Useful talk from last summer by Alan Krueger. All of the talks from the IGIER 20th Anniversary conference are available on youtube (programme here)
Showing posts with label unemployment. Show all posts
Showing posts with label unemployment. Show all posts
Friday, April 13, 2012
Monday, March 12, 2012
Can a Country's Online 'Mood' Predict Unemployment Spikes?
"SAS and United Nations Global Pulse have learned that social media chatter and conversation sentiment could warn of pending unemployment increases and inform policymakers of likely effects. Analyzing half a million blogs, forums and news sites, SAS(R) Social Media Analytics and SAS Text Miner examined two years of social media data from the US and Ireland for references to unemployment and how people were coping."
More from the WSJ here.
More from the WSJ here.
Saturday, November 19, 2011
Rates of Unemployment
Discussions of Irish unemployment generally focus on the standard ILO unemployment rate, currently 14.3%, and youth unemployment rates, for example 27.7% for those aged 20-24. However these rates are merely a lower bound for the excess labour supply that currently exists.
Similarly to the Bureau of Labour Statistics in the US, the CSO produces a number of alternative measures to the ILO unemployment rate. These are contained in Table S7 here (this table is not contained in the usual QNHS release). The alternative measures are:
S1: Unemployed plus discouraged workers as a percentage of the Labour Force plus discouraged workers.
S2: Unemployed plus marginally attached plus others not in education who want work as a percentage of the Labour Force plus marginally attached plus others not in education who want work.
S3: Unemployed plus marginally attached plus others not in education who want work plus underemployed part-time workers as a percentage of the Labour Force plus marginally attached plus others not in education who want work. From Q3 2008 part-time underemployment was calculated in a new way, by removing the condition that the respondent be actively looking for an additional or replacement job.
These rates are shown in the following figure (click to enlarge).
So under S3, the widest measure, unemployment is currently 24% and steadily increasing. The individual elements of S3 are shown in Table 1A of the QNHS; underemployment appears to be the main driver of the measure at present.
When this is combined with the skills lost by those who are unemployed, the experience forgone by those who would have jobs in times of “normal” employment levels and the psychological costs incurred by the long-term unemployed, we can see that the standard unemployment rate falls short of describing the true extent of losses due to unemployment.
Cross-posted at http://irisheconthoughts.wordpress.com/.
Friday, November 04, 2011
Irish Debate Session on Unemployment Video
My unemployment talk from today is below. I will use this post to put up some links over the weekend.
NOTES
(i) One issue I need to clarify is whether jobbridge applicants are counted on the live register. I had assumed that they were, but one of the discussants suggested that they were not counted and pointed to an Irish Times article. The live register notes are here. I will clarify it here as soon as I can find the information. Thanks to the commentor.
(ii) Thanks to commentor @alanrouge on twitter for asking about underemployment. Will add a post on this as soon as I get a chance.
(iii) One of the commentors, Daniel Davis, mentioned the Georgia Works programme in the US. A PBS podcast on this is here. It is an interesting model.
(iv) There is a thread on the Irish Economy blog linked here
NOTES
(i) One issue I need to clarify is whether jobbridge applicants are counted on the live register. I had assumed that they were, but one of the discussants suggested that they were not counted and pointed to an Irish Times article. The live register notes are here. I will clarify it here as soon as I can find the information. Thanks to the commentor.
(ii) Thanks to commentor @alanrouge on twitter for asking about underemployment. Will add a post on this as soon as I get a chance.
(iii) One of the commentors, Daniel Davis, mentioned the Georgia Works programme in the US. A PBS podcast on this is here. It is an interesting model.
(iv) There is a thread on the Irish Economy blog linked here
Unemployment in Ireland
I will do the online Irish Debate session tomorrow (November 4th 2011) at 12pm. Below is an initial overview. The debate on unemployment in Ireland so far has been paltry. We really need to get something more substantive and sustained going on this key issue.
Overview
The most pressing problem addressing the Irish economy is unemployment. Seamus Coffey, in a blogpost on irisheconomy.ie, points to the basic patterns of unemployment across demographic groups and regions. It is an issue across age-groups but most particularly for the young.
The extent to which youth unemployment is an issue has been discussed in a number of recent papers. Bell and Blanchflower have a number of recent papers arguing that this recession has disproportionately affected young people (see David Bell's IDEAS page). Youth unemployment rates across Europe have reached levels as high as 46 per cent in countries like Spain. In Ireland, the rate of 26 per cent among 20-24 olds is one of the most worrying statistics of the Irish recession, given the potential for early unemployment to lead to labour market scarring across the life-cycle.
In terms of a response to unemployment, a dominant view in the Irish case is that unemployment cannot be solved without a resolution to the fiscal and banking crises in the country. There is generally a great deal of suspicion of the role of active labour market policies and there has not been a strong impetus to actively respond to unemployment as an issue in itself. Dan O'Brien, economics editor at the Times, has a good piece on the extent of government inaction in this area. The problem with the inaction position is that there are well-known long-run costs to short-run unemployment and the duration of unemployment spells are becoming extremely high in a context where migration possibilities are low. The idea that the market should simply be allowed to work this through doesn't make any sense, particularly in a context where we spend an enormous amount of money already on unemployment benefits, job training and so on. Ignoring the issue, as is largely currently happening, is not the same as leaving it to the market. It is effectively not providing proper scrutiny, debate and ideas in the areas where this money is being spent.
To the extent that there has been a response, it has come on the following fronts. (i) The welfare payment and job assistance functions, previously located in different departments, have been merged. (ii) The state training agency, FAS, has been renamed SOLAS and some of its functions have changed. Technically, this has involved abolishing FAS and creating a new agency called SOLAS but its really not clear how different the new agency will be in practice (iii) Unemployment welfare payments to younger people were reduced in an effort to ensure that replacement ratios at that end of the job market were lowered. (iv) The government has created a pilot internship initiative called Jobbridge (website here), which seeks to match interns with employers. Interns are allowed to continue to claim welfare payments and are given a 50 euro per week top-up. This is one of a number of work experience type initiatives that have been attempted but is the first to be applied seriously. (v) Back-to-education initiatives have also formed a part of government unemployment strategy, including the HEA Springboard initiative.
In terms of other potential responses to unemployment, the papers by Bell and Blanchflower provide a useful backdrop. Their work argues for greater use of mechanisms such as internships, training initiatives, potential further raising of the school-leaving age, switching toward shovel-ready labour-intensive capital projects and repairs, cuts in pay-related-insurance contributions and providing greater evaluation focus to active labour market policies.
Unemployment cannot be understood properly within standard labour market models. There are psychological well-being effects associated with unemployment that have yet to be fully explained. Furthermore, there is a scarring effect of unemployment that must be considered when examining policies aimed at counteracting current employment (see the classic scarring paper by Clark and Oswald). Recent work by Alan Krueger and Andreas Mueller is showing marked patterns of psychological well-being reduction through the process of unemployment. A recent paper by myself and colleagues in the Geary Institute examined the experience of unemployment in Ireland from a psychological perspective. The psychological aspect of unemployment needs to be factored into new models of job activation in terms of creating job activation and welfare payment environments that do not demoralise people.
In the Irish case, all the recommendations discussed by Bell and Blanchflower should form part of the debate. With regard employer PRSI contributions, this is clearly an area the government should prioritise in terms of tax reductions at the earliest possibility. While a number of people have argued that the government should not use capital projects to stimulate employment due to their high cost per job (see Morgenroth paper), this view ignores the fact that the relatively high cost-per job of existing projects comes largely from their capital intensity and is not an argument against switching money to a national repairs programme. The recent OECD conference on jobs held in Dublin gave another set of more long-term directions to examine, including the importance of early intervention. The paper produced from the event is a useful input into the policy debate in Ireland.
The development of a full response to unemployment is an urgent priority. It should take into account the long-term costs of unemployment to the person and society. It should draw from literatures in different disciplines. It should embed good principles of design and evaluation. It should have a great urgency and focus.
Overview
The most pressing problem addressing the Irish economy is unemployment. Seamus Coffey, in a blogpost on irisheconomy.ie, points to the basic patterns of unemployment across demographic groups and regions. It is an issue across age-groups but most particularly for the young.
The extent to which youth unemployment is an issue has been discussed in a number of recent papers. Bell and Blanchflower have a number of recent papers arguing that this recession has disproportionately affected young people (see David Bell's IDEAS page). Youth unemployment rates across Europe have reached levels as high as 46 per cent in countries like Spain. In Ireland, the rate of 26 per cent among 20-24 olds is one of the most worrying statistics of the Irish recession, given the potential for early unemployment to lead to labour market scarring across the life-cycle.
In terms of a response to unemployment, a dominant view in the Irish case is that unemployment cannot be solved without a resolution to the fiscal and banking crises in the country. There is generally a great deal of suspicion of the role of active labour market policies and there has not been a strong impetus to actively respond to unemployment as an issue in itself. Dan O'Brien, economics editor at the Times, has a good piece on the extent of government inaction in this area. The problem with the inaction position is that there are well-known long-run costs to short-run unemployment and the duration of unemployment spells are becoming extremely high in a context where migration possibilities are low. The idea that the market should simply be allowed to work this through doesn't make any sense, particularly in a context where we spend an enormous amount of money already on unemployment benefits, job training and so on. Ignoring the issue, as is largely currently happening, is not the same as leaving it to the market. It is effectively not providing proper scrutiny, debate and ideas in the areas where this money is being spent.
To the extent that there has been a response, it has come on the following fronts. (i) The welfare payment and job assistance functions, previously located in different departments, have been merged. (ii) The state training agency, FAS, has been renamed SOLAS and some of its functions have changed. Technically, this has involved abolishing FAS and creating a new agency called SOLAS but its really not clear how different the new agency will be in practice (iii) Unemployment welfare payments to younger people were reduced in an effort to ensure that replacement ratios at that end of the job market were lowered. (iv) The government has created a pilot internship initiative called Jobbridge (website here), which seeks to match interns with employers. Interns are allowed to continue to claim welfare payments and are given a 50 euro per week top-up. This is one of a number of work experience type initiatives that have been attempted but is the first to be applied seriously. (v) Back-to-education initiatives have also formed a part of government unemployment strategy, including the HEA Springboard initiative.
In terms of other potential responses to unemployment, the papers by Bell and Blanchflower provide a useful backdrop. Their work argues for greater use of mechanisms such as internships, training initiatives, potential further raising of the school-leaving age, switching toward shovel-ready labour-intensive capital projects and repairs, cuts in pay-related-insurance contributions and providing greater evaluation focus to active labour market policies.
Unemployment cannot be understood properly within standard labour market models. There are psychological well-being effects associated with unemployment that have yet to be fully explained. Furthermore, there is a scarring effect of unemployment that must be considered when examining policies aimed at counteracting current employment (see the classic scarring paper by Clark and Oswald). Recent work by Alan Krueger and Andreas Mueller is showing marked patterns of psychological well-being reduction through the process of unemployment. A recent paper by myself and colleagues in the Geary Institute examined the experience of unemployment in Ireland from a psychological perspective. The psychological aspect of unemployment needs to be factored into new models of job activation in terms of creating job activation and welfare payment environments that do not demoralise people.
In the Irish case, all the recommendations discussed by Bell and Blanchflower should form part of the debate. With regard employer PRSI contributions, this is clearly an area the government should prioritise in terms of tax reductions at the earliest possibility. While a number of people have argued that the government should not use capital projects to stimulate employment due to their high cost per job (see Morgenroth paper), this view ignores the fact that the relatively high cost-per job of existing projects comes largely from their capital intensity and is not an argument against switching money to a national repairs programme. The recent OECD conference on jobs held in Dublin gave another set of more long-term directions to examine, including the importance of early intervention. The paper produced from the event is a useful input into the policy debate in Ireland.
The development of a full response to unemployment is an urgent priority. It should take into account the long-term costs of unemployment to the person and society. It should draw from literatures in different disciplines. It should embed good principles of design and evaluation. It should have a great urgency and focus.
Thursday, October 13, 2011
IZA Working Paper: A Guide and Advice for Economists on the U.S. Junior Academic Job Market
IZA DP No. 5984
John Cawley:
A Guide and Advice for Economists on the U.S. Junior Academic Job Market (2011-2012 Edition)
Abstract:
This guide, updated for the 2011-12 job market season, describes the U. S. academic market for new Ph.D. economists and offers advice on conducting an academic job search. It reports findings from published papers, describes practical details, and provides links to internet resources. Topics addressed include: preparing to go on the market, applying for academic jobs, signaling, interviewing at the ASSA meetings, campus visits, the secondary market scramble, offers and negotiating, diversity, and dual job searches.
http://ftp.iza.org/dp5984.pdf
John Cawley:
A Guide and Advice for Economists on the U.S. Junior Academic Job Market (2011-2012 Edition)
Abstract:
This guide, updated for the 2011-12 job market season, describes the U. S. academic market for new Ph.D. economists and offers advice on conducting an academic job search. It reports findings from published papers, describes practical details, and provides links to internet resources. Topics addressed include: preparing to go on the market, applying for academic jobs, signaling, interviewing at the ASSA meetings, campus visits, the secondary market scramble, offers and negotiating, diversity, and dual job searches.
http://ftp.iza.org/dp5984.pdf
Thursday, October 06, 2011
Song About Unemployment
Great song about a depressingly topical issue. Ordinary Man by Christy Moore.
Wednesday, October 05, 2011
Irish Debate Session on Unemployment
I will do another session on the Irish Debate website on October 28th at 12pm. A preliminary version of the outline is below. Suggestions welcome. I will post about how to login closer to the time.
Irish Unemployment Policy: An Urgent Debate
The dramatic rise in unemployment in recent years is the most urgent policy problem facing the Irish state. Unemployment durations greater than one-year, in particular, are associated with a range of negative long-run social, economic and psychological consequences. While rebalancing the economy in terms of debt, price and fiscal policy following a protracted bubble and collapse is clearly the most direct route to solving this problem, it is also absolutely clear that such a process is a medium-to-long term one and the question of short-run active employment policy must be given greater focus. This debate discusses the current policy environment in Ireland. It will begin with some overviews of the extent of unemployment in different regions and among different demographic groups. It will talk about some likely consequences of the high-level of unemployment in these groups. It will then examine government policy in the area of unemployment during the course of the last three years. The bulk of the discussion will be devoted to discussing current and potential government initiatives in the area of jobs stabilisation. The recent jobbridge initiative has created much debate online and we will discuss the potential for internship and placement programmes. The bringing together of the benefit payment and job placement aspects of the welfare system is another potential opportunity for improvement. Furthermore the extent to which the cash and non-cash benefit systems creates distorted incentives at the margins of the labour market and how this might be changed will be discussed.
Selected Readings:
1. The papers of Bell and Blanchflower on this topic are very useful - a collection of these are available below
http://connect.stir.ac.uk/pg/blog/dnfb1/read/119758/labour-papers
2. The Krueger/Mueller paper "Job Search in a period of Mass Unemployment" is very useful
http://www.princeton.edu/~ceps/workingpapers/215krueger.pdf
3. Geary Working paper by me and co-authors on the experience of unemployment in Ireland is useful for getting a sense of the views of people who are unemployment
http://www.ucd.ie/geary/static/publications/workingpapers/gearywp201116.pdf
4. Card et al is one of the most useful papers on the success or otherwise of job activation programmes
Card, D., Kluve, J.& Weber, A. (2010) Active labour Market Policy Evaliations: A Meta Analysis. NBER Working Paper No. 16173.
http://www.nber.org/papers/w16173.pdf
Irish Unemployment Policy: An Urgent Debate
The dramatic rise in unemployment in recent years is the most urgent policy problem facing the Irish state. Unemployment durations greater than one-year, in particular, are associated with a range of negative long-run social, economic and psychological consequences. While rebalancing the economy in terms of debt, price and fiscal policy following a protracted bubble and collapse is clearly the most direct route to solving this problem, it is also absolutely clear that such a process is a medium-to-long term one and the question of short-run active employment policy must be given greater focus. This debate discusses the current policy environment in Ireland. It will begin with some overviews of the extent of unemployment in different regions and among different demographic groups. It will talk about some likely consequences of the high-level of unemployment in these groups. It will then examine government policy in the area of unemployment during the course of the last three years. The bulk of the discussion will be devoted to discussing current and potential government initiatives in the area of jobs stabilisation. The recent jobbridge initiative has created much debate online and we will discuss the potential for internship and placement programmes. The bringing together of the benefit payment and job placement aspects of the welfare system is another potential opportunity for improvement. Furthermore the extent to which the cash and non-cash benefit systems creates distorted incentives at the margins of the labour market and how this might be changed will be discussed.
Selected Readings:
1. The papers of Bell and Blanchflower on this topic are very useful - a collection of these are available below
http://connect.stir.ac.uk/pg/blog/dnfb1/read/119758/labour-papers
2. The Krueger/Mueller paper "Job Search in a period of Mass Unemployment" is very useful
http://www.princeton.edu/~ceps/workingpapers/215krueger.pdf
3. Geary Working paper by me and co-authors on the experience of unemployment in Ireland is useful for getting a sense of the views of people who are unemployment
http://www.ucd.ie/geary/static/publications/workingpapers/gearywp201116.pdf
4. Card et al is one of the most useful papers on the success or otherwise of job activation programmes
Card, D., Kluve, J.& Weber, A. (2010) Active labour Market Policy Evaliations: A Meta Analysis. NBER Working Paper No. 16173.
http://www.nber.org/papers/w16173.pdf
Tuesday, September 20, 2011
Suicide and the macroeconomy
The current macroeconomic and financial crisis provides quite a natural experiment, much as the oil crisis on the early 1970s did for an older generation. The data will generate many papers in the years to come. One grim aspect to this is that it sheds some light on the macroeconomic determinants of suicide. Brendan & Dermot Walsh have looked at this in the Irish case in a paper published in the Economic and Social Review.
A newspaper article today suggests there has been a recent spike in suicide in Greece. This isn't a scholarly study but then with pressing issues like this, one can't wait for the research to occur before addressing the public policy issues.
A newspaper article today suggests there has been a recent spike in suicide in Greece. This isn't a scholarly study but then with pressing issues like this, one can't wait for the research to occur before addressing the public policy issues.
Saturday, September 17, 2011
Exiting Unemployment: The Role of Coping Strategies
Exiting unemployment: How do program effects depend on individual coping strategies?
Author info | Abstract | Publisher info | Download info | Related research | Statistics| Author Info |
Additional information is available for the following registered author(s):
| Abstract |
This paper analyses if individual coping strategies explain heterogeneous effects of participation in active labour market programs (ALMPs) on reemployment probabilities for the unemployed. I use survey data linked with administrative data from Statistics Denmark and focus on respondents who are unemployed or participating in ALMPs (n = 1310). To account for selection bias I analyse the data with a mixed logit model. I find that the coping strategies displayed by the unemployed persons explain heterogeneous effects of participation in ALMPs.
Saturday, March 26, 2011
Krueger and Muller: Unemployment and Wellbeing
Really important paper below by Krueger and Muller on unemployment and well-being. This type of research is vital to understand for those designing the new unemployment benefit and job assistance system in Ireland. It provides the most detailed account of how people actually feel and behave during the course of unemployment and offers the potential for the development of a humane, enabling and evidence-based unemployment policy.
Job Search, Emotional Well-Being and Job Finding in a Period of Mass Unemployment: Evidence from High-Frequency Longitudinal Data
Abstract
This paper presents findings from a survey of 6,025 unemployed workers who were interviewed every week for up to 24 weeks in the fall of 2009 and winter of 2010. Our main findings are: (1) the amount of time devoted to job search declines sharply over the spell of unemployment; (2) we do not observe a rise in job search or job finding around the time Unemployment Insurance (UI) benefits expire; (3) unemployed workers express much dissatisfaction and unhappiness with their lives, and their unhappiness rises the longer they are unemployed; (4) the unemployed appear to be particular sad during episodes of job search, and they find job search more depressing over the course of unemployment; (5) in the Great Recession the exit rate from unemployment was low at all durations, and declined gradually over the spell of unemployment; and (6) the amount of time devoted to job search and the reservation wage help predict early exits from Unemployment Insurance (UI).
Job Search, Emotional Well-Being and Job Finding in a Period of Mass Unemployment: Evidence from High-Frequency Longitudinal Data
Abstract
This paper presents findings from a survey of 6,025 unemployed workers who were interviewed every week for up to 24 weeks in the fall of 2009 and winter of 2010. Our main findings are: (1) the amount of time devoted to job search declines sharply over the spell of unemployment; (2) we do not observe a rise in job search or job finding around the time Unemployment Insurance (UI) benefits expire; (3) unemployed workers express much dissatisfaction and unhappiness with their lives, and their unhappiness rises the longer they are unemployed; (4) the unemployed appear to be particular sad during episodes of job search, and they find job search more depressing over the course of unemployment; (5) in the Great Recession the exit rate from unemployment was low at all durations, and declined gradually over the spell of unemployment; and (6) the amount of time devoted to job search and the reservation wage help predict early exits from Unemployment Insurance (UI).
Friday, March 25, 2011
The original Phillips Curve
The Phillips Curve is a justly famous idea in macroeconomics, showing the trade-off between unemployment and inflation.A.W.H. Phillips was an engineer by training and constructed this hydraulic model of the economy to illustrate his ideas.
A tip of the hat to Mark Wynne for providing this.
Wednesday, March 02, 2011
Live Register Figures
I am going to try to increase the frequency of posts about unemployment. The Live Register figures are out today and I think these marginal dips are not something people should be getting too excited about, particularly given the overall trend toward longer unemployment durations. Constantin Gurdgiev gives a useful summary of the numbers on his blog. I hope that one outcome of the negotiations will be a more prominent concern for this issue, particularly addressing concern that failure to integrate into the labour market has lifetime consequences for young people and also that unemployment duration spells have scarring effects at all ages.
Saturday, February 12, 2011
The importance of cognitive and social skills for the duration of unemployment
Verena Niepel
This paper studies how cognitive and social skills in childhood are related to the duration of unemployment in adolescence and early adulthood. I estimate a flexible proportional hazard rate model for the probability of making a transition from unemployment to employment during an individual's first unemployment spell. The analysis is based on British cohort data from the National Child Development Study. Results show that higher cognitive and social skills at the age of 7 are associated with an increased probability of finding employment, even when controlling for educational attainment. For men, these effects are mostly driven by individuals with low social skills. The results are robust to controlling for family background, parenting activities and school characteristics.
This paper studies how cognitive and social skills in childhood are related to the duration of unemployment in adolescence and early adulthood. I estimate a flexible proportional hazard rate model for the probability of making a transition from unemployment to employment during an individual's first unemployment spell. The analysis is based on British cohort data from the National Child Development Study. Results show that higher cognitive and social skills at the age of 7 are associated with an increased probability of finding employment, even when controlling for educational attainment. For men, these effects are mostly driven by individuals with low social skills. The results are robust to controlling for family background, parenting activities and school characteristics.
Tuesday, February 01, 2011
VOX Article on Short-Time Work as an Unemployment Remedy
A useful article by Cahuc and Carcillo
One method for combating unemployment during the global crisis has been the use of short-time work schemes that allow employers to temporarily reduce hours worked while compensating workers for the induced loss of income. In the first of two columns on labour markets, the authors present new evidence establishing that these schemes do indeed reduce unemployment. But they are no panacea and are not without their own problems.
Monday, January 17, 2011
ESRI: Profiling Long-Term Unemployment Risk
A Statistical Profiling Model of Long-Term Unemployment Risk in Ireland
Author info | Abstract | Publisher info | Download info | Related research | Statistics
Author Info
O'Connell, Philip J.
McGuinness, Seamus
Kelly, Elish
Abstract
This paper develops a statistical profiling model of long-term unemployment risk in Ireland using a combination of administrative data and information gathered from a unique questionnaire that was issued to all jobseekers making a social welfare claim between September and December 2006 who were then tracked for eighteen months. We find that factors such as a recent history of long-term unemployment, advanced age, number of children, relatively low levels of education, literacy/numeracy problems, location in urban areas, lack of personal transport, low rates of recent labour market engagement, spousal earnings and geographic location all significantly impact the likelihood of remaining unemployed for 12 months or more. While the predicted probability distribution for males was found to be relatively normal, the female distribution was bimodal, indicating that larger proportions of females were at risk of falling into long-term unemployment. We find evidence that community based employment schemes for combating long-term unemployment have little effect as participants re-entering the register typically experience extended durations. Finally, we argue that the adoption of an unemployment profiling system will result in both equity and efficiency gains to Public Employment Services.
Author info | Abstract | Publisher info | Download info | Related research | Statistics
Author Info
O'Connell, Philip J.
McGuinness, Seamus
Kelly, Elish
Abstract
This paper develops a statistical profiling model of long-term unemployment risk in Ireland using a combination of administrative data and information gathered from a unique questionnaire that was issued to all jobseekers making a social welfare claim between September and December 2006 who were then tracked for eighteen months. We find that factors such as a recent history of long-term unemployment, advanced age, number of children, relatively low levels of education, literacy/numeracy problems, location in urban areas, lack of personal transport, low rates of recent labour market engagement, spousal earnings and geographic location all significantly impact the likelihood of remaining unemployed for 12 months or more. While the predicted probability distribution for males was found to be relatively normal, the female distribution was bimodal, indicating that larger proportions of females were at risk of falling into long-term unemployment. We find evidence that community based employment schemes for combating long-term unemployment have little effect as participants re-entering the register typically experience extended durations. Finally, we argue that the adoption of an unemployment profiling system will result in both equity and efficiency gains to Public Employment Services.
Thursday, December 30, 2010
Behavioural Economics and Labour Market Policy
Notes on Behavioral Economics and Labor Market Policy
Labor, Jobs and the Economy, Unemployment, U.S. Economy
Linda Babcock, James M. Walton Professor of Economics, Carnegie Mellon University
William J. Congdon, Research Director, Economic Studies
Lawrence F. Katz, Elisabeth Allison Professor of Economics, Harvard University
Sendhil Mullainathan, Professor of Economics, Harvard University; Nonresident Senior Fellow, Brookings Institution
The Brookings Institution
I am currently reading this paper with a view to thinking about the applicability to the Irish and UK labour market. Their suggestions for policy reform are below. Any policy people who read this blog and are interested in unemployment should read this paper. Would be great to start thinking concretely about applications in the Irish case.
Labor, Jobs and the Economy, Unemployment, U.S. Economy
Linda Babcock, James M. Walton Professor of Economics, Carnegie Mellon University
William J. Congdon, Research Director, Economic Studies
Lawrence F. Katz, Elisabeth Allison Professor of Economics, Harvard University
Sendhil Mullainathan, Professor of Economics, Harvard University; Nonresident Senior Fellow, Brookings Institution
The Brookings Institution
I am currently reading this paper with a view to thinking about the applicability to the Irish and UK labour market. Their suggestions for policy reform are below. Any policy people who read this blog and are interested in unemployment should read this paper. Would be great to start thinking concretely about applications in the Irish case.
Recommendations for policy reform
Unemployment compensation. Should include wage-loss insurance in some form. In addition to the insurance benefits it provides, wage-loss insurance offers a way of assisting individuals with the psychological adjustment to changing labor market conditions and addresses likely biases in wage expectations that impede work incentives.
Employment services and job search assistance. Should be expanded to provide more accessible and meaningful information about labor market conditions and occupational projections. These programs should help address procrastination in job search and provide guidance to unemployed and low-wage individuals in a way that both reflects and takes advantage of the way people process information.
Job training. Should simplify program take-up, navigation, and completion, and provide user-friendly information on the quality of training providers. These programs should structure choices to reflect the limited abilities of individuals to manage complexity and exert self-control.
Tuesday, October 19, 2010
Suicide in Ireland: The Influence of Alcohol and Unemployment
Brendan Walsh, Dermot Walsh
In this paper we model the behaviour of the Irish suicide rate over the period 1968‐2009 using the unemployment rate and the level of alcohol consumption as explanatory variables. It is found that these variables have significant positive effects on suicide mortality in several demographic groups. Alcohol consumption is a significant influence on the male suicide rate up to age 64. Its influence on the female suicide rate is not as well‐established, although there is evidence that it is important in the 15‐24 and 25‐34 age groups. The unemployment rate is also a significant influence on the male suicide rate in the younger age groups. The behaviour of suicide rates among males aged 55 and over and females aged 25 and over is largely unaccounted for by our model. These broad conclusions hold when account is taken of a structural break in the 1980s, with the response to unemployment being greater in the earlier period and that to alcohol greater in the later period. The findings suggest that higher alcohol consumption played a major role in the increase in suicide mortality among young Irish males between the late 1960s and the end of the century. In the early twenty first century a combination of falling alcohol consumption and low unemployment led to a marked reduction in suicide rates, although there is some evidence that the suicide rate is being increasingly under‐reported in recent years. The recent rise in the suicide rate may be attributed to the sharp increase in unemployment, especially among males, but it has been moderated by the continuing fall in alcohol consumption. Some policy implications of the findings are discussed.
In this paper we model the behaviour of the Irish suicide rate over the period 1968‐2009 using the unemployment rate and the level of alcohol consumption as explanatory variables. It is found that these variables have significant positive effects on suicide mortality in several demographic groups. Alcohol consumption is a significant influence on the male suicide rate up to age 64. Its influence on the female suicide rate is not as well‐established, although there is evidence that it is important in the 15‐24 and 25‐34 age groups. The unemployment rate is also a significant influence on the male suicide rate in the younger age groups. The behaviour of suicide rates among males aged 55 and over and females aged 25 and over is largely unaccounted for by our model. These broad conclusions hold when account is taken of a structural break in the 1980s, with the response to unemployment being greater in the earlier period and that to alcohol greater in the later period. The findings suggest that higher alcohol consumption played a major role in the increase in suicide mortality among young Irish males between the late 1960s and the end of the century. In the early twenty first century a combination of falling alcohol consumption and low unemployment led to a marked reduction in suicide rates, although there is some evidence that the suicide rate is being increasingly under‐reported in recent years. The recent rise in the suicide rate may be attributed to the sharp increase in unemployment, especially among males, but it has been moderated by the continuing fall in alcohol consumption. Some policy implications of the findings are discussed.
Wednesday, September 22, 2010
Upside of Unemployment
One question Michael asked during the focus groups with people who were looking for work was whether there were any positive aspects of being unemployed. Again, further details will be in the paper, but it is clear that there are few positive things about being unemployed. Of those that responded that they had benefited from being laid off, the main theme revolved around spending more time with their family, something particularly pronounced among men. Some others mention being able to recapture their identity after several years working in a very time-consuming position that took up a lot of their personal energy. Consistent with the literature when respondents mention positive aspects, many of them do so in the context of adapting to being unemployed and resetting their expectations.
My predominant feeling in reading the interviews and the notes is that this system seems broken. Most of the people interviewed were articulate and had good recent labour market experience. The experiences of unemployment they describe seem like something that should be relegated to the 20th century. While I grew up in a time and place of high unemployment, I still find it hard to fully identify with the respondents as I have not experienced a spell of involuntary unemployment and my job is currently secure. I am currently preparing a talk for the Galway debating society and I have been asked to talk about whether the Irish education system has failed. As it is evolving, I am increasingly coming down on the view that it has failed to the extent that we clearly are not educating people in ways that allow them to adapt and thrive in a fluctuating economy. In some sense, the massive sign on unemployment that still exists in well-being regressions is a measure of educational failure.
My predominant feeling in reading the interviews and the notes is that this system seems broken. Most of the people interviewed were articulate and had good recent labour market experience. The experiences of unemployment they describe seem like something that should be relegated to the 20th century. While I grew up in a time and place of high unemployment, I still find it hard to fully identify with the respondents as I have not experienced a spell of involuntary unemployment and my job is currently secure. I am currently preparing a talk for the Galway debating society and I have been asked to talk about whether the Irish education system has failed. As it is evolving, I am increasingly coming down on the view that it has failed to the extent that we clearly are not educating people in ways that allow them to adapt and thrive in a fluctuating economy. In some sense, the massive sign on unemployment that still exists in well-being regressions is a measure of educational failure.
No Silver Bullet
The response on unemployment since the start of this recession has been truly dismal. Short-run labour market policy is not a priority of the government and neither Fine Gael nor Labour have put out anything serious in terms of labour market adjustment. Various parties and academics have outlined strategies for longer term economic recovery and stabilisation but short-run labour market adjustment has been remarkably absent from the wider discussion. Brian Cowen met today with various different state agencies to discuss job creation. I don't know what this harbours but it is way past time to have a serious review of government policy in this area. At the start of this recession, various people put forward the view that no policy to counteract unemployment could have an effect and that we needed to let nature take its course. Many of them cited the failure of adjustment policies in the 1980s. The history of the 1980s was a history of poorly thought-out labour market strategies aimed an older cohort of people who were long-term unemployed. We are coming close to a self-fulfilling prophecy in that it is now likely that major policy in this area will only take place long after the bulk of the current cohort have become long-term unemployed.
I am conscious of sounding like a broken record on this and I am also conscious that nobody, as the Taoiseach points out, has a silver bullet to make this problem go away. But just in case people have forgotten - unemployment is the worst thing the economy can do to you in terms of affecting your mental well-being (or utility if you prefer). It has effects as large as chronic illness and it spreads in the sense that there are intergenerational patterns and whole regions can embed norms of unemployment. Duration is particularly important and, while different studies give different results, durations above a year are particularly hazardous in terms of longer term effects. Some of my libertarian friends point out that no-one has the right to expect a job and it is duty of the individual to seek work and not to expect work from the state. That is fine and good, but it is not an argument you can levy at someone who has paid their taxes to support a large state that includes a whole host of expensive institutions designed to perform this function. If these institutions exist, they should be accountable.
There are a range of policies that could counteract unemployment in Ireland. Anyone looking for a clearly revenue neutral policy with certain returns is demanding a standard that does not exist in any area of government policy and is not possible in a situation that has few precedents. Many of these policies e.g. capital programme redeployment are clearly revenue neutral and may be positive in terms of larger domestic multipliers. I have reading lists for almost all the points below is anyone is particularly interested.
1. We need to have a debate about the minimum wage for younger people.
2. The potential for work experience programmes has not been discussed widely at all. It has to be remembered that a lot of 15/16 will be growing up now in areas where unemployment is becoming increasingly the norm.
3. Similarly on the graduate side, the IBEC internship programme looks promising and is an idea that could have a marked effect on graduate unemployment. A few people told that some of the people on the scheme started to get a little fed-up after spending six months on such low salaries. This is a good sign. The purpose of these internships are not to condition people to want to work for free but rather to make sure that people get through their first couple of years after college with a good CV.
4. The potential for diverting capital funding to labour intensive repair work, subject to the need and economic rationale of the work, should be explored in much more depth.
5. It is worth examining the age of retirement for the current cohort of people in their 50s. While many of use now face an age of retirement of 68, most of us started working somewhere between the age of 18 and 24. Compare this to the situation of a manual worker who has been laid off at age 59, having worked since leaving school at 12.
6. Other than media stories about expenses, there has been no serious review of how FAS and the Department of Social Protection actually function in terms of promoting an active labour market.
7. We need more work on the potential Oswald effect in Ireland. I will use this post to apologise to Ronan Lyons, with whom I have an, as yet, unpublished paper on this issue. The Oswald effect arises when people are tied to their home and cannot migrate to better employment areas as they cannot sell their homes because of negative equity. My paper with Ronan is still unpublished because the data to test this for Ireland is just simply inadaquate and we have not agreed on how to talk around the patchy data we have. In either case, Ronan has already clearly documented the potential extent of negative equity in Ireland and no-one yet has addressed this as a labour market issue.
8. There needs to be more emphasis on hiring in the public sector if the economy recovers rather than restoring paycuts.
9. I am going to float the idea of a "jobs tzar", who would be a recognised international expert on labour market design and would force all the current policies to obey rigorous standards of design and evaluation and actually make the results of these available.
I am conscious of sounding like a broken record on this and I am also conscious that nobody, as the Taoiseach points out, has a silver bullet to make this problem go away. But just in case people have forgotten - unemployment is the worst thing the economy can do to you in terms of affecting your mental well-being (or utility if you prefer). It has effects as large as chronic illness and it spreads in the sense that there are intergenerational patterns and whole regions can embed norms of unemployment. Duration is particularly important and, while different studies give different results, durations above a year are particularly hazardous in terms of longer term effects. Some of my libertarian friends point out that no-one has the right to expect a job and it is duty of the individual to seek work and not to expect work from the state. That is fine and good, but it is not an argument you can levy at someone who has paid their taxes to support a large state that includes a whole host of expensive institutions designed to perform this function. If these institutions exist, they should be accountable.
There are a range of policies that could counteract unemployment in Ireland. Anyone looking for a clearly revenue neutral policy with certain returns is demanding a standard that does not exist in any area of government policy and is not possible in a situation that has few precedents. Many of these policies e.g. capital programme redeployment are clearly revenue neutral and may be positive in terms of larger domestic multipliers. I have reading lists for almost all the points below is anyone is particularly interested.
1. We need to have a debate about the minimum wage for younger people.
2. The potential for work experience programmes has not been discussed widely at all. It has to be remembered that a lot of 15/16 will be growing up now in areas where unemployment is becoming increasingly the norm.
3. Similarly on the graduate side, the IBEC internship programme looks promising and is an idea that could have a marked effect on graduate unemployment. A few people told that some of the people on the scheme started to get a little fed-up after spending six months on such low salaries. This is a good sign. The purpose of these internships are not to condition people to want to work for free but rather to make sure that people get through their first couple of years after college with a good CV.
4. The potential for diverting capital funding to labour intensive repair work, subject to the need and economic rationale of the work, should be explored in much more depth.
5. It is worth examining the age of retirement for the current cohort of people in their 50s. While many of use now face an age of retirement of 68, most of us started working somewhere between the age of 18 and 24. Compare this to the situation of a manual worker who has been laid off at age 59, having worked since leaving school at 12.
6. Other than media stories about expenses, there has been no serious review of how FAS and the Department of Social Protection actually function in terms of promoting an active labour market.
7. We need more work on the potential Oswald effect in Ireland. I will use this post to apologise to Ronan Lyons, with whom I have an, as yet, unpublished paper on this issue. The Oswald effect arises when people are tied to their home and cannot migrate to better employment areas as they cannot sell their homes because of negative equity. My paper with Ronan is still unpublished because the data to test this for Ireland is just simply inadaquate and we have not agreed on how to talk around the patchy data we have. In either case, Ronan has already clearly documented the potential extent of negative equity in Ireland and no-one yet has addressed this as a labour market issue.
8. There needs to be more emphasis on hiring in the public sector if the economy recovers rather than restoring paycuts.
9. I am going to float the idea of a "jobs tzar", who would be a recognised international expert on labour market design and would force all the current policies to obey rigorous standards of design and evaluation and actually make the results of these available.
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