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Labour Market Flexibility and Inequality: The Changing Skill-Based Temporary Employment and Unemployment Risks in Europe
Michael Gebel
(MZES, Mannheim)Johannes Giesecke (WZB, Berlin)
2Michael Gebel (MZES, Mannheim) and Johannes Giesecke (WZB, Berlin)
1. Motivation
“Unified economic theory”
(Blau/Kahn 2002)Structural changes: technological change, globalization reduced demand for low educated workers
U.S.: rising skill-related wage inequality due to flexible labour marketEU: rising skill-related unemployment due to rigid labor market
“Sociological perspective”
(DiPrete
et al. 2006)Institutional heterogeneity in EuropeFlexibility gained by deregulation of the usage of temporary work contracts
rising skill-related inequalities in job (in)security in most EU countires
3Michael Gebel (MZES, Mannheim) and Johannes Giesecke (WZB, Berlin)
2. Theory and Hypotheses
Institutional heterogeneity in EuropeEmployment protection legislation (EPL) and reforms (Kahn 2007)
Two
important
dimensions
of EPL:
1. Regulations of regular
employment-
protection
of employment
relations of „insiders“
-
induce
dismissal
costs
for
employers-
impact
on the
structure
of employment
and unemployment
-
lower
EPL levels
are
expected
to decrease
skill-divide
in both
temporary employment
and unemployment
4Michael Gebel (MZES, Mannheim) and Johannes Giesecke (WZB, Berlin)
2. Theory and Hypotheses
Institutional heterogeneity in EuropeEmployment protection legislation (EPL) and reforms (Kahn 2007)
Two
important
dimensions
of EPL:
2. Regulations of temporary
employment-
temporary
employment
decrease
dismissal
costs
for
employers
-
lower
levels
are
expected
to increase
skill-divide
in temporary
employment-
lower
levels
are
expected
to decrease
skill-divide
in unemployment
but: impact
is
expected
to vary
with
levels
of EPL of regular
employment-
particularly
strong
effects
if
EPL of regular
employment
is
high
AT 95/00
AT 05
ES 95
ES 00 ES 05FI 95FI 00FI 05
.51
1.5
22.
53
3.5
44.
55
EP
L re
gula
r em
ploy
men
t
0 .5 1 1.5 2 2.5 3 3.5 4 4.5 5EPL temporary employment
BE 95BE 00
BE 05
DE 95
DE 00DE 05
DK 95DK 00/05
GR 95/00GR 05
IE 95/00IE 05IT 95IT 00IT 05
NL 95NL 00/05
NO 95NO 00
NO 05
PT 95PT 00PT 05
SE 95SE 00/05
.51
1.5
22.
53
3.5
44.
55
EP
L re
gula
r em
ploy
men
t
0 .5 1 1.5 2 2.5 3 3.5 4 4.5 5EPL temporary employment
UK 95/00UK 05
FR 95/00FR 05
.51
1.5
22.
53
3.5
44.
55
EP
L re
gula
r em
ploy
men
t
0 .5 1 1.5 2 2.5 3 3.5 4 4.5 5EPL temporary employment
UK 95/00UK 05
FR 95/00FR 05
.51
1.5
22.
53
3.5
44.
55
EPL
regu
lar e
mpl
oym
ent
0 .5 1 1.5 2 2.5 3 3.5 4 4.5 5EPL temporary employment
AT 95/00
AT 05
ES 95
ES 00 ES 05FI 95FI 00FI 05
.51
1.5
22.
53
3.5
44.
55
EP
L re
gula
r em
ploy
men
t
0 .5 1 1.5 2 2.5 3 3.5 4 4.5 5EPL temporary employment
BE 95BE 00
BE 05
DE 95
DE 00DE 05
DK 95DK 00/05
GR 95/00GR 05
IE 95/00IE 05IT 95IT 00IT 05
NL 95NL 00/05
NO 95NO 00
NO 05
PT 95PT 00PT 05
SE 95SE 00/05
.51
1.5
22.
53
3.5
44.
55
EPL
regu
lar e
mpl
oym
ent
0 .5 1 1.5 2 2.5 3 3.5 4 4.5 5EPL temporary employment
Trends in EPL, Western Europe 1995-2005
AT 95/00
AT 05
ES 95
ES 00 ES 05FI 95FI 00FI 05
.51
1.5
22.
53
3.5
44.
55
EP
L re
gula
r em
ploy
men
t
0 .5 1 1.5 2 2.5 3 3.5 4 4.5 5EPL temporary employment
BE 95BE 00
BE 05
DE 95
DE 00DE 05
DK 95DK 00/05
GR 95/00GR 05
IE 95/00IE 05IT 95IT 00IT 05
NL 95NL 00/05
NO 95NO 00
NO 05
PT 95PT 00PT 05
SE 95SE 00/05
.51
1.5
22.
53
3.5
44.
55
EP
L re
gula
r em
ploy
men
t
0 .5 1 1.5 2 2.5 3 3.5 4 4.5 5EPL temporary employment
UK 95/00UK 05
FR 95/00FR 05
.51
1.5
22.
53
3.5
44.
55
EP
L re
gula
r em
ploy
men
t
0 .5 1 1.5 2 2.5 3 3.5 4 4.5 5EPL temporary employment
Partial Deregulation, Type I
Skill-divide
in temporary
employment
↑ Skill-divide
in unemployment
↓
stronger
effects
für high levels
of EPL regular
Partial Deregulation, Type II
Skill-divide
in temporary
employment
↓ Skill-divide
in unemployment
↓
7Michael Gebel (MZES, Mannheim) and Johannes Giesecke (WZB, Berlin)
3. Research Design
Data:
European Labour Force Survey 1992-2005+ German Mikrozensus 1993-2001
Sample:
persons aged 25-64, self-employed excluded
Design:
multilevel
model
(3 levels: country, time, individual)two-step procedure instead of simultaneous maximum
likelihood
procedure
(Franzese
2005, Jusko/Shively
2005)
8Michael Gebel (MZES, Mannheim) and Johannes Giesecke (WZB, Berlin)
3. Research Design
Micro level
First step:
micro-level
analysis
of determinants
of temporary
work
and unemployment; estimated
separately
for
every
country/year
Dependent
variables:
dummies
for
temporary
contract
and unemployment
Independent microvariables
X: -
age groups
(5-years intervals)
-
gender-
education
(ISCED low, medium, high)
9Michael Gebel (MZES, Mannheim) and Johannes Giesecke (WZB, Berlin)
3. Research Design
Micro level
First step:
micro-level
analysis
of determinants
of temporary
work
and unemployment; estimated
separately
for
every
country/year
( ) ( )( )
( ) ( )( )
1 1' 10
2 2' 20
1 ln
2 ln
ctict ct cti cti
cti
ctict ct cti cti
cti
P Y tempu
P Y perm
P Y unemployedu
P Y employed
β
β
⎛ ⎞== + +⎜ ⎟⎜ ⎟=⎝ ⎠
⎛ ⎞== + +⎜ ⎟⎜ ⎟=⎝ ⎠
β x
β x
10Michael Gebel (MZES, Mannheim) and Johannes Giesecke (WZB, Berlin)
3. Research Design
Macro
level
Second step:
pooled
time series
cross section
analysis
of logit
coefficientsRE and FE models
Dependent
variables:
logit
coefficients
from
micro-level
regressions
Independent macrovariables
Z:-
2 EPL indicators
based
on OECD indices
(OECD 2004)
-
Collective
bargaining
coverage
(Visser 2004)-
GDP growth (ILO 2008)
-
GDP share
of ALMP (ILO 2008, Eurostat
2008)-
Share of workers
in service
sector
(NACE G-Q)
-
KOF Index of Economic
Globalization
(Dreher 2006)
11Michael Gebel (MZES, Mannheim) and Johannes Giesecke (WZB, Berlin)
3. Research Design
Macro
level
Second step:
pooled
time series
cross section
analysis
of logit
coefficientsRE and FE models
( )( )
1 1 1' 1, 0
2 2 2' 2, 0
3 low vs. high education
low vs. medium education4k
k
X ct ct ctk
X ct ct ct
eX
e
β γ
β γ
= + + ⎧⎨
= + + ⎩
γ zγ z
12Michael Gebel (MZES, Mannheim) and Johannes Giesecke (WZB, Berlin)
4. Results
For both
temporary
employment
and unemployment
risks:
Micro level-
Results
of level-1 regressions
-
Focus on coefficients
related
to skill-divide-
In this
presentation: contrast
low
versus
medium
levels
of education
Macro
level-
Three
different level-2 regressions
-
In this
presentation: only
results
of RE-Models (FE-Models
produce
very
similar
results)
-.50
.51
1.5
-.50
.51
1.5
-.50
.51
1.5
-.50
.51
1.5
1990 1995 2000 2005
1990 1995 2000 2005 1990 1995 2000 2005 1990 1995 2000 2005
AT BE DE DK
ES FI FR GR
IE IT NL NO
PT SE UK
logi
t coe
ffici
ents
(lev
el 1
)
Contrast: low versus medium educated
Trends in skill-divide temporary employment
Michael Gebel
(MZES, Mannheim) and Johannes Giesecke (WZB, Berlin)
14Michael Gebel (MZES, Mannheim) and Johannes Giesecke (WZB, Berlin)
Temporary employment low vs. medium education
Unemployment low vs. medium education
M1 M2 M3 M1 M2 M3 EPLreg .0348 .0939 (.652) (1.59) EPLtemp -.0691*** (-3.72) EPLtemp - low EPLreg .0115 (.202) - med EPLreg -.0581** (-3.06) - high EPLreg -.126*** (-3.79) (EPLreg-EPLtemp) .0654*** (3.94) N 188 188 188 R2 within .122 .145 .12 R2 between .0139 .00296 .00774
4. Results
+ p < 0.10, * p < 0.05, ** p < 0.01, *** p < 0.001Additional macro-level controls: GDP growth, CBC, ALMP, size of service sector, KOF globalization index
0.5
11.
50
.51
1.5
0.5
11.
50
.51
1.5
1990 1995 2000 2005
1990 1995 2000 2005 1990 1995 2000 2005 1990 1995 2000 2005
AT BE DE DK
ES FI FR GR
IE IT NL NO
PT SE UK
logi
t coe
ffici
ents
(lev
el 1
)
Contrast: low versus medium educated
Trends in skill-divide unemployment
Michael Gebel
(MZES, Mannheim) and Johannes Giesecke (WZB, Berlin)
16Michael Gebel (MZES, Mannheim) and Johannes Giesecke (WZB, Berlin)
Temporary employment low vs. medium education
Unemployment low vs. medium education
M1 M2 M3 M1 M2 M3 EPLreg .0348 .0939 .0469 .0598 (.652) (1.59) (1.12) (1.27) EPLtemp -.0691*** -.0017 (-3.72) (-.111) EPLtemp - low EPLreg .0115 -.0342 (.202) (-.724) - med EPLreg -.0581** -.0023 (-3.06) (-.144) - high EPLreg -.126*** -.0255 (-3.79) (-.934) (EPLreg-EPLtemp) .0654*** .0084 (3.94) (.623) N 188 188 188 188 188 188 R2 within .122 .145 .12 .0795 .0781 .0644 R2 between .0139 .00296 .00774 .00278 .0283 .0261
4. Results
+ p < 0.10, * p < 0.05, ** p < 0.01, *** p < 0.001Additional macro-level controls: GDP growth, CBC, ALMP, size of service sector, KOF globalization index
17Michael Gebel (MZES, Mannheim) and Johannes Giesecke (WZB, Berlin)
Temporary employment low vs. medium education
Unemployment low vs. medium education
M1 M2 M3 M1 M2 M3 EPLreg .0348 .0939 .0469 .0598 (.652) (1.59) (1.12) (1.27) EPLtemp -.0691*** -.0017 (-3.72) (-.111) EPLtemp - low EPLreg .0115 -.0342 (.202) (-.724) - med EPLreg -.0581** -.0023 (-3.06) (-.144) - high EPLreg -.126*** -.0255 (-3.79) (-.934) (EPLreg-EPLtemp) .0654*** .0084 (3.94) (.623) N 188 188 188 188 188 188 R2 within .122 .145 .12 .0795 .0781 .0644 R2 between .0139 .00296 .00774 .00278 .0283 .0261
4. Results
+ p < 0.10, * p < 0.05, ** p < 0.01, *** p < 0.001Additional macro-level controls: GDP growth, CBC, ALMP, size of service sector, KOF globalization index
18Michael Gebel (MZES, Mannheim) and Johannes Giesecke (WZB, Berlin)
6. Conclusion
-
since
mid-1990ies: no general
trend
towards
increasing
relative unemployment risks
for
low
educated
in Western Europe
-
partial deregulation
in many
Western European countries-
this
kind
of flexibilization
is
characterized
by
rising skill-based temporary employment risksunchanged skill-based unemployment risks
19Michael Gebel (MZES, Mannheim) and Johannes Giesecke (WZB, Berlin)
6. Conclusion
-
Two
possible
perspectives
on the
results: Partial deregulation has prevented an increase in skill-basedunemployment risks
or
Partial deregulation lead to an increase of substitution betweenpermanent and temporary jobs for low-skilled workers
-
if
France (no changes
in EPL, no changes
of skill-based
risks) is
taken
as baseline: support
for
the
substitution-hypothesis
20Michael Gebel (MZES, Mannheim) and Johannes Giesecke (WZB, Berlin)
Thank you for your attention!
21Michael Gebel (MZES, Mannheim) and Johannes Giesecke (WZB, Berlin)
Backup
22Michael Gebel (MZES, Mannheim) and Johannes Giesecke (WZB, Berlin)
Backup: Unemployment vs. temporary employment
+ p < 0.10, * p < 0.05, ** p < 0.01, *** p < 0.001Additional macro-level controls: GDP growth, CBC, ALMP, size of service sector, KOF globalization index
Unemployment vs. Temporary employment (low vs. medium) M1 M2 M3 EPLreg .0391 -.0527 (.683) (-.876)
EPLtemp .0412* (2)
EPLtemp - low EPLreg -.136*
(-2.07)
- med EPLreg .00231
(.111)
- high EPLreg .035
(.951)
(EPLreg-EPLtemp) -.0323+ (-1.75) N 188 188 188 R2 within .0917 .0697 .0744 R2 between .0158 .263 .0602
23Michael Gebel (MZES, Mannheim) and Johannes Giesecke (WZB, Berlin)
Backup: low vs. high education / low vs. medium education
+ p < 0.10, * p < 0.05, ** p < 0.01, *** p < 0.001Additional macro-level controls: GDP growth, CBC, ALMP, size of service sector, KOF globalization index
Temporary employment low vs. high Temporary employment low vs. medium M1 M2 M3 M1 M2 M3 EPLreg .126 .237* .0348 .0939 (1.5) (2.5) (.652) (1.59)
EPLtemp -.0429 -.0691*** (-1.38) (-3.72)
EPLtemp – low EPLreg .127 .0115 (1.31) (.202)
– med EPLreg -.0157 -.0581** (-.493) (-3.06)
– high EPLreg -.12* -.126*** (-2.14) (-3.79)
(EPLreg-EPLtemp) .0689* .0654*** (2.51) (3.94) N 188 188 188 188 188 188 R2 within .0826 .0983 .0894 .122 .145 .12 R2 between 4.66e-06 .0325 .0304 .0139 .00296 .00774
24Michael Gebel (MZES, Mannheim) and Johannes Giesecke (WZB, Berlin)
Backup: low vs. high education / low vs. medium education
+ p < 0.10, * p < 0.05, ** p < 0.01, *** p < 0.001Additional macro-level controls: GDP growth, CBC, ALMP, size of service sector, KOF globalization index
Unemployment low vs. high Unemployment low vs. medium M1 M2 M3 M1 M2 M3 EPLreg .159* .159* .0469 .0598 (2.26) (2.02) (1.12) (1.27)
EPLtemp .0161 -.00168 (.625) (-.111)
EPLtemp – low EPLreg -.248** -.0342
(-3.2) (-.724)
– med EPLreg .0015 -.00225
(.0585) (-.144)
– high EPLreg -.00376 -.0255
(-.0833) (-.934)
(EPLreg-EPLtemp) .0109 .00839 (.472) (.623) N 188 188 188 188 188 188 R2 within .187 .242 .146 .0795 .0781 .0644 R2 between .0324 .000094 .00263 .00278 .0283 .0261
25Michael Gebel (MZES, Mannheim) and Johannes Giesecke (WZB, Berlin)
Backup: FE vs. RE
+ p < 0.10, * p < 0.05, ** p < 0.01, *** p < 0.001Additional macro-level controls: GDP growth, CBC, ALMP, size of service sector, KOF globalization index
FE Panel estimator RE Panel estimator Temporary employment low vs.
high Temporary employment low vs.
high M1 M2 M3 M1 M2 M3 EPLreg .114 .174+ .126 .237* (1.14) (1.66) (1.5) (2.5)
EPLtemp -.0836** -.0429 (-2.7) (-1.38)
EPLtemp – low EPLreg .0513 .127
(.546) (1.31)
– med EPLreg -.0651* -.0157
(-2.03) (-.493)
– high EPLreg -.158** -.12*
(-2.8) (-2.14)
(EPLreg-EPLtemp) .0871** .0689* (3.09) (2.51) N 188 188 188 188 188 188 R2 within .0913 .114 .0908 .0826 .0983 .0894 R2 between .117 .093 .179 4.66e-06 .0325 .0304
26Michael Gebel (MZES, Mannheim) and Johannes Giesecke (WZB, Berlin)
Backup: All covariates
+ p < 0.10, * p < 0.05, ** p < 0.01, *** p < 0.001Additional macro-level controls: GDP growth, CBC, ALMP, size of service sector, KOF globalization index
RE Panel estimator Temporary employment low vs. high M1 M2 M3 EPLreg .126 .237*
EPLtemp -.0429
EPLtemp – low EPLreg .127
– med EPLreg -.0157
– high EPLreg -.12*
(EPLreg-EPLtemp) .0689*
GDP growth .00301 .00636 .00196
CBC .00327 .0019 .00541
ALMP -.0587 -.00594 -.0724
Service Sector .878 .499 .563
KOF Globalization .00111 .000804 .000353 N 188 188 188 R2 within .0826 .0983 .0894 R2 between 4.66e-06 .0325 .0304