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Career Explorer provides customized career exploration tools for workforce development staff and job seekers in Michigan. There are two separate Career Explorer modules: a staff-mediated service and a self-service for job seekers. The system was developed by the Michigan Center for Data and Analytics in collaboration with the W.E. Upjohn Institute for Employment Research and Michigan Works! Southwest. It was funded by the U.S. Department of Labor's Office of Workforce Investment and the Schmidt Futures' Data for the American Dream (D4AD) project. In this paper, the authors describe the machine learning models behind the predictive analytics of the frontline staff-mediated version of Career Explorer. These models were trained on program administrative data. Additionally, the authors describe the self-service version of Career Explorer, which provides clients with customized labor market information based on published U.S. Bureau of Labor Statistics data. Career Explorer became an active feature of Michigan's online reemployment services system in June 2021. [ABSTRACT FROM AUTHOR]

The authors investigate reasons unemployment insurance (UI) claims have declined dramatically over the past 3 decades. The fall is concerning because it suggests a reduced countercyclical effectiveness of the UI program. Additionally, weekly initial UI claims are an important leading indicator of aggregate economic activity, so their meaning has changed. The authors identify the main factors that changed with the decline in claims. Their procedure suggests what the level of claims would have been later in the period, had values of variables or parameters of the system been at levels observed earlier in the period. The analysis of state-year data suggests that the decline in UI claims stems largely from changes in the industrial and occupational mix of employment interacting with changes in UI program features set by individual states. This decline could be offset by federal rules for states to improve benefit access, replacement rates, and potential UI durations. [ABSTRACT FROM AUTHOR]

This article characterizes the relation between the equilibrium unemployment insurance replacement rate and the frequency of its political choice. We first use a tractable analytical model to show how insurance, incentive, and redistribution effects interact at the equilibrium. We then examine a fully repeated choices equilibrium in a quantitative heterogeneous agents model and show that unemployment persistence, whether a policy is announced first or not, and the type of the political process are key determinants of the relation between the equilibrium replacement rate and the frequency of its choice. In a utilitarian welfare context, we find that the equilibrium replacement rate is higher if the policy is chosen more frequently but this relation is reversed in a median voter context. [ABSTRACT FROM AUTHOR]

Most studies on benefit sanctions within the German welfare system rely on established datasets about welfare receipt. This paper analyzes how using a dataset from the operational system of the German Federal Employment Agency for processing welfare claims can contribute to further research on benefit sanctions. For this purpose, I use a random sample of welfare recipients with at least one sanction between 2016 and 2018. First, this allows the detailed analysis of time lags between different steps in the sanction process. Second, linking this dataset with established datasets allows the identification of imposed sanctions for which sanction periods could not be (fully) implemented. This is largely explained by individuals leaving the welfare system between sanction events and sanction periods, e.g., by taking up employment. Third, the paper shows differences in benefit cuts across subgroups. This opens up paths for future research. [ABSTRACT FROM AUTHOR]

We analyse how habit formation affects collective bargaining outcomes if a firm-specific trade union determines wages. For a wide variety of alternative analytical settings, such internal reference points induce the union to increase wages over time. A numerical example suggests that the resulting decline in employment can be substantial. Furthermore, policy changes in one period, which are either reversed in the next or anticipated in previous periods, have effects on wage outcomes for multiple periods because they affect the habit stock at times at which they are not yet or no longer in operation. [ABSTRACT FROM AUTHOR]

This paper presents an average treatment effect analysis of Spain's furlough program during the onset of the COVID-19 pandemic. Using 2020 labour force quarterly microdata, we construct a counterfactual made of comparable nonfurloughed individuals who lost their jobs and apply propensity score matching based on their pretreatment characteristics. Our findings show that the probability of being re-employed in the next quarter significantly increased for the treated (furlough granted group). These results appear robust across models, after testing a wide range of matching specifications that reveal a reemployment probability premium of near 30 percentage points in the group of workers who had been furloughed for a single quarter. Nevertheless, a different time arrangement affected the magnitude of the effect, suggesting that it may decrease with the furlough duration. Thus, an analogous analysis for a longer (two quarter) scheme estimated a still positive but smaller effect, approximately 12 percentage points. Although this finding might alert against long lasting schemes under persistent recessions, this policy still stands as a useful strategy to face essentially transitory adverse shocks. Highlights: We present a novel contribution that assesses the causal effects of furlough programs using updated microdata from the pandemic period in Spain. We found key evidence of a robust and positive average effect (approx. 30 percentage points) of furlough schemes on the probability of being re-employed in the short run. However, this positive effect was time-dependent and lessened when the furlough scheme was extended for two consecutive quarters (down to 12 percentage points). This result suggests effectiveness losses with time and advises against long-lasting schemes. [ABSTRACT FROM AUTHOR]

Following the covid-induced lockdowns, many commented on the role the German model of Kurzarbeit could play in reducing unemployment. Other countries emulated the model. Looking at the experiences of Germany, the UK, Sweden and the USA, the article analyses the strengths and weaknesses of short-time working (STW) schemes. It asks whether STW has been well designed to have optimal short and longer run impact. It is quite effective as a short-term palliative, but in longer downturns, its weaknesses come to the fore. It is by no means clear that the UK needs a permanent replacement for the furlough. [ABSTRACT FROM AUTHOR]

The Unemployment Insurance (UI) system in the United States has played a decisive lifeline role in effectively mitigating the economic and social impact of the Covid-19 pandemic, which prompted the largest expansion of UI programs in history, one that is unprecedented in scope, scale and cost. However, the crisis has once again exposed some well-known challenges of the program, perhaps best epitomized by the steady decline since the 1980s of both the recipiency rate and the wage replacement rate, which is partly related to the UI system's funding structure. As a result, on the eve of the pandemic less than one in three unemployed workers used to collect UI benefits – of lower amounts and often for shorter periods of time than before – despite that the average duration of unemployment had almost doubled in the aftermath of the Great Recession. The pandemic has also laid bare additional shortcomings – most notably in the effectiveness of the UI delivery infrastructure to provide timely and accurate payments – which have prompted further calls for modernizing the UI system. The objective of this paper is threefold: first, after a brief description of the main structural characteristics of the UI system, it compares the role played by UI in mitigating the impact of the 2008–09 Great Recession and the 2020 Covid-19 pandemic; second, it reviews the empirical evidence from the pandemic on potential demand-side (countercyclical stabilization) and supply-side (job-search disincentives) effects of emergency extensions of UI programs. Finally, it discusses the main lessons that the expansion of UI programs to respond to the pandemic can offer to inform – and enrich – the debate on whether and how to reform the UI system. The experience with the UI system provides fundamental lessons that can usefully inform the debate on whether and how to introduce – for example in Europe – a common unemployment insurance scheme for macroeconomic stabilization.

Short-time work (STW) in Germany allows for a lot of flexibility in actual usage. Ex ante, firms notify the Employment Agency about the total number of employees eligible, and, up to the total granted, firms can flexibly choose how many employees actually use STW. In firm-level surveys, which provide timely information on STW in Germany, over-reporting of the number of employees on STW is prevalent. This study explores reasons for STW over-reporting based on a high-frequency and low-cost survey initiated during the Covid-19-pandemic (BeCovid) and a low-frequency and high-cost long-running survey (BP). Merging administrative records on actual use of STW, firms that use STW prove more likely to participate in the BeCovid survey. Multi-establishment firms over-report STW because they tend to report STW for all subfirms. The BP uses more interview time and confirms the over-reporting of STW use in the survey month, while—crucially—the over-reporting drops sharply with a few months of retrospection. [ABSTRACT FROM AUTHOR]

We build a small open economy business cycle model with search and matching frictions to assess the impact of labor market policies on the dynamics of employment and other macroeconomic variables in emerging economies. The model features an endogenous selection mechanism by which inefficient jobs are destroyed in recessions, thus linking labor market dynamics and aggregate productivity. In a quantitative version of the model calibrated to the Mexican economy, we find that reducing labor taxes and increasing firing costs would have mitigated the fall in employment during the Great Recession of 2008–2009. However, by preventing firms from dismissing low-productive workers, higher firing costs would have impaired this selection mechanism, thus generating a larger fall in TFP and delaying the recovery. Cutting labor taxes, in contrast, have minor effects on productivity by mainly affecting hiring decisions. An extension of the model shows that lowering labor taxes provides an additional productivity boost by expanding formal hirings and reducing the informality rate. [ABSTRACT FROM AUTHOR]

We evaluate the sources of wage losses of workers displaced due to firm closure by comparison of workers' wages before and after displacement. We decompose the sources of the wage losses into the contribution of firm, match quality, and job title fixed effects. Sorting into lower paying job titles represents the largest component of the monthly wage loss of displaced workers, accounting for 37 percent of the total average monthly wage loss compared to 31 percent for the firm and 32 percent for the match effects. With respect to the hourly wage losses, job title effects account for 46 percent of the total loss, while firm and match effects contribute in equal shares representing each 27 percent of the loss. [ABSTRACT FROM AUTHOR]

Three features of real‐life reforms of dual employment protection legislation (EPL) systems are particularly hard to study through the lens of standard labor‐market search models: (i) the excess job turnover implied by dual EPL, (ii) the nonretroactive nature of EPL reforms, and (iii) the transition dynamics from dual to a unified EPL system. In this paper, we develop a computationally tractable model addressing these issues. Our main finding is that the welfare gains of reforming a dual EPL system are sizeable and achieved mostly through a decrease in turnover at short job tenures. This conclusion continues to hold in more general settings featuring wage rigidities, heterogeneity in productivity upon matching, and human capital accumulation. We also find substantial cross‐sectional heterogeneity in welfare effects along the transition to a unified EPL scheme. Given that the model is calibrated to data from Spain, often considered as the epitome of a labor market with dual EPL, our results should provide guidance for a wide range of reforms of dual EPL systems. [ABSTRACT FROM AUTHOR]

This paper studies the intergenerational impact of parental job loss on school performance during the Great Recession in Spain. Collecting data through parental surveys in a school in the province of Barcelona, I obtain information about the parental labour market status before and after the Great Recession. I can then link this information to repeated information on their children's school performance, for a sample of over 300 students. Using individual fixed effects, the estimates show a negative and significant decrease on average grades of around 15% of a standard deviation after father's job loss. These results are mainly driven by those students whose fathers suffer long unemployment spells. In contrast, the average impact of mother's job loss on school performance is close to zero and non-significant. The decline in school performance during the Great Recession after father's job loss, particularly among disadvantaged students, could result in detrimental long-term effects that might contribute to increased inequality. This could be an important and underemphasised cost of recessions. [ABSTRACT FROM AUTHOR]

The key assumption in regression discontinuity analysis is that the distribution of potential outcomes varies smoothly with the running variable around the cutoff. In many empirical contexts, however, this assumption is not credible; and the running variable is said to be manipulated in this case. In this paper, we show that while causal effects are not point identified under manipulation, one can derive sharp bounds under a general model that covers a wide range of empirical patterns. The extent of manipulation, which determines the width of the bounds, is inferred from the data in our setup. Our approach therefore does not require making a binary decision regarding whether manipulation occurs or not, and can be used to deliver manipulation‐robust inference in settings where manipulation is conceivable, but not obvious from the data. We use our methods to study the disincentive effect of unemployment insurance on (formal) reemployment in Brazil, and show that our bounds remain informative, despite the fact that manipulation has a sizable effect on our estimates of causal parameters. [ABSTRACT FROM AUTHOR]

In this paper, we investigate the causes and consequences of "unclaimed" unemployment insurance (UI) benefits. A search model is developed where the costs to collecting UI benefits include both a traditional "fixed" administrative cost and an endogenous cost arising from worker and firm interactions. Experience rated taxes give firms an incentive to challenge a worker's UI claim, and these challenges are costly for the worker. Exploiting data on improper denials of UI benefits across states in the U.S. system, a two‐way fixed effects analysis shows a statistically significant negative relationship between the improper denials and the UI take‐up rate, providing empirical support for our model. We calibrate the model to elasticities implied by the two‐way fixed effects regression to quantify the relative size of these UI collection costs. The results imply that on average the costs associated with firm challenges of UI claims account for 41% of the total costs of collecting, with improper denials accounting for 8% of the total cost. The endogenous collection costs imply the unemployment rate responds much slower to changes in UI benefits relative to a model with fixed collection costs. Finally, removing all eligibility requirements and allowing workers to collect UI benefits without cost shows these costs to be 4.5% of expected output net of vacancy costs. Moreover, this change has minimal impact on the unemployment rate. [ABSTRACT FROM AUTHOR]

We use administrative data to examine the effect of a 50 percent benefit cut for young unemployed claimants in Ireland during the Great Recession. Because the cut applied only to new spells, claimants whose unemployment start dates differed by one day received very different benefits; we exploit this feature in a regression discontinuity analysis. We find that the benefit cut significantly reduced unemployment duration, with exits to training and work accounting for the majority of this effect. [ABSTRACT FROM AUTHOR]

This paper explores the short-term employment effect of deregulating job protection for regular workers and how it varies with prevailing business cycle conditions. We apply the local projection method to a newly constructed dataset of major regular job protection reforms covering 26 advanced economies over the past four decades. The analysis relies on country-sector-level data, using as identifying assumption the fact that stringent dismissal regulations are more binding in sectors that are characterized by a higher 'natural' propensity to make regular adjustments to the workforce. We find that the response of sectoral employment to deregulation depends crucially on the state of the economy at the time of reform—deregulation increases employment if implemented during an economic expansion, but reduces employment if carried out in a recession. These findings are consistent with theory and are robust to a battery of sensitivity checks. [ABSTRACT FROM AUTHOR]

We study unemployment insurance in a framework where the main source of heterogeneity among agents is the type of household they live in: some agents live alone while others live with their spouses as a family. Our exercise is motivated by the fact that married individuals can rely on spousal income to smooth labor market shocks, while singles cannot. We extend a version of the standard incomplete‐markets model to include two‐agent households and calibrate it to the US economy with special emphasis on matching differences in labor market transitions across gender and marital status as well as aggregate wealth moments. Our central finding is that changes to the current unemployment insurance program are valued differently by married and single households. In particular, a more generous unemployment insurance reduces the welfare of married households significantly more than that of singles and vice versa. We show that this result is driven by the amount of self‐insurance existing in married households, and thus, we highlight the interplay between self‐ and government‐provided insurance and its implication for policy. [ABSTRACT FROM AUTHOR]

In the aftermath of the Great Recession, the Spanish government reduced the replacement rate (RR) from 60 percent to 50 percent after 180 days of unemployment for all spells beginning on or after July 15, 2012. Using Social Security data and a differences-in-differences approach, we find that reducing the RR by ten percentage points (or 17 percent) increases workers' odds of finding a job by 41 percent relative to similar workers not affected by the reform. To put it differently, the reform reduced the mean expected unemployment duration by 5.7 weeks (or 14 percent), implying an elasticity of 0.86. A regression discontinuity approach indicates that the reform increased the job-finding rate by 26 percent. We find strong behavioral effects as the reform reduced the expected unemployment duration right from the beginning of the unemployment spell. While the reform had no effect on wages, it did not decrease other measures of post-displacement job-match quality. After 15 months, the reform decreased unemployment insurance expenditures by 16 percent, about one-half of which are explained by job seekers' behavioral changes. [End Page 119] [ABSTRACT FROM AUTHOR]

The purpose of this paper is to simultaneously investigate whether the active labour market programmes (ALMPs) and the imposition of benefit sanctions help unemployed insured workers in Denmark to find a job sooner than those who do not get any activation. Earlier studies have modelled ALMPs and benefit sanctions separately, which may have resulted in over- or underestimation of the true effect. As part of our empirical methodology, we used a multivariate mixed proportional hazard model and optimally selected the number of support points for the specification of unobserved heterogeneity distribution in our sample. Our results revealed that the impositions of both benefit sanctions and employment subsidies in the private sector have a positive impact on reducing unemployment duration. Some policy implications are drawn. [ABSTRACT FROM AUTHOR]

This paper uses a high quality administrative longitudinal dataset to assess the impact of an active labour market intervention consisting of referral for interview plus job search assistance with the public employment service in the Republic of Ireland. During the period of the interventions, both job search monitoring and sanctions were virtually non-existent in the country. We found that, relative to a control group that received no public employment service assistance, unemployed individuals that received the interview letter and participated in job search assistance were 11.2 percentage points less likely to have exited to employment prior to 12 months. This result holds when tested against the influences of both sample selection and unobserved heterogeneity bias. The negative treatment impact is attributed to individuals lowering their job search intensity on learning through the activation interview of the lax nature of the activation process in Ireland at that time. The research finds job search assistance being less effective unless combined with other key aspects of the activation process, such as regular job search monitoring and sanctions for non-compliance. [ABSTRACT FROM AUTHOR]

I model job‐search monitoring in the optimal unemployment insurance framework, in which job‐search effort is the worker's private information. In the model, monitoring provides costly information upon which the government conditions unemployment benefits. Using a simple one‐period model with two effort levels, I show analytically that the monitoring precision increases and the utility spread decreases if and only if the inverse of the worker's utility in consumption has a convex derivative. The quantitative analysis that follows extends the model by allowing a continuous effort and separations from employment. That analysis highlights two conflicting economic forces affecting the optimal precision of monitoring with respect to the generosity of the welfare system: higher promised utility is associated not only with a higher cost of moral hazard, but also with lower effort and lower value of employment. The result is an inverse U‐shaped precision profile with respect to promised utility. [ABSTRACT FROM AUTHOR]

The purpose of this paper is to study the role of social insurance design in a comparative-advantage model of offshoring and trade. To do so, we incorporate social insurance into a modified version of the Grossman and Rossi-Hansberg (Am Econ Rev 98(5):1978-1997, 2008) model by formalizing its administrative, compensation, cost, labor-supply and productivity effects. The compensation and productivity effects, which are novel, give rise to important offshoring and trade implications that can contribute to explain how social insurance provision can be sustained under globalization pressure and why similar globalization pressure can lead to different skill premia developments in Western economies. [ABSTRACT FROM AUTHOR]