Labour Market Analysis from a Behavioral Economics Perspective: From the Perspective of Unemployment Insurance and Employment Discrimination

Research Article
Open access

Labour Market Analysis from a Behavioral Economics Perspective: From the Perspective of Unemployment Insurance and Employment Discrimination

Jiawen Yang 1*
  • 1 University College London    
  • *corresponding author YJMSJYA@ucl.ac.uk
Published on 13 September 2023 | https://doi.org/10.54254/2754-1169/25/20230469
AEMPS Vol.25
ISSN (Print): 2754-1177
ISSN (Online): 2754-1169
ISBN (Print): 978-1-915371-93-5
ISBN (Online): 978-1-915371-94-2

Abstract

This article analyzes labor market problems through the lens of behavioral economics. This article seeks to identitys methods in which behavioral economics can provide policy recommendations for addressing issues related to unemployment and employment. While traditional economics fails to explain how unemployment insurance discourages job search and leads to long-term unemployment, behavioral economics finds that cognitive biases like loss aversion and present bias prolong unemployment. It suggests that policies must be designed by considering these cognitive biases to increase the motivation of the unemployed to accept work. One policy that can supplement unemployment insurance is wage-loss insurance. Wage-loss insurance is a short or long-term monetary subsidy when the wages in the new job are lower than in the old job. This paper uses qualitative analysis and a literature review to gather insights into labor market problems and the role of behavioral economics in addressing them.

Keywords:

behaviroul economics, labour markets, unemployment insurances, cognitive bias,discrimination

Yang,J. (2023). Labour Market Analysis from a Behavioral Economics Perspective: From the Perspective of Unemployment Insurance and Employment Discrimination. Advances in Economics, Management and Political Sciences,25,20-24.
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References

[1]. Meyer, B. D. (1990). Unemployment Insurance and Unemployment Spells. Econometrica, 58(4), 757–782. https://doi.org/10.2307/2938349

[2]. Meyer, B. D. (1995). Lessons from the U.S. Unemployment Insurance Experiments. Journal of Economic Literature, 33(1), 91–131. http://www.jstor.org/stable/2728911

[3]. Kahneman, D. (2011). Thinking, Fast and Slow. Farrar, Straus and Giroux.

[4]. Tversky, A., & Kahneman, D. ( 1973). Availability: A heuristic for judging frequency and probability. Cognitive Psychology, 5(2), 207–232. https://doi.org/ 10. 1016/0010-0285(73)90033-9

[5]. Babcock, L., Congdon, W. J., Katz, L. F., & Mullainathan, S. (2012). Notes on behavioral economics and labor market policy. IZA Journal of Labor Policy, 1(1). https://doi.org/10.1186/2193-9004-1-2

[6]. O’Donoghue, T., & Rabin, M. (1999). Doing It Now or Later. The American Economic Review, 89(1), 103–124. http://www.jstor.org/stable/116981

[7]. Laibson, D. (1997). Golden eggs and hyperbolic discounting. The Quarterly Journal of Economics, 112(2), 443-478.

[8]. Spinnewijn, J. (2015). Unemployed but optimistic: Optimal insurance design with biased beliefs. Journal of the European Economic Association, 13(1), 130-167.

[9]. Bertrand, M., & Mullainathan, S. (2004). Are Emily and Greg more employable than Lakisha and Jamal? A field experiment on labor market discrimination. American economic review, 94(4), 991-1013.

[10]. Carlsson, M., & Eriksson, S. (2019). Age discrimination in hiring decisions: Evidence from a field experiment in the labor market. Labour Economics, 59, 173-183.

[11]. Yean, Z., & Gefei, W.(2021). The Theoretical Evolution of Social Insurance Systems: Under a Behavioral Economic View[J]. South China Journal of Economics, 40(2): 19-34.

[12]. Bertrand, M., Chugh, D., & Mullainathan, S. (2005). Implicit discrimination. American Economic Review, 95(2), 94-98.

[13]. Wallace, P. A. (1973). EMPLOYMENT DISCRIMINATION: SOME POLICY CONSIDERATIONS. In O. Ashenfelter & A. Rees (Eds.), Discrimination in Labor Markets (pp. 155–175). Princeton University Press. http://www.jstor.org/stable/j.ctt13x10hs.13

Cite this article

Yang,J. (2023). Labour Market Analysis from a Behavioral Economics Perspective: From the Perspective of Unemployment Insurance and Employment Discrimination. Advances in Economics, Management and Political Sciences,25,20-24.

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About volume

Volume title: Proceedings of the 2023 International Conference on Management Research and Economic Development

ISBN：978-1-915371-93-5(Print) / 978-1-915371-94-2(Online)
Editor：Canh Thien Dang, Javier Cifuentes-Faura
Conference website: https://2023.icmred.org/
Conference date: 28 April 2023
Series: Advances in Economics, Management and Political Sciences
Volume number: Vol.25
ISSN：2754-1169(Print) / 2754-1177(Online)

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References

[1]. Meyer, B. D. (1990). Unemployment Insurance and Unemployment Spells. Econometrica, 58(4), 757–782. https://doi.org/10.2307/2938349

[2]. Meyer, B. D. (1995). Lessons from the U.S. Unemployment Insurance Experiments. Journal of Economic Literature, 33(1), 91–131. http://www.jstor.org/stable/2728911

[3]. Kahneman, D. (2011). Thinking, Fast and Slow. Farrar, Straus and Giroux.

[4]. Tversky, A., & Kahneman, D. ( 1973). Availability: A heuristic for judging frequency and probability. Cognitive Psychology, 5(2), 207–232. https://doi.org/ 10. 1016/0010-0285(73)90033-9

[5]. Babcock, L., Congdon, W. J., Katz, L. F., & Mullainathan, S. (2012). Notes on behavioral economics and labor market policy. IZA Journal of Labor Policy, 1(1). https://doi.org/10.1186/2193-9004-1-2

[6]. O’Donoghue, T., & Rabin, M. (1999). Doing It Now or Later. The American Economic Review, 89(1), 103–124. http://www.jstor.org/stable/116981

[7]. Laibson, D. (1997). Golden eggs and hyperbolic discounting. The Quarterly Journal of Economics, 112(2), 443-478.

[8]. Spinnewijn, J. (2015). Unemployed but optimistic: Optimal insurance design with biased beliefs. Journal of the European Economic Association, 13(1), 130-167.

[9]. Bertrand, M., & Mullainathan, S. (2004). Are Emily and Greg more employable than Lakisha and Jamal? A field experiment on labor market discrimination. American economic review, 94(4), 991-1013.

[10]. Carlsson, M., & Eriksson, S. (2019). Age discrimination in hiring decisions: Evidence from a field experiment in the labor market. Labour Economics, 59, 173-183.

[11]. Yean, Z., & Gefei, W.(2021). The Theoretical Evolution of Social Insurance Systems: Under a Behavioral Economic View[J]. South China Journal of Economics, 40(2): 19-34.

[12]. Bertrand, M., Chugh, D., & Mullainathan, S. (2005). Implicit discrimination. American Economic Review, 95(2), 94-98.

[13]. Wallace, P. A. (1973). EMPLOYMENT DISCRIMINATION: SOME POLICY CONSIDERATIONS. In O. Ashenfelter & A. Rees (Eds.), Discrimination in Labor Markets (pp. 155–175). Princeton University Press. http://www.jstor.org/stable/j.ctt13x10hs.13

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