Evidence-based policy making

IZA World of Labor is an online platform that provides policy analysts, journalists, academics and society generally with relevant and concise information on labor market issues. Based on the latest research, it provides current thinking on labor markets worldwide in a clear and accessible style. IZA World of Labor aims to support evidence-based policy making and increase awareness of labor market issues, including current concerns like the impact of Covid-19, and longer-term problems like inequality.

View our content on Covid-19—Pandemics and the labor market 

featured article

Class size: Does it matter for student achievement?

Smaller classes are often associated with increased achievement, but the evidence is far from universal

Christopher Jepsen

Numerous economic studies have considered the relationship between class size and student achievement, the majority of which have focused on elementary schools in the US and Europe. While the general finding is that smaller classes are associated with increased student achievement, a few high-quality studies find no relationship. Further, empirical research on the costs and benefits of smaller classes concludes that other education policies, such as tutoring, early childhood programs, or improving teacher quality would be better investments.

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  • Inequality and informality in transition and emerging countries Updated

    A bidirectional relationship between informality and inequality exists; in transition and emerging countries, higher informality decreases inequality

    Roberto Dell'Anno, April 2021
    Higher inequality reduces capital accumulation and increases the informal economy, which creates additional employment opportunities for low-skilled and deprived people. As a result, informal employment leads to beneficial effects on income distribution by providing sources of income for unemployed and marginalized workers. Despite this positive feedback, informality raises problems for public finances and biases official statistics, reducing the effectiveness of redistributive policies. Policymakers should consider the links between inequality and informality because badly designed informality-reducing policies may increase inequality.
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  • Low-wage employment Updated

    Are low-paid jobs stepping stones to higher-paid jobs, do they become persistent, or do they lead to recurring unemployment?

    Claus Schnabel, March 2021
    Low-wage employment has become an important feature of the labor market and a controversial topic for debate in many countries. How to interpret the prominence of low-paid jobs and whether they are beneficial to workers or society is still an open question. The answer depends on whether low-paid jobs are largely transitory and serve as stepping stones to higher-paid employment, whether they become persistent, or whether they result in repeated unemployment. The empirical evidence is mixed, pointing to both stepping-stone effects and “scarring” effects (i.e. long-lasting detrimental effects) of low-paid work.
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  • Disability and labor market outcomes Updated

    Disability is associated with labor market disadvantage; evidence points to this being a causal relationship

    Melanie Jones, March 2021
    In Europe, about one in eight people of working age report having a disability; that is, a long-term limiting health condition. Despite the introduction of a range of legislative and policy initiatives designed to eliminate discrimination and facilitate retention of and entry into work, disability is associated with substantial and enduring labor market disadvantage in many countries. Identifying the reasons for this is complex, but critical to determine effective policy solutions that reduce the extent, and social and economic costs, of disability-related disadvantage.
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  • The value of language skills Updated

    A common language facilitates communication and economic efficiency, but linguistic diversity has economic and cultural value too

    In today's globalized world, people are increasingly mobile and often need to communicate across different languages. Learning a new language is an investment in human capital. Migrants must learn the language of their destination country, but even non-migrants must often learn other languages if their work involves communicating with foreigners. Economic studies have shown that fluency in a dominant language is important to economic success and increases economic efficiency. However, maintaining linguistic diversity also has value since language is also an expression of people's culture.
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