The young are not forever young:

Transcription

1 The young are not forever young: the assmlaton of young persons n the labour market n France Stephen Bazen and Khald Maman Wazr Paper presented at AMSE-Banque de France Labour Economcs Conference December 2015 Ax-Marselle Unversty (Ax-Marselle School of Economcs), CNRS and EHESS

2 Current facts about the French labour market Current unemployment rate : 10% (under 25s: 25%) Out of 40 persons who are recruted: 1 on standard contract 26 on contract duraton less than one month Mnmum wage currently : recpents : 9.61 (60% of medan earnngs) 10.8% (under 25s: 40% of MW workers) Payroll taxes* : 40% (ncludes socal securty) 2

3 Two unemployment rates (15-24 age group, ) 3

4 Employment-Populaton rato and labour force partcpaton rate (15-24 age group ) 4

5 Educaton levels n France Reference: the Baccalaureat hgh school dploma, taken the year n whch student s 18 (obtaned by 60-70%) Pre-baccalaureat : Mnmum school leavng age :16 Vocatonal qualfcatons after age of 15 Post-baccalaureat : Two year preparatory studes for compettve entry exam to Grandes Ecoles Unversty no selecton at pont of entry fees: 450 euros Techncal unversty two year programme, selecton at pont of entry Prvate hgher educaton schools 5

6 Specal labour market measures 6

7 Temporary contracts Agency Fxed term Apprentces Total 7

8 Am of paper How young persons become assmlated n the labour market How long and what forms does the process take? What s the qualty of ths assmlaton? Approach Cohort survey data : 1998 leavers, followed over seven years Use of stochastc earnngs fronter approach 8

9 1. THE GENERATION SURVEY Cohort survey data : sample of ndvduals leavng full-tme educaton n 1998 (same survey exsts for 1992, 2001, 2004, 2007 and 2010 cohorts) Selected from records provded by educaton authortes and nsttutons Intervewed n 2001 by telephone (computer aded questonnare survey) run by the CEREQ, Marselles Retrospectve questons on tme spent n dfferent labour market states Detaled questons on current labour market state, educaton, background, subjectve ssues. 9

10 Intervewed agan n 2003, 2005 and 2008 by telephone Sample sze : , , ,200 We use retrospectve answers for twelve months out, drect responses for 2001 and

11 THE BIG PICTURE 11

12 THE BIG PICTURE 12

13 Percentage havng spent at least three months unemployed n the frst twelve months 13

14 Educaton levels n Cohort Postgrad Bachelor s Bac+2 Baccalaureat Vocatonal Basc 14

15 Labour market status of 1998 cohort after 12 months 15

16 Labour market status of 1998 cohort after 36 months 16

17 Labour market status of 1998 cohort after seven years 17

18 Labour market status of 1998 cohort after seven years 18

19 Labour market status of 1998 cohort after seven years 19

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25 2. THE QUALITY OF ASSIMILATION Job match qualty leads to longer/ndefnte duraton labour contracts Productvty s a functon of human captal and job match Pay s a functon of productvty Concept of earnngs fronter : ntal dea mperfect nformaton leads to neffcent job matches (Hofler and Polachek, JBusEcon,1985; Hofler and Murphy, EcInq, 1992) Example: assmlaton of mmgrants Daneshvary et al, REStat, 1992 Lack host country-specfc human captal; lack nformaton on jobs 25

26 Stochastc earnngs fronter : wage gnorance w * w w * w exp

27 Stochastc earnngs fronter : bad match w over-qualfcaton educaton

28 Specfcaton of the stochastc earnngs fronter model Due to nose n observed earnngs and wth fully effcent wage determnaton (OLS lnear model) w = x β + v 2 ' v d( 0, σ ) ~ v Due to neffcency, observed earnngs are often below potental (.e. fronter) earnngs : w = x ' β + v u 0 u u s assumed to be ndependent of v and wth a half-normal, truncated normal or exponental dstrbuton

29 u a half-normal, truncated normal or exponental dstrbuton 29

30 A normal random varable plus a truncated normal r.v. (f ndependent) has a skew-normal dstrbuton The standard skew-normal densty : = Z ~ ( 0,1) Z = η, η ~ ( 0,1) z Z 1 + Z 2 1 N 2 N f ( z) φ( z) Φ( α z) = 2 α s a skew parameter Plays a very mportant role n stochastc fronter models Enables them to be extended and adapted to take nto account selectvty and other phenomena encountered n a labour economcs context H.-P. La, JProdAnalyss, 2015

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32 w = x ' β + v u = x ' β + ε If ( ) 2 v IN 0, σ and u = ~ v η 2 ( 0, ) η ~ N σ u a half-normal The skew-normal densty of ε = v u s gven by f 2 ε λε ( ε ) = φ Φ σ σ σ where σ = + and σ v σ u σ u λ = σ v Agner, Lovell and Schmdt, JEconometrcs (1977)

33 It s possble to calculate ( ) Φ = σ λε σ λε σ λε φ σ σ σ ε u v u E 1 u v σ σ ε ˆ, ˆ, ˆ usng Jondrow, Lovell, Materov and Schmdt JEconometrcs (1982) Techncal neffcency x w ε β ˆ ˆ ' = u v ˆ, ˆ cannot be estmated separately ( ) u The estmated resdual s : u v x w + = β '

34 Descrptve Statstcs Apprentceshp/ Permanent contract : mean earnngs medan earnngs Fxed term contract : mean earnngs medan earnngs

35 Table 4 Stochastc fronter estmates half-normal specfcaton Dependent varable : log earnngs Constant Level 1 post graduate Level 2 bachelor s Level 3 two year Baccalaureat Hgh School dploma Ref Ref Level 5 Vocatonal dploma Level 6 Secondary only Apprentceshp Experence σ u σ v Average Effcency (Medan) (0.822) (0.858) log L Observatons 37,082 12,166 35

36 Dfferent Specfcatons Average Effcency (Medan) Half-normal (0.822) (0.858) Truncated normal (0.878) (0.892) Half-normal excludng postgraduate level dplomas (0.843) (0.881) Truncated normal excludng postgraduate level dplomas (0.891) (0.901) 36

37 The determnants of neffcency w = x ' β + v u v 2 ( 0, σ ) ~ IN v u * 2 = η η N µ + f (, α ), σ * ( ) ~ z u 37

38 The determnants of neffcency Fxed term contract Female Couple *** Chldren Delay n school ns Immgrant orgns *** Urban area Moblty *** Constant *** 38

39 Robustness ssues Selectvty bas omsson of unemployed Dstrbutonal assumptons Attrton bas 39

40 Table 5 Stochastc fronter estmates half normal specfcaton wth and wthout selectvty correcton for the omsson of the unemployed Dependent varable : log earnngs wth selectvty correcton Constant Level 1 post graduate Level 2 bachelor s Level 3 two year Baccalaureat Hgh School dploma Ref Ref Level 5 Vocatonal dploma Level 6 Secondary only Apprentceshp Experence

41 Reservaton wages Percent Level 6 - secondary only Mnmum wage around 1120 euros net 900 euros 41

42 CONCLUSIONS Assmlaton takes more than three years One group has a partcularly dffcult tme, n spte of specal measures Stochastc earnngs fronter s a useful tool n ths context Over-qualfcaton s a key feature of the French labour market for young persons Data set rch and under-exploted 42