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Unemployment Insurance and Reservation Wages: Evidence from Administrative Data

Le Barbanchon, Thomas and Alexandra Roulet. Unemployment Insurance and Reservation Wages: Evidence from Administrative Data. Journal of Public Economics, forthcoming.

Although the reservation wage plays a central role in job search models, empirical evidence on the determinants of reservation wages, including key policy variables such as unemployment insurance (UI), is scarce. In France, unemployed people must declare their reservation wage to the Public Employment Service when they register to claim UI benefits. We take advantage of these rich French administrative data and of a reform of UI rules to estimate the effect of the Potential Benefit Duration (PBD) on reservation wages and on other dimensions of job selectivity, using a difference-in-difference strategy. We cannot reject that the elasticity of the reservation wage with respect to PBD is zero. Our results are precise and we can rule out elasticities larger than 0.006. Furthermore, we do not find any significant effects of PBD on the desired number of hours, duration of labor contract and commuting time/distance. The estimated elasticity of actual benefit duration with respect to PBD of 0.3 is in line with the consensus in the literature. Exploiting a Regression Discontinuity Design as an alternative identification strategy, we find similar results.

Read the VoxEU column

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Measuring Segregation on Small Units: A Partial Identification Analysis

D’Haultfoeuille Xavier and Rathelot Roland. Measuring Segregation on Small Units: A Partial Identification Analysis. Quantitative Economics,
8(1), pp. 39-73, March 2017.

We consider the issue of measuring segregation in a population of small units, considering establishments in our application. Each establishment may have a different probability to hire an individual from the minority group. We define segregation indices as inequality indices on these un- observed, random probabilities. Because these probabilities are measured with error by proportions, standard estimators are inconsistent. We model this problem as a nonparametric binomial mixture. Under this testable assumption and conditions satisfied by standard segregation indices, such indices are partially identified and sharp bounds can be easily obtained by an optimization over a low dimensional space. We also develop bootstrap confidence intervals and a test of the binomial mixture model. Finally, we apply our method to measure the segregation of foreigners in small French firms.

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The Heterogeneity of Ethnic Employment Gaps

Aeberhardt Romain, Coudin Elise and Rathelot, Roland. The Heterogeneity of Ethnic Employment Gaps. Journal of Population Economics, 30(1), pp. 307-337, January 2017.

This paper investigates the heterogeneity of ethnic employment gaps using a new single-index based approach. Instead of stratifying our sample by age or education, we study ethnic employment gaps along a continuous measure of employability, the employment probability minority workers would have if their characteristics were priced as in the majority group. We apply this method to French males, comparing those whose parents are North African immigrants and those with native parents. We find that both the raw and the unexplained ethnic employment differentials are larger for low-employability workers than for high-employability ones. We show in a theoretical framework that this heterogeneity can be accounted for by homogeneous underlying mechanisms and is not evidence for, say, heterogeneous discrimination. Finally, we discuss our main empirical findings in the light of simple taste-based vs. statistical discrimination models.

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Ethnic Differentials on the Labor Market in the Presence of Asymmetric Spatial Sorting

Rathelot, Roland. Ethnic Differentials on the Labor Market in the Presence of Asymmetric Spatial Sorting: Set Identification and Estimation. Regional Science and Urban Economics, 48 (1), pp. 154-167, September 2014.

This paper aims to isolate the ethnic gap on the labor market that can be attributed to ethnicity and not to differences in individual characteristics or residential location. Controlling for residential location is important as ethnic minorities often live in distressed neighborhoods. It is also challenging because spatial sorting is likely to differ across ethnicities because of labor- or housing-market discrimination. This paper shows that controlling for neighborhoods and observed individual characteristics fails to provide a consistent estimate for the component of the gap accountable to ethnicity only. However, under some assumptions, the quantity of interest is set identified even when heterogeneous sorting patterns across ethnicities are allowed for and the set estimate can still be informative. A two-step estimation method is presented and applied to explain the ethnic employment differential in France, between French individuals of North African ancestry and those with non-immigrant parents. Most of the gap is not due to differences in residential location or individual characteristics, but rather to ethnicity itself.

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Place-based Tax Exemptions and Displacement Effects: An Evaluation of the Zones Franches Urbaines Program

Givord, Pauline, Roland Rathelot and Patrick Sillard. Place-based Tax Exemptions and Displacement Effects: An Evaluation of the Zones Franches Urbaines Program. Regional Science and Urban Economics, 43(1), pp. 151-163, January 2013

In this study, we evaluate the impact of the French Zones Franches Urbaines on economic activity. This public-funded place-based program, comparable to US enterprise zones, exempts businesses from taxes for a period of at least five years. For the purpose of this evaluation, we merged several administrative datasets at the company level. This allows us to exhaustively observe business creations and stocks, as well as employment and financial outcomes for companies at specific geographical locations. We focus on the second round of the program, during which treated territories were selected among a pool of deprived areas according to a known set of covariates. The way treatment was assigned makes the conditional independence assumption credible in our case. Overall, we find significant effects on both business creation and employment while the impact on companies that were located in the treated areas before the program is not significant, regardless of the outcome. We also provide evidence of significant negative spillovers of the program on neighboring areas.

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Do Labor Market Policies have Displacement Effects?

Crépon, Bruno, Esther Duflo, Marc Gurgand, Roland Rathelot and Philippe Zamora. Do Labor Market Policies have Displacement Effects? Evidence from a Clustered Randomized Experiment. Quarterly Journal of Economics, 128(2), pp. 531-580, May 2013

This article reports the results from a randomized experiment designed to evaluate the direct and indirect (displacement) impacts of job placement assistance on the labor market outcomes of young, educated job seekers in France. We use a two-step design. In the first step, the proportions of job seekers to be assigned to treatment (0%, 25%, 50%, 75%, or 100%) were randomly drawn for each of the 235 labor markets (e.g., cities) participating in the experiment. Then, in each labor market, eligible job seekers were randomly assigned to the treatment, following this proportion. After eight months, eligible, unemployed youths who were assigned to the program were significantly more likely to have found a stable job than those who were not. But these gains are transitory, and they appear to have come partly at the expense of eligible workers who did not benefit from the program, particularly in labor markets where they compete mainly with other educated workers, and in weak labor markets. Overall, the program seems to have had very little net benefits.

Policy briefs “Job Placement or Displacement”:
Read J-PAL Policy Brief
Read VoxEU column

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Local Ethnic Composition and Natives’ and Immigrants’ Geographic Mobility in France

Rathelot, Roland and Mirna Safi. Local Ethnic Composition and Natives’ and Immigrants’ Geographic Mobility in France, 1982-1999. American Sociological Review, 79(1), pp. 17-42, February 2014

This article provides empirical results on patterns of native and immigrant geographic mobility in France. Using longitudinal data, we measure mobility from one French municipality (commune) to another over time and estimate the effect of the initial municipality’s ethnic composition on the probability of moving out. These data allow us to use panel techniques to correct for biases related to selection based on geographic and individual unobservables. Our findings tend to discredit the hypothesis of a “white flight” pattern in residential mobility dynamics in France. Some evidence does show ethnic avoidance mechanisms in natives’ relocating. We also find a strong negative and highly robust effect of co-ethnics’ presence on immigrants’ geographic mobility.

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