Essays on Unemployment Duration and Programme Evaluation

Abstract

The process of labour market transformation in the 1990s attracted a lot of attention from economists and policy makers. Unprecedented changes, like rapid reforms in Central and Eastern Europe and later the expansion of the European Union, require a deeper understanding of current labour-market trends. This dissertation provides three essays focusing on the impact of the active labour market programmes and the determinants of unemployment duration in the second half of the 1990s in Russia and Sweden.

The first two chapters of my dissertation provide a foundation for a policy analysis of issues related to unemployment duration and for an evaluation of the effect of training programmes offered by the state to unemployed individuals in urban Russia.

Paper 1 investigates the impact of training programmes on wages of individuals. Using data from the official unemployment register combined with the information from the follow-up survey, I use the method of ‘propensity-score matching’ to evaluate the effect of training programmes. The result suggests that participants of training programmes receive higher wages after deregistering from the employment office. The paper identifies important gender differences; the effect of training was smaller for females.

Paper 2 examines the determinants of unemployment duration of individuals registered as unemployed. The results of a piece-wise constant proportional hazard model imply that the hazard of finding a job is non-monotonic and tends to decrease with time spent in unemployment. An important finding is that only 29% of the unemployed obtained a job simultaneously with deregistering from the Public Employment Office (PEO). Others continued to search for job on their own. I find that the intensity of the job search increases after individuals leave the public employment office.

The final chapter of the thesis, Paper 3, addresses the question of whether the possibility of exit from unemployment to the previous employer affects the duration of unemployment spells in Sweden. The empirical analysis is performed using an employee-employer dataset that includes a number of enterprise characteristics and provides information on individual tenure. The econometric approach employs estimation of a competing risk duration model to distinguish between exits to the previous employer and exits to a new job. The findings suggest that greater tenure raises the risks of transitions to the previous employer, while high education levels increase the risk of obtaining a new job. Moreover, the impact of benefit exhaustion is observed only for transitions to new employment.