Background information

Some articles include "background information" boxes that provide further details on concepts, economic, scholarly, or technical terms, or on the historical background to an argument. All background information terms and concepts are brought together here in an alphabetized list—with direct links back to the corresponding article.


  • Job search monitoring and sanctions

    Job search monitoring is the process of checking whether unemployed workers are engaging in sufficient search activity to qualify to receive unemployment benefits or unemployment insurance. This can mean checking up on search methods, time spent searching, and employer contacts made. Monitoring is usually backed up by the threat of withdrawing benefits (sanctions) for people who are not sufficiently active in their job search. Benefit sanctions may also be imposed for declining a suitable job offer or for other administrative infractions.

  • Job security rules

    Job security rules, also known as employment protection legislation, refer to regulations governing the initiation and termination of employment contracts. These rules determine the degree of job security by restricting the ability of employers to hire workers on an explicitly non-permanent basis or by making dismissal costly. The stringency of these rules can range from protective (restrictions on non-permanent contracts and limited employer dismissal rights) to flexible (unrestricted non-permanent contracting and minimal limits on dismissal).



  • Labor cost and demand in the United States during World War II

    During World War II, the rate at which men were drafted for military service differed across American states. In those states where more men were called up, their scarcity in the civilian sector resulted in a greater increase in the demand for female workers. That, in turn, led to greater increases in women’s wages in those states. As the theory of labor demand predicts, there was a negative relation between wages and employment. And the effect was not small: each 10% decrease in wages of women at this time was associated with a 12% increase in their employment (Acemoglu et al., 2004).

    Acemoglu, D., D. Autor, and D. Lyle. “Women, war and wages: The effect of female labor supply on the wage structure at midcentury.” Journal of Political Economy 112:3 (2004): 497–551.

  • Labor force participation rate

    The labor force participation rate is the percentage of the working-age population (generally aged 16 to 65) that is actively involved in the labor force. They can be employed full- or part-time or be actively seeking work.

  • Labor market failures

    Market failures, including in the labor market, occur when the market mechanism fails to deliver a socially efficient and equitable allocation of scarce resources.

    The best example in the context of the labor market is monopsony, when dominant employers (for example, in an industry or in a region) use their buying power to drive wages below the level that would have occurred in a competitive environment. Other causes of labor market failures include, for example, imperfect information and discrimination.

    They may lead to misallocation of resources, welfare losses for society and social problems.

  • Labor market reforms in Denmark during the economic crisis

    Labor market policies are not static, and there have been several recent changes in Denmark (Andersen and Svarer, 2012). Particularly controversial is a recent reform of unemployment insurance that shortens the maximal benefit period from four to two years, and a tightening of the employment history required to regain unemployment benefits (from 26 weeks to 52 weeks of employment within the preceding three years). The reform was approved in 2010 to take effect in 2012, at which time the business situation was expected to have improved. When this did not happen, concern arose over how many people would lose their entitlement to unemployment benefits and turn instead to lower means-tested social benefits. To avoid this, several ad hoc measures have been implemented (Danish Economic Council, 2014). A commission has been appointed to prepare a proposal for a longer-term reform of the unemployment insurance system.

    The social assistance system has also been reformed, with a stronger focus on incentives for all Danes to obtain a labor market-relevant education. For individuals below the age of 30 without a qualifying education, the social assistance level has been adjusted so that it does not provide better compensation than study grants. Applicants for social assistance must begin a new education program or participate in an employment activation program. A recent reform focuses more on job search and less on employment activation programs. The law identifies the right and duty to participate in an activation program after six months for people aged 30–49 and after three months for people older than 50.

    Source: Andersen, T. M., and M. Svarer. “Active labour market policies in a recession.” IZA Journal of Labor Policy 1:7 (2012): 1–19.

    Danish Economic Council. The Danish Economy–Autumn. Copenhagen: Dansk Økonomi–Efteråret, 2014.

  • Labor markets

    Labor markets are the mechanisms that enable labor services to be bought and sold. They include wage employment, where employees sell labor services to an employer, as well as self-employment, where workers sell labor services to themselves. Labor markets include both agricultural and nonagricultural activities.

  • Labor supply elasticity to a single employer

    The wage elasticity of workers’ labor supply to a single employer gives the percentage change in the labor supplied to this employer following from an increase (or a decrease) in the offered wage by 1%. Workers’ labor supply to a single employer, that is, whether workers supply labor to this employer or not, differs conceptually from their labor supply at the level of the market, that is, workers’ decision whether to participate in the labor market or not. Whereas it is conventional wisdom that women’s labor supply is more wage-elastic than men’s at the level of the market, with women’s participation rate and working hours being more sensitive to wages than men’s, the crucial dimension for employers’ monopsony power over their workers is workers’ labor supply at the single employer level. For this reason, the literature on monopsonistic gender wage discrimination examines whether employers possess more wage-setting power over women by investigating whether women supply labor less wage-elastically than men to the single employer (rather than at the level of the market).

    Source: Hirsch, B. Monopsonistic Labour Markets and the Gender Pay Gap: Theory and Empirical Evidence. Heidelberg: Springer, 2010; Manning, A. Monopsony in Motion. Imperfect Competition in Labor Markets. Cambridge, MA: Princeton University Press, 2003.

  • Laboratory experiment

    A laboratory experiment uses a standardized procedure where extraneous variables can be accurately controlled, and so the cause and effect relationship can be clearly established. Accurate results can therefore be recorded. The researcher decides where and when the experiment takes place, with which participants, and in what circumstances. Participants are randomly allocated to each independent variable group being studied.

    Laboratory experiments are also called controlled experiments as they are conducted in a well-controlled environment which is not necessarily a laboratory.

    Although laboratory experiments have the advantages of being easy to replicate as they follow a standardized procedure and of being able to clearly establish cause and effect, the artificial setting can produce unnatural behavior that does not reflect real life, and demand characteristics (where participants interpret the purpose of the experiment and unconsciously change their behavior to fit that interpretation) or the observer effect (where the researcher unconsciously influences the participants) can bias the results.

    There are more pros than cons associated with conducting laboratory experiments (McLeod, 2012).

    Source: McLeod, S. A. “Experimental method.” Simply Psychology (2012). Online at:

  • Legalization and regularization of immigrants

    Legalization, the term commonly used in the US, confers authorized immigration status on people previously categorized as unauthorized, undocumented, or irregular immigrants. In the US, legal status is typically adjusted to legal permanent resident status, with the potential of eventually becoming US citizens.

    Regularization, the term commonly used in Europe, grants either temporary or permanent legal status, through programs or mechanisms, to people previously categorized as unauthorized, undocumented, or irregular immigrants. Programs are one-time measures, while mechanisms are part of a more comprehensive policy. Other terms also used in connection with regularization are normalization, adjustment of status, and toleration.

    Source: Kerwin, D., K. Brick, and R. Kilberg. Unauthorized Immigrants in the United States and Europe: The Use of Legalization/Regularization as a Policy Tool. Washington, DC: Migration Policy Institute, 2012.

  • Life expectancy at birth (LEB)

    The average number of years that the citizens of a country are expected to live in a given year.

  • Linguistic tree

    The encyclopedia of languages Ethnologue presents the linguistic family tree. With that information it is possible to establish how many levels in the tree two languages share. The first level refers to the most aggregated level and distinguishes, for example, Indo-European and Uralic (Finnish, Estonian, and Hungarian) languages. Among the languages that split at the second tree level are Germanic and Slavic languages. At the third tree level, branches split Germanic West languages from Germanic North languages. Finally, at the fourth level of the linguistic tree family, Scandinavian West (Icelandic) is separated from Scandinavian East (Danish, Norwegian, and Swedish), German from English, and Italo-Western (Italian, French, Spanish, Catalan, and Portuguese) from Romance East (Romanian).