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Do labor market flows affect labor-force participation?

Author

Listed:
  • Johansson, Kerstin

    (IFAU - Institute for Labour Market Policy Evaluation)

Abstract
This study examines if the flow rate from open unemployment to labor market programs affect the labor-force participation rate. This question is relevant because Swedish labor-force participation is expected to decline due to the age distribution in the population. A new dataset, with monthly data from Swedish municipalities between 1991:08 and 2002:10, has been constructed. The results show that increased probability of moving from open unemployment to labor market programs has positive effects on the labor-force participation rate. Positive effects are found for different age groups. The estimated effect of the flow rate from open unemployment into labor market programs is countercyclical. The participation rate is procyclical, and counter-cyclical labor market programs could be used to prevent discouraged workers from leaving labor force. The effects of flow rates from programs to open unemployment, and from the job destruction rate are negative, as expected. Income and labor market tightness have positive effects, except for older participants. This is because it is a spurios negative correlation in data for the older participants. In general, the long run levels are achieved after about nine years, and most of the adjustment takes place during the first four years.

Suggested Citation

  • Johansson, Kerstin, 2006. "Do labor market flows affect labor-force participation?," Working Paper Series 2006:17, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    • Handle: RePEc:hhs:ifauwp:2006_017
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    File URL: http://www.ifau.se/upload/pdf/se/2006/wp06-17.pdf
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    References listed on IDEAS

    as
    1. Forslund, Anders & Johansson, Kerstin, 2007. "Random and stock-flow models of labour market matching - Swedish evidence," Working Paper Series 2007:11, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    2. Calmfors, Lars & Skedinger, Per, 1995. "Does Active Labour-Market Policy Increase Employment? Theoretical Considerations and Some Empirical Evidence from Sweden," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 11(1), pages 91-109, Spring.
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    6. Calmfors, Lars & Forslund, Anders & Hemström, Maria, 2002. "Does active labour market policy work? Lessons from the Swedish experiences," Working Paper Series 2002:4, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    7. Dahlberg, Matz & Forslund, Anders, 1999. "Direct displacement effects of labour market programmes: the case of Sweden," Working Paper Series 1999:7, IFAU - Institute for Evaluation of Labour Market and Education Policy.
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    Cited by:

    1. Ioannidis, Yiorgos, 2013. "Η κρυφή ανεργία στην Ελλάδα / Hidden Unemployment in Greece [Hidden Unemployment in Greece]," MPRA Paper 52120, University Library of Munich, Germany.
    2. Lundin, Daniela & Mörk, Eva & Öckert, Björn, 2007. "Do reduced child care prices make parents work more?," Working Paper Series 2007:2, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    3. Annette Bergemann & Gerard J. Van Den Berg, 2008. "Active Labor Market Policy Effects for Women in Europe - A Survey," Annals of Economics and Statistics, GENES, issue 91-92, pages 385-408.
    4. Nekby, Lena, 2008. "Active labor market programs for the integration of youths and immigrants into the labor market: the Nordic experience," Macroeconomía del Desarrollo 5441, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).

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    More about this item

    Keywords

    Labor market flow; labor-force participation; labor market program;
    All these keywords.

    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure

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