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Long-term unemployment and labor force participation : a decomposition of unemployment to test for the discouragement and added worker hypotheses

Author

Listed:
  • Fuchs, Johann

    (Institute for Employment Research (IAB), Nuremberg, Germany)

  • Weber, Enzo

    (Institute for Employment Research (IAB), Nuremberg, Germany ; Univ. Regensburg)

Abstract

"We sharpen tests for 'discouragement' and 'added worker' effects by splitting the explanatory variable - the unemployment rate - into a short-term and a long-term component. While short-term unemployment might not result in additional workers on a large scale, long-term unemployment reduces household income more, increasing the need for additional income. On the other hand, it may discourage older workers for psychological and sociological reasons. Applying our model to the German labor market, these hypotheses could be confirmed. Even for men, about whom only few empirical studies on this issue are available, distinguishing between short-term and long-term unemployment reveals discouragement effects." (Author's abstract, IAB-Doku) ((en))

Suggested Citation

  • Fuchs, Johann & Weber, Enzo, 2015. "Long-term unemployment and labor force participation : a decomposition of unemployment to test for the discouragement and added worker hypotheses," IAB-Discussion Paper 201532, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    • Handle: RePEc:iab:iabdpa:201532
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    Cited by:

    1. Maridueña-Larrea, Ángel & Martín-Román, Ángel L., 2023. "The asymmetric cyclical behaviour of female labour force participation in Latin America," MPRA Paper 117408, University Library of Munich, Germany.
    2. Nicholas Apergis & Ibrahim Arisoy, 2017. "Unemployment and labor force participation across the US States: new evidence from panel data," SPOUDAI Journal of Economics and Business, SPOUDAI Journal of Economics and Business, University of Piraeus, vol. 67(4), pages 45-84, October-D.
    3. Möller, Joachim, 2016. "Lohnungleichheit: Gibt es eine Trendwende? (German wage inequality: Is there a trend reversal?)," IAB-Discussion Paper 201609, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    4. Gehrke, Britta & Weber, Enzo, 2018. "Identifying asymmetric effects of labor market reforms," European Economic Review, Elsevier, vol. 110(C), pages 18-40.
    5. Bod’a, Martin & Považanová, Mariana, 2021. "Output-unemployment asymmetry in Okun coefficients for OECD countries," Economic Analysis and Policy, Elsevier, vol. 69(C), pages 307-323.
    6. Maridueña-Larrea, Ángel & Martín-Román, Ángel L., 2023. "The unemployment invariance hypothesis and the implications of added and discouraged worker effects in Latin America," MPRA Paper 115966, University Library of Munich, Germany.
    7. Martín-Román, Ángel L., 2022. "Beyond the added-worker and the discouraged-worker effects: the entitled-worker effect," Economic Modelling, Elsevier, vol. 110(C).
    8. Martina Rengers & Johann Fuchs, 2022. "Stille Reserve in Deutschland: Gemeinsamkeiten und Unterschiede zweier Konzepte [Hidden labour force in Germany: similarities and differences between two concepts]," AStA Wirtschafts- und Sozialstatistisches Archiv, Springer;Deutsche Statistische Gesellschaft - German Statistical Society, vol. 16(3), pages 189-230, December.
    9. Jan Gromadzki, 2019. "The Added Worker Effect, Employment Contracts, and the Reasons for the Wife’s Inactivity," IBS Working Papers 02/2019, Instytut Badan Strukturalnych.
    10. Krzysztof Bartosik, 2020. "Świadczenia pieniężne na rzecz dzieci a podaż pracy kobiet w krajach OECD," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 3, pages 83-110.
    11. Jajati Keshari Parida & Shiba Shankar Pattayat & Sher Verick, 2023. "Why is the size of discouraged labour force increasing in India?," Economic Change and Restructuring, Springer, vol. 56(5), pages 3601-3630, October.
    12. Fuchs, Johann & Weber, Brigitte, 2021. "Neue Schätzungen für die Stille Reserve - erstmalig Anwendung des IAB-Konzepts auf Gesamtdeutschland," IAB-Forschungsbericht 202106, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].

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    More about this item

    Keywords

    Bundesrepublik Deutschland ; Erwerbsbeteiligung ; Geschlechterverteilung ; kurzfristige Arbeitslosigkeit ; Langzeitarbeitslosigkeit ; altersspezifische Faktoren ; stille Reserve ; 1983-2011;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure

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