IZA World of Labor
  • Multitasking at work: Do firms get what they pay for?

    Rewarding only one dimension of performance may result in employees ignoring other dimensions

    Ann P. Bartel, May 2017
    To align employees’ interests with the firm’s goals, employers often use performance-based pay, but designing such a compensation plan is challenging because performance is typically multifaceted. For example, a sales employee should be incentivized to sell the company’s product, but a focus on current sales without rewarding the salespeople according to the quality of the product and/or customer service may result in fewer future sales. To solve this problem, firms often increase the number of metrics by which they evaluate their employees, but complex compensation plans may be difficult for employees to understand.
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  • Motherhood wage penalty may affect pronatalist policies

    If ignored, the motherhood wage penalty may threaten the effectiveness of policies targeting fertility

    Olena Y. Nizalova, May 2017
    The motherhood wage penalty denotes the difference in wages between mothers and women without children that is not explained by differences in human capital characteristics and labor market experience. As part of the gender pay gap, the motherhood wage penalty can represent a significant cost to being female and having children. If ignored, it may undermine policy initiatives aiming to increase fertility rates in post-socialist countries, such as the costly “baby bonus,” which is a government payment to new parents to assist with the costs of childrearing.
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  • International trade and economic insecurity

    Trade can increase economic insecurity for some workers while increasing stability for others

    Mine Z. Senses, May 2017
    Whether or not international trade exposes workers to economic insecurity depends on the nature of the trade exposure of the firm, or industry, in which the worker is employed. Import-competing industries experience higher levels of risk to workers’ incomes and employment, while firms that import intermediate production stages (“offshoring”) display bigger employment responses to small changes in workers’ wages, and are more likely to shut down home factories. But offshoring also helps firms weather economic shocks. Offshoring firms are more likely to survive and provide greater employment stability to their workers.
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  • The happiness gap between transition and non-transition countries

    Economic progress coupled with political and institutional stability is needed to reduce unhappiness

    Ekaterina Skoglund, May 2017
    Since 1989, post-communist countries have undergone profound changes in their political, economic, and social structures and institutions. Across a range of development outcomes—in terms of the speed and success of reforms—transition is an “unhappy process.” The “happiness gap,” i.e. the difference in average happiness levels between the populations of transition and non-transition economies, is closing, but at a slower pace than the process of economic convergence. Economic growth, as the determinant of a country’s collective well-being, has been superseded by measurements of institutional quality and social development.
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  • Multiple job-holding: Career pathway or dire straits?

    Moonlighting responds to economic needs, but can generate new skills and careers

    Multiple job-holding, or “moonlighting,” is an important form of atypical employment in most economies. New forms of work, driven by digitalization, may enable its future growth. However, many misconceptions exist, including the belief that multiple job-holders are low-skilled workers who moonlight primarily for financial reasons, or that the practice increases during economic downturns. Recent literature highlights the significant links between moonlighting and job mobility. Multiple job-holding allows for the development of workers’ skills and spurs entrepreneurship.
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  • Gender differences in corporate hierarchies

    How and why do the careers of men and women differ? What policies could reduce the differences?

    Antti Kauhanen, May 2017
    The gender wage gap is largely due to men and women holding different kinds of jobs. This job segregation is partly driven by gender differences in careers in corporate hierarchies. Research has shown that the careers of men and women begin to diverge immediately upon entry into the labor market and that subsequent career progress exacerbates the divergence. This divergence of career progress explains a large part of the gender wage gap. Understanding how and why the careers of men and women differ is necessary to design effective policies that can reduce the gender differences in hierarchies.
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  • The need for and use of panel data

    Panel data provide an efficient and cost-effective means to measure changing behaviors and attitudes over time

    Hans-Jürgen Andreß, April 2017
    Stability and change are essential elements of social reality and economic progress. Cross-sectional surveys are a means of providing information on specific issues at a particular point in time, though without providing any information about the prevailing stability. Limited information on change can be obtained by retrospective questioning, but this is often impaired by “recall bias.” However, valid information on change is essential for assessing whether phenomena such as poverty are permanent or only temporary. Panel data analyses can address these problems as well as provide an essential tool for effective policy design.
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  • The labor market in the US, 2000–2016

    Recovery from the Great Recession is essentially complete, but there are difficult unemployment and wage issues

    Daniel S. Hamermesh, April 2017
    As the largest economy in the world, the US labor market is crucial to the economic well-being of citizens worldwide as well as, of course, that of its own citizens. Since 2000 the US labor market has undergone substantial changes, both reflecting the Great Recession, but also resulting from some striking trends. Most interesting have been a remarkable drop in the labor force participation rate, reversing a nearly 50-year trend; the nearly full recovery of unemployment from the depths of the Great Recession; and the little-known continuing growth in post-inflation average earnings.
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  • Do firms’ wage-setting powers increase during recessions?

    Monopsony models question the classic view of wage-setting and reveal a new reason why wages may decrease during recessions

    Todd Sorensen, April 2017
    Traditional models of the labor market typically assume that wages are set by the market, not the firm. However, over the last 15 years, a growing body of empirical research has provided evidence against this assumption. Recent studies suggest that a monopsonistic model, where individual firms and not the market set wages, may be more appropriate. This model attributes more wage-setting power to firms, particularly during economic downturns, which helps explain why wages decrease during recessions. This holds important implications for policymakers attempting to combat lost worker income during economic downturns.
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  • Measuring flows of international migration

    Consistent measures of migration are needed to understand patterns and impacts on labor market outcomes

    James Raymer, April 2017
    International migration alters the socio-economic conditions of the individuals and families migrating as well as the host and sending countries. The data to study and to track these movements, however, are largely inadequate or missing. Understanding the reasons for these data limitations and recently developed methods for overcoming them is crucial for implementing effective policies. Improving the available information on global migration patterns will result in numerous and wide-ranging benefits, including improved population estimations and providing a clearer picture of why certain migrants choose certain destinations.
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