Unemployment Persistence in the West German Labour Market: Negative Duration Dependence or Sorting?

Steiner, Viktor

doi:10.1111/1468-0084.00210

“…This leads to a longer duration of search for mothers. Hunt (1995) and Steiner (2001) calculate hazard rates for Western Germany based on GSOEP data. Hunt shows that an increase in entitlement to unemployment compensation increases the duration of unemployment.…”

Section: Labor Supply and Job Searchmentioning

confidence: 99%

Explaining Age and Gender Differences in Employment Rates: A Labor Supply Side Perspective

Humpert

¹

,

Pfeifer

²

2012

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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 Abstract This paper takes a labor supply perspective (neoclassical labor supply, job search) to explain the lower employment rates of older workers and women. The basic rationale is that workers choose non-employment if their reservation wages are larger than the offered wages. Whereas the latter depend on workers' productivity and firms' decisions, reservation wages are largely determined by workers' endowments and preferences for leisure. To shed some empirical light on this issue, we use German survey data to analyze age and gender differences in reservation and entry wages, preferred and actual working hours, and satisfaction with leisure and work. Terms of use: Documents in Eine Erklärung alters-und geschlechtsspezifischer

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“…In this context, improved knowledge of how individual characteristics as well as the regional and institutional context shape labor market outcomes of unemployed jobseekers is of central concern to policy makers aiming to design policies that will contribute to a shortening of the average unemployment duration. However, most research on the determinants of unemployment duration has been confined to an analysis of individual level determinants (Steiner, 1990;Hunt, 1995;Hujer and Schneider, 1996;Steiner, 2001) Both of these approaches remain rather incomplete with respect to improving our understanding of the regional factors that prolong or shorten unemployment. We do not know much either about how the institutional context such as local labor market policies and the organization of local job placement activities affect individual labor market outcomes.…”

Section: Introductionmentioning

confidence: 99%

Unemployment Duration in Germany: Individual and Regional Determinants of Local Job Finding, Migration and Subsidized Employment

Arntz¹,

Wilke²

2009

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Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar.Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW.Download this ZEW Discussion Paper from our ftp server:ftp://ftp.zew.de/pub/zew-docs/dp/dp06092.pdf Non-technical summaryIn the light of high and even rising unemployment levels in Germany, an improved knowledge of how individual characteristics as well as the regional and institutional context shape labor market outcomes of unemployed jobseekers is of central concern to policy makers aiming to design policies that contribute to a shorter average unemployment duration. Recent labor market reforms in Germany aim, among other things, at reducing unemployment by restricting passive unemployment measures, emphasizing local labor market policies and re-structuring public employment services. Empirical evidence regarding the extent to which the regional and institutional context shape labor market outcomes of unemployed jobseekers, however, is quite incomplete. In order to fill this research gap, we explore the main individual, regional as well as institutional determinants of unemployment duration in Germany. For this purpose, we use a rich set of indicators that capture passive and active labor market policies as well as local economic conditions and job counselling activities. Moreover, we distinguish three main exit states each of which are affected quite differently by the regional and institutional context: exits to local regular employment, exits to non-local employment via migration and exits to subsidized employment. By doing so, we provide evidence about the extent to which recent reforms concerning passive labor market measures, regional employment policies and the organization of public employment services are likely to contribute to a reduction of unemployment duration.We generally obtain that individual characteristics strongly affect the duration of unemployment and the chosen destination state while the effect of local labor market conditions is often rather small. Regional disparities thus appear to be much less important than usually considered by the German public and by German policy makers. Therefore, our results suggest that regional policies may only be a supplementary means of improving labour market outcomes of unemployed individuals. Similarly, there is no evidence that public counselling efforts and active labour market policies have much of an shortening effect on the duration of unemployment.Instead, the results point towards the role of the unemployment compensation and welfare system in shaping individual unemployment experiences. Individ...

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“…1 We use a discrete-time hazard rate model because the duration of unemployment and benefit receipt are coded on a monthly basis in our data (see section 3.2). The specification of the hazard rate model closely follows Steiner (2001), although the focus here is on the effects of regulations concerning unemployment compensation on the hazard rate from unemployment.…”

Section: Hazard Rate Modelmentioning

confidence: 99%

“…In the empirical model we specify the baseline hazard by a set of dummy variables, with the first month as the base category, and beginning with the fifth and sixth months variables are grouped to get sufficient exits from unemployment within each category. The coefficients can be 7 interpreted as means of the respective category but refer to a single month within the group (see Steiner, 2001 With the multinomial logit specification, the survivor function can be rewritten to …”

Section: Hazard Rate Modelmentioning

confidence: 99%

Benefit-Entitlement Effects and the Duration of Unemployment: An Ex-Ante Evaluation of Recent Labour Market Reforms in Germany

Schmitz

¹

,

Steiner

²

2007

Self Cite

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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. Terms of use: Documents in SOEPpapers on Multidisciplinary Panel Data Research at DIW BerlinThis series presents research findings based either directly on data from the German SocioEconomic Panel Study (SOEP) or using SOEP data as part of an internationally comparable data set (e.g. CNEF, ECHP, LIS, LWS, CHER/PACO). SOEP is a truly multidisciplinary household panel study covering a wide range of social and behavioral sciences: economics, sociology, psychology, survey methodology, econometrics and applied statistics, educational science, political science, public health, behavioral genetics, demography, geography, and sport science.The decision to publish a submission in SOEPpapers is made by a board of editors chosen by the DIW Berlin to represent the wide range of disciplines covered by SOEP. There is no external referee process and papers are either accepted or rejected without revision. Papers appear in this series as works in progress and may also appear elsewhere. They often represent preliminary studies and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be requested from the author directly. We analyse benefit-entitlement effects and the likely impact of the recent reform of the unemployment compensation system on the duration of unemployment in Germany on the basis of a flexible discrete-time hazard rate model estimated on pre-reform data from the German Socioeconomic Panel. We find (i) relatively strong benefit-entitlement effects for the unemployed who are eligible to means-tested unemployment assistance after the exhaustion of unemployment benefit, but not for those without such entitlement; (ii) that benefit-entitlement effects on hazard rates are not monotonic in time to benefit-exhaustion but rather occur around the month of benefit-exhaustion, and (iii) relatively small marginal effects of the amount of unemployment compensation on the duration of unemployment. Simulation results show that the recent labour market reform is unlikely to have a major impact on the average duration of unemployment in the population as a whole, but will significantly reduce the level of long-term unemployment among older workers.JEL Classification: J64, J65, H31

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Unemployment Persistence in the West German Labour Market: Negative Duration Dependence or Sorting?

Cited by 74 publications

References 8 publications

Explaining Age and Gender Differences in Employment Rates: A Labor Supply Side Perspective

Explaining Age and Gender Differences in Employment Rates: A Labor Supply Side Perspective

Unemployment Duration in Germany: Individual and Regional Determinants of Local Job Finding, Migration and Subsidized Employment

Benefit-Entitlement Effects and the Duration of Unemployment: An Ex-Ante Evaluation of Recent Labour Market Reforms in Germany

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