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A few plain exercises in comparative analysis of

European labour markets

Emilio Reyneri

University of Milan Bicocca

Equalsoc Summer School

Trento, July 3rd 2007

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Different approaches in cross-national studies

Methods

• Variable-oriented• Case-oriented• Societal analysis

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Different approaches in cross-national studies

Explanatory factors

1. Economic (growth and technology)

2. Cultural (social norms and values)

3. Institutional (political system and organisations)

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Variable-oriented approach

- Macro analysis- Focus on relations between variables- Country = set of items of variables

included in the analysis- Usually quantitative variables (data-

bases)- A quite large number of countries

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Case-oriented approach

- Micro analysis- Focus on how phenomena are working

in each case- Country = case considered as a “whole”- Qualitative variables are often stressed- (Very) few country-cases

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Societal analysis approach- Micro-macro analysis- Two steps:

1. stressing relations between variables inside any country

(also at individual level) 2. cross-national comparing the results of those relations

- Quali/quantitative variables (recently also longitudinal)

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Societal analysis approach

- Intermediate number of countries- Standardised data-sets are needed- Usual outcomes = typologies

- un/employment models- labour market systems- welfare regimes

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Variable-oriented approachMeritsEasy availability of national average data allows exploratory analyses on many countries, also for long periods of time.LimitsNumber of countries often too restricted for statistical methods (regressions).Choice of countries can undermine the results.Macro-relations may not be confirmed at the micro level.

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Two easy examples concerning the choice of countries

1. Cross-national relation between penalisation of women and their labour market participation.

2. Cross-national relation between female employment and the proportion of part time.

Women in the labour market: at a cross-road between cultural norms, socio-political institutions, economic growth.

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Fig. 1. Relation between women penalisation and their labour market participation, Western European countries

2005

y = -0,0328x + 3,3999

R2 = 0,3891

0,5

1

1,5

2

2,5

3

45 50 55 60 65 70 75 80

Women activity rate

Rat

io o

f wom

en/m

en

unem

ploy

men

t rat

es

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The underlying hypothesis

Women are more penalised in societies that are less accustomed to regarding their participation in the labour market as fully normal by social standards (gender culture: mother vs. worker).ButSuch a hypothesis is grounded on the choice of countries where labour market participation of women was growing over time at least since early Seventies

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Fig. 2. Relation between women penalisation and their labour market participation. All European countries, 2005

y = -0,0203x + 2,4732

R2 = 0,1589

0,5

1

1,5

2

2,5

3

45 50 55 60 65 70 75 80

Women activity rate

Rat

io o

f wom

en/m

en

unem

ploy

men

t rat

es

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Fig. 3. Relation between women penalisation and their labour market participation. Eastern European countries,

2005

y = -0,0002x + 1,0759

R2 = 0,00

0,60

0,70

0,80

0,90

1,00

1,10

1,20

1,30

1,40

1,50

1,60

54 56 58 60 62 64 66 68

Women activity rate

Rat

io o

f wom

en/m

en

unem

ploy

men

t rat

es

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The different story of former planned societies

Near full employment also for women in planned societies; then transition caused a more or less important decrease of women activity rate and increase of unemployment, both for women and men.In those countries, long time fully accustomed in regarding women as workers, their (recent) penalisation followed idiosyncratic pathways.

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Fig. 4. Relation between women employment and part time. Western European countries, 2005

y = 0,9349x - 23,337

R2 = 0,2725

0,0

10,0

20,0

30,0

40,0

50,0

60,0

70,0

80,0

40,0 45,0 50,0 55,0 60,0 65,0 70,0 75,0

Employment rate (15-64 yrs)

% p

art

tim

e

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The underlying hypothesisSince early ’70s, growth in % part time paralleled growth of women employment in all Western countries (but Italy till early ’90s).Part time pushed women employment because it let also poorly educated (and more family-committed / poorly paid) women to get a paid work.So, women are more employed in countries where opportunities for part time jobs are larger.

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Fig. 5. Relation between women employment and part time. Eastern European countries, 2005

y = 0,0454x + 5,7483

R2 = 0,0061

0,0

2,0

4,0

6,0

8,0

10,0

12,0

14,0

40,0 45,0 50,0 55,0 60,0 65,0

Employment rate (15-64 yrs)

% P

art

tim

e

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The different story of former planned societies

In those countries also poorly educated women were accustomed to being fully employed in full time jobs.When transition caused a more or less important decrease in their employment rate, the proportion of women in part time jobs remained very low and cross-nationally followed idiosyncratic pathways without any relation with their labour participation.

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A macro-relation not confirmed at the micro level

Proportion of self-employed workers in EU15 countries is often related to Oecd protection index for dependent employment (EIP)

A (weak) positive cross-national relation does exist (hypothesis A)

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Table 6. Relation between the proportion of self-employed and the dependent employment protection

index

0,0

5,0

10,0

15,0

20,0

25,0

30,0

35,0

40,0

45,0

0 0,5 1 1,5 2 2,5 3 3,5 4 4,5 5

Employment protection index (Ocde 2004)

Pro

port

ion

of s

elf-

empl

oyed

r = 0.21

Greec

Portuga

Sw edeDenmar

FrancGerman

FinlanNetherland

Great

SpaiBelgiu

Ital

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Proportion of self-employed workers

However,A (negative) cross-national relation between the proportion of self-employment and the generosity of unemployment benefits is even larger

(hypothesis B)

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Table 7. Relation between the proportion of self-employed and the index of generosity of unemployment

benefits

0,0

5,0

10,0

15,0

20,0

25,0

30,0

35,0

40,0

45,0

0 10 20 30 40 50 60 70 80

Index of generosity of unemployment benefits

Pro

po

rtio

n o

f sel

f-em

plo

yed

r = - 0.39

Denmar

Greec

ItalPortuga

Great German

Sw ede

Franc

Spai

Belgium

Finlan

Netherland

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Both those macro relations are poorly consistent at a micro-levelMost of people entering self-employment are only apparently - young first-job seekers (A) → intergenerational transmission- job-losers (B) → pseudo-self-employment of

seasonal workers(from a research on Italy, 27 % self-employed)

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Who self-employed really are

- prime age men, - skilled and professional workers, - long work experience as employees,- well-endowed with social capital, attained working in small firms,- committed to individualistic mobilization

Cross-national variation in % self-em. grounded on differences in wider economic and social fabric

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Cross-national variation in youth unemployment

Variation in total unemployment rate among EU countries is important, but much more important is variation in penalisation of youth vs. prime age people (as well as of women vs. men).

Ratio of youth/adult unemployment rates ranges from 1.1 to 3.6

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Fig. 8. Unemployment rate by age, 2004

0,0

5,0

10,0

15,0

20,0

25,0

30,0

35,0

40,0

15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64

France Spain Ireland Belgium Italy Germany

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The connection with the strictness of the labour market

regulation

• Oecd tried to cross-nationally relates - unemployment rate to EIP → failure - youth/adult unemployment rate to

EIP → failure• To look for a viable relation between

youth/adult unemployment and EIP, Breen (2005) added an institutional variable: the educational system

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Educational system’s role in the transition from school to work

• Vocational education → signalling a job seeker for a job → reducing seeking time

• General education→ no signalling function

• Where vocational education prevails, impact of high EIP is counterbalanced → youth vs. adult unemployment

low penalisation

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Breaking-down the ratio of youth/ adult unemployment rates by

education

Low Medium High

Italy 2.8 4.8 6.3

Spain 1.8 3.1 3.5

France 2.1 2.3 2.0

Britain 2.2 2.4 1.7

Netherlands 1.9 2.0 1.9

Germany 1.0 0.9 1.0

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Fig. 9. Unemployment rate by age and educational attainment. Italy 2001, Men

0,0

5,0

10,0

15,0

20,0

25,0

30,0

35,0

40,0

15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70-74

Low Medium High

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Fig. 10. Unemployment rate by age and educational attainment. UK 2001, Men

0,0

5,0

10,0

15,0

20,0

25,0

30,0

15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70-74

Low Medium High

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Are Breen’s results confirmed?• EU cross-national differences in the gap

between youth and prime age unemployment rates concern essentially highly and medium educated people.

• YES, but …

• We can wonder if in some countries just educated youth face more difficulties in finding jobs because highly qualified labour demand is too poor

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People in employment by skill level (employers excepted)

Italy Spain Germany France Ireland

Senior officials and managers 1,8 1,8 3,8 4,7 11,2

Professionals 10,7 12,9 16,3 13,3 18,7

Technicians 23,6 11,3 22,5 18,8 6,9

Clerks 11,7 8,6 12,2 13,3 13,8

Service and sales workers 12,1 15,6 10,8 12,7 14,7

Skilled workers 20,0 24,7 20,4 17,3 16,5

Plant and machine operators 10,0 11,5 7,9 10,1 9,2

Elementary occupations 10,1 13,6 6,2 9,8 9,0

Total 100,0 100,0 100,0 100,0 100,0

Source: Eurostat, Labour Force Surveys

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A mismatch between demand and supply

• In countries (Italy, Spain) most penalising educated youths, the proportion of youths attaining higher educational qualifications is still relatively low

But• Their economic systems provide younger

cohorts with even lower proportions of highly qualified jobs- predominance of small and very small firms- shortage of high tech economic sectors.

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Why no displacement effect?

Oversupply of highly educated youths entering labour markets, who have to wait long time for getting a job suitable to their socio-professional expectations

ButThey are also able to do so, as in

those countries most of them can rely on their parents’ support

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Fig. 11. Proportion of young adults aged 30 yrs living with their parents

(2002)

0

10

20

30

40

50

60

Italy Spain Ireland Germany Belgium GreatBritain

France

Men Women

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An unbalanced support for youths and prime age people

looking for a jobIf educated youths can allow themselves

long searching time for the first job.

Prime age job losers receive only very scarce unemployment benefits (a punitive “welfare to work” policy), thus they are forced to take a new job as soon as possible.

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The impact of welfare system on the unemployment structure

More generally

Among old EU member states does exist a negative relation between the level of the unemployment benefits and the ratio of youth/adult unemployment rates

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Fig. 12. Relation between the ratio of youth/adult unemployment rates and the level of generosity of

unemployment benefits

Germany

GreeceItaly

r = - 0,43

0,00

0,50

1,00

1,50

2,00

2,50

3,00

3,50

4,00

0 10 20 30 40 50 60 70 80

Index of generosity of unemployment benefits

Rat

io o

f yo

uth

/ad

ult

u

nem

plo

ymen

t ra

tes

Great

Sw ede

Denmar

Netherlan

Finlan

BelgiuFrancPortug

Spai

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Unemployment between welfare state and family

Gap in unemployment rate between prime age people (the breadwinners) and young people (first job seekers) is larger in EU15 countries where

- job seekers receive a very poor support by welfare state and have to rely only on their households’ support;

- young job seekers can rely for a long time on their parents’ support.

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A typology of unemployment

Model of family residence

Welfare regime

Extendeddependence

Intergenerational autonomy

Sub-protective Italy, Spain

Minimal Ireland UK

Employment centred  

France, Germany, Belgium

Universalistic   Denmark, Sweden

(Gallie-Paugam, 2000)

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A case of societal analysis•Who exits unemployment?The problem:which impact on transition from

unemployment to employment have personal characteristics?

and in particular education

Two events:job seekers with and without

working experience

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Britain vs. ItalyFor two countries & both the

events a gendered model of exit from

unemployment, stressing the impact of:

- age,- class of origin (last occupational class)- education /vocational training,- living with parents / family status(Bernardi, Layte, Schizzerotto, Jacobs 2000)

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Cross-national / cross event analysis

• For each country, the outcomes of the models are explained referring to how its labour market regulation, family system, welfare regime are working.

• Then, the national scenarios are compared to emphasize cross-national variations in the impact of personal characteristics.

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Methodological issues

No single model including country as an independent variable, but separate national models

• Forced research designnational datasets: different, although alike

• Choicefocus on societal coherence

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The impact of education

• Higher education promotes exit - in UK both for first-job seekers and job losers; - in Italy for job losers, but not for first-job seekers.

• As first-job seekers = youths, those results confirm the cross-national position of UK and Italy concerning variation in youth unemployment by education.

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A moot explanation • As in both countries the signalling effect

by vocational education is null, authors focus on variation in the labour market regulation.

• In Italy, + regulation → + protection for (adult)

insiders → collectivist exclusion for youth outsiders

Butthis relation cannot be checked at a micro-level

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A tale of Italy as a strictly regulated labour market

• Employed prime age people (the insiders) are supposed to be over-protected by labour laws preventing young first job-seekers (the outsiders) from being hired in their place.

• Such a hypothesis in grounded on- A very high ranking in the Oecd

EIP- A very low number of job losers

among unemployed people

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A new evidence

•2004 revised EIP puts Italy at the lowest rungs in Europe,

•work-turnover in Italy is among the highest in Europe- this does not clash with a poor number of job-losers if most of them were able to find a new job very quickly

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Coming back to a micro-grounded explanation

• From an economic point of view, the oversupply of highly educated youth.

• From a social point of view, highly educated young job-seekers are able to be sheltered long time by their parents.