confirm the previous research of Gałecka-Burdziak and Pater (2016). Other indicators, including unemployment, job search duration, and wages, fluctuated with higher periodicity, of around 10 years.…”

Section: Datasupporting

confidence: 92%

“…For example, some studies investigated the determinants of the labour market status and the indicated phenomena (Dagsvik et al, 2006(Dagsvik et al, , 2013van Ham et al, 2001), while others explored the labour supply model at the household level (Baslevent & Onaran, 2003;Bredtmann et al, 2018;Karaoglan & Okten, 2015;Mankart & Oikonomou, 2016;Stephens, 2001) The labour market in Poland has also been studied quite extensively. Gałecka-Burdziak and Pater (2016) found a significant and time-varying added worker effect, as well as a discouraged worker effect for both sexes, for the 1994-2014 period. The AWE was shown to be considerably stronger in recessions than in economic expansions.…”

Section: Literature Reviewmentioning

confidence: 92%

“…Benati (2001) applied band spectrum regression and band-pass filtering techniques to analyse the cyclicality of the magnitude of the labour force at the macroeconomic level. Gałecka-Burdziak and Pater (2016) developed this approach, and analysed both effects in time and in the frequency domain. Filatriau and Reynes (2012) estimated an unobserved component model with a Kalman filter to investigate the impact of the unemployment rate on the labour market participation rate, broken down by age and sex.…”

Section: Literature Reviewmentioning

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: Datasupporting

confidence: 92%

Section: Literature Reviewmentioning

confidence: 92%

Section: Literature Reviewmentioning

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

Self Cite

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“…Del Boca, Locatelli, and Pasqua (2000) and Ghignoni and Verashchagina (2016) have identified the same effect for Italy. Parker and Skoufias (2004) detect empirical evidence of a prevailing AWE in Mexico, and Gałecka‐Burdziak and Pater (2016) do the same for Poland. In the Spanish case, this effect is dominant in Prieto‐Rodríguez and Rodríguez‐Gutiérrez (2000, 2003), and partially in Congregado, Golpe, and Van Stel (2011).…”

Section: Literature Reviewmentioning

confidence: 93%

Labor supply and the business cycle: The “bandwagon worker effect”

Román

Cuéllar‐Martín

Blas

2020

Papers in Regional Science

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The relationship between labour force participation and the business cycle is a common topic in economic literature. However, few studies have examined if the cyclical sensitivity of labour force participation is influenced by social effects. In this paper, we construct a theoretical model defining a relatively new hypothesis, the bandwagon worker effect (BWE). We use spatial econometrics techniques to test the existence of the BWE in the local labour markets in Spain. Our results reveal a positive spatial dependence in the cyclical sensitivity of labour force participation that decreases as we fix a laxer neighbourhood criterion, which verifies the existence of the BWE.

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“…Additionally, low wages discourage individuals from taking up a job, especially if they are aware of state assistance, when the incentives to take up a job may be weakened by the discouraged worker effect (Gałecka-Burdziak -Pater 2016). Low wages may lead to the expansion of informal or parallel job markets.…”

Section: Introductionmentioning

confidence: 99%

Low wages – Coincidence or a result? Evidence from Poland

Ryczkowski

Maksim

2018

Acta Oeconomica

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The article evaluates the influence of a wide range of socio-demographic, job and company-related characteristics on the likelihood of low earnings by applying logistic regression on a broad range of Labour Force Survey data. We evidenced that the average impact of the company-related characteristics is three times stronger than the impact of personal characteristics. We also found that working full-time considerably decreases this risk of low wages, but company-related and personal characteristics (except for the kind of company’s economic activity) have not provided a rent (benefit) from working full-time. The underlying conclusion is that reforms decreasing the size of the low-wage sector in the former transition countries should be focused on targeted employment programmes enhancing transitions to more profitable economic activities instead of possibly maintaining the unprofitable industries at all costs. Additionally, the reforms should be concentrated on introducing employment regulations to harmonise the rules of employment among all contract types, which would put the part-timers and the underemployed on a more equal footing with fulltime workers especially in terms of pension schemes and access to training.

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Discouraged or added worker effect: Which one prevails in the Polish labour market?

Cited by 6 publications

References 17 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

Labor supply and the business cycle: The “bandwagon worker effect”

Low wages – Coincidence or a result? Evidence from Poland

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