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Labor economics, social policies and policy evaluations
The faculty members involved are Muriel Dejemeppe, Florian Mayneris, Marthe Nyssens, William Parienté, Vincent Vandenberghe, and Bruno Van der Linden. The team includes many young researchers and collaborators from other universities and institutions.
Ten recent selected publications:
Within the area of unemployment, our first topic of research is the determinants of the unemployment rate and the effectiveness of labor market and training policies. One objective of this project is to evaluate the new monitoring scheme for unemployed benefit claimants in Belgium which was introduced in July 2004. This system was designed to foster job-seeking, the supply of vocational training and other active policy measures. In addition, workers’ efforts to find a job are more closely monitored than before, and sanctions are applied if the efforts are deemed to be insufficient. Recent micro-economic evaluations in other countries have concluded that this type of policy can be effective in stimulating participants’ return to employment. This conclusion is important, given that most active policy measures turn out, when evaluated, only to have weak effects. This research is aimed at seeing whether these conclusions also apply in Belgium. This project is led by Muriel Dejemeppe and Bruno Van der Linden in collaboration with Bart Cockx from Ghent University. It involves five researchers: Sofia Pessoa e Costa, Andrey Launov, Cyriaque Edon, Matteo Picchio, and Fatemeh Shadman-Metha. It benefits from the cooperation of Bruno Crépon (CREST) and Marc Gurgand (PSE and CREST). The second project relates to the determinants of youth unemployment. Unemployment rates among young people vary dramatically across OECD countries and over time. This project tries to identify the economic forces underpinning these variations. By using OECD labor market aggregate time series it aims to assess the relative importance of (aggregate) labor demand versus (youth) labor supply as determinants of the youth unemployment rate. In particular we evaluate the "lower demographic dividend" hypothesis, according to which the smaller cohorts of young people since the 1980s should translate into lower youth unemployment rates. The second objective is to identify countries where the level and the variability of youth unemployment significantly deviates from that predicted by the overall/adult level of unemployment (a good proxy of the state of the business cycle) and demographic factors. We investigate whether specific institutional arrangements can make a difference to youth unemployment. The existence of such arrangements is a prerequisite for the justification of specific youth employment policies and analyzes of youth unemployment. So far, we have arrived at several conclusions. First, youth unemployment rates since 1980 have been strongly driven by the adult unemployment rate and the overall demand for labor. Second, smaller cohorts since 1980 have translated into lower youth unemployment. Third, some countries seem to be able to achieve better (or worse) in terms of youth unemployment than their overall employment performances and demographics would predict. Vincent Vandenberghe and Thomas Manfredi from the OECD are conducting this project. Design and evaluation of labor market institutions The first objective in this area is to characterize and evaluate the design of labor market institutions in Belgium. Labor market institutions include formal organizations, laws, rules and policies that affect the functioning of the labor market. This research starts with the question of the extent to which some federal labor market institutions should be decentralized. We argue that some gains can be expected from the appropriate decentralization of some of these institutions. However, to overcome the huge demographic and economic challenges that we currently face, a comprehensive reform of these institutions is much more important. Within the limits of this research we focus on the design of the employment protection legislation (EPL) and of unemployment insurance (UI). The promoters of this project are Bruno Van der Linden and Bart Cockx from Ghent University. Another concern is the empirical analysis of gendered wage discrimination on the Belgian labor market. This research uses a matched employer/employee dataset to investigate the presence of gender wage discrimination in the private sector. We identify and measure wage discrimination at the firm level, using a labor index decomposition pioneered by Hellerstein and Neumark (1995). This allows us to compare direct estimates of a gender productivity differential with those of a gender labor-cost differential. Using the panel structure of our data we can distinguish gender wage discrimination from within-firm variation. We address the problem of endogeneity in input choice using a structural production function estimator devised by Olley and Pakes. Although subject to important caveats, our results indicate that we cannot reject the null hypothesis that there is no gender wage discrimination on the Belgian labor market. Our findings suggest that other causes of the current gender differences in salaries/wages have to be investigated. This project is led by Vincent Vandenberghe and involves Daniel B. Martins from the OECD. Another topic in the broad area of labor market participation is self-employment. The IRES is investigating the effects of interventions supporting youth self employment in disadvantaged areas of France. These are areas where youth unemployment is particularly high and young people face significant constraints in terms of human capital, experience, and access to information that keep them from starting their own businesses. The program aims to relax these constraints by developing an entrepreneurship training program. We have developed an experimental design to rigorously identify the effects of the program: some of the eligible young people are randomly encouraged to participate, while others are not. This creates a sufficient participation differential between the two groups to estimate the parameter of interest. A similar research project is being implemented in Morocco. These projects were developed by William Parienté, in collaboration with several other researchers: Bruno Crépon (CREST), Esther Duflo (MIT), Elise Huillery (Sciences PO) and Juliette Seban (PSE).
Non-profit organizations and public policies The three projects in the area of non-profit organizations and public policy are supervised by Marthe Nyssens and involve researchers from CIRTES (Centre Interdisciplinaire de Recherche Travail et Société – Interdisciplinary Center for Research on Work and Society, UCL). The first study concerns the provision of care services in European countries in a comparative perspective. In the context of the crisis in the Welfare State and massive unemployment, “proximity services” are often presented in the policy debates of European countries as a solution to two major challenges: they meet the growing demand for personal and social services generated by demographic, social and family changes; and they generate job opportunities particularly adapted for the low-skilled unemployed. The provision of care services is characterized by a plurality of providers: public, cooperative, non-profit, social enterprises as well as private for-profit organizations. The objective of this study is to achieve a better understanding of the way the in which the provision of care services is organized, so as to define the broad lines of a public intervention to support their development.
Social policies, poverty and development In the field of social policies, poverty and development, we are studying the microeconomic determinants of poverty in developing countries and using field experiments to analyze the effectiveness of specific development policies. Access to credit, human capital, and basic infrastructure is often limited in poor areas. Two research projects are focusing on the effects of relaxing credit constraints in poor rural areas of Morocco and Pakistan. Financial services are essential for many reasons, including the accumulation of physical and human capital, and for smoothing consumption in the absence of insurance markets. Lack of access to credit may therefore have significant consequences on the economic productivity and mobility of households. The project is exploring the effect of interventions to improve access to credit on households’ production, income, consumption and food security. We are also looking at externalities affecting populations that are do not benefit directly from these policies. The two projects are led by William Parienté, in collaboration with Bruno Crépon (CREST), Esther Duflo (MIT) and Florencia Devoto (PSE) for Morocco, and with Dean Karlan (Yale) for Pakistan. In a related project, we are studying the demand for, and the effect of, private access to water on health, time use, social integration and well-being among households in urban Morocco. The private and public returns of policies that are promoting access to water at home are compared to evaluate whether or not they should be subsidized. This research is being undertaken by William Parienté in collaboration with Esther Duflo (MIT), Pascaline Dupas (UCLA), Vincent Pons (MIT) and Florencia Devoto (PSE). Many development policies are implemented within developed countries, to help lagging regions catch-up or to promote the competitiveness of particular industries through geographically targeted measures. One example of this approach is cluster policies, which try to generate and enhance relationships between firms in the same sector located in the same region. These increased collaborations between geographically proximate firms are expected to facilitate, among other things, the circulation of ideas, the exploitation of technological complementarities, and the optimization of input purchasing. These are all factors that may improve firm-level performance (productivity, exports etc.) Many countries or regions, such as the Spanish Basque Country, Germany, Southern Korea, Brazil, UK, France or Belgium, have implemented development strategies based on cluster policies over the last twenty years. However, such policies are advocated both by supporters of regional policies to favor lagging areas, and by exponents of competitiveness policies focused on national leaders. They therefore suffer from considerable ambiguity between equity and efficiency considerations, and their implementation can be highly varied. Ex-ante and ex-post evaluations of these policies are needed to understand their determinants and their impact. We are focusing on the situation in France, by evaluating two different French cluster policies, the Local Productive Systems and the Competitiveness Clusters policies. This research is led by Florian Mayneris, in collaboration with Philippe Martin (Sciences-Po) and Thierry Mayer (Sciences-Po) on the one hand, and Pamina Koenig (Paris School of Economic), Lionel Fontagné (Paris School of Economic) and Sandra Poncet (Paris 11) on the other. Some other policies target deprived city areas directly. These areas often experience low levels of education, high levels of unemployment and poverty, damaged housing and security issues, which, cumulatively, lower their attractiveness considerably. In order to break this vicious circle, some policies are aimed at attracting economic activities to these places through geographically targeted incentives. In France, for example, tax and social-contribution exemptions are offered to firms that relocate to the deprived urban areas targeted by the government. First evaluations of these policies in developed countries have generally yielded mixed results. When an effect is detected on the number of workplaces created, it is often quite weak; moreover, some studies show that the unemployment of local residents does not necessarily decrease when workplaces are created in these areas The French Ministry of Labor and Solidarity has decided to evaluate the various measures taken in France since the mid 1990s. Florian Mayneris is participating in this evaluation, with a team of researchers from Sciences-Po comprising Clément Malgouyres, Thierry Mayer, Loriane Py and Etienne Wasmer. Three specific issues will be investigated in more detail:
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7/09/2011
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