Gerard J. van den Berg

NONSTATIONARITY IN JOB SEARCH THEORY

Generally, structural job search models are taken to be stationary. In this paper models are examined in which every exogenous variable can cause nonstationarity, for instance because its value is dependent on unemployment duration. A general differential equation that describes the evolution of the reservation wage over time is derived. As an empirical illustration a nonstationary structural model is estimated that focuses on the consequences of a downward shift in the level of benefits. It appears that the elasticity of duration with respect to the level of benefits after the shift is much larger than the elasticity with respect to the level before the shift.

Economic Conditions Early in Life and Individual Mortality

We analyze the effect of economic conditions early in life on individual mortality rate later in life, using business cycle conditions early in life as an exogenous indicator. Individual records from Dutch registers of birth, marriage, and death, covering a window of unprecedented size (1912-2000) are merged with historical data on macroeconomic and health indicators. We correct for secular changes over time and other mortality determinants. We nonparametrically compare those born in a recession to those born in the preceding boom, and we estimate duration models where the individuals mortality rate depends on current conditions, conditions early in life, age individual characteristics, including individual socio-economic indicators, and interaction terms. The results indicate a significant negative effect of economic conditions early in life on individual mortality rates at all ages.

Punitive Sanctions and the Transition Rate from Welfare to Work

In The Netherlands, the average exit rate out of welfare is dramatically low. Most welfare recipients have to comply with guidelines on job search effort that are imposed by the welfare agency. If they do not, then a sanction in the form of a temporarily benefit reduction can be imposed. This paper investigates the effect of such sanctions on the transition from welfare to work using a unique set of rich administrative data on welfare recipients in The Netherlands. We find that the imposition of sanctions substantially increases the individual transition rate from welfare to work. We also describe the other determinants of the transition from welfare to work.

Equilibrium Search with Continuous Productivity Dispersion: Theory and Nonparametric Estimation

In this article we develop an equilibrium search model with a continuous distribution of firm productivity types within a given labor market. We characterize equilibrium, derive expressions for the endogenous equilibrium wage distributions, and characterize the set of wage distributions that can be generated by the model. We develop a structural nonparametric estimation method for the productivity distribution. We estimate the model using French longitudinal survey data on labor supply, and we compare the results with those from a French panel data set of firms. The results are informative on the degree to which firms exploit search frictions.

The identifiability of the mixed proportional hazards competing risks model

Summary. We prove identification of dependent competing risks models in which each risk has a mixed proportional hazard specification with regressors, and the risks are dependent by way of the unobserved heterogeneity, or frailty, components. We show that the conditions for identification given by Heckman and Honore can be relaxed. We extend the results to the case in which multiple spells are observed for each subject.

Unemployment dynamics and duration dependence

A major issue in the analysis of unemployment durations concerns distinguishing genuine duration dependence of the exit rate out of unemployment from unobserved heterogeneity. We present a method for the nonparametric estimation of both phenomena, designed to be applicable to time-series data on aggregate outflows from different duration classes. The model explicitly takes into account that individual exit rates are affected by the business cycle and by seasonal effects. The method is applied to U.S. data. We find diverging duration effects among black and white individuals. However, except for white males, duration dependence is dominated by unobserved heterogeneity.A major issue in the analysis of unemployment durations concerns distinguishing genuine duration dependence of the exit rate out of unemployment from unobserved heterogeneity. The authors present a method for the nonparametric estimation of both phenomena, designed to be applicable to time-series data on aggregate outflows from different duration classes. The model explicitly takes into account that individual exit rates are affected by the business cycle and by seasonal effects. The method is applied to U.S. data. The authors find diverging duration effects among black and white individuals. However, except for white males, duration dependence is dominated by unobserved heterogeneity. Copyright 1996 by University of Chicago Press.

Unemployment dynamics and duration dependence in France, the Netherlands and the United Kingdom

This paper analyzes unemployment dynamics in the French, Dutch, and U.K. labor market. It presents a method to distinguish between the effects of duration dependence and unobserved heterogeneity on the exit rate out of unemployment. It turns out that for British male unemployed there is strong genuine negative duration dependence. For French unemployed, there is no strong duration dependence during the first year of unemployment, while for Dutch unemployed there is nonmonotonic duration dependence. For all groups of French and Dutch individuals, significant unobserved heterogeneity is found. For U.K. male unemployed, heterogeneity seems to be empirically unimportant. Copyright 1994 by Royal Economic Society.

The Effect of Vocational Employment Training on the Individual Transition Rate from Unemployment to Work

Amongst the active labor market policy programs for the unemployed in Sweden, the vocational employment training program is the most ambitious and expensive. We analyze its effect on the individual transition rate from unemployment to employment using a unique set of administrative data and a novel empirical approach that exploits variation in the timing of training and exit to work. The approach involves the estimation of duration models, and it allows us to quantify the individual effect of training in the presence of selectivity on unobservables. The data contain the full population of unemployed in the period 1993-2000 and include multiple unemployment spells for many individuals. The results indicate a significantly positive effect on exit to work after exiting the program. Its magnitude is very large shortly after leaving the course but diminishes afterwards. If we also take account of the time spent in the program then the net effect of participation in the program on the mean unemployment duration is close to zero.

Long-run effects on longevity of a nutritional shock early in life: The Dutch potato famine of 1846-1847

Nutritional conditions in utero and during infancy may causally affect health and mortality during childhood, adulthood, and at old ages. This paper investigates whether exposure to a nutritional shock in early life negatively affects survival at older ages, using individual data. Nutritional conditions are captured by exposure to the Potato famine in the Netherlands in 1846-1847, and by regional and temporal variation in market prices of potato and rye. The data cover the lifetimes of a random sample of Dutch individuals born between 1812 and 1902 and provide individual information on life events and demographic and socioeconomic characteristics. First we non-parametrically compare the total and residual lifetimes of individuals exposed and not exposed to the famine in utero and/or until age 1. Next, we estimate survival models in which we control for individual characteristics and additional (early life) determinants of mortality. We find strong evidence for long-run effects of exposure to the Potato famine. The results are stronger for boys than for girls. Boys and girls lose on average 4, respectively 2.5 years of life after age 50 after exposure at birth to the Potato famine. Lower social classes appear to be more affected by early life exposure to the Potato famine than higher social classes. These results confirm the mechanism linking early life (nutritional) conditions to old-age mortality. Finally, higher food prices at birth appear to reduce later life mortality of children of farmers from higher social classes. We interpret this as an income effect.

Empirical Inference with Equilibrium Search Models of the Labour Market

This paper examines the use of equilibrium search models in the empiricalanalysis of labor markets. We survey the literature on structural estimationof these models with micro data on wages and durations, and we discuss theadvantages of the equilibrium approach, for policy analysis and forunderstanding a number of stylized facts that are hard to explain otherwise.During the past years, substantial progress has been made in terms of theexplanatory power of these models. We finish with a critical examination ofthe extent to which the approach can be fruitfully applied to (matchedworker-)firm data.