These incomplete records were discarded. The lesser frequency of job turnover of more educated workers, which creates fewer episodes of unemployment, is in large part attributable to more on-the-job training. You can help correct errors and omissions. The more experienced a worker, the greater the potential for enhanced skills and desirability. This analysis examines the short-term individual impact of education in re-employment wages and does not address the longer term impact of macro dynamics and the potential for long-term wage disparity convergence. Thurow, L. (1987, May). It also allows you to accept potential citations to this item that we are uncertain about. All values shown are significant at the 1 percent level. A major benefit of education is the lower risk of unemployment at higher educational levels. Public profiles for Economics researchers, Various rankings of research in Economics & related fields, Curated articles & papers on various economics topics, Upload your paper to be listed on RePEc and IDEAS, RePEc working paper series dedicated to the job market, Pretend you are at the helm of an economics department, Data, research, apps & more from the St. Louis Fed, Initiative for open bibliographies in Economics, Have your institution's/publisher's output listed on RePEc. Binary variables ascertain the influence of educational attainment. Blackburn, M. L. (1990, Fall). The link between education and weeks of benefits is not as strong as it was in the wage difference model. For each record, no information is provided to delineate part-time labor, full-time labor, weeks worked or the number of hours worked within the quarter. A major benefit of education is the lower risk of unemployment at higher educational levels. The average of the second and third quarters of wages is a better indication of wages before entry and exit of the claims system. The Role of Education: Mobility Increasing or Mobility Impeding? This argument is consistent with research using data after 1970 that indicates increasing wage inequality in the labor market due to skill requirement differentiation (Blackburn, 1990; Bound & Johnson, 1992; Karoly, 1992; Katz & Murphy, 1992; Kosters, 1991). A test of dual labor market theory. If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. Deindustrialization and the labor market segmentation. van de Klundert, Th. Variables statistically significant at the 1 percent level are discussed. Education plays a vital role in eradicating unemployment. Wage Difference = In explaining the lesser conditional unemployment of educated workers and the somewhat shorter duration of their unemployment, indirect evidence is provided that (1) costs of on-the-job search for new employment relative to costs of searching while unemployed are lower for more educated workers; (2) that these workers are also more efficient in acquiring and processing job search information; and (3) that firms and workers search more intensively to fill more skilled vacancies. ", Bartel, Ann P & Lichtenberg, Frank R, 1987. Unemployment can have a devastating impact both on a household and the general economy. In K. Lang and J. Leonard (Eds.). These individuals did not have available data and are beyond the reach of this study. The educational achievement levels are: As part of the unemployment application process, a claimant completes a profile when registering for benefits. A two-year associate degree is valued more by the post-unemployment job market than partial degrees at one or three years. While most are significant, there is little variation in magnitude. A random identifier is applied and the researcher never has access to identified data, insuring record anonymity. ", Stafford, Frank & Duncan, Greg J., 1979. Inside This Issue Source: Author’s calculations. This view of job creation and wage growth is not universally accepted (Dickens & Lang, 1985, 1987). In a poor economy, separation from a company is more likely and even good candidates can find themselves unemployed. Does it help people regain employment after receiving unemployment insurance benefits? For this reason, economists have long sought better information on the dynamic influences of the re-employment market. In the short term, higher wages are afforded positions requiring more skill. Only aggregate results are provided with the study. * Significant at the 1 percent level Since firm-specific data are not available, the inclusion of occupational variables helps control for the influence of this unobserved behavior. THE EDUCATION – AN IMPORTANT FACTOR ON UNEMPLOYMENT AND PROFESSION The available wage data are presented in quarterly aggregates. It is possible that selection bias is causing this result. For a high school degree, the quarterly wage increase is $298 for the first position emerging from unemployment. Card, D. (1999). Wage differentials and employment in a two-sector model with a dual labor market. There is a large and consistent body of literature establishing a connection between wages and years of schooling as overviewed by Card (1999). If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation. The increase in supply puts downward price pressure on high-skilled jobs, which lowers wages. Spring 2016  |  Volume 91, No. However, the results suggest the opposite effect. What is the short-term influence of education in the re-employment market? The wage difference is calculated using the average wages post-UI claim minus the calculated average wages pre-UI claim. A two-year associate degree is valued more by the post-unemployment job market than partial degrees at one or three years. Figure 1 shows education’s impact on the re-employment market and the potential of wage adjustment. The duration of unemployment is only modestly impacted by the type of industry. Others disagree with the notion of long-term dynamic wage convergence and decreased wage disparity. When the economy is strong, only the weakest elements of the workforce will disconnect and enter the re-employment market. The positive influence of age on post-UI claim wages appears to peak around age 45. A binary gender variable was used with positive being an indication of male. Teulings, C. N. (2005). Source: Author’s calculations, * Significant at the 1 percent level Education at all the levels should be job oriented. From this dynamic perspective, education will cause wages to converge. The study uses data for individuals applying for Indiana unemployment insurance (UI) benefits from 2004 through 2009 that had been successfully matched with corresponding wage and education records. Additionally, as the wage data are in nominal terms, the yearly binaries should account for any inflationary influence. The variable coefficient is negative in the wage difference model and positive in the weeks of benefit model. The study examines factors, within the constraints of data availability, to determine which influences impact both the wage that someone will receive and the duration of unemployment. This change in the mix of job creation suppresses low-skilled wages and maintains a high-wage disparity. The assignment of educational level is valid regardless of whether it is obtained prior to or during the study period. For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (). After age 45, diminishing returns set in and the wage of a person emerging from claims decreases.


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