Uppsala Center for Labor Studies
Oskar Nordström Skans, Uppsala University
Unemployment remains a major social issue, a fact underlined by the “Great Recession” of 2008/09. Our research in this area aims at improving the understanding of the mechanisms of unemployment and social exclusion, including the impact on individual welfare. We will also evaluate policies aimed at increasing employment or reducing the adverse effects of unemployment.
Several important changes of the Swedish unemployment insurance (UI) system have been initiated from 2007 and onwards. The caps on benefit levels have been reduced, the replacement rate has been conditioned on elapsed unemployment duration, and the qualification rules for eligibility were have been made more stringent. Much less generous rules pertaining to part-time unemployment have been introduced. The desirability of solid evaluations of these reforms is clear.
An important and challenging issue concerns social interactions in unemployment. Is unemployment easier to cope with, the more prevalent it is? The idea of “unemployment cultures” has been around for years and captures the notion that social interactions may contribute to persistent unemployment. Failure to account for such social interactions in general means that the researcher underestimates the total effect of any specific intervention. However, identifying social interactions raises difficult methodological problems. Just looking at correlations between individual unemployment and unemployment in a reference group will typically not be sufficient since such correlations may reflect other factors than social interactions (such as similar personal characteristics).
Concern over high or rising costs for social assistance has in many countries initiated welfare reforms. Some of these “from welfare to work” policies have involved more stringent work requirements. Other policies to foster labor supply have been operating through the tax system. Our research in this area includes the projects on (i) mandatory activiation of welfare recipients, (ii) the impact of welfare reform on child well-being, (iii) the employment effects of earned-income tax credits, and (iv) the effects of subsidized child care on labor supply.