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Job Displacement and First Birth Over the Business Cycle.

ABSTRACT: In this article, we investigate the impact of job displacement on women's first-birth rates as well as the variation in this effect over the business cycle. We use mass layoffs to estimate the causal effects of involuntary job loss on fertility in the short and medium term, up to five years after displacement. Our analysis is based on rich administrative data from Germany, with an observation period spanning more than 20 years. We apply inverse probability weighting (IPW) to flexibly control for the observed differences between women who were and were not displaced. To account for the differences in the composition of the women who were displaced in a downturn and the women who were displaced in an upswing, we use a double weighting estimator. Results show that the extent to which job displacement has adverse effects on fertility depends on the business cycle. The first-birth rates were much lower for women who were displaced in an economic downturn than for those who lost a job in an economic upturn. This result cannot be explained by changes in the observed characteristics of the displaced women over the business cycle.

SUBMITTER: Hofmann B

PROVIDER: S-EPMC5486876 | biostudies-literature | 2017 Jun

REPOSITORIES: biostudies-literature

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Job Displacement and First Birth Over the Business Cycle.

Hofmann Barbara B Kreyenfeld Michaela M Uhlendorff Arne A

Demography 20170601 3

In this article, we investigate the impact of job displacement on women's first-birth rates as well as the variation in this effect over the business cycle. We use mass layoffs to estimate the causal effects of involuntary job loss on fertility in the short and medium term, up to five years after displacement. Our analysis is based on rich administrative data from Germany, with an observation period spanning more than 20 years. We apply inverse probability weighting (IPW) to flexibly control for ...[more]

PMID: 28585024

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Project description:Entry rates into self-employment increase during recessions and decrease during economic upswings. I show that this is mostly explained by the higher unemployment rate during a recession, together with the fact that at all times, unemployed persons have a relatively high propensity to become self-employed out of necessity. I use econometric decomposition techniques to quantify these effects based on the monthly matched US Current Population Survey before, during, and after the Great Recession. I also document that the entry rate into self-employment with unincorporated businesses strongly increased during the recession, but not into self-employment with incorporated businesses. This highlights the association of unincorporated and incorporated self-employment with necessity and opportunity entrepreneurship, respectively. The results are useful for policymakers and practitioners to understand, forecast and act on the different types of self-employment that can be expected over the business cycle. There are also important implications for theories of the cyclicality of unemployment and entrepreneurship. Plain English Summary Self-employment will increase during recessions when unemployment is high, but it may not boost innovation. During recessions, increased unemployment underlies the higher entry rate into self-employment. Our evidence is from representative survey data from the USA covering the Great Recession. The upside is that self-employment enables workers who lose their jobs to continue to work, which can speed up the subsequent economic recovery. Thus, public policy should enable people to start businesses. However, as during recessions the unemployed mostly start unincorporated businesses, one cannot expect them to boost innovation as much as start-ups during better economic times. These insights also speak to the 2020 recession triggered by COVID-19. If unemployment remains high after the relaxation of the lockdowns, a rise can be expected especially in non-innovative self-employment. Thus, the principal policy implication of this study is that policymakers should ensure that their expectations for new businesses started during deep recessions are realistic for the circumstances. Electronic supplementary material The online version of this article (10.1007/s11187-020-00375-3) contains supplementary material, which is available to authorized users.

Project description:BackgroundThe Statutory Health Insurance scheme is one of two main schemes of health care system financing in Europe. This scheme mainly relies on wage-based contributions from employers and employees and is thus prone to business cycle fluctuations. This turned out to be a problem especially after the 2008 crisis. We estimate the magnitude of the effect of the business cycle on health insurance funds' revenues in the Czech Republic where the health care system financing is based on the Statutory Health Insurance scheme. The relationship between the business cycle and healthcare system's revenues has not been quantified to this date.MethodsWe use static and lagged regression models to estimate the impact of business cycle on health care system's revenues. The business cycle is proxied by eight different indicators (nominal GDP, unemployment, industrial production, recession index, business cycle index, GDP gap, consumer price index and consumer expenditure). Using quarterly data from 2000-2017, we examine the effect of business cycle on total revenues and its two main components: the employer-employee contributions and state contributions.ResultsHealth insurance funds' revenues display significant pro-cyclicality, which is mainly driven by employer-employee contributions. Out of all eight business cycle indicators, nominal GDP has the largest effect. In particular, the model estimates that if quarter-over-quarter GDP increases by 1%, then quarter-over-quarter healthcare system's revenues increase by 0.7% and quarter-over-quarter employer-employee contributions increase by 1.1%. The lagged effect of business cycle on healthcare system's revenues is smaller in magnitude. State contributions on behalf of economically inactive people do not display a significant relationship with business cycle in the static nor lagged model. The effect is consistent across different business cycle indicators, although the magnitudes of the effect vary.ConclusionThe results show large pro-cyclicality in healthcare system's revenues in Statutory Health Insurance schemes. Counter-cyclical mechanisms are needed to offset this loss of revenues during economic downturns to ensure sufficient resources in healthcare.

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Job Displacement and First Birth Over the Business Cycle.

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Job Displacement and First Birth Over the Business Cycle.

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