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This paper investigates how the potential duration of unemployment benefits affects the quality of post-unemployment jobs. It takes advantage of a natural experiment introduced by a change in Slovenia's unemployment insurance law that substantially reduced the potential benefit duration. Although this reduction strongly increased job finding rates, the quality of the post-unemployment jobs remained unaffected. The paper finds that the law change had no effect on the type of contract (temporary versus permanent), the duration of the post-unemployment job, or the wage earned in the job.

Employment Office --- Human Capital --- Job --- Job Match --- Job Matches --- Job Search --- Job Separation --- Job Tenure --- Jobs --- Labor Markets --- Re-Employment Bonuses --- Social Protections and Labor --- Unemployed --- Unemployment --- Unemployment Benefits --- Unemployment Durations --- Unemployment Insurance --- Unemployment Outcomes --- Unemployment Spell --- Unemployment Spells --- Wage Gains --- Worker

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To prevent trained workers from quitting to open their own businesses, firms pay higher than market efficiency wages to reduce turnover. What is the impact of macroeconomic shocks and policy innovations, such as labor market reform, in an economy where this is of central importance? Combining microeconomic evidence with macroeconomic theory, Krebs and Maloney present an integrated approach to wage and employment determination in an economy where firms pay above market efficiency wages to prevent trained workers from quitting. The model offers predictions about the behavior of formal employment, labor turnover, and segmentation in response to formal sector productivity shocks (including economic growth and tax reductions), changes in the desirability of self-employment (formal sector tax rates), and the cost of training a new worker. They use panel data from Mexican labor surveys to estimate the quit function derived from the model and the results support their view that transitions from formal salaried work to informal self-employment are quits rather than fires. (Quitting is positively related to the mean self-employment income and the probability of being rehired and negatively related to the mean formal salaried wage.) They then use the parameters estimated from the quit function to calibrate the model economy and simulate the impacts of economic shocks and policy innovations and find the impact on employment, turnover, and segmentation to be substantial. This paper - a product of the Poverty Reduction and Economic Management Sector Unit, Latin America and Caribbean Region - is part of a larger effort in the region to understand the functioning of developing country labor markets. The authors may be contacted at tkrebs@uiuc.edu or wmaloney@worldbank.org.

Adjustment Costs --- Economic Theory and Research --- Employment --- Finance and Financial Sector Development --- Financial Literacy --- Informal Sector --- Involuntary Unemployment --- Job --- Job Separation --- Jobs --- Labor --- Labor Economics --- Labor Market --- Labor Markets --- Labor Policies --- Labor Turnover --- Long-Run Effects --- Macroeconomics and Economic Growth --- Management --- Minimum Wages --- Social Protections and Labor --- Training Costs --- Unemployment Benefits --- Wage Rate --- Worker --- Workers

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This paper investigates the occupational mobility and job quality of young people in Indonesia and relates this to the concept of "scarring." The concept of labor market scarring in this paper is the occurrence of low or zero returns to certain types of work (for example, self-employment). Scarring is expected to occur whenever an individual spends periods working in occupations in which their human capital is either stagnant or deteriorating. Fixed effects estimations using panel data from the Indonesian Family Life Survey reveal that a period in self-employment is associated with negative returns for youth (about 3 to 4 percent per year penalty), but not for older adults. In addition, there are clear patterns of persistence in self-employment over time with few individuals progressing from petty self-employment to businesses with permanent workers.

Adult males --- Aggregate unemployment --- Casual worker --- College graduate --- Contingent workers --- Displaced workers --- Earning --- Earnings losses --- Educational attainment --- Employee --- Employment outcomes --- Employment probability --- Employment prospects --- Employment status --- Expected wages --- Family labor --- Full time job --- Health insurance --- Household characteristics --- Human capital --- Human resource --- Informal employment --- Informal sector --- Job --- Job creation --- Job match --- Job search --- Job security --- Job separation --- Job status --- Job training --- Labor --- Labor contract --- Labor economics --- Labor force --- Labor management & relations --- Labor market --- Labor market characteristics --- Labor market experience --- Labor market outcomes --- Labor market segmentation --- Labor markets --- Labor policies --- Labor productivity --- Labor relations --- Labor standards --- Labour --- Labour market --- Long term wage --- Occupational mobility --- Older workers --- Permanent employment --- Permanent worker --- Permanent workers --- Private sector --- Private sector workers --- Public sector employment --- Safety net --- Salaried employment --- Self-employed --- Self-employment --- Social protections and labor --- Temporary work --- Temporary workers --- Unemployed --- Unemployed individual --- Unemployed youth --- Unemployment --- Unemployment rate --- Wage differentials --- Wage effects --- Wage employment --- Wage growth --- Wage impact --- Wage rates --- Wage sector --- Wage subsidies --- Work experience --- Worker --- Workers --- Working conditions --- Youth employment --- Youth unemployment