Browsing by Subject "unemployment"

Extensive evidence in economics shows that facing a recession upon entry to the labor market can have sizable and persistent effects on the earnings and careers of labor market entrants. Long-term negative effects have been found among young and low- educated workers, but also among highly educated labor market participants such as university graduates. Theory and empirical evidence suggest that the negative effects arise because of a prolonged period of job search and fewer opportunities early on in the career for finding employment that fits the worker’s skills, for example. Identifying those most susceptible to persistent effects and understanding the mechanisms and channels underlying them are important for improving the effectiveness of active labor market policies and other public policy instruments as well as the school-to-work transition. This thesis studies the short-term and long-term effects of facing adverse economic conditions upon graduation on real annual earnings, unemployment and other labor market outcomes among Finnish university graduates who obtained a Master’s degree between 1988 and 2004. The empirical strategy uses idiosyncratic variation in regional unemployment rates as a proxy for regional business cycle fluctuation, controlling for common national business cycle fluctuation and regional fixed effects. The thesis contributes to the existing literature in three ways. First, it provides the first evidence on the effects of graduating from university upon adverse economic conditions in Finland. The results with Finnish data are compared to other countries with different labor market institutions. Second, the time period investigated in this thesis (1988-2014) includes a period unlike any other studied in the existing literature: the exceptionally deep 1990s Finnish depression. Third, it contributes to the relatively scarce evidence on gender differences in the effects of graduating into a recession. The data used in this thesis contain matched employer-employee panel data on the first ten post-graduation years of around 140,000 graduates. The results show that facing a six percentage points (roughly a standard deviation) above average regional unemployment rate in the region of residence in the year of graduation on average reduces annual earnings by 12.6% in the following year after graduation. Remarkably, this initial effect is only halved after 9–10 years. These effects on earnings are larger than what have generally been found in the literature and are similar to those reported with U.S. and Canadian data, for example. Furthermore, there is a persistently higher probability of being unemployed that lasts for roughly seven years. Smaller and more short-lived effects are found when only considering cohorts who graduated after the 1990s depression: the effects on earnings last only for the first five years and there are no effects on unemployment. These findings suggest that under more normal business cycle fluctuation, mechanisms other than unemployment are responsible for the earnings losses. Given the relatively high levels of wage rigidity in Finland, the existing literature suggests that the earnings losses can result from task downgrading and skill mismatch, for example. Finally, the results show that the effects on earnings are smaller for female graduates, perhaps reflecting gender differences in fields of study, employing sector and labor market attachment. Robustness checks indicate that the empirical results are not likely to be affected by selective timing or place of graduation.

This study seeks to comparatively analyse how well-being is distributed across the social structure in European welfare regimes. Welfare regime refers to a group of countries having a relatively similar orientation and culture regarding social policy. Well-being is interpreted and operationalised as a multidimensional concept. More concretely, well-being is approached in terms of the traditional core areas of welfare and social policy (indicators: economic hardship, sickness) but a special emphasis is piaced upon social aspects of life (indicators: social relations, social contribution, local ties, recognition and societal pessimism). The perspective of vulnerable social positions (unemployment, poverty, immigration background etc.) is chosen in all the analyses. The data set of the European Social Survey (round 3, 2006/2007) is used in the study since it includes an extensive module on well-being, which enables convenient and fruitful analytical paths. Multilevel analysis is chosen as the key method for the study due to its ability to handle data that involve grouped observations (e.g. individuals in countries) and research questions that are of multilevel nature themselves. The overall methodological idea is to start from general and broad descriptions and move towards a narrower and more specific focus. Four indicators are chosen for the in-depth analysis: economic hardship, sickness, societal pessimism and recognition. The results mostly corroborate the view that well-being is to a significant extent conditioned by the position one occupies in the social structure and also by the welfare regime one lives in. How life chances are distributed across the social structure varies between the country groups due to their different approaches to welfare policy. The Eastern European country group is generally characterised by relatively frequent ill-being — lack of well-being — on almost all dimensions included in the analysis. Economic hardship is conspicuousiy prevalent in these nations, especially among the unemployed. In fact, unemployment is a major risk factor for economic hardship in all regimes. The Nordic regime is distinguished by low rates of ill-being in virtually all dimensions, but the relatively high sickness rate is an exception: poverty in particular exposes to sickness in the Nordic world of welfare. The link between vulnerability and societal pessimism is rather typical for both the Eastern European and Continental European regimes. Poverty makes future views bleaker in almost ali country groups, whereas immigrants are generally less pessimistic. However, in the Nordic regime immigration background seems to be an adverse factor with respect to well-being. Poverty, unemployment and oneliness are associated to low recognition, whereas old age seems to be related to more respectful treatment. Living in the liberal welfare regime and being poor or unemployed is the combination that most severely exposes its occupant to the demoralising expetiences of low recognition. In other words, the moral flavour of everyday life in a vulnerable social position differs by country groups. Welfare regimes are more than just systems of benefit allocation and service production - also culture matters.