Documents IFAU 11 results

"This paper investigates the impact of a collective agreement stipulating a one shot increase in establishment-specific wage levels in a public-sector setting where wages otherwise are set according to individualized wage bargaining. The agreement stipulated that wages should increase in proportion to the number of low-paid females within each establishment. We find that actual wages among incubents responded to the share of females with a wage below the stipulated threshold, conditional on the separate effects of the share of low wage earners, and the share of females. We find clear evidence of path-dependence in wages, covered workers remained on higher wage levels 4 years after the agreement took effect. The increase in wages resulted in a reduced probability of exit among young workers with relatively good grades and a lower frequency of new hires at the establishment level."

"This paper discusses the case for expanding active labor market policy in recession. We find that there is reasonable case for relying more heavily on certain kinds of programs. The argument is tied to the varying size of the lock-in effect in boom and recession. If programs with relatively large lock-in effects should ever be used, they should be used in a downturn. The reason is simply that the cost of forgoing search time is lower in recession. We also provide new evidence on the relative effectiveness of different kinds of programs over the business cycle. In particular we compare an on-the-job training scheme with (traditional) labor market training. We find that labor market training is relatively more effective in recession. This result is consistent with our priors since labor market training features relative large lock-in effects."

"In this paper we provide a description of the labor market in the Netherlands. Compared to other OECD countries labor force participation is high and the unemployment rate is low (also for young workers). Among the unemployed there are, however, relatively many long-term unemployed workers. Labor force participation of older workers is increasing but still low and Dutch workers have relatively low working hours. Disability is high, particularly among young individuals. We discuss the relevant labor market institutions in the Netherlands and use recent reforms to assess the importance of the different reforms. Where possible we provide an international comparison. We find that inflow into benefits programs responds to (financial) incentives. The outflow is much more difficult to affect, in particular we could not find any evidence of substantial positive effects of active labor market programs (which are frequently offered in the Netherlands)."

"This paper reviews how income-support systems affect labour force participation in the UK. The UK's approach to social insurance is “basic security”, with modest, typically flat-rate, benefits; insurance-based benefits are relatively unimportant. Compared with the EU, the UK has high employment rates, but a high proportion of non-workers say that they are not working through disability. In general, the low generosity of out-of-work benefits means that positive incentives to work exist for almost all benefit recipients, but weak work incentives exist for those receive Housing Benefit, and for primary earners in couples who have low earnings. Recent reforms to strengthen work incentives have altered the in-work tax credits, rather than the benefit system, and recent reforms to the out-of-work benefits have involved toughening and extending job-search requirements. The two main political parties seem to agree that future reforms will involve more conditionality, a greater use of the private sector, and a unification of the different labour market programmes."

"This paper summarizes a set of expert reports commissioned by the IFAU. The expert reports cover Estonia, Germany, Italy, the Netherlands, Sweden, and the United Kingdom. These countries represent range of welfare states, both in terms of scope and design. And in each country there are interesting experiences from which other countries may learn. The overall objective is to identify policy tools that help generate sustained increases in employment in the long run. Therefore, we focus on policies that improve the incentives for labour force participation and reduce the barriers to participation."

"Comparing Sweden to other EU countries, labour force participation rates of older individuals and females are high. These facts are consistent with the idea that institutional design matters: access to child care, paid parental leave, and a tax system with individual rather than household income taxation, probably explain a significant fraction of the high female participation rate; and the evidence suggests that the design of pension systems has an impact on the labour force participation of the elderly. Active labour market policies may contribute to high labour force participation, but cannot be relied on as a major means of raising employment and participation in the long run."

"This paper looks at welfare reforms in Italy and their effects on labour supply. I focus on social security reforms, which have taken place in the 1990s and on labour market reforms. Old age social security expenditure in Italy is high (14% of GDP) and the system has been very generous on early retirement possibilities: the reforms have tried to tackle these issues with mixed results. The labour market reforms have addressed the rigidity of the labour market by making it easier for firms to hire on a short-term basis. However the UI system is limited to open-ended contracts and coverage is also restricted, so that young workers employed in short-term contracts have very little protection from the welfare state."