Abstract
This paper analyses the relationship between the characteristics of parents (namely, income, occupation and education) and the unemployment duration of their children using the job search theory. The empirical specification featured Lancaster’s (Econometrics 28:113–126, 1985) simultaneous estimate of two equations: completed unemployment duration and the starting wage accepted for a new job. The sample is drawn from the European Community Household Panel (1995–2000) and consists of unemployed Italian children who lived with their parents while looking for work. The results demonstrate that household economic conditions affect unemployment duration at different levels of educational attainment. Specifically, Italians who have graduate degrees from the wealthiest families have briefer unemployment duration. Netting out the effects of liquidity constraints and education, children from the wealthiest families can afford high-quality schools and universities and may also have better information and search strategies, thereby reducing their unemployment duration.
This is a preview of subscription content, log in via an institution.
Buying options
Tax calculation will be finalised at checkout
Purchases are for personal use only
Learn about institutional subscriptionsNotes
- 1.
ECHP consists of eight waves (from 1994 to 2001). We draw data from six waves as only job offers accepted after the first year can be considered. We ignore the final year (2001), as income figures for that year referred to the previous financial year.
- 2.
OECD data, (see http://epp.eurostat.ec.europa.eu).
- 3.
The Italian LTU rate decreased sharply from 2002 until 2009, thanks to the labour market reforms in the 1990s and early 2000s, but has begun to increase again and now stands at 53 %.
- 4.
- 5.
Nickell 1979; Lancaster and Nickell 1980; Narendranathan et al. 1985. Few analyses employ structural estimates of unemployment duration and the reservation wage (Bettio and Mazzotta 2011; Hui 1991; Haurin and Sridhar 2003) but these studies concentrate on estimating the reservation wage. Addison et al. (2004), using ECHP data for all the EU countries, estimate the probability of receiving a job and the reservation wage equation (albeit without correcting for the sample selection), the unemployment duration and the accepted wage (using elapsed and not completed duration) and they analyse more the accepted wage than unemployment duration.
- 6.
The reservation wage is available from the ECHP survey, and its definition is compatible with the theoretical approach of job search theory. Nevertheless, Bettio and Mazzotta (2011) use ECHP data and show a sharp difference between the reservation wage provided in the survey and the wage actually accepted.
- 7.
The ‘statutory time limits’ are as follows: the completion of one’s first degree: age 25; completion of upper secondary school: age 19; completion of lower secondary school: age 14. The number above or below the statutory limits is calculated as the difference between the maximum number of years as reflected in the limits and the actual number of years spent in education, as reported by the survey. If this difference is ≤1 (the statutory limit is greater than or equal to the actual number of years spent in education), the variable is assigned a value of 1; if the number of years an individual required to complete his/her highest educational qualification is greater than the statutory limit, creating a negative difference, a value of 0 is assigned.
- 8.
We operationalise residential areas using Eurostat macroregions.
- 9.
The estimates from Eq. 8.5 are not presented in the paper but are available upon request.
- 10.
The unemployed are defined as individuals who did not work during the reference week and are seeking full-or part-time employment.
- 11.
Income figures are adjusted account for their real value in 1995 prices.
- 12.
Excluding the personal income of the offspring.
- 13.
The results of Eq. 8.2 are not presented here for the sake of brevity but are available upon request.
- 14.
Estimated with GMM. We perform the Hansen test of over identifying restrictions for each estimate, and we do not reject the null hypothesis that the instruments are valid (results are available upon request).
- 15.
Italian geographical area are quite different in terms of labour market conditions and financial and cultural condition of families, that’s the reason why we also estimate the model dividing the South from the Centre-North of Italy.
- 16.
When estimating the accepted wage, we also control for monetary benefits that the individual receives.
- 17.
In Italy, young individuals could relocate from the poorer area of the country (i.e., the South) to the wealthiest (i.e., the North) to find jobs, but we are unable to identify such individuals in our data. Consequently our sample could fail to track these individuals, meaning that our unemployment duration could be overestimated. However, this phenomenon is in line with our expectations: poor children face more difficult conditions (leave the parental home) than their wealthier counterparts.
- 18.
This is also indicated by the positive sign on the accepted wage (although this is not significant). We may interpret this result using a labour demand explanation: individuals in middle occupational positions could reduce their unemployment duration by accepting lower wages.
- 19.
We include in our estimates a variable that provides information on the channels (formal, informal or public) through which the individual/child was informed about his/her job, as described in Sect. 3.1.
References
Addison JT, Bellmann L, Schnabel C, Joachim W (2004) The reform of the German works constitution act: a critical assessment. Industrial Relations 43(2):392–420
Arulampalam W (2001) Is unemployment really scarring? Effects of unemployment experiences on wages. Economic J 111(475):585–606
Becker G (1975) Human capital, 2nd edn. University of Chicago Press, Chicago
Becker G (1994) Human capital: a theoretical and empirical analysis with special reference to education, NBER Books, 3rd edn. Cambridge, MA, National Bureau of Economic Research
Bernardi F (2006) Globalization and men’s employment careers in Italy. In: Blossfeld H-P, Mills M, Bernardi F (eds) Globalization, uncertainty increasing flexibility at labor market entry and in the early career 33 and men’s careers. An international comparison. Cheltenham/Northampton, MA: Edward Elgar
Bettio F, Mazzotta F (2011) Aspettative salariali disattese: il divario Nord - Sud. Rivista Italiana degli Economisti, XVI, n. 1, aprile 2011, Il Mulino, Bologna, pp 109–48
Brunello G, Cappellari L (2008) The labour market effects of Alma Mater: evidence from Italy. Economics of Education Review 27:564–574
Caliendo M, Schmidl R, Uhlendorff A (2010) Social networks, job search methods and reservation wages: evidence for Germany, Discussion Paper n. 1055, DIW Berlin, Berlin.
Calvo-Armengol A, Jackson MO (2007) Networks in labor markets: wage and employment dynamics and inequality. Journal of Economic Theory 132(1):27–46
Checchi D, Zollino F (2001) Struttura del sistema scolastico e selezione sociale. Rivista di Politica Economica, 7-8/2001, pp 43–84
Checchi D, Ichino A, Rustichini A (1999) More equal but less mobile? Education financing and intergenerational mobility in Italy and in the US. Journal of Public Economics 74:351–393
Corsini L (2011) On wealth, unemployment benefits and unemployment duration: some evidence from Italy. Discussion Paper, Dipartimento di Scienze Economiche, Università di Pisa, no 119:1–24
Dolton P, O'Neill D (1995) The impact of restart on reservation wages and long-term unemployment. Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol 57(4):451–470
Granovetter M (1985) Economic action and social structure: the problem of embeddedness. American Journal of Sociology 91:481–510
Gruber J (2007) Public finance and public policy, 2nd edn. Worth Publishers, New York
Guimarães J, Sampaio B (2013) Family background and students’ achievement on a university entrance exam in Brazil. Education Economics 21(1):38–59
Haurin DR, Sridhar KS (2003) The impact of local unemployment rates on reservation wages and the duration of search for a job. Applied Economics 35:1469–1476
Hui WT (1991) Reservation wage analysis of unemployed youths in Australia. Applied Economics 23:1341–50
Iacovou M, Parisi L (2009) Leaving home. In: Ermisch J, Brynin M (eds) Changing relationships. Routledge, New York
Kiefer NM, Neumann GR (1981) Individual effects in a nonlinear model: explicit treatment of heterogeneity in the empirical Job-search model. Econometrica 49:965–979
Krueger A, Meyer B (2002) Labor supply effects of social insurance. In: Auerbach A, Feldstein M (eds) Handbook of public economics, vol 4. North-Holland, Amsterdam
Lancaster T (1985) Simultaneous equation models in applied search theory. Journal of Econometrics 28:113–126
Lancaster T, Nickell S (1980) The analysis of reemployment probabilities for the unemployment. Journal of the Royal Statistical Society, A 143:141–165
Mocetti S (2007) Intergenerational earnings mobility in Italy. The BE Journal of Economic Analysis & Policy 7((2):art.5
Montgomery JD (1991) Social networks and labour-market outcomes: toward an economic analysis. Am Econ Rev 81(5):1408–1418
Mortensen DT (1986) Job search and labor market analysis. In: Ashenfelter O, Layard R (eds) Handbook of labor economics, vol 1L. Elsevier Science Publishers B V, Amsterdam, Ch. 15
Narendranathan W, Nickell S, Stern J (1985) Unemployment benefits revisited. Economic Journal 95:307–329
Nickell SJ (1979) Estimating the probability of leaving unemployment. Econometrica 47:1249–1266
OECD (2009) Highlights from education at glance. OECD, Paris
Pellizzari M (2004) Do friends and relatives really help in getting a good job? CEP Discussion paper No 623, London School of Economics, London
Pissarides C (1994) Search unemployment with on – the-job search. The Review of Economic Studies 61(3):457–475
Pistaferri L (1999) Informal networks in the italian labor market. Giornale degli Economisti e Annali di Economia 58:355–376
Ponzo M, Scoppa V (2010) The use of informal networks in Italy: efficiency or favoritism? Journal of Socio-Economics 39:89–99
Rees A, Wayne G (1982) Family effects in youth employment, NBER chapters. In: Freeman RB, Wise DA (eds) The youth labor market problem: its nature, causes, and consequences. National Bureau of Economic Research, Inc, Cambridge, MA, pp 453–474
Schizzerotto A, Bison I (1996) Mobilità Occupazionale tra Generazioni e Mobilità di Carriera: un Confronto Internazionale. In: Galli G (ed) La Mobilità Della Società Italiana. SIPI, Roma, pp 445–508
Tatsiramos, K. (2009). “Unemployment Insurance in Europe: Unemployment Duration and Subsequent Employment Stability,” Journal of the European Economic Association, MIT Press, vol. 7(6), pp.1225-1260
Tunali I (1986) A general structure for models of double selection and an application to a joint migrant-earnings process with remigration. Ronald E. Ehremberg (eds), Research in labour economics, part B, Vol. 8, JAI Press Inc., Greenwich
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Appendix
Appendix
Rights and permissions
Copyright information
© 2014 Springer International Publishing Switzerland
About this chapter
Cite this chapter
Farace, S., Mazzotta, F., Parisi, L. (2014). Characteristics of Parents and the Unemployment Duration of their Offspring. Evidence from Italy. In: Malo, M., Sciulli, D. (eds) Disadvantaged Workers. AIEL Series in Labour Economics. Springer, Cham. https://doi.org/10.1007/978-3-319-04376-0_8
Download citation
DOI: https://doi.org/10.1007/978-3-319-04376-0_8
Published:
Publisher Name: Springer, Cham
Print ISBN: 978-3-319-04375-3
Online ISBN: 978-3-319-04376-0
eBook Packages: Business and EconomicsEconomics and Finance (R0)