Labor Market Policy

We propose a unified analysis of the labor market and different aspects of the welfare state. This unified perspective is essential for a thorough evaluation because of the interrelation between these spheres. Examples are interactions between the labor market and changes in unemployment-, retirement-, health-, and disability insurance or the relation between poverty, health care utilization and unemployment. High-quality individual data matched from administrative sources - covering basically the employment history of all Austrian workers of the past 30 years - allow us to study vital policy questions in great detail We investigate how predictions from theoretical models correspond to actual individual behavior. Specifically, we identify empirical situations in which there is arguably a close link between policy interventions and individual reactions. By isolating the causal effects in an empirical setup, our results which are derived from the Austrian economy are transferable to more general settings and are of relevance in a much wider context, both for theoretical and policy considerations. Aging of the workforce, increased exposure to (international) competition and a financial squeeze on the social security system will shape the labor market in the future. These trends have major repercussions on unemployment, income distribution, and social welfare. It is of vital importance how labor markets and social security institutions master these challenges. Amongst others, the following questions will be analyzed: what is the impact of population aging on the behavior of workers and firms and on welfare state institutions? How do workplace and employment relations react to increased competition in the economy? What is the impact of changes in unemployment benefits or social security regulations? How is the welfare state financed and how does this financing affect labor supply? How does fertility react to financial incentives and regulations? What is the impact of migration and what role does the welfare state play? How do health status and utilization of health systems interact with labor markets? How do active labor market policy interventions affect labor supply, job mobility and earnings?