Institute for the Study of Labor

About: Institute for the Study of Labor is a nonprofit organization based out in Bonn, Germany. It is known for research contribution in the topics: Wage & Unemployment. The organization has 2039 authors who have published 13475 publications receiving 439376 citations.

Microeconometric Evaluation of the Active Labour Market Policy in Switzerland

Abstract: Microeconometric Evaluation of the Active Labour Market Policy in Switzerland In the second part of the 1990?s Switzerland conducted an ambitious active labour market policy (ALMP) encompassing a wide variety of programmes. We evaluate the effects of these programmes on the individual employment probability of potential participants. Our econometric analysis uses unusually informative data originating from administrative unemployment and social security records. We apply a matching estimator adapted for the case of multiple programmes. We find substantial positive effects for one particular programme that is a unique feature of the Swiss ALMP. It consists of a wage subsidy for temporary jobs in the regular labour market that would otherwise not be taken up by the unemployed. We also find large negative effects for traditional employment programmes operated in sheltered labour markets. For training courses the results are mixed.

Enforcement of Contribution Norms in Public Good Games with Heterogeneous Populations

Abstract: Economic and social interaction takes place between individuals with heterogeneous characteristics. We investigate experimentally the emergence and informal enforcement of different contribution norms to a public good in homogeneous and different heterogeneous groups. When punishment is not allowed all groups converge towards free-riding. With punishment, contributions increase and differ distinctly across groups and individuals with different induced characteristics. We show econometrically that these differences are not accidental but enforced by punishment. The enforced contribution norms are related to fairness ideas of equity regarding contribution possibilities but not regarding earnings. Individuals with different characteristics tacitly agree on the norm to be enforced, even if this leads to large payoff differences. Our results also emphasize the role of details of the environment that may alter focal contribution norms in an important way.

Key lessons for labour market reforms: evidence from OEGD countries' experiences

Abstract: Summary II Since 1992, the OECD has been intensively researching into the causes and consequences of high, persistent unemployment and effective remedies to tackle it. In particular, since the Jobs Stu& was published in 1994, the OECD has elaborated detailed policy recommendations for each of its member countries and closely monitored their progress (or lack of it) in implementing these recommendations. This process identified six countries that ha1.e succeeded in reducing unemployment significantly in the 1990s, together with a few other countries that have maintained unemployment at relatively low levels. The purpose of this paper is to distil the lessons for labour market reforms from the szicceues and faihres. It begins by discussing the structural urlemploj~ment indicator that the OECD has used to identify the successful countries. This is followed by a review of the cross-country determinants of structural unemplojrment that focuses on the role of labour market policies and certain institutional factors. One novelty is the specific attention paid to potential interactions between labour market policies and institutional features of the collective bargaining system. The paper also highlights several key lessons for labour market reforms drawing on recent OECD research. In particular, it discusses the role played by labour market insiders in the process of reform. It considers the uTay in which concerns about the equity effects of labour market reforms have played a role in shaping policies. Finally, it discusses the role of crises as a potential catalyst for needed reforms. II

Building a Better Theory of Well-Being

Abstract: What do social surveys of life cycle experience tell us about the determinants of subjective well-being? First, that the psychologists' setpoint model is wrong. Life events in the nonpecuniary domain, such as marriage, divorce, and physical disability, have a lasting effect on well-being, and do not simply deflect the average person temporarily above or below a setpoint given by genetics and personality. Second, mainstream economists' inference that in the pecuniary domain "more is better," based on revealed preference theory, is wrong. An increase in income, and thus in the goods at one's disposal, does not bring with it a lasting increase in well-being, because of the negative effect on utility of hedonic adaptation and social comparison. The utility anticipated ex ante from an increase in consumption turns out ex post to be less than expected, as one adapts to the new level of living, and as the living levels of others improve correspondingly. A better theory of well-being builds on the evidence that adaptation and social comparison affect utility more in pecuniary than nonpecuniary domains. The failure of individuals to anticipate that these influences disproportionately undermine utility in the pecuniary domain leads to an excessive allocation of time to pecuniary goals at the expense of nonpecuniary goals, such as family life and health, and reduces well-being. There is need to devise policies that will yield better-informed individual preferences, and thereby increase individual and societal subjective well-being.

Teenage Childbearing and its Life Cycle Consequences: Exploiting a Natural Experiment

Abstract: In this paper, we exploit a 'natural experiment' associated with human reproduction to identify the effect of teen childbearing on subsequent educational attainment, family structure, labor market outcomes and financial self-sufficiency. In particular, we exploit the fact that a substantial fraction of women who become pregnant experience a miscarriage (spontaneous abortion) and thus do not have a birth. If miscarriages were purely random and if miscarriages were the only way, other than by live births, that a pregnancy ended, then women, who had a miscarriage as a teen, would constitute an ideal control group with which to contrast teenage mothers. Exploiting this natural experiment, we devise an Instrumental Variables (IV) estimators for the consequences of teen mothers not delaying their childbearing, using data from the National Longitudinal Survey of Youth, 1979 (NLSY79). Our major finding is that many of the negative consequences of not delaying childbearing until adulthood are much smaller than has been estimated in previous studies. While we do find adverse consequences of teenage childbearing immediately following a teen mother's first birth, these negative consequences appear short- lived. By the time a teen mother reachers her late twenties, she appears to have only slightly more children, is only slightly more likely to be single mother, and has no lower levels of educational attainment than if she had delayed her childbearing to adulthood. In fact, by this age teen mothers appear to be better off in some aspects of their lives. Teenage childbearing appears to raise levels of labor supply, accumulated work experience and labor market earnings and appears to reduce the chances of living in poverty and participating in the associated social welfare programs. These estimated effects imply that the cost of teenage childbearing to U.S. taxpayers is negligible. In particular, our estimates imply that the widely held view that teenage childbearing imposes a substantial cost on government is an artifact of the failure to appropriately account for pre- existing socioeconomic differences between teen mothers and other women when estimating the causal effects of early childbearing. While teen mothers are very likely to live in poverty and experience other forms of adversity, our results imply that little of this would be changed just by getting teen mothers to delay their childbearing into adulthood.