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Titel: Transitions between employment, unemployment and entrepreneurial activities - evidence from Germany
Sonstige Titel: Übergänge zwischen Erwerbstätigkeit, Arbeitslosigkeit und Selbständigkeit - Evidenz für Deutschland
Sprache: Englisch
Autor*in: Hillmann, Katja
Erscheinungsdatum: 2016
Tag der mündlichen Prüfung: 2016-01-08
This dissertation analyzes the mechanisms behind labor market dynamics from different angles. Entrepreneurship is, as well as an alternative to paid labor, a source of job creation. High rates of nascent entrepreneurship can considerably decrease unemployment if the matching of new jobs and the unemployed is efficient and without large institutional frictions. As the matching of new jobs and the unemployed is not an instantaneous process, frictional unemployment is part of a healthy labor market. When short-term unemployment turns into long-term, the Beveridge curve --- with its negative relationship between vacancy rate and unemployment rate --- shifts outwards, indicating an inefficient matching processes that may lead to persistent mismatch patterns and unemployment. Here, instruments of Active Labor Market Policy (ALMP) can also decrease unemployment if they work as intended, which must be carefully evaluated. Tools to evaluate labor market must eventually deal with the large heterogeneity in real world societies concerning individual traits such as education, age, etc.

From a macroeconomic perspective, the interactions between firms and workers, and the flows of people between unemployment and employment or out of the labor force are strongly affected by periods of up- and down-turns in the business cycle. The exact reasons for fluctuations in job finding and separation rates still pose puzzles in macroeconomic research of labor market dynamics. Labor market fluctuations, and in particular their magnitudes and autocorrelations after shocks in productivity and separation are still not fully understood today. A better replication and, hence, understanding, lies in the openness to new analytical models, exploratory methodologies or the work in interdisciplinary teams to adapt promising standard methods from one field to the other.

The incidence of long and persistent unemployment remains one of the major challenges in economic policy. There is large body of literature that documents the negative consequences of unemployment for society and the individual: the economy is undermined by declining human capital, lower wages and increasing governmental expenditures on unemployment and welfare benefits.
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On the individual level, long-term unemployed people often experience a lower wellbeing and an impairment of mental and physical health. During the last two decades, many European countries went through a paradigm shift in unemployment policy from welfare towards workfare as a response to high and structural unemployment rates. Training measures, job-search monitoring, and sanctions for non-compliance with job-search requirements have become well-established measured used by Active Labor Market Policies (ALMPs) that aim to shorten periods of unemployment.
The evaluation of specific instruments of ALMPs regarding the effectiveness in encouraging unemployed people to take up jobs earlier and/or not become locked-in to training measures is highly important, they might turn out to be ambiguous for the heterogeneous group of unemployed.

In Germany, the focus of this thesis, a major part of the decline in unemployment has been attributed to the reform of active and passive labor market policy in the period 2003--2005. The so called 'Hartz' reform led to a substantial restructuring of the unemployment and social benefit system. Its core was the implementation of an extensive monitoring and sanctioning system that aimed to dramatically increase individual job search activities. Even though the overall unemployment rate decreases from $11.17%$ in 2005 to $4.98%$ in 2014, a high stock of long-term unemployed with $44.66%$ still remains. To date, sanctions are one of the major instruments to encourage unemployed to search and actively apply for jobs. Existing studies generally confirm sanctions as effective instruments to increase the likelihood of finding a job for recipients of unemployment insurance. However, a continuous evaluation of the effect of sanctions on welfare recipients, specific inflow cohorts or specific groups --- e.g. the long-term, elderly, or youth --- is required to prevent unintended (side) effects.

Based on public administrative regional data, I estimate an empirical matching function in functional form of a stochastic efficiency frontier that seeks evidence for the effect of the 'Hartz IV' reform on matching efficiency before and after its implementation in 2005. As a functional framework I choose the translog function to address the interactions of stocks and flows in generating new hirings. Furthermore, the twofold structure of a stochastic frontier allows for a modeling of potential sources expected to induce an increase or decrease in matching efficiency over time and between regions (e.g. 'Hartz IV'). According to the results, 'Hartz IV' has increased the matching efficiency for both specifications. The younger and the long-term unemployed contribute to a significantly higher matching efficiency, which is in line with the aims of the 'Hartz IV' reform.

Another study of my thesis aims to evaluate the effect of Unemployment Benefit II (UB II) sanctions on unemployment outflow. Under 'Hartz IV', the monitoring and sanction system was radically reshaped to lower the persistent stock of unemployed, in particular long-term unemployed. By far the majority of European studies, evaluating the effect of sanctions, focus on the recipients of unemployment insurance (UI). Compared to welfare recipients, they are, on average, more likely to find a job. Using a survey sample of UB II recipients covering the years 2005--2007, we also ask whether the intended positive effect of benefit sanctions on employment entry of UB II recipients also results in unintended and increased incentives to leave the labor market. Controlling for the endogeneity of a sanction enforcement, we employ a mixed proportional hazard model for both destinations. Our findings suggest an increasing impact on the outflow to both employment and non-employment.

Venture creation with a successful performance implies job creation and a reduction in unemployment. A fruitful entrepreneurship landscape is determined by venture creation, and in particular their establishment and survival. The factors that divide the group of entrepreneurs from the group of (un-)employed are examined by a growing number of empirical and theoretical studies on entrepreneurship. Besides regional factors --- such as urbanization and localization economies, regional knowledge creation and public institutions --- personal traits and individual behavior are found to be highly influential upon the decision to become an entrepreneur and stay in business.

Moreover, evidence suggests that the group of self-employed is very heterogeneous. Differences between, for example, female and male entrepreneurs, between necessity and opportunity self-employed, or between own-account-self-employed and self-employed who become employers and hire other workers are broadly investigated. Do we observe other differences in the group of self-employed? Lately, working as self-employed, either part-time, or with an additional wage job on the side ('hybrid' self-employed) has become popular in Germany and Europe. Which personal traits or regional determinants influence this development? What exactly turns an employed worker into a part-time or into a hybrid entrepreneur?

My contribution to this topic is to explain the entry decisions of nascent entrepreneurs who choose between part-time and full-time self-employment, or between hybrid and exclusive self-employment. My findings reveal the importance of accounting for possible (re)transitions between the two pairs of subtypes of self-employment in addition to the alternative of self-employment exit. Thes results suggest that people with a low risk propensity benefit from an intermediate step into hybrid entrepreneurship. This intermediate step appears crucial, yielding a higher probability of subsequently switching to exclusive self-employment. From a political perspective, is it of particular interest to analyze which factors ensure the success and survival of ventures. This knowledge can help develop and improve start-up programs aimed to support entrepreneurs with the best chances to survive and create employment.

The last chapter is a methodological excursion to a novel application of Rule-Based Modeling (RBM) --- a subclass of agent-based modeling --- in labor economics. Thinking outside the box, a rule-based labor model approach illustrates the interactions and transitions between employed, unemployed and entrepreneurs that have been highlighted in the previous chapters. We apply rule-based modeling (RBM) to a simple labor market model, consisting of employed, unemployed and entrepreneurs. The interaction between these agents follows both explicit-defined and emergent rules. Our simulation allows us to observe the macro-level-effects that emerge from the micro-level-interactions of the agents. This simple example model aims to illustrate the potential of RBM to replicate the labor market dynamics at the macro level 'emerging' from micro interactions between unemployed, employed and entrepreneurs. It represents an introductory work that establishes RBM as an alternative tool in the field of agent-based computational economics.
URL: https://ediss.sub.uni-hamburg.de/handle/ediss/6755
URN: urn:nbn:de:gbv:18-79184
Dokumenttyp: Dissertation
Betreuer*in: Funke, Michael (Prof. Dr.)
Enthalten in den Sammlungen:Elektronische Dissertationen und Habilitationen

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