Wolter H.J. Hassink

Managed competition and consumer price sensitivity in social health insurance

This paper examines whether the introduction of managed competition in Dutch social health insurance has resulted in effective price competition among insurance funds. We find evidence of limited price competition, which may be caused by low consumer price sensitivity. Using aggregate panel data from all insurance funds over the period 1996-1998, estimated premium elasticities of market share are -0.3 for compulsory coverage and -0.8 for supplementary coverage. These elasticities are much smaller than in managed competition settings in US group insurance. This may be explained by differences in switching experience and higher search costs associated with individual insurance.

Do Financial Bonuses Reduce Employee Absenteeism? Evidence from a Lottery

This paper investigates the effectiveness of a lottery-based bonus reward system in reducing employee absenteeism. Starting in June 2002, a Dutch manufacturing firm held a monthly lottery for workers who had taken no sick leave in the previous three months and had not previously won the lottery. In a given lottery, each of seven contestants whose names were randomly drawn received 75 Euros. The authors find statistically significant differences in absence patterns across groups of workers with different eligibility statuses depending on their attendance records and whether they had previously won. One finding is that absenteeism rose among workers who, having won already, were ineligible for further participation. Nevertheless, and although the reduction in firm-wide absence associated with the lottery drifted from 2.4 percentage points to 1.1 percentage points after seven months, the authors conclude that the lottery was of net benefit to the firm.

Wage differences between internal and external candidates

Purpose - The purpose of this paper is to investigate three hypotheses for the existence of a wage premium between incumbents and employees who are hired from other employers in the external labour market. Design/methodology/approach - The paper presents estimates of wage equations for a sample of externally hired workers and internally promoted employees. It uses an employer-employee matched data set of Dutch firms from all economic sectors (1998). It controls for various observed characteristics of the firm, the worker and the job. Findings - The estimates reject the hypothesis that firms rely more on observable characteristics for wage formation of external candidates. Nor do the estimates favor the prediction that there is a wage premium due to the option value of risky employees. Finally, employees who are recruited internally have on average a 15 percent higher wage (net of tenure) than comparable employees who are hired from other employers. Research limitations/implications - It was found that there was a limited possibility of identifying risky employees. Practical implications - Firms do not reward risky employees; the incumbents seem to be of better quality than the external hirees. Originality/value - Here the focus is on hirees who were previously employed elsewhere. Usually, a broader definition of external hiring is used.

An empirical note on job turnover and internal mobility of workers

I find that large firms have a higher rate of job turnover in which internal mobility of workers is involved. These firms are able to reduce turnover costs, by making use of their ability to attain a higher internal mobility rate.

Multiple Glass Ceilings

Both vertical (between job levels) and horizontal (within job levels) mobility can be sources of wage growth. We find that the glass ceiling operates at both margins. The unexplained part of the wage gap grows across job levels (glass ceiling at the vertical margin) and across the deciles of the intra-job-level wage distribution (glass ceiling at the horizontal margin). This implies that women face many glass ceilings, one for each job level above the second, and that the glass ceiling is a pervasive phenomenon. In the Netherlands it affects about 88% of jobs, and 81% of Dutch women in employment work in job levels where a glass ceiling is present.

Cash benefits in long-term home care

This paper tests empirically for differences in prices paid between parts of the cash benefit that clients may and not may keep when it is unspent. In The Netherlands, demand-side subsidies were introduced in 1996. Clients receive a cash benefit to purchase the type of home care (housework, personal care, support with mobility, organisational tasks or social support) they need from the care supplier of their choice (private care provider, regular care agency, commercial care agency or paid informal care provider). Furthermore, they negotiate with the care supplier about price and quantity. Our main findings are the following: (1) the component of the cash benefit that a client may not keep when it is unspent has a positive impact on the price of care. (2) In contrast, the components of the cash benefit a client may keep when it is unspent, have no or a negative impact on the price of care. Both results have important implications for designing health policy. If cash benefits are introduced in long-term home care in an attempt to make consumers more conscious about prices, it is only successful when consumers may keep the unspent part of the cash benefit.

Filling vacancies: an empirical analysis of the cost and benefit of search in the labour market

This paper investigates empirically the factors that affect the cost–benefit ratio of employers’ search. The empirical analysis is based on a small Dutch data set containing individual information on filled vacancies. It is found that firms that use advertisements during recruitment are sensitive to labour market conditions; their search cost per applicant rises (drops) in tight (slack) labour markets because of the diminished ability of advertisements to generate applicants in tight labour markets. Furthermore, it is found that the high search cost incurred by posting identical vacancies is more than compensated for by the benefits from having a larger flow of applicants.

The structure of hiring and labour market tightness

Abstract This paper examines the structure of firms’ hiring processes using Dutch data compiled from filled vacancies. If more than one employee is to be hired, firms may choose either to hire all their employees at one time (instantaneous hiring) or to hire them over a longer period of time (gradual hiring). We find that 56% of the employees are hired at one time. Furthermore, a tightening of the labour market leads to a decrease in the probability of all employees being hired at one time.

On the Endogeneity of Output in Dynamic Labour-Demand Models.

This paper investigates the endogeneity of output in the context of the standard dynamic labour-demand model. Using a panel of Dutch firms, we find that the assumption of endogeneity of output cannot be rejected, so that an adjusted procedure has to be followed in which information on the output expectations of entrepreneurs is used. The estimated effect of the endogenous, current output variable on employment appears to be significantly larger than the effect of the exogenous, expected output variable. The adjustment parameter of employment is however, remarkably robust against distinct specifications for output.

Labour demand and job-to-job movement

The relationship between labour demand and job-to-job movement is investigated, both theoretically and empirically, at the macro level. It concentrates on the role of the employment regime (hiring, do-nothing or firing) and the hiring and firing costs. The exact upper bounds of the marginal hiring costs of an employed worker are derived, for which job mobility between two firms yields a positive aggregate relationship between job-to-job movement and employment. The relationship is estimated as a cointegration model for the Netherlands; it appears that the inclusion of the job-to-job mobility rate may provide a substantial improvement of the estimated labour-demand equation.