Retrenchments in Unemployment Insurance Benefits and Wage Inequality: Longitudinal Evidence from the Netherlands, 1985-2000

Abstract

This study includes retrenchments in unemployment insurance (UI) benefits as an understudied mechanism to investigate possible explanations for wage inequality in the labor market. Using longitudinal data from the Dutch Labor Supply Panel (OSA) over the period 1985-2000, and adopting a quasi-experimental design, we not only extend current research by asking if restrictive changes in UI benefits affect re-employment wages, but also explore variation by the level, and eligibility conditions of UI benefits across gender and over time. Results from a series of fixed-effects models show that lower and shorter UI benefits lead to persisting wage inequalities over time. When investigating whether wage penalties vary across gender, we find that women experience the largest penalties. These findings provide evidence that these particular types of restrictions in UI benefits have likely increased rather than decreased wage inequalities between men and women.

The cumulative disadvantage of unemployment: Longitudinal evidence across gender and age at first unemployment in Germany

“…Previously unemployed with long and repeated spells of unemployment are expected to end up in such "bad" jobs that will negatively affect workers' long-term employment prospects by increasing the chances of recurring unemployment. Indeed, empirical evidence based on longitudinal data among unemployment insurance (UI) recipients demonstrates that previously unemployed individuals are more likely to end up in low-status and low-paying jobs [6,21], which we think reflect jobs that are located in the secondary labor markets. Thus, from a labor market segmentation perspective, the repetition or frequency of previous unemployment is highly correlated with precarious employment in the future, which in turn determines the level of future career scars.…”

“…For example, simulation analyses in the United States and West Germany have indicated that supportive unemployment benefit institutions can offset up to 20% of the cumulative disadvantages associated with unemployment for German workers [6]. Based on a set of reforms in the Dutch unemployment benefit system during the 1980s and 1990s, supporting evidence about the offsetting role of generous institutions was also found for the Netherlands [20,21]. These findings imply that cumulative inequality processes attached to unemployment could be offset by supportive benefit institutions and efficient job matching, and that, at least theoretically, full recovery from previous spells of unemployment should be possible over the course of one's career.…”

Effects of a Travel Behaviour Change Program on Sustainable Travel

“…On the other hand, with the aim of correcting the potential sample selection bias caused by panel attrition, the Heckman two-step procedure [70] is used. This predictive model has been applied in an analogous way elsewhere, for example, to study the effect of unemployment insurance benefits on workers' re-employment wages [71]. First, a Probit model is used to evaluate the likelihood of participating in the TBCP or CG group (Equation (1)) and the outcomes are saved to be used in the following step of the model (selection equation).…”

Fixed‐Term Contracts: Short‐Term Blessings or Long‐Term Scars? Empirical Findings from theNetherlands 1980–2000

“…The reason for the growing share of jobs with fixed‐term contracts in the Netherlands may relate to a history of strong labour unions, collective agreements and a generous welfare state that protect and compensate workers utilizing these types of contracts (Abbring et al . ; Mills and Täht ; Mooi‐Reci ; Mooi‐Reci and Mills ). Specifically, since 1996, according to the Dutch Civil Code, there is no difference between full‐ and part‐time working individuals.…”

“…This is different for other western European countries where the use of fixed-term contracts has reached a stable level (such as in Germany and the United Kingdom) or has decreased in the last few years (such as Denmark and Spain) (Zijl 2006). The reason for the growing share of jobs with fixed-term contracts in the Netherlands may relate to a history of strong labour unions, collective agreements and a generous welfare state that protect and compensate workers utilizing these types of contracts (Abbring et al 2002;Mills and Täht 2010;Mooi-Reci 2012;Mooi-Reci and Mills 2012). Specifically, since 1996, according to the Dutch Civil Code, there is no difference between full-and part-time working individuals.…”