labour market flexibility and inequality: the changing skill ......(nace g-q)-kof index of economic...

Labour Market Flexibility and Inequality: The Changing Skill-Based Temporary Employment and Unemployment Risks in Europe

Michael Gebel

(MZES, Mannheim)Johannes Giesecke (WZB, Berlin)

2Michael Gebel (MZES, Mannheim) and Johannes Giesecke (WZB, Berlin)

1. Motivation

“Unified economic theory”

(Blau/Kahn 2002)Structural changes: technological change, globalization reduced demand for low educated workers

U.S.: rising skill-related wage inequality due to flexible labour marketEU: rising skill-related unemployment due to rigid labor market

“Sociological perspective”

(DiPrete

et al. 2006)Institutional heterogeneity in EuropeFlexibility gained by deregulation of the usage of temporary work contracts

rising skill-related inequalities in job (in)security in most EU countires


2. Theory and Hypotheses

Institutional heterogeneity in EuropeEmployment protection legislation (EPL) and reforms (Kahn 2007)

Two

important

dimensions

of EPL:

1. Regulations of regular

employment-

protection

of employment

relations of „insiders“

-

induce

dismissal

costs

for

employers-

impact

on the

structure

of employment

and unemployment

-

lower

EPL levels

are

expected

to decrease

skill-divide

in both

temporary employment

and unemployment


2. Theory and Hypotheses

Institutional heterogeneity in EuropeEmployment protection legislation (EPL) and reforms (Kahn 2007)

Two

important

dimensions

of EPL:

2. Regulations of temporary

employment-

temporary

employment

decrease

dismissal

costs

for

employers

-

lower

levels

are

expected

to increase

skill-divide

in temporary

employment-

lower

levels

are

expected

to decrease

skill-divide

in unemployment

but: impact

is

expected

to vary

with

levels

of EPL of regular

employment-

particularly

strong

effects

if

EPL of regular

employment

is

high

AT 95/00

AT 05

ES 95

ES 00 ES 05FI 95FI 00FI 05

.51

1.5

22.

53

3.5

44.

55

EP

L re

gula

r em

ploy

men

t

0 .5 1 1.5 2 2.5 3 3.5 4 4.5 5EPL temporary employment

BE 95BE 00

BE 05

DE 95

DE 00DE 05

DK 95DK 00/05

GR 95/00GR 05

IE 95/00IE 05IT 95IT 00IT 05

NL 95NL 00/05

NO 95NO 00

NO 05

PT 95PT 00PT 05

SE 95SE 00/05

.51

1.5

22.

53

3.5

44.

55

EP

L re

gula

r em

ploy

men

t


UK 95/00UK 05

FR 95/00FR 05

.51

1.5

22.

53

3.5

44.

55

EP

L re

gula

r em

ploy

men

t


UK 95/00UK 05

FR 95/00FR 05

.51

1.5

22.

53

3.5

44.

55

EPL

regu

lar e

mpl

oym

ent


AT 95/00

AT 05

ES 95

ES 00 ES 05FI 95FI 00FI 05

.51

1.5

22.

53

3.5

44.

55

EP

L re

gula

r em

ploy

men

t


BE 95BE 00

BE 05

DE 95

DE 00DE 05

DK 95DK 00/05

GR 95/00GR 05

IE 95/00IE 05IT 95IT 00IT 05

NL 95NL 00/05

NO 95NO 00

NO 05

PT 95PT 00PT 05

SE 95SE 00/05

.51

1.5

22.

53

3.5

44.

55

EPL

regu

lar e

mpl

oym

ent


Trends in EPL, Western Europe 1995-2005

AT 95/00

AT 05

ES 95

ES 00 ES 05FI 95FI 00FI 05

.51

1.5

22.

53

3.5

44.

55

EP

L re

gula

r em

ploy

men

t


BE 95BE 00

BE 05

DE 95

DE 00DE 05

DK 95DK 00/05

GR 95/00GR 05

IE 95/00IE 05IT 95IT 00IT 05

NL 95NL 00/05

NO 95NO 00

NO 05

PT 95PT 00PT 05

SE 95SE 00/05

.51

1.5

22.

53

3.5

44.

55

EP

L re

gula

r em

ploy

men

t


UK 95/00UK 05

FR 95/00FR 05

.51

1.5

22.

53

3.5

44.

55

EP

L re

gula

r em

ploy

men

t


Partial Deregulation, Type I

Skill-divide

in temporary

employment

↑ Skill-divide

in unemployment

↓

stronger

effects

für high levels

of EPL regular

Partial Deregulation, Type II

Skill-divide

in temporary

employment

↓ Skill-divide

in unemployment

↓


3. Research Design

Data:

European Labour Force Survey 1992-2005+ German Mikrozensus 1993-2001

Sample:

persons aged 25-64, self-employed excluded

Design:

multilevel

model

(3 levels: country, time, individual)two-step procedure instead of simultaneous maximum

likelihood

procedure

(Franzese

2005, Jusko/Shively

2005)


3. Research Design

Micro level

First step:

micro-level

analysis

of determinants

of temporary

work

and unemployment; estimated

separately

for

every

country/year

Dependent

variables:

dummies

for

temporary

contract

and unemployment

Independent microvariables

X: -

age groups

(5-years intervals)

-

gender-

education

(ISCED low, medium, high)


3. Research Design

Micro level

First step:

micro-level

analysis

of determinants

of temporary

work

and unemployment; estimated

separately

for

every

country/year

( ) ( )( )

( ) ( )( )

1 1' 10

2 2' 20

1 ln

2 ln

ctict ct cti cti

cti

ctict ct cti cti

cti

P Y tempu

P Y perm

P Y unemployedu

P Y employed

β

β

⎛ ⎞== + +⎜ ⎟⎜ ⎟=⎝ ⎠

⎛ ⎞== + +⎜ ⎟⎜ ⎟=⎝ ⎠

β x

β x


3. Research Design

Macro

level

Second step:

pooled

time series

cross section

analysis

of logit

coefficientsRE and FE models

Dependent

variables:

logit

coefficients

from

micro-level

regressions

Independent macrovariables

Z:-

2 EPL indicators

based

on OECD indices

(OECD 2004)

-

Collective

bargaining

coverage

(Visser 2004)-

GDP growth (ILO 2008)

-

GDP share

of ALMP (ILO 2008, Eurostat

2008)-

Share of workers

in service

sector

(NACE G-Q)

-

KOF Index of Economic

Globalization

(Dreher 2006)


3. Research Design

Macro

level

Second step:

pooled

time series

cross section

analysis

of logit

coefficientsRE and FE models

( )( )

1 1 1' 1, 0

2 2 2' 2, 0

3 low vs. high education

low vs. medium education4k

k

X ct ct ctk

X ct ct ct

eX

e

β γ

β γ

= + + ⎧⎨

= + + ⎩

γ zγ z


4. Results

For both

temporary

employment

and unemployment

risks:

Micro level-

Results

of level-1 regressions

-

Focus on coefficients

related

to skill-divide-

In this

presentation: contrast

low

versus

medium

levels

of education

Macro

level-

Three

different level-2 regressions

-

In this

presentation: only

results

of RE-Models (FE-Models

produce

very

similar

results)

-.50

.51

1.5

-.50

.51

1.5

-.50

.51

1.5

-.50

.51

1.5

1990 1995 2000 2005

1990 1995 2000 2005 1990 1995 2000 2005 1990 1995 2000 2005

AT BE DE DK

ES FI FR GR

IE IT NL NO

PT SE UK

logi

t coe

ffici

ents

(lev

el 1

)

Contrast: low versus medium educated

Trends in skill-divide temporary employment

Michael Gebel

(MZES, Mannheim) and Johannes Giesecke (WZB, Berlin)


Temporary employment low vs. medium education

Unemployment low vs. medium education

M1 M2 M3 M1 M2 M3 EPLreg .0348 .0939 (.652) (1.59) EPLtemp -.0691*** (-3.72) EPLtemp - low EPLreg .0115 (.202) - med EPLreg -.0581** (-3.06) - high EPLreg -.126*** (-3.79) (EPLreg-EPLtemp) .0654*** (3.94) N 188 188 188 R2 within .122 .145 .12 R2 between .0139 .00296 .00774

4. Results

+ p < 0.10, * p < 0.05, ** p < 0.01, *** p < 0.001Additional macro-level controls: GDP growth, CBC, ALMP, size of service sector, KOF globalization index

0.5

11.

50

.51

1.5

0.5

11.

50

.51

1.5

1990 1995 2000 2005

1990 1995 2000 2005 1990 1995 2000 2005 1990 1995 2000 2005

AT BE DE DK

ES FI FR GR

IE IT NL NO

PT SE UK

logi

t coe

ffici

ents

(lev

el 1

)

Contrast: low versus medium educated

Trends in skill-divide unemployment

Michael Gebel

(MZES, Mannheim) and Johannes Giesecke (WZB, Berlin)




M1 M2 M3 M1 M2 M3 EPLreg .0348 .0939 .0469 .0598 (.652) (1.59) (1.12) (1.27) EPLtemp -.0691*** -.0017 (-3.72) (-.111) EPLtemp - low EPLreg .0115 -.0342 (.202) (-.724) - med EPLreg -.0581** -.0023 (-3.06) (-.144) - high EPLreg -.126*** -.0255 (-3.79) (-.934) (EPLreg-EPLtemp) .0654*** .0084 (3.94) (.623) N 188 188 188 188 188 188 R2 within .122 .145 .12 .0795 .0781 .0644 R2 between .0139 .00296 .00774 .00278 .0283 .0261

4. Results



6. Conclusion

-

since

mid-1990ies: no general

trend

towards

increasing

relative unemployment risks

for

low

educated

in Western Europe

-

partial deregulation

in many

Western European countries-

this

kind

of flexibilization

is

characterized

by

rising skill-based temporary employment risksunchanged skill-based unemployment risks


6. Conclusion

-

Two

possible

perspectives

on the

results: Partial deregulation has prevented an increase in skill-basedunemployment risks

or

Partial deregulation lead to an increase of substitution betweenpermanent and temporary jobs for low-skilled workers

-

if

France (no changes

in EPL, no changes

of skill-based

risks) is

taken

as baseline: support

for

the

substitution-hypothesis


Thank you for your attention!


Backup


Backup: Unemployment vs. temporary employment


Unemployment vs. Temporary employment (low vs. medium) M1 M2 M3 EPLreg .0391 -.0527 (.683) (-.876)

EPLtemp .0412* (2)

EPLtemp - low EPLreg -.136*

(-2.07)

- med EPLreg .00231

(.111)

- high EPLreg .035

(.951)

(EPLreg-EPLtemp) -.0323+ (-1.75) N 188 188 188 R2 within .0917 .0697 .0744 R2 between .0158 .263 .0602


Backup: low vs. high education / low vs. medium education


Temporary employment low vs. high Temporary employment low vs. medium M1 M2 M3 M1 M2 M3 EPLreg .126 .237* .0348 .0939 (1.5) (2.5) (.652) (1.59)

EPLtemp -.0429 -.0691*** (-1.38) (-3.72)

EPLtemp – low EPLreg .127 .0115 (1.31) (.202)

– med EPLreg -.0157 -.0581** (-.493) (-3.06)

– high EPLreg -.12* -.126*** (-2.14) (-3.79)

(EPLreg-EPLtemp) .0689* .0654*** (2.51) (3.94) N 188 188 188 188 188 188 R2 within .0826 .0983 .0894 .122 .145 .12 R2 between 4.66e-06 .0325 .0304 .0139 .00296 .00774


Backup: low vs. high education / low vs. medium education


Unemployment low vs. high Unemployment low vs. medium M1 M2 M3 M1 M2 M3 EPLreg .159* .159* .0469 .0598 (2.26) (2.02) (1.12) (1.27)

EPLtemp .0161 -.00168 (.625) (-.111)

EPLtemp – low EPLreg -.248** -.0342

(-3.2) (-.724)

– med EPLreg .0015 -.00225

(.0585) (-.144)

– high EPLreg -.00376 -.0255

(-.0833) (-.934)

(EPLreg-EPLtemp) .0109 .00839 (.472) (.623) N 188 188 188 188 188 188 R2 within .187 .242 .146 .0795 .0781 .0644 R2 between .0324 .000094 .00263 .00278 .0283 .0261


Backup: FE vs. RE


FE Panel estimator RE Panel estimator Temporary employment low vs.

high Temporary employment low vs.

high M1 M2 M3 M1 M2 M3 EPLreg .114 .174+ .126 .237* (1.14) (1.66) (1.5) (2.5)

EPLtemp -.0836** -.0429 (-2.7) (-1.38)

EPLtemp – low EPLreg .0513 .127

(.546) (1.31)

– med EPLreg -.0651* -.0157

(-2.03) (-.493)

– high EPLreg -.158** -.12*

(-2.8) (-2.14)

(EPLreg-EPLtemp) .0871** .0689* (3.09) (2.51) N 188 188 188 188 188 188 R2 within .0913 .114 .0908 .0826 .0983 .0894 R2 between .117 .093 .179 4.66e-06 .0325 .0304


Backup: All covariates


RE Panel estimator Temporary employment low vs. high M1 M2 M3 EPLreg .126 .237*

EPLtemp -.0429

EPLtemp – low EPLreg .127

– med EPLreg -.0157

– high EPLreg -.12*

(EPLreg-EPLtemp) .0689*

GDP growth .00301 .00636 .00196

CBC .00327 .0019 .00541

ALMP -.0587 -.00594 -.0724

Service Sector .878 .499 .563

KOF Globalization .00111 .000804 .000353 N 188 188 188 R2 within .0826 .0983 .0894 R2 between 4.66e-06 .0325 .0304

labour market flexibility and inequality: the changing skill ......(nace g-q)-kof index of economic...

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