December 1998, Vol. 121, No. 12
and unemployment duration
Severance pay and job search
Travel and the home-based worker
Précis from past issues
Job losers and unemployment durationThe duration of unemployment measures have remained high compared with the same measures during typical expansions, observes Robert G. Valletta in the Federal Reserve Bank of San Franciscos Economic Review. This, says Valletta, is consistent with the secular trend toward rising unemployment duration that many analysts have documented. His article then tracks the impact of changes in the structure of unemployment by reason toward permanent job loss and away from voluntary job search and labor force entry.
Vallettas steady-state estimates of expected duration of unemployment found that duration was strongly countercyclical across all the various reasons for unemployment. He also found an upward trend in expected duration that led to an increase of 17 percent in that measure between 1979 and 1998.
After establishing his estimate of the upward trend in duration, Valletta proceeds to decompose it among changes in reasons for unemployment and changes in duration for each specific reason. He finds that the increases in the incidence of permanent job loss and the duration of unemployment associated with it can account for the full change in the trend in duration. "The incidence and duration of unemployment for other reasons [than permanent job loss] made essentially no contribution to rising unemployment duration," he concludes.
Severance pay and job searchThe most obvious impact of providing displaced workers with severance pay is the positive effect it has on their living standards. In this respect, it is similar to unemployment insurance and other safety net provisions. Yolanda K. Kodrzycki, writing in the November/December issue of New England Economic Review, asks if severance pay might also have an impact on job search that is also similar to that of unemployment insurance.
Kodrzycki first compares severance pay with unemployment benefits: severance pay plans do not cover as much of the employer universe, tend to vary more among firms, and often favor more highly paid workers. Then, using a data-base that combines data on displaced workers with information on severance plans that may have been in effect at their employers at the time of displacement, she looks at how severance pay affects job search intensity and the likelihood a displaced worker would enroll in training or education.
She found that severance recipients took longer to become re-employed and were somewhat more likely to enroll in remedial and basic education programs, but were unlikely to earn any more in their new jobs than were displaced workers who did not get severance pay. In general, she concludes that "the key to displaced workers being able to find a new job with comparable pay is not searching longer, but having transferable skills."
Travel and the home-based workerHome-based work, as Patricia L. Mokhtarian and Dennis K. Henderson remind us in the October 1998 issue of the Journal of Transportation and Statistics, is a multifaceted phenomenon, encompassing full- and part-time home-based businesses as primary sources of income (whether on a fully self-employed or contract work basis); moonlighting at a home-based business (HBB) as a secondary source of income; working overtime on evenings and weekends, whose practitioners are sometimes referred to as supplementors or work permeators; and home-based telecom-muting, in which a salaried employee works at home part or full time instead of commuting to a conventional workplace at the usual time.
The impact of home-based work on transportation patterns, they go on to find, is also multifaceted. When home-based business owners and home-based telecommuters are compared with non-home-based workers in the 1991 Caltrans Statewide Travel Survey, home business owners had the highest daily total trip rate and telecommuters had about the same trip rate as conventional workers. Telecommuters had the highest rate of shopping and social/recreational trips, although it was not significantly higher than the rate for home-based business workers. Telecommuters also used a different pattern of transportation mode than the other two groups: fewer drive-alone trips, more carpool trips, and almost no transit trips.
The time patterns of travel were very different across the groups. The traditional workers, as expected, exhibited the traditional dual-peaks pattern reflecting the morning and afternoon rush hours, while trips of home business operators peaked in the late morning and dropped throughout the afternoon. This suggested to Mokhtarian and Henderson that this group was more successful at avoiding the afternoon peak (for whatever reason) than the other groups. There was no real peak for telecommuters: their trips were fairly uniformly spread across the 9 a.m. to 6 p.m. period.
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