Labour Market Institutions and Labour Market Outcomes: International Perspectives
Paper SummariesCanadian International Labour Network: Second Major Conference
Click on a title below to view a brief summary of the paper presented at the conference
Unemployment Sessions:
Models of Matching and Consumption
"A Matching Model with Endogenous Skill Requirements"
James Albrecht and Susan Vroman (Georgetown University)"Shocks, Stocks and Socks: the Timing of the Replacement of Durables During an Unemployment Spell"
Martin Browning (McMaster University) and Tom Crossley (York University)Unemployment in Transition Economies
"The Unemployment Duration of Women During the Transition: Evidence From Micro Data in the Czech and Slovak Republics"
John Ham (University of Pittsburgh), Jan Svejnar and Katherine Terrell (University of Michigan)"Living Standards and Incentives in Transitions: The Implications of UI Exhaustion in Hungary"
John Micklewright (UNICEF) and Gyula Nagy (Budapest University of Economics)Labour Market Dynamics
"The Dynamics of Labour Force Attachment in the US Labour Market"
Stephen Jones (McMaster University) and W. Craig Riddell (University of British Columbia)"Estimating Measures of Labor Market Imperfections for Five OECD Countries, Using Aggregate Data and an Equilibrium Search Framework"
Gerard J. van den Berg and Geert Ridder (Free University of Amsterdam)"Search Frictions in the U.S. Labor Market: Equilibrium Estimates from the PSID"
Audra Bowlus and Shannon N. Seitz (University of Western Ontario)European Labour Markets and the "Rigidity" Debate
"EMU and Wage Bargaining: The Americanization of the European Labor Market?"
Andrew Martin (Harvard University)"Job Protection and Jobs: Evidence from a Natural Experiment"
Jimmy Royer and Marc Van Audenrode (Université Laval)
Family Sessions:
Family Decisions
"The Efficiency Case for Universality"
Nick Rowe and Frances Woolley (Carleton University)"Household Labor Supply, Sharing Rule and the Marriage Market"
Pierre-Andre Chiappori (University of Chicago), Bernard Fortin and Guy Lacroix (Université Laval)"Differential Fecundity and Gender-Biased Parental Investments"
Aloysius Siow and Xiaodong Zhu (University of Toronto)Joint Labour Supply
"Joint Retirement: Evidence from the Spouse's Allowance"
Michael Baker (University of Toronto)"Job Loss, Unemployment Insurance and Spousal Labour Supply"
Heather Antecol (McMaster University) and Thomas Crossley (York University)"Child Development and Success or Failure in the Labour Market"
Paul Gregg (LSE) and Stephen Machin (University College London and LSE)Intergenerational Income Mobility
"Death and Divorce: The Long-Term Consequences of Parental Loss"
Miles Corak (Statistics Canada)"Intergenerational Income Mobility among Daughters in the United States"
Laura Nelson Chadwick and Gary Solon (University of Michigan)"The Impact of the Number of Siblings on Men's Adult Wages: Evidence from Finland, Sweden and the United States"
Anders Björklund (Swedish Institute for Social Research) and Marcus Jäntti (Åbo Akademi University, Finland)Child Outcomes
"Is Child Welfare Converging in the European Union?"
John Micklewright (UNICEF) and Kitty Stewart"Outcomes for Children in Canada, Norway, and the US: A Microdata Comparison"
Shelley Phipps (Dalhousie University)"Child Health and Family Socioeconomic Status in the Canadian National Longitudinal Survey of Children and Youth"
Martin Dooley (McMaster University) and Lori Curtis (Dalhouise University)
Wage Sessions:
Displacement in International Context (Jointly Sponsored with Upjohn Institute)
"Worker Displacement in Canada and Japan"
Masahiro Abe (Central Research Institute of Electric Power Industry, Tokyo), Yoshio Higuchi (Keio University), Masao Nakamura (UBC), Peter Kuhn (McMaster), and Arthur Sweetman (University of Victoria)"Worker Displacement in the US and the Netherlands"
Jaap Abbring, Gerard van den Berg, and Pieter A. Gautier (Free Univ. of Amsterdam), A. Gijsbert and C. van Lomwel (Tilburg University) and Chris Ruhm (University of North Carolina-Greensboro)"Worker Displacement in Belgium and Denmark"
Karsten Albæk (University of Copenhagen), Martin Browning (McMaster University and Copenhagen), and Marc van Audenrode* (Université Laval)"Worker Displacement in Germany and France"
Stephen Bender (Institute für Arbeitsmarkt und Berufsforschung), Christian Dustmann (University College London), David Margolis (Université de Paris I) and Costas Meghir (University College London)"Worker Displacement in Australia and Britain"
Jeff Borland (Australian National University), Paul Gregg (LSE), Genevieve Knight (LSE) and Jonathan Wadsworth (LSE/RHNBC)Prospects for the Welfare State
"The Welfare State and the Politics of Cultural Diversity"
Keith Banting (Queen's University)"Restructuring Welfare States: How Nations Are Redesigning Old Age Security Systems"
John Myles (Florida State University) and Paul Pierson (Harvard University)
A Matching model with Endogenous Skill Requirements
(James Albrecht and Susan Vroman)This paper examines the role of skill in the labour market by developing a model in which some workers are low skilled while the reminders are high skilled.
Increasing wage inequality in the US and in the UK and high unemployment in Europe have long been interest to labour economists and skill has been used to explain these phenomena. The technological progress seems to create demand for high skilled labour and this leads to increased earnings inequality in both the US and the UK. By modeling the labour market within a matching framework, the authors have generated two labour market outcomes. The first one is the one in which it is worthwhile for high skilled worker to take a low skill job. Wage inequality within and across the skill groups due to skilled- biased technological change can be generated in this case. The second outcome is the one in which it is not worthwhile for the high skilled labour to fill up the low skill vacancies.
Finally, the authors state that there can be a number of extensions to their model which would allow one to carry out welfare analysis and to examine the effect of possible policy interventions to labour market.Shocks, Stocks and Socks: the Timing of the Replacement of Durables During an Unemployment Spell
(Martin Browning and Thomas F. Crossley)Job loss causes a temporary fall in household's income. This paper investigates the issues behind the change in consumption patterns due to a temporary income fall, particularly the reaction of poor households to such a shock. It seems plausible to expect that the agents smooth their consumption through borrowing during low income periods. But it is also known that the poor agents with no jobs may find it hard to benefit from the credit markets. In the paper, the authors suggests an alternative way of consumption smoothing and examine its empirical validity using Canadian Out of Employment Panel. The alternative the authors suggest is that the households smooth their consumption through postponing the purchase of clothing and other small durables.
Job loss has three possible effects on household expenditure. First, due to the job loss job related expenses such as transportation and clothing go down. Second, a fall in income may lead to a lower level of durable purchases. Third, if the household is having hard time accessing to credit markets, a temporary fall in income may lead to a lower level of total expenditure. The authors find support in the data for the alternative they suggest for consumption smoothing. The evidence suggests that households adjust the timing of purchase of small durables to the timing of their income.Job Loss, Unemployment Insurance and Spousal labour Supply
(Heather Antecol and Thomas F. Crossley)This paper investigates the labour supply response of spouses of primary earners who separated from their jobs using a new survey of Canadian job searchers. Theoretically, a temporary fall in household income due to the job loss of the primary earner should lead to an increase in spousal labour supply. This is commonly referred to as "the added worker effect ". From past research, there is evidence that spousal labour supply is sensitive to public income maintenance programs such as unemployment insurance. In particular, recent research in the United States suggests that the unemployment insurance crowds out the added worker effect. This paper also examines whether the added worker effect is crowded out by publicly provided income support. The authors find some evidence of a small added worker effect but only for households with no liquid assets at the time of the job loss. They find no evidence that unemployment insurance crowds out the added worker effect.
The Unemployment Duration of Women During the Transition: Evidence From Micro Data in the Czech and Slovak Republics
(John Ham, Jan Svejnar and Katherine Terrell)In 1990 - 1991 almost all Central European economies started the transition from socialist economy to a market economy. During the transition, almost all of them experienced a decrease in output and increasing in unemployment rate. Except for the Czech Republic, the persistent unemployment with long duration has been a common problem in CEE countries. This paper investigates the determinants of the difference in unemployment rates and duration between Czech and Slovak Republic women using weekly data from unemployment spells. The authors found that the short unemployment duration and remarkable low unemployment rate in Czech Republic can be explained by demographics and demand conditions and the difference between two republics in this respect can be attributed to inability of Slovak Republic (and probably other CEE countries which have been experiencing high and persistent unemployment) to absorb low skilled unemployed workers.
Living Standards and Incentives in Transitions: The Implications of UI Exhaustion in Hungary
(John Micklewright and Gyula Nagy)In 1990 - 1991 almost all CEE economies started the transition from socialist economy to a market economy. Along this transition almost all of them have experienced high and persistent unemployment. CEE governments in early 1990s introduced unemployment insurance in order to support unemployed . I this paper, the authors investigate the effect of unemployment insurance on living standards in Hungary where the way of leaving the UI register is not by getting a job but by exhausting entitlement to benefit. Secondly, the authors examine the impact of UI exhaustion on the likelihood of getting a job. They investigate these issues with a survey of males and females exhausting entitlement to UI in Summer 1995.
Based on a cohort of men and women entering the UI register, coupled with data from a follow-up survey of those cohort members who exhausted UI entitlement, The authors reach two main conclusions. First, the impact of the UI exhaustion on living standards depends on household circumstances. Second, the changes in benefit duration can be a very important tool to create incentives to return to work for certain claimants.The Dynamics of Labor Force Attachment in the US Labor Market
(Stephen R. G. Jones and W. Craig Riddell)This paper looks at the dynamics of labor force attachment in the U.S. and considers alternate classifications of labor force status. Currently, people are classified as either employed, unemployed or out of the labor force. Definitions behind the classifications can differ between countries, and which class a person belongs may not be so clear cut. People who are unemployed are thought to be engaged in job search activities and people out of the labor force are thought to be in home activity. However, there is evidence from previous studies that some unemployed are waiting for new openings to appear. To capture people engaged in passive search the authors add a category to labor force status and call it marginal attachment. Using the US Current Population Survey they see if this category is different from nonparticipation and unemployment. Preliminary findings indicate that the marginally attached appear to exhibit different unconditional behavior than the non-attached, falling clearly between the unemployed and nonparticipating categories.
The Efficiency case for Universality
(Nick Rowe and Frances Woolley)This paper compares the universal social programs with targeted ones in order to assess the relative efficiency of both. Relative efficiency of different tax/transfer systems has log been interest to researches and policy makers. In this paper, The authors develop a model based on optimal tax theory along with certain key assumptions in order to examine this issue closely. In addition to that, the paper offers a formal definition of "universality" and introduces the concept of "parallel equity".
Under certain assumptions and a model specification the authors found that the universality is efficient as well as equitable and hence the departures from universality result in an inefficient structure of tax rates.Child Development and Success or Failure in the Labour Market
(Paul Gregg and Stephen Machin)This paper investigates the determinants of economic success in the initial years of working life focusing specifically on disadvantages associated with childhood. Economic success is the outcome of many different interactions such as healthy childhood, family background, school experience and the like. The authors determine the disadvantages associated with childhood by focusing on two broad characteristics: Family circumstances and child specific factors such as school attendance and contact with police. They then go on and use higher education, higher wages and being in work as a measure of economic success. This empirical analysis is based on the National Child Development Survey, a survey of all individuals born in a week of March 1958 and currently contains detailed information (from parents, schools etc.) at ages 0, 7, 11, 16, 23 and 33.
The basic finding of this study is that economic and social disadvantages faced during the childhood display a persistent association with the subsequent economic success of British individuals. The results of the paper suggest that individual and family characteristics play an important role determining the subsequent success and failure in the labour market.Search Frictions in the U.S. Labor Market: Equilibrium Estimates from the PSID
(Audra Bowlus and Shannon N. Seitz)Worker flows and wage determination have long been of interest to labour economists. Developments of new estimation techniques and availability of panel data allow researchers to estimate the parameters of general equilibrium search models for different countries including US, Canada, Denmark, Netherlands and France. The US studies were based on National Longitudinal Survey of Youth which has a limited focus on youth. Therefore the results only reflect a small subset of the US population. In this paper, The authors examine the feasibility of using US Panel Study of Income Dynamics for estimation as well as estimating the parameters of the underlying model. They found that the data collected from PSID are sufficient for identification of the model's parameters.
The authors draw the following conclusions from their study: First, blacks tend to face a grater level of job search friction while unemployed then whites which is consistent with the previous work, but a similar level when employed which displays a contrast to the previous work. Second, young workers tend to have lower levels of search friction then their older counterparts.EMU and Wage Bargaining: The Americanization of the European Labor Market?
(Andrew Martin)Economic and Monetary Union is expected to have very significant effects on European labour market. This paper speculates about the possible consequences of EMU by examining the possible effects of such a change on union's core function of wage bargaining. It focuses particularly on what is likely to happen to the structure of wage bargaining throughout the EMU after the introduction of a common currency and a common monetary policy for that matter. The author suggests that a possible result of EMU might be Americanization of the European market. Such a market would involve a highly decentralized wage setting with very little coordination and week unions. This outcome would be a long-run response of the European labour market to the introduction of a single currency.
In the paper, the possible consequences of EMU have been framed in terms of three alternative scenarios: Americanization, Europeanization and re-nationalization. The tentative conclusion that the author draws is that the introduction of a single currency is more likely to result in the Americanization of the European labour market than either of the other two alternatives, not immediately but eventually.
Joint Retirement: Evidence from the Spouse's Allowance
(Michael Baker)Aging population has been a serious concern for policy makers in most developed countries. Increasing transfer payments to the aged is becoming a real burden for these governments' budgets. As a result, resources have been channeled into research on retirement behavior. Most of the studies in this area focused on males as decision makers in the household. In this paper, the author takes the female labour force participation into account and examines the effect of the introduction of the Spouse's Allowance to the Canadian income security system in the 1970s on the retirement behavior of the couples. Specifically he investigates the effect of the program on timing of retirement. The study is about joint labour market decisions of the couples. Even if the policy targets only one member of the household, the effect of the policy may be on both members. The scarcity of useful data, unobserved family decision making process and low labour market participation rate of women cause serious problems in investigating the retirement behavior of both males and females.
The results of this study suggest that the introduction of the Spouse's Allowance program is associated with a decrease in employment rates and increase in not in the labour force rates for eligible males. The author also observes reductions in labour market activity among eligible females. Finally, the evidence in the paper suggests that the introduction of the program is correlated with an increase in joint absence from labour market among eligible couples.Job Protection and Jobs: Evidence from a Natural Experiment
(Jimmy Royer and Marc Van Audenrode)Job protection laws have long been blamed for high unemployment in Europe. The researchers have been trying to find a possible link between employment protection laws and employment performance. Belgium did have almost all negative institutional characteristics often associated with poor economic performance: High job protections, rigid wages and generous unemployment insurance compensation. In this paper the authors propose a test on the impact of employment protection laws on the Belgian labour market. The study is based on a within country experiment. The data is analyzed in a way that the impact of a legal change on both hirings and separations rather than only on total employment can be examined. Consistent with the theory , the authors found the evidence that the reduction in job protection for some workers that took place in January 1985 in Belgium, resulted in changes in hirings and separations. Workers who lost employment protection were more likely to lose their jobs but those who were unemployed have a better chance of finding a new job after the decline in job protection.
As a conclusion, decrease in job protection may have two opposite effects on labour market: Increase in number of separations and increase in hirings. However, the authors suggest that the results should be interpreted with a caution because the effects overall are found to be quite small.Differential Fecundity and Gender Biased Parental Investment
(Aloysius Siow and Xiaodong Zhu)Parents invest in their sons and daughters differently. It is observed that in some societies boys are favored whereas girls are favored in others. In this paper the authors develop a model to explain why and how parents act the way they do in raising their children. Trivers and Willard proposed a model of gender biased parental investment based on differential fecundity. According to the model, first, both men and women act as if they want to maximize the number of their descendants. Second, women are fecund for shorter period of their lives than men. Third, if it was possible to have multiple spouses, rich males would have multiple spouses whereas poor men would have none. On the other hand women can have spouses regardless of their wealth. Based on these hypothesis one would expect that poor parents invest more in the health of their daughters because poor daughters are more likely to have children compared to poor sons. Since rich sons are more likely to have more children than rich daughters rich parents should be investing more in their sons.
This paper presents a formal reconsideration of the Trivers-Willard Hypothesis. Economists have ignored the effects of differential fecundity and marriage market considerations on gender roles, welfare consequences of family laws, household formation and intra-household allocation. The authors point out the necessity of research in this area while stating that the framework they present in the paper remains to be investigated.Estimating Measure of Labor Market Imperfections for five OECD Countries, Using Aggregate Data and Equilibrium Search Framework
(Gerard J. van den Berg and Geert Ridder)In the standard economic theory, labor market is a competitive market in which the wage of a worker is equal to his marginal productivity. In this paper, the authors suggest that there are deviations from standard competitive market evidenced by positively related wages and the number of employees in the firm. Evidence against the simple competitive model is also provided by the fact that in many countries unemployment is persistent and wage adjustments do not restore the balance between labour demand and supply. The recent literature stresses the importance of labour market frictions and the labour market flows in understanding unemployment and wage determination. In this paper, the authors examine the importance of labour market imperfections for a number of OECD countries: Germany, The Netherlands, France, The United Kingdom and USA.
They define and estimate measures of labour market imperfections in the context of an equilibrium search and matching framework. The data they use are collected in the Current Population Survey in the US and the Labour Force Survey in EC countries. According to the estimation results, the authors conclude that the United States has by far the most dynamic labour market among all five OECD countries. Moreover they note that most wage variations in these countries is explained by productivity variations, not by search frictions. By this measure the UK and US labor markets are close to competitive.Household Labor Supply, Sharing Rule and the Marriage Market
(Pierre-Andre Chiappori, Bernard Fortin and Guy LacroixTraditionally, the economic theory takes household as a unit and assumes that the household members act as if they maximize a unique family utility function. In this traditional model, behavior of the individuals within the household is not modeled in any way and it is not possible to recover individual preferences from the observed outcomes. Alternative models attempted to take the individual preferences into account by modeling the intra-household decision making process. In this paper, the authors extend the previous study by Chiappori by allowing marriage market and especially the sex ratio, to affect the sharing rule and house labor supply decisions. They estimate the model using PSID data for the year 1988.
The authors provide evidence that sex ratio affects household labor supply decisions. This result rejects one important prediction of the standard model according to which no distribution factor affects intra-household decisions. Finally, the impact of individual wage rates suggests that spouses behave in an althuristic manner within the household."Worker Displacement in Japan and Canada"
Masahiro Abe (Central Research Institute of Electric Power Industry, Tokyo), Yoshio Higuchi (Keio University), Masao Nakamura (University of British Columbia), Peter Kuhn (McMaster University) and Arthur Sweetman (University of Victoria)Paper presented by Masao Nakamura and Arthur Sweetman
Despite profound institutional and structural differences in the labour markets of Japan and Canada, both countries have had to struggle to find ways to respond to large-scale labour displacement. Of particular interest to these countries is how to mitigate the costs of displacement in terms of lower wages once the displaced are reemployed and lost wages during unemployment. The research reveals that the main approaches taken by employers to adjust employment levels differs considerably in Japan and Canada. In Japan, involuntary permanent terminations can be the result of layoffs, mandatory retirement (of workers as young as their mid-40's) and shukko, which involves transferring workers between affiliated or related firms either on a temporary basis or permanently. In Canada, on the other hand, virtually all displacement of prime-aged workers takes the form of layoffs, but unlike Japan almost half of the layoffs are temporary. Perhaps reflecting the importance of alternatives to layoffs in Japan, the rate of involuntary, permanent job loss is considerably higher in Canada. Further, the authors find that in both countries displaced, young workers experience virtually no wage consequences as their wages in their new jobs are typically equivalent to those in their original jobs. However, when other age groups are compared they find that the wage consequences of displacement rise with age in both countries but much more strongly in Japan. The authors suggest that this may reflect the negative impact of tenure as older workers in Japan tend to have higher tenure due to greater job security. In conclusion, the authors find that their results are consistent with the common perception that Japanese labour markets are less "fluid" as workers are more strongly attached to firms and less likely to experience job loss.
"Displaced Workers in the United States and the Netherlands"
Jaap Abbring, Gerard van den Berg, Pieter A. Gautier (Free University of Amsterdam), A. Gijsbert C. van Lomwell, Jan C. van Ours (Tilburg University) and Chris Ruhm (University of North Carolina-Greensboro)Paper presented by Jaap Abbring and Chris Ruhm.
This paper investigates involuntary and permanent job terminations in the United States and the Netherlands by comparing institutional features regulating worker displacement, the types of workers experiencing displacement in each country and the costs associated with this experience. Unfortunately, the authors are limited in their analysis by the absence of comparable data sets for the two countries. Nonetheless, their evidence suggests that in the period 1993-1995 displacement rates were about the same even when compared across gender and age groups. In both countries, displacement is also found to result in hastened retirement as displaced workers that would otherwise have remained in the labour force seek retirement as an alternative to reemployment. Further, in both countries displaced workers are found to experience lower post-displacement than pre-displacement wages implying common costs of displacement. However, comparison of the extent of these costs is difficult as displaced workers in the Netherlands are more likely to move directly into alternative jobs, but for those that experience some joblessness, unemployment durations are longer in the Netherlands. Therefore, comparison of wage costs may simply be reflecting costs of longer joblessness in the Netherlands. It may also be reflecting more anticipation of displacement in the Netherlands, given expectations of longer unemployment spells, and therefore efforts to mitigate displacement through job search prior to actual terminations.
"Employment Protection and the Consequences of Displaced Workers: A Comparison of Belgium and Denmark."
Karsten Albaek (University of Copenhagen), Martin Browning (University of Copenhagen and McMaster University) and Marc van Audenrode (Université Laval)Paper presented by Karsten Albaek and Marc van Audenrode.
This paper begins with an extensive institutional comparison of labour markets in Belgium and Denmark. These countries are in some sense an ideal comparison because they have similar social safety nets and trading partners. However, the institutional comparison reveals that an important difference is considerably higher costs of firing workers, such as advance notice requirements and severence pay, in Belgium. Using similar data sets for the two countries from the 1980's, the authors examine what happens to workers that are displaced from long tenure jobs and relate the differences to the role of differences in firing costs. As expected, the authors find that workers in Denmark are more likely to be displaced from firms that continue to stay in business. Moreover, they find that Belgian workers experience longer unemployment spells on average than Danish workers (10 months compared to 6 weeks). One possible explanation for this difference is Unemployment Insurance (UI). However, the authors reject this explanation as the UI system is found to be very similar in generosity between the two countries and if anything implies slightly longer unemployment spells in Denmark. Rather, the authors find the difference is due to lower demand for workers in Belgium which probably reflects their higher cost of firing workers.
"Worker Displacement in France and Germany"
Stefan Bender (Institute fòr Arbeitsmarkt and Berufsforschung), Christian Dustmann (University College London), David Margolis (Universit3/4 de Paris I) and Costas Meghir (University College London)Paper presented by Christian Dustmann and David Margolis.
This paper compares the institutional setting surrounding layoffs and unemployment benefits in France and Germany and then relates any differences to nonemployment durations and wage losses experienced by displaced workers. Due to complications of identifying all workers that involuntarily lose their jobs for reasons beyond their control (ie. displaced workers), the authors focus on workers whose separation is the result of a firm closure. Perhaps the most interesting finding in the paper is that a large share of displaced workers in both countries find alternative employment without experiencing any periods of joblessness, but for those that do experience nonemployment for more than one year the costs of displacement, in terms of low post-displacement wages relative to pre-displacement wages, are high. In Germany, the earnings loss is 20 percentage points larger than if a job was found within one year and in France it is 31 percentage points larger. These findings for Germany and France are very different than findings from similar research done for North America where analyses have repeatedly shown unemployment spells following displacement and modest wage losses, particularly for younger workers.
"The Get Knocked Down. Do They Get Up Again? Displaced Workers in Britain and Australia"
Jeff Borland (Australian National University), Paul Gregg, Genevieve Knight (London School of Economics), Jonathan Wadsworth (London School of Economics)Paper presented by Paul Gregg
This paper examines the consequences of worker displacement (the involuntary separation of workers from their jobs) in Britain and Australia. An emphasis is made to relate institutional differences in the two countries to differences in the outcomes for displaced workers. The institutional analysis reveals similar employment protections for workers as well as unemployment benefit systems, but considerably different wage-setting institutions. Specifically, the authors expect that minimum wages and centralised wage-setting institutions in Australia will lead to longer unemployment spells following displacement in Australia as workers struggle to find employers that are willing to hire them at pre-displacement wages. In attempting to link this institutional difference to actual outcomes the authors are limited by the absence of comparable data for the two countries. However, the results do indicate that differences in the rates of worker displacement were quite similar between the two countries in the 1990's. Further, in neither country is there any evidence of significant differences between post-displacement and pre-displacement earnings for young workers. This suggests that Australian policy-makers should not interpret the absence of earnings losses as a consequence of supportive wage-setting institutions since earnings losses were similarly absent in Britain which does not have comparable wage-setting institutions.
"The Multicultural Welfare State: Social Policy and the Politics of Ethno-Linguistic Diversity"
Keith Banting (Queen's University)Paper presented by Keith Banting.
The purpose of this paper is to examine the relationship between ethno-linguistic diversity that results from new immigration flows into western democracies and the welfare state that was erected in these nations during the postwar era. Earlier analysts have argued that growing ethno-linguistic diversity is weakening the welfare state by undermining the sense of community on which this system of social rights was built. By focusing on two distinct periods, the postwar period in which the welfare state was created and the contemporary period in which many western nations have seen a deconstruction of the welfare state, Banting attempts to determine whether the welfare state is sustainable in a multicultural nation. His analysis suggests that beginning most apparently in the postwar era, there has been a tension between ethno-linguistic diversity and the welfare state. However, Banting also cautions that this does not imply a necessary inconsistency between cultural pluralism and welfare states. One reason for this caution is that ethno-linguistic diversity followed the creation of the welfare state so that current responses to cultural pluralism are largely shaped by the existing welfare state. In conclusion, Banting is optimistic that the movement away from basing citizenship on identity and community will not erode the welfare state. Rather, the legal nature of the welfare state which is in some sense universally inclusive, rather than based on cultural terms, may serve to sustain the welfare state as societies become more culturally diverse.
"Reforming Public Pensions."
John Myles (Florida State University) and Paul Pierson (Harvard University)Paper presented by John Myles.
Beginning in the 1980's, developed capitalist economies increasingly began to restructure their old age security systems that had more or less been complete by the 1970's. The reform movement gained considerable intensity and speed in the 1990's so that by 1997 almost all of the OECD countries have gone through at least one major restructuring initiative. This paper examines whether this reform movement represents convergence among these industrialized nations to an old age security system which is primarily provided by private pension plans and the state only in cases where the elderly are impoverished. The authors distinguish between two distinct routes taken to reform: (i) "latecomers" which did not have large-scale pay-as-you-go pension systems in place by the end of the 1960's and (ii) most of the affluent economies which had mature pay-as-you-go plans in place by the 1970's. From this distinction the authors conclude that the size of the welfare state for the elderly in the next century will be larger than it is now because the demand for benefits are growing more quickly than reform. However, countries will not converge to a single system for two reasons. First, reformers are constrained by existing commitments and popular expectations that differ considerably across countries. Second, there are significant differences across countries in the political capacities of the key constituencies affected by welfare states.
"Death and Divorce: The Long-Term Consequences of Parental Loss."
Miles Corak (Statistics Canada)Paper presented by Miles Corak.
This paper examines the impact of parental divorce on the future income, labour market behaviour, use of social programs and marital/fertility behaviour of children of divorced parents. Corak emphasizes the difficulty in establishing causation in this type of analysis due to the role of various unobserved factors that may impact both the probability of parental divorce and a particular outcome of a child. For example, a negative impact of divorce on children's future incomes may simply be reflecting the lower education of parents which is affecting both the probability of divorce and the child's future income. In an attempt to overcome this complication, Corak uses a "quasi-experimental" approach by comparing children of divorced parents to children that have lost a parent through death. To the extent that divorce has a causal impact on the outcomes of children, similar outcomes should be experienced by children from bereaved families. In addition, changes to the Canadian Divorce Act in 1986 are used to create a quasi-experiment. The findings suggest that simple comparison between children from divorced and intact families significantly overstate the impact of divorce on a wide range of child outcomes. In particular, it is found that parental labour market behaviour and income are lower for divorced parents, but these parental outcomes also have a direct impact on the future attainments of children from divorced families. In general, Corak finds some interesting effects of divorce on child outcomes, but they are much smaller than has been found in earlier research.
"Intergenerational Income Mobility Among Daughters in the United States"
Laura Nelson Chadwick and Gary Solon (University of Michigan)Paper presented by Gary Solon.
Extensive research in the US has been done on the impact of fathers' incomes on their sons' future incomes. The general finding from this research is that a 1 percent increase in a father's income is associated with a 0.4 percent increase in a son's income. This paper represents a first attempt to estimate similar statistics for daughters. The authors use the Panel Study of Income Dynamics, which is a US data set that provides information on the same group of families over many years so that comparisons can be made between the incomes of daughters from relatively wealthy and poor families. The findings suggest that a 1 percent increase in family income raises a daughter's income from 0.35 to 0.43 percent. This suggests that intergenerational income transmission is slightly weaker for women than men. Further, the authors consider the role of husbands' incomes for those daughters in the sample that are married and find that the intergenerational income result for daughters is largely due to assortive mating. That is, daughters from families with higher income status tend to have spouses that also have relatively higher income status.
"The Impact of Siblings on Men's Adult Wages: Evidence from Finland, Sweden and the United States"
Anders Björklund (Stockholm University) and Marcus Jäntti (Åbo Akademi University)Paper presented by Anders Björklund.
It is a firmly established empirical result in the economics, psychology and sociological literature that a person's success in the labour market is negatively related to the number of siblings of that individual. One possible explanation for this relation, due to the work of economist Gary Becker, is that parents face financial and time constraints so that parents with more children, given some constraint, will be able to invest less in each child. This paper attempts to provide additional information on this link by comparing evidence from Sweden, Finland and the US. They use similar data from these countries and focus on the impact of siblings on the earnings of men. These countries are chosen because they allow identification of the role of parents' financial constraints as Sweden and Finland have relatively more equality in disposable income and provide free schooling beyond high school. When parents' income is allowed to vary, the results suggest a strong negative relation between men's incomes and number of siblings in each country. However, when comparisons are made between individuals from families with equal income the negative relationship decreases in magnitude and almost entirely for Sweden and Finland. Further, the authors find part of the effect reflects educational attainment thereby supporting the role of parents' financial constraints.
"Is Child Welfare Converging in the European Union?"
John Micklewright and Kitty Stewart (UNICEF)Paper presented by John Micklewright.
Under the 1992 Maastricht Treaty, membership in the European monetary union required some level of convergence among states in terms of broad economic indicators, such as inflation and government debt. The goal is to increase the standard of living across all member states. Rather than focus on the welfare of all citizens in the European Union (EU), this paper focuses on its children and evaluates whether the welfare of children across the Union's member states is becoming more or less similar in recent decades. Given that children represent nearly a quarter of the Union's population and are the future of the EU, this is clearly an important question. The authors consider measures of economic well-being, mortality, education, teenage fertility and life satisfaction. Their analysis suggests increased disparities across countries in youth unemployment, convergence in under-5 mortality and death rates from traffic accidents, convergence in both levels of expenditure on education and enrolment at age 16, convergence in all measures of teenage fertility from 1960 to 1975 followed by stagnation and some setbacks and strong convergence in life satisfaction measures. Thus, there is some evidence of convergence, although the authors warn that in some cases the convergence is actually to lower levels of child welfare.
"Outcomes for Children in Canada, Norway, and the US."
Shelley Phipps (Dalhousie University)Paper presented by Shelley Phipps.
This paper compares levels and determinants of child well-being for Canada, the US and Norway. The motivation is previous research that has shown child poverty to be more extensive in Canada and the US than in most other industrialized countries. Using data that provides information on a random sample of children in each country, Phipps examines whether other outcomes for children are also inferior in Canada and the US in comparison to Norway. The findings suggest that other outcomes for children are also better in Norway, such as a lower incidence of injury and experience of fear/anxiety. When comparing Canada and the US, Phipps finds that while child poverty is lower in Canada other measures of welfare do not support the argument that Canadian children are better off than American children. Taking a more sophisticated statistical approach, Phipps finds that measures of parents' incomes and the incidence of lone mothers that smoke or have low levels of education are important in determining child welfare across various dimensions. Despite the relatively strong policy implications of the results, Phipps cautions that the survey questions are often difficult to compare and the Norwegian sample size is small.
"Child Health and Family Socioeconomic Status in the Canadian National Longitudinal Survey of Children and Youth"
Martin Dooley (McMaster University) and Lori Curtis (Dalhousie University)Paper presented by Martin Dooley.
This paper is an attempt to broaden our understanding of the link between the health of Canadian children and various indicators of socioeconomic status. Such an analysis of Canada is now possible as a result of a new data set called the National Longitudinal Survey of Children and Youth (NLSCY) which contains information on a large sample of children (newborns to 11 year olds) from 1994-1995. This data initiative is particularly important as it will continue to collect information on the same sample of children every two years until they are adults. From detailed evaluation of the first issue of this data the authors conclude that Canadian children are generally very healthy as two-thirds have no health problems. However, simple comparisons between children from low-income and lone mother families and other children suggests that socioeconomic status is an important determinant of child health. From more sophisticated analyses that attempt to compare otherwise similar children from different socioeconomic backgrounds, the authors find that child health is generally stronger for younger girls from non-poor families with two parents and a mother who had at least a high school diploma. Despite, these important results the authors caution that policy implications should not be inferred. The reason is that the data provides no information on the permanence of reported socioeconomic status. Thus, future issues of the NLSCY can be expected to enable analysts to produce more convincing results.
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