Objective: Previous studies suggest that unemployment predicts increased cardiovascular disease (CVD) risk, but whether unemployment insurance programs mitigate this risk has not been assessed. Exploiting US state variations in unemployment insurance benefit programs, we tested the hypothesis that more generous benefits reduce CVD risk. Methods: Cohort data came from 16,108 participants in the Health and Retirement Study (HRS) aged 50–65 at baseline interviewed from 1992 to 2010. Data on first and recurrent CVD diagnosis assessed through biennial interviews were linked to the generosity of unemployment benefit programmes in each state and year. Using state fixed-effect models, we assessed whether state changes in the generosity of unemployment benefits predicted CVD risk. Results: States with higher unemployment benefits had lower incidence of CVD, so that a 1% increase in benefits was associated with 18% lower odds of CVD (OR:0.82, 95%-CI:0.71–0.94). This association remained after introducing US census regional division fixed effects, but disappeared after introducing state fixed effects (OR:1.02, 95%-CI:0.79–1.31).This was consistent with the fact that unemployment was not associated with CVD risk in state-fixed effect models. Conclusion: Although states with more generous unemployment benefits had lower CVD incidence...

This paper uses 16 waves of panel data from the British Household Panel Survey to evaluate the role of subjective well-being in determining labor market transitions. It confirms a previous finding in the literature: individuals report a fall in their happiness when they lose a job, but they report a smaller fall when they are surrounded by unemployed peers, an effect called the "social norm". The main results of interest are that job search effort and unemployment duration are affected by the utility differential between having a job and being unemployed. Since this differential is also affected by the social norm, it implies that when unemployment increases, the unemployed are happier and they reduce their search effort. These results indicate that unemployment hysteresis has labor supply causes.

The paper tests three hypotheses about the causes of unemployment in the Central-East European transition economies and in a benchmark market economy (Western part of Germany). The first hypothesis (H1) is that unemployment is caused by inefficient matching. Hypothesis 2 (H2) is that unemployment is caused by low demand. Hypothesis 3 (H3) is that restructuring is at work. Our estimates suggest that the west and east German parts of Germany, Czech Republic and Slovakia are consistent with H2 and H3. Hungary provides limited support to all three hypotheses. Poland is consistent with H1. The economies in question hence contain one broad group of countries and one or two special cases. The group comprises the Czech Republic, Hungary, Slovak Republic and (possibly) East Germany. These countries resemble West Germany in that they display increasing returns to scale in matching and unemployment appears to be driven by restructuring and low demand. The East German case is complex because of its major active labor market policies and a negative trend in efficiency in matching. In some sense...

High youth unemployment rates may be a signal of difficult labor market entry for youth or may reflect high churning. The European and United States literature finds the latter conclusion while the Latin American literature suggests the former. This paper uses panel data to examine whether Latin American youth follow OECD patterns or are, indeed, unique. By decomposing transition matrices into propensity to move and rate of separation matrices and estimating duration matrices, the authors find that Latin American youth do follow the OECD trends: their high unemployment reflects high churning while their duration of unemployment is similar to that of non-youth. The paper also finds that young adults (age 19-24) have higher churning rates than youth; most churning occurs between informal wage employment, unemployment, and out-of-the labor force, even for non-poor youth; and unemployment probabilities are similar for men and women when the analysis control for greater churning by young men. The findings suggest that the "first employment" programs that have become popular in the region are not addressing the key constraints to labor market entry for young people and that more attention should be given to job matching...

This paper estimates the impacts of world agricultural trade liberalization on wages, employment and unemployment in Argentina, a country with positive net agricultural exports and high unemployment rates. In the estimation of these wage and unemployment responses, the empirical model allows for individual labor supply responses and for adjustment costs in labor demand. The findings show that a 10 percent increase in the price of agricultural exports would cause an increase in the Argentine employment probability of 1.36 percentage points, matched by a decline in the unemployment probability of 0.75 percentage points and an increase in labor market participation of 0.61 percentage points. Further, the unemployment rate would decline by 1.23 percentage points (by almost 10 percent). Expected wages would increase by 10.3 percent, an effect that is mostly driven by higher employment probabilities. This indicates that the bulk of the impacts of trade reforms originates in household responses in the presence of adjustment costs...

This paper analyzes the cyclical properties of worker flows in Brazil and Mexico, two important developing countries with large unregulated or informal sectors. It generates three stylized facts that are critical to the accurate modeling of the sector and which suggest the need to rethink the approaches to date. First, the unemployment rate is countercyclical essentially because job separations of informal workers increase dramatically in recessions. Second, the share of formal employment is countercyclical because of the difficulty of finding formal jobs from inactivity, unemployment and other informal jobs during recessions rather than because of increased separation from formal jobs. Third, flows from formality into informality are not countercyclical, but, if anything, pro-cyclical. Together, these challenge the conventional wisdom that has guided the modeling the sector that informal workers are primarily those rationed out of the formal labor market. They also offer a new synthesis of the mechanics of the cyclical adjustment process. Finally...

Relatively little is known about youth unemployment and its lasting consequences in transition economies, despite the difficult labor market adjustment experienced by these countries over the past decade. The authors examine early unemployment spells and their longer-term effects among the youth in Bosnia and Herzegovina (BiH), where the labor market transition is made more difficult by the challenges of a post-conflict environment. They use panel data covering up to 4,800 working-age individuals over the 2001 to 2004 period. There are three main findings from their analysis. First, youth unemployment is high-about twice the national average-consistent with recent findings from the BiH labor market study. Younger workers are more likely to go into inactivity or unemployment and are also less likely to transition out of inactivity, holding other things constant. Second, initial spells of unemployment or joblessness appear to have lasting adverse effects on earnings and employment ("scarring"). But there is no evidence that the youth are at a greater risk of scarring...

Public Employment Services (PES) in several Europe and Central Asia (ECA) countries are severely limited by underfunded labor market programs, understaffing, and fragmented networks of employment offices. Cash benefits and other entitlements like health insurance often act as incentives to job seekers to register with PES. However, such benefits can and often do encourage unemployment registration by economically inactive individuals. Registered unemployment exceeds survey based unemployment rates in about half of ECA countries (mostly Central Europe and Western Balkans). Registered unemployment is much lower than survey-based unemployment in the Baltic States and Commonwealth of Independent States (CIS) countries, primarily due to low access to unemployment benefits and active labor market programs (ALMPs). The numbers of unemployment assistance beneficiaries vary significantly across ECA. In 2009, for example, 85 percent of the registered unemployed in Russia received benefits but, in eight ECA countries...

Mounting evidence suggests that excessive job protection reduces employment and labor market flows, hinders technological innovations, pushes workers into the informal sector, and hurts vulnerable groups by depriving them of job opportunities. Flexible labor markets stimulate job creation, investment, and growth, but they create job insecurity and displace some workers. How can the costs of such insecurity and displacements be minimized while ensuring that the labor market remains flexible? Each of the main unemployment income support systems (unemployment insurance, unemployment assistance, unemployment insurance savings accounts, severance pay, and public works) has strengths and weaknesses. Country-specific conditions, chief among them labor market and other institutions, the capacity to administer each type of system, and the size of the informal sector, determine which system is best suited to developing and transition countries.

This paper studies the incidence and determinants of episodes of drastic unemployment reduction, defined as swift, substantial, and sustained declines in unemployment. Forty-three episodes are identified over a period of nearly three decades in 94 rich, middle-income, and transition countries. Unemployment reductions often coincide with an acceleration of growth and an improvement in macroeconomic conditions. Episodes are much more prevalent in countries with higher levels of unemployment and, given unemployment, are more likely in countries with better regulation. An efficient legal system that enforces contracts expeditiously is particularly important for reducing unemployment. The results imply that while employment is largely related to the business cycle, better regulation reduces the likelihood of high unemployment and facilitates a more rapid recovery in the event unemployment builds up.

Global economic shocks coupled with natural disasters left most Caribbean countries with zero to negative growth and high unemployment rates. The Caribbean region was strongly affected by the last great financial crisis, which resulted in a regional average of zero economic growth in 2010. The purpose of this note is to evaluate the nature of youth unemployment in order to propose policy options to address it. It is organized in three sections. The first section describes the trends and patterns of total unemployment. The second section focuses on youth unemployment. The third and final section discusses policy considerations.

Several middle income countries are considering reforms of severance pay regulations to both increase flexibility for firms and better protect workers. Policy discussions then often revolve around whether to adopt an unemployment insurance (UI) scheme or unemployment individual savings accounts (UISAs). Proponents of the first emphasize its ability to pool risks and introduce an element of solidarity. Critics point to its potentially negative effects on labor supply as individuals can have fewer incentives to seek, take or keep jobs. In this paper, the authors show that UI and UISAs are, in fact, particular cases of a more general design and that the crucial policy choice is in terms of how redistribution - to cover benefits for those who cannot save enough is financed. The authors outline key features of this general design and discuss trade-offs and possible solutions. The authors discusses issues related to implementation and show how recent technological developments around biometric identification can facilitate the monitoring of conditionalities related to participation in job-search and training activities.

While the unemployment rate has fallen significantly in the last several years, it is still around 7 per cent at the beginning of 2000 and remains very high relative to the experience from 1950 to the mid-1970s. Nearly 200,000 of today’s unemployed have been in that state for 12 months or more, and this group is known as the long-term unemployed (LTU). The duration of unemployment is a fundamental issue for policy and reduction in the numbers of those experiencing long term unemployment is a continuing policy priority.

There are two reasons for governments to be concerned about long-term unemployment. It is well documented that members of the group are some of the least advantaged in the labour market, a group disproportionately made up of those with low formal skills and education. Moreover, those with long term unemployment are by definition not accumulating labour market experience, one of the most important determinants of wage income.

Long-term unemployment is also fundamental to policy due to its impact on macroeconomic efficiency. A labour supply pool with a large proportion of long-term unemployed will be characterised by structural mismatch. Long-term unemployed workers will be considered to be irrelevant in firms’ hiring decisions so that unemployment is higher than it would otherwise be. This has significant implications for the budget. In addition...

Unemployment has been at unacceptable levels for at least twenty-five years and is probably Australia’s most serious economic and social problem. Emphasising the economics of the unemployment problem and focussing mainly on the labour market, a historical approach was used which viewed unemployment as consisting of two parts: a cyclical component and an underlying component, divided into three historical periods: 1950 to the early-mid 1970s; early-mid 1970s to the early 1980s and early 1980s to the present. The paper addressed: the unemployment response to labour market deregulation policies over the last decade; new policy ideas to reduce unemployment; the unemployment cycle and the current and near future unemployment situation. The conclusions reached were: that labour productivity growth has increased but this has increased real wages; policies tor educe unemployment over the last decade in general have so far not been successful nor is it expected that currently proposed new policy ideas will be able to substantially reduce unemployment. It is also unlikely that avoidance of a recession will be sufficient to achieve a sustained and significant reduction in unemployment. This is particularly the case if there is not mechanism for real wage moderation and if labour supply reductions cease to be important.; no

The official labour force statistics that are used in Australia have serious limitations. While appropriate for characterising the employment and unemployment situations of a labour market dominated by standard employment relations, however, they may now be inappropriate as standard employment relations no longer dominate the Australian labour market. Over the past 25 years, significant restructuring of both the economy and the labour market has occurred resulting in slower growth of full-time employment, a substantial increase in part-time work, a continued decline in the male labour force participation rate and a continued increase in the female participation rate. As a result, two serious problems emerged in the Australian labour market in the wake of the recession of the early-1990s, a substantial increase in both hidden unemployment and visible underemployment, which were not reflected in the official Australian measures of labour underutilisation, that is the seasonally adjusted unemployment rate and the trend unemployment rate. Up until the late-1980s, hidden unemployment and visible underemployment were not important sources of labour underutilisation in Australia, but they now contribute significantly to the level of labour underutilisation. Herein lies the problem that is the crux of this thesis. The growth in hidden unemployment and visible underemployment means that the official measures of labour underutilisation for Australia...

This paper investigates how the potential duration of unemployment benefits affects the quality of post-unemployment jobs. It takes advantage of a natural experiment introduced by a change in Slovenia's unemployment insurance law that substantially reduced the potential benefit duration. Although this reduction strongly increased job finding rates, the quality of the post-unemployment jobs remained unaffected. The paper finds that the law change had no effect on the type of contract (temporary versus permanent), the duration of the post-unemployment job, or the wage earned in the job.

This note describes the key features of the Unemployment Insurance Simulation Model (UISIM) - how the model is structured, what data inputs are needed, and what outputs the model generates (the model comes with user's and technical manuals, which provide detailed information about how to operate the model and how it calculates the outputs). For illustrative purposes, the note also presents an example where the model is used to generate simulations for a countrywide unemployment insurance (UI) system. The appendix to the note describes typical data sources and provides a detailed description of requisite data.

The author studies the potential disincentive effects of unemployment insurance, and social assistance payments on the duration of unemployment in the Slovak Republic. For this purpose, she uses new, very detailed data on receipt of benefits from the Unemployment Registry (1990-2000) and the Labor Force Survey (1996, 1999, and 2000). She employs a flexible methodology that makes it possible to identify behavioral changes that may occur as the quantity, and duration of the benefits change over time, as well as behavioral differences between recipients, and non-recipients. This approach, she argues, constitutes a more accurate test for the presence of incentive, and disincentive effects, than those presented before in the literature. She expands the scope of her analysis, to study the effect of receiving benefits on several outcomes in addition to exit from unemployment (for example, job seeking behavior, and duration of unemployment). She finds important behavioral differences between those who receive benefits, and those who do not. Recipients tend to spend more time unemployed...

The past three and a half decades witnessed a distinctly declining trend in Singapore's unemployment rate, which dropped from an average annual rate of 7.85 percent in 1966-70 to 2.74 percent in 1991-2000. The authors seek to identify and empirically examine the factors that have influenced Singapore's unemployment rate in an environment of low and stable inflation. They incorporate a union bargaining framework into a standard-factors trade model, in which an increase in the relative price or capital stock in the export sector raises the demand wage that firms can afford to pay relative to workers' fall-back income, and consequently lowers equilibrium unemployment. The magnitude of the effects depends on the fall-back income, the weight unions attach to employment, and the elasticity of labor demand, which the authors estimate using data on Singapore. The results show that labor unions in Singapore care more about employment than wages. Together with a small fall-back income and elastic labor demand, the authors show that given the same percentage change in relative export prices and capital accumulation in the export sector...

This report reviews international experiences and presents options for the design of four types of labor regulations: employment contracts, minimum wages, dismissal procedures, as well as severance pay and unemployment benefits. In each case, it discusses the market failures that these regulations aim to address and suggests options to better protect workers while preserving incentives to create good jobs.