Development

Low-income countries differ from higher-income countries in that they have large informal sectors, greater prevalence of self-employment and subsistence agriculture, low female labor participation rates and poor labor market conditions. As labor is most often the only asset of someone in poverty, policies that are not associated with job creation may fail to reduce poverty. Hence, development deals with the potential of labor economics to address those challenges.

Subject Editor

David Robalino World Bank, USA, and IZA, Germany

Associate Editor(s)

Jere Behrman University of Pennsylvania, USA

Markus Frölich University of Mannheim, Germany, and IZA, Germany

David Lam University of Michigan, USA, and IZA, Germany

David Margolis Paris School of Economics, France, and IZA, Germany

  • Articles

  • Opinions

Social protection programs for women in developing countries

How to design social protection programs that poor women can benefit from

10.15185/izawol.14 14 Cameron, L

by Lisa Cameron

Women are more likely than men to work in the informal sector and to drop out of the labor force for a time, such as after childbirth, and to be impeded by social norms from working in the formal sector. This work pattern undermines productivity, increases women’s vulnerability to income shocks, and impairs their ability to save for old age. Many developing countries have introduced social protection programs to protect poor people from social and economic risks, but despite women’s often greater need, the programs are generally less accessible to them than to men.

Public works programs in developing countries have the potential to reduce poverty

The success of public works programs in reducing poverty depends on their design and implementation—in practice, they do better as safety nets

10.15185/izawol.25 25 Zimmermann, L

by Laura Zimmermann

Public works programs in developing countries can reduce poverty in the long term and help low-skilled workers cope with economic shocks in the short term. But success depends on a scheme’s design and implementation. Key design factors are: properly identifying the target population; selecting the right wage; and establishing efficient implementation institutions. In practice, rationing, corruption, mismanagement, and other implementation flaws often limit the effectiveness of public works programs.

Youth bulges and youth unemployment

Youth bulges are not a major factor explaining current levels of youth unemployment

10.15185/izawol.26 26 Lam, D

by David Lam

The youth population bulge is often mentioned in discussions of youth unemployment and unrest in developing countries. But the youth share of the population has fallen rapidly in recent decades in most countries, and is projected to continue to fall. Evidence on the link between youth bulges and youth unemployment is mixed. It should not be assumed that declines in the relative size of the youth population will translate into falling youth unemployment without further policy measures to improve the youth labor market.

Does increasing the minimum wage reduce poverty in developing countries?

Whether raising minimum wages reduces—or increases—poverty depends on the characteristics of the labor market

10.15185/izawol.30 30 Gindling, T

by T. H. Gindling

Raising the minimum wage in developing countries could increase or decrease poverty, depending on labor market characteristics. Minimum wages target formal sector workers—a minority in most developing countries—many of whom do not live in poor households. Whether raising minimum wages reduces poverty depends not only on whether formal sector workers lose jobs as a result, but also on whether low-wage workers live in poor households, how widely minimum wages are enforced, how minimum wages affect informal workers, and whether social safety nets are in place.

The brain drain from developing countries

The brain drain produces many more losers than winners in developing countries

10.15185/izawol.31 31 Docquier, F

by Frédéric Docquier

The proportion of foreign-born people in rich countries has tripled since 1960, and the emigration of high-skilled people from poor countries has accelerated. Many countries intensify their efforts to attract and retain foreign students, which increases the risk of brain drain in the sending countries. In poor countries, this transfer can change the skill structure of the labor force, cause labor shortages, and affect fiscal policy, but it can also generate remittances and other benefits from expatriates and returnees. Overall, it can be a boon or a curse for developing countries, depending on the country’s characteristics and policy objectives.

Redesigning pension systems

The institutional structure of pension systems should follow population developments

10.15185/izawol.51 51 Góra, M

by Marek Góra

For decades, pension systems were based on the rising revenue generated by an expanding population (demographic dividend). As changes in fertility and longevity created new population structures, however, the dividend disappeared, but pension systems failed to adapt. They are kept solvent by increasing redistributions from the shrinking working-age population to retirees. A simple and transparent structure and individualization of pension system participation are the key preconditions for an intergenerationally just old-age security system.

Introducing a statutory minimum wage in middle and low income countries

Successful implementation of a statutory minimum wage depends on context, capacity, and institutional design

10.15185/izawol.52 52 Margolis, D

by David N. Margolis

Motivations for introducing a statutory minimum wage in developing countries include reducing poverty, advancing social justice, and accelerating growth. Attaining these goals depends on the national context and policy choices. Institutional capacity tends to be limited, so institutional arrangements must be adapted. Nevertheless, a statutory minimum wage could help developing countries advance their development objectives, even where enforcement capacity is weak and informality is pervasive.

Do firms benefit from apprenticeship investments?

Why spending on occupational skills can yield economic returns to employers

10.15185/izawol.55 55 Lerman, R

by Robert Lerman

Economists once believed firms do not pay to develop occupational skills that workers could use in other, often competing, firms. Researchers now recognize that most firms benefit from investing in apprenticeship training. Evidence indicates that financial returns to firms vary. Some recoup their investment within the apprenticeship period, while others see their investment pay off only after accounting for reduced turnover, recruitment, and initial training costs. Generally, the first year of apprenticeships involves significant costs, but subsequently, the apprentice’s contributions exceed his/her wages and supervisory costs. Most participating firms view apprenticeships as offering certainty that all workers have the same high level of expertise and ensuring a supply of well-trained workers during sudden increases in demand and to fill leadership positions.

Designing labor market regulations in developing countries

Labor market regulation should aim to improve the functioning of the labor market while protecting workers

10.15185/izawol.57 57 Betcherman, G

by Gordon Betcherman

Governments regulate employment to protect workers and to improve labor market efficiency. However, employment regulations can be controversial, often complicated by opposing ideological views. Thus, it is important for policymakers in developing countries to base decisions on empirical evidence of the impacts of these regulations. The majority of the evidence suggests that most countries have set their regulations in the appropriate range. But it can be costly when countries either overregulate or underregulate their labor market.

Self-employment and poverty in developing countries

The right policies can help the self-employed to boost their earnings above the poverty level and earn more for the work they do

10.15185/izawol.60 60 Fields, G

by Gary S. Fields

A key way for the world’s poor—nearly half of humanity—to escape poverty is to earn more for their labor. Most of the world’s poor people are self-employed, but because there are few opportunities in most developing countries for them to earn enough to escape poverty, they are working hard but working poor. Two key policy planks in the fight against poverty should be: raising the returns to self-employment and creating more opportunities to move from self-employment into higher paying wage employment.

Do youth mentoring programs change the perspectives and improve the life opportunities of at-risk youth?

While most effects are positive, they tend to be modest and fade over time—in addition, some mentoring programs can backfire

10.15185/izawol.62 62 Rodríguez-Planas, N

by Núria Rodríguez-Planas

Mentoring programs such as Big Brothers Big Sisters of America have been providing positive role models and building social skills for more than a century. However, most formal mentoring programs are relatively novel and researchers have only recently begun to rigorously evaluate their impact on changing at-risk youth’s perspectives and providing opportunities for them to achieve better life outcomes. While a variety of mentoring and counseling programs have emerged around the world in recent years, knowledge of their effectiveness remains incomplete.

Designing unemployment benefits in developing countries

For unemployment benefit programs, the key policy issues are the level of benefits and subsidies and the types of taxes used to finance them

10.15185/izawol.15 15 Robalino, D

by David A. Robalino

In reforming unemployment benefit systems, the policy debate should be on the appropriate level of benefits, the subsidies needed for people who cannot contribute enough, and how to finance the subsidies, rather than on whether unemployment insurance or individual unemployment savings accounts are better. Unemployment insurance finances subsidies through implicit taxes on savings, while individual savings accounts with solidarity funds finance subsidies through payroll taxes. Taxes on certain consumption goods and real estate could be considered as well and could be less distortionary.

Does minimum age of employment regulation reduce child labor?

The global fight against child labor might be better served by focusing less on existing laws and more on implementation and enforcement

10.15185/izawol.73 73 Edmonds, E

by Eric V. Edmonds

Regulation of the minimum age of employment is the dominant tool used to combat child labor globally. If enforced, these regulations can change the types of work in which children participate, but minimum age regulations are not a useful tool to promote education. Despite their nearly universal adoption, recent research for 59 developing countries finds little evidence that these regulations influence child time allocation in a meaningful way. Going forward, coordinating compulsory schooling laws and minimum age of employment regulations may help maximize the joint influence of these regulations on child time allocation, but these regulations should not be the focus of the global fight against child labor.

Compliance with minimum wage laws in developing countries

Institutional, individual, firm, and local labor market characteristics are critical for understanding non-compliance with minimum wage laws

10.15185/izawol.80 80 Bhorat, H

by Haroon Bhorat

The level of compliance with minimum wage laws often depends on factors specific to each labor market. In most developing countries, a substantial share of workers still earns less than the legal minimum. Enforcement has not kept up with growth in regulations to protect workers from low wages and poor working conditions. Several institutional structures shape enforcement, including the role of labor inspectors and approaches to compliance, and these and other variables can be analyzed to explore their effects on the level of minimum wage violations.

The incentive effects of minimum pensions

Minimum pension programs reduce poverty in old age but they can also reduce the labor supply of low-income workers

10.15185/izawol.84 84 Jiménez-Martín, S

by Sergi Jiménez-Martín

The main purpose of minimum pension benefit programs and old-age social assistance programs is to guarantee a minimum standard of living after retirement and thus to alleviate poverty in old age. In many developing and developed countries, the minimum pension program is a key welfare program and a major influence on the retirement decisions of low-income workers and workers with erratic work histories. The design of many minimum pension programs tends to create strong incentives for low-income workers to retire as soon as they become eligible for the program, which is often earlier than the normal retirement age.

International trade regulation and job creation

Trade policy is not an employment policy and should not be expected to have major effects on overall employment

10.15185/izawol.75 75 Winters, L

by L. Alan Winters

Trade regulation can create jobs in the sectors it protects or promotes, but almost always at the expense of destroying a roughly equivalent number elsewhere in the economy. At a product-specific or micro level and in the short term, controlling trade could reduce the offending imports and save jobs, but for the economy as a whole and in the long term, this position has neither theoretical support nor empirical evidence in its favor. Given that protection may have other—usually adverse—effects, understanding the difficulties in using it to manage employment is important for economic policy.

Female labor force participation in developing countries

Improving employment outcomes for women takes more than raising labor market participation—good jobs are important too

10.15185/izawol.87 87 Verick, S

by Sher Verick

While women’s labor force participation tends to increase with economic development, the relationship is not straightforward or consistent at the country level. There is considerably more variation across developing countries in labor force participation by women than by men. This variation is driven by a wide variety of economic and social factors, which include economic growth, education, and social norms. Looking more broadly at improving women’s access to quality employment, a critical policy area is enhancing women’s educational attainment beyond secondary schooling.

Products and policies to promote saving in developing countries

Combine behavioral insights with good products to increase formal savings in developing countries

10.15185/izawol.74 74 Goldberg, J

by Jessica Goldberg

Poor people in developing countries can benefit from saving to take advantage of profitable investment opportunities, to smooth consumption when income is uneven and unpredictable, and to insure against emergencies. Despite the benefits of saving, only 41% of adults in developing countries have formal bank accounts, and many who do rarely use their accounts. Improving the design and marketing of financial products has the potential to increase savings among this population.

The good and the bad in remittance flows

Remittances have the potential to lift up developing economies

10.15185/izawol.97 97 Amuedo-Dorantes, C

by Catalina Amuedo-Dorantes

Remittances have risen spectacularly in recent decades, capturing the attention of researchers and policymakers and spurring debate on their pros and cons. Remittances can improve the well-being of family members left behind and boost the economies of receiving countries. They can also create a culture of dependency in the receiving country, lowering labor force participation, promoting conspicuous consumption, and slowing economic growth. A better understanding of their impacts is needed in order to formulate specific policy measures that will enable developing economies to get the greatest benefit from these monetary inflows.

The welfare impact of rising food prices

The welfare impact of rising food prices differs for net food consumers and net producers

10.15185/izawol.135 135 Dimova, R

by Ralitza Dimova

Dramatic food price spikes in recent years have stimulated debate on the welfare implications of food price risk. According to the Food and Agriculture Organization of the United Nations, the number of undernourished people in sub-Saharan Africa rose to a record 265 million in 2009. There is a gradually developing policy consensus in favor of income redistribution to the poor in developing countries hit by the food price crisis. This recommendation makes sense when the poor are net food consumers, but it ignores the possibility that some poor people are net producers of food and so are likely to benefit from rising food prices.

Relative deprivation and individual well-being

Low status and a feeling of relative deprivation are detrimental to health and happiness

10.15185/izawol.140 140 Chen, X

by Xi Chen

People who are unable to maintain the same standard of living as others around them experience a sense of relative deprivation that has been shown to reduce feelings of 
well-being. Relative deprivation reflects conditions of worsening relative poverty despite striking reductions in absolute poverty. The effects of relative deprivation explain why average happiness has been stagnant over time despite sharp rises in income. Consumption taxes on status-seeking spending, along with official and traditional sanctions on excess consumption and redistributive policies may lessen the negative impact of relative deprivation on well-being.

Who owns the robots rules the world

Workers can benefit from technology that substitutes robots or other machines for their work by owning part of the capital that replaces them

10.15185/izawol.5 5 Freeman, R

by Richard B. Freeman

Robots, that is any sort of machinery from computers to artificial intelligence programs that provides a good substitute for work currently performed by humans, can increasingly replace workers, even highly skilled professionals, and thus reduce opportunities for good jobs and pay. But, with appropriate policies, the higher productivity due to robots can improve worker well-being by raising incomes and creating greater leisure for workers. Consider the way Google reduces the need for reference librarians and research assistants, or the way massive open online courses reduce the need for professors and lecturers. How these new technologies affect worker well-being and inequality depends on who owns them.

Policies to support women’s paid work

Policies in developing countries to improve women’s access to paid work should also consider child welfare

10.15185/izawol.157 157 Giannelli, G

by Gianna Claudia Giannelli

Engaging in paid work is generally difficult for women in developing countries. Many women work unpaid in family businesses or on farms, are engaged in low-income self-employment activities, or work in low-paid wage employment. In some countries, vocational training or grants for starting a business have been effective policy tools for supporting women’s paid work. Mostly lacking, however, are job and business training programs that take into account how mothers’ employment affects child welfare. Access to free or subsidized public childcare can increase women’s labor force participation and improve children’s well-being.

The boom in university graduates and the risk of underemployment

Better information on university quality may reduce underemployment and overeducation in developing countries

10.15185/izawol.165 165 Yamada, G

by Gustavo A. Yamada

As the number of secondary school graduates rises, many developing countries expand the supply of public and private universities or face pressure to do so. However, several factors point to the need for caution, including weak job markets, low-quality university programs, and job–education mismatches. More university graduates in this context could exacerbate unemployment, underemployment, and overeducation of professionals. Whether governments should regulate the quantity or quality of university programs, however, depends on the specific combination of factors in each country.

Entrepreneurship for the poor in developing countries

Well-designed entrepreneurship programs show promise for improving earnings and livelihoods of poor workers

10.15185/izawol.167 167 Cho, Y

by Yoonyoung Cho

Can entrepreneurship programs be successful labor market policies for the poor? A large share of workers in developing countries are self-employed in low-paying work or engage in low-return entrepreneurial activities that keep these workers in poverty. Entrepreneurship programs provide business training and access to finance, advisory, and networking services with the aim of boosting workers’ earnings and reducing poverty. Programs vary in design, which can affect their impact on outcomes. Recent studies have identified some promising approaches that are yielding positive results, such as combining training and financial support.

Pensions, informality, and the emerging middle class

Getting the incentives right for firms and workers should be the priority in the labor formalization agenda

10.15185/izawol.169 169 Melguizo, A

by Angel Melguizo

A large share of the population in emerging market economies has no pension coverage, exposing them to the economic risks arising from socio-economic and individual shocks. This problem, which arises from having large informal (unregulated) sectors, affects not only poor workers, but as many as half the newly or nearly middle class in some emerging market economies. With very little social protection coverage today, these workers will also be vulnerable in the future unless tax, labor, and social policies change to encourage formalization. While formalization would require substantial resources in the short-term, it seems financially sustainable.

Are social security programs progressive?

Whether social security programs reduce inequality is not related to the amount they redistribute

10.15185/izawol.172 172 Forteza, A

by Alvaro Forteza

Social security programs generally seek to provide insurance and to reduce poverty and inequality. Providing insurance requires little redistribution. But reducing inequality and alleviating poverty do require redistribution. To reduce inequality, programs must redistribute income, but redistributing income is not the same as reducing inequality. While some programs redistribute large amounts of income without noticeably reducing inequality, others reduce inequality with less redistribution and fewer labor market distortions. A non-contributory tier, which provides benefits without requiring contributions, is a key component for reducing inequality.

New firms entry, labor reallocation, and institutions in transition economies

In transition economies, better property rights protection and rule of law enforcement can boost job creation and growth

10.15185/izawol.180 180 Bruno, R

by Randolph L. Bruno

In the transition from central planning to a market economy in the 1990s, governments focused on privatizing or closing state enterprises, reforming labor markets, compensating laid-off workers, and fostering job creation through new private firms. After privatization, the focus shifted to creating a level playing field in the product market by protecting property rights, enforcing the rule of law, and implementing transparent start-up regulations. A fair, competitive environment with transparent rules supports long-term economic growth and employment creation through the reallocation of jobs in favor of new private firms.

Collective bargaining in developing countries

Negotiating work rules at the firm level instead of the industry level could lead to productivity gains

10.15185/izawol.183 183 Lamarche, C

by Carlos Lamarche

Because theoretical arguments differ on the economic impact of collective bargaining agreements in developing countries, empirical studies are needed to provide greater clarity. Recent empirical studies for some Latin American countries have examined whether industry- or firm-level collective bargaining is more advantageous for productivity growth. Although differences in labor market institutions and in coverage of collective bargaining agreements limit the generalizability of the findings, studies suggest that work rules may raise productivity when negotiated at the firm level but may sometimes lower productivity when negotiated at the industry level.

Environmental regulations and business decisions

Environmental regulations impose costs on firms, affecting productivity and location but providing significant health benefits

10.15185/izawol.187 187 Gray, W

by Wayne B. Gray

Environmental regulations raise production costs at regulated firms, though in most cases the costs are only a small fraction of a firm’s total costs. Productivity tends to fall, and firms may shift new investment and production to locations with less stringent regulation. However, environmental regulations have had enormous benefits in terms of lives saved and illnesses averted, especially through reductions in airborne particulates. The potential health gains may be even greater in developing countries, where pollution levels are high. The benefits to society from environmental regulation hence appear to be much larger than the costs of compliance.

Trade, foreign investment, and wage inequality in developing countries

Exposure to foreign trade raises the skill premium in countries with a large stock of educated workers and reduces it in others

10.15185/izawol.193 193 Cigno, A

by Alessandro Cigno

Liberalization of foreign trade and investment raises the domestic ratio of skilled to unskilled wages (skill premium) if the country has a sufficiently well-educated workforce, but lowers it otherwise. Wide wage inequality is undesirable on equity grounds, especially in poor countries where the bottom wage is close to the breadline; but it gives parents an incentive to invest in their children’s education. The incentive will be ineffective, however, if parents cannot borrow for their child’s education because of underdeveloped credit markets or because they are too poor to finance the investment from their own income and savings.

Measuring disincentives to formal work

Does formal work pay? Synthetic measurements of taxes and benefits can help identify incentives and disincentives to formal work

10.15185/izawol.213 213 Weber, M

by Michael Weber

Evidence from transition economies shows that formal work may not pay, particularly for low-wage earners. Synthetic measurements of work disincentives, such as the formalization tax rate or the marginal effective tax rate, confirm a significant positive correlation between these measurements and the probability of informal work. These measures are especially informative for impacts at lower wage levels, where informality is highest. Policymakers who want to increase formal work can use these measurements to determine optimal labor taxation rates for low-wage earners and reform benefit design.

Do family and kinship networks support entrepreneurs?

Family and kinship ties offer multiple benefits to developing country entrepreneurs but can also have adverse effects

10.15185/izawol.262 262 Nordman, C

by Christophe Jalil Nordman

Family and kinship networks are important in helping people get jobs and start companies, as statistics for developing countries show. Promising new research has begun to assess the positive and negative effects of these family and kinship ties on entrepreneurial success. To what extent, and why, are family networks used, and do they result in better economic outcomes for entrepreneurs? Results point to the need for policymakers to identify and emulate efficient informal networks in order to develop innovative support policies for vulnerable entrepreneurs, especially for those who are attached to weak or inefficient networks.

Do economic reforms hurt or help the informal labor market?

The evidence is mixed on whether and how economic reforms benefit informal labor

10.15185/izawol.263 263 Kar, S

by Saibal Kar

The evidence is mixed on whether informal labor in developing countries benefits from trade and labor market reforms. Reforms lead to higher wages and improved employment conditions in the informal sector in some cases, and to the opposite effect in others. At a cross-country level, lifting trade protection boosts informal-sector employment. The direction and size of the impacts on informal-sector employment and wages are determined by capital mobility and the interactions between trade and labor market reforms and public policies, such as monitoring the formal sector. To guarantee best practice policymakers need to take these interdependencies into account.

Are apprenticeships beneficial in sub-Saharan Africa?

As they do not lead to high-productivity jobs, apprenticeships in sub-Saharan Africa fail to generate high incomes

10.15185/izawol.268 268 Teal, F

by Francis Teal

Apprenticeships are the most common form of non-academic training in sub-Saharan Africa. Most apprenticeships are provided by the private sector, for a fee, and lead to self-employment rather than to wage jobs. Where the effects have been measured, they show that earnings are not higher, on average, for people who did an apprenticeship than for those who did not. This presents a conundrum. Why would people pay for apprenticeship training that does not benefit them? Research reveals that apprenticeships do benefit some people more than others. Especially striking is that the returns to apprenticeships can fall with the level of education.

Trade liberalization and poverty reduction

Trade can reduce poverty when accompanied by appropriate policies and institutions

10.15185/izawol.272 272 Mitra, D

by Devashish Mitra

Economic growth is essential, though not sufficient, for poverty reduction in developing countries. Research based on many different approaches and including both cross-
country and intra-country studies shows that international trade can contribute to economic growth, and thus can help many poor people escape poverty. However, the domestic environment has to be conducive to realizing the poverty-reduction benefits of increased trade. Complementary domestic policies and institutions needed include regulations that foster labor mobility, adequate financial development, and good public infrastructure.

Can higher education reduce inequality in developing countries?

Expanding higher education might solve rising youth unemployment and widening inequality in Africa

10.15185/izawol.273 273 Shimeles, A

by Abebe Shimeles

Developing countries often face two well-known structural problems: high youth unemployment and high inequality. In recent decades, policymakers have increased the share of government spending on education in developing countries to address both of these issues. The empirical literature offers mixed results on which type of education is most suitable to improve gainful employment and reduce inequality: is it primary, secondary, or tertiary education? Investigating recent literature on the returns to education in selected developing countries in Africa can help to answer this question.

Access to public transport and labor informality

Poor public transport can reduce employment in the formal sector

10.15185/izawol.274 274 Moreno-Monroy, A

by Ana I. Moreno-Monroy

Public transport infrastructure has not kept up with the demands of growing populations in cities in developing countries. Infrastructure provision has historically been biased against less affluent areas, so access to formal jobs is often difficult and costly for a large part of the lower-income population. As a result, low-income workers may be discouraged from commuting to formal jobs, lack information on job opportunities, and face discrimination. Through these channels, constrained accessibility can result in higher rates of job informality. Reducing informality can be a target for well-designed transport policies.

Do global value chains create jobs?

Impacts of GVCs depend on lead firms, specialization, skills, and institutions

10.15185/izawol.291 291 Farole, T

by Thomas Farole

Global value chains (GVCs) describe the cross-national activities and inputs required to bring a product or service to the market. While they can boost exports and productivity, the resulting labor market impacts vary significantly across developing countries. Some experience large-scale manufacturing employment, while others see a shift in demand for labor from manufacturing to services, and from lower to higher skills. Several factors shape the way in which a country’s labor market will be impacted by GVC integration, including the type of sector, lead firms’ strategies, domestic skills base, and the institutional environment.

Can cash transfers reduce child labor?

Cash transfers can reduce child labor if structured well and if they account for the reasons children work

10.15185/izawol.293 293 Rosati, F

by Furio C. Rosati

Cash transfers are a popular and successful means of tackling household vulnerability and promoting human capital investment. They can also reduce child labor, especially when it is a response to household vulnerability. But if not properly designed, cash transfers that promote children’s education can increase their economic activities in order to pay the additional costs of schooling. The efficacy of cash transfers may also be reduced if the transfers enable investment in productive assets that boost the returns to child labor. The impact of cash transfers must thus be assessed as part of the entire social protection system.

Does unemployment insurance offer incentives to take jobs in the formal sector?

Unemployment insurance can protect against income loss and create formal employment

10.15185/izawol.300 300 Bosch, M

by Mariano Bosch

Unemployment insurance can be an efficient tool to provide protection for workers against unemployment and foster formal job creation in developing countries. How much workers value this protection and to what extent it allows a more efficient job search are two key parameters that determine its effectiveness. However, evidence shows that important challenges remain in the introduction and expansion of unemployment insurance in developing countries. These challenges range from achieving coverage in countries with high informality, financing the scheme without further distorting the labor market, and ensuring progressive redistribution.

What can be expected from productive inclusion programs?

Grants and training programs are great complements to social assistance to help people out of poverty

10.15185/izawol.301 301 Rigolini, J

by Jamele Rigolini

Productive inclusion programs provide an integrated package of services, such as grants and training, to promote self-employment and wage employment among the poor. They show promising long-term impacts, and are often proposed as a way to graduate the poor out of social assistance. Nevertheless, neither productive inclusion nor social assistance will be able to solve the broader poverty challenge independently. Rather, the future is in integrating productive inclusion into the existing social assistance system, though this poses several design, coordination, and implementation challenges.

How do adult returns to schooling affect children’s enrollment?

Raising future expected monetary gains to schooling and poor families’ current incomes promotes school enrollment in developing countries

10.15185/izawol.305 305 Swinnerton, K

by Kenneth A. Swinnerton

Universal completion of secondary education by 2030 is among the targets set by the United Nations’ Sustainable Development Goals. Higher expected adult wages traced to schooling may play a major role in reaching this target as they are predicted to induce increased school enrollment for children whose families wish to optimally invest in their children’s future. However, low incomes and the obligation to meet immediate needs may forestall such investment. Studies suggest that school enrollment in developing countries is positively correlated with higher expected future wages, but poor families continue to under-enroll their children.

Upgrading technology in Central and Eastern European economies

Existing policies in Eastern Europe will not sufficiently promote technological innovation

10.15185/izawol.338 338 Radosevic, S

by Slavo Radosevic

The future growth of Central and Eastern Europe (CEE) depends on upgrading technology, exporting and coupling domestic technology efforts while improving their position in global value chains. Current policies in the region are not geared to these tasks, despite the availability of huge financial opportunities in the form of EU structural funds. Existing policies are overly focused on research and development (R&D) and neglect sources of productivity growth, such as management practices, skills, quality, and engineering. The challenge is how to design industrial and innovation policies so that they promote modernization and drive structural change.

Designing social protection for women

by Lisa Cameron

In low-income countries a typical woman’s work history is a patchwork of informal sector work; periods out of the labor market for child birth, then childcare, and then, later, elderly parent ca...

The FutureWork Opinion Series - David Robalino

by David Robalino

In this opinion series, part of our FutureWork campaign, we are asking key figures from the IZA World of Labor community to speculate on the future of the global labor economic landscape. The IZA...

The FutureWork Opinion Series - Colm Harmon

by Colm Harmon

In this opinion series, part of our FutureWork campaign, we are asking key figures from the IZA World of Labor community to speculate on the future of the global labor economic landscape. Our Subject ...