IZA World of Labor
  • 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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  • The changing nature of jobs in Central and Eastern Europe

    Restructuring and upskilling prevents job polarization but may leave countries vulnerable to routine-biased technical change

    Piotr Lewandowski, April 2017
    Job polarization can pose serious problems for emerging economies that rely on worker reallocation from low-skilled to middle-skilled jobs to converge toward advanced economies. Evidence from Central and Eastern European (CEE) countries shows that structural change and education expansion can prevent polarization, as they enable a shift from manual to cognitive work and prevent the “hollowing out” of middle-skilled jobs. However, in CEE countries they have also led to a high routine cognitive content of jobs, which makes such jobs susceptible to automation and computerization in the future.
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  • Microfinance and rural non-farm employment in developing countries

    Expansion of microfinance to rural areas may reduce credit constraints, helping non-farm sector growth, employment, and development

    Shyamal Chowdhury, April 2017
    The rural non-farm sector plays an important role in diversifying income for rural households in developing countries and has the potential to emerge as a major source of employment. In some cases it has outgrown the agricultural sector, in part due to the expansion of credit through microfinance institutions that are supported by governments, donor agencies, and businesses. However, future expansion of the rural non-farm sector requires increased flexibility in credit contracts, as well as decreasing the cost of credit and the delivery of complementary inputs, e.g. skills training.
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  • Is teacher certification an effective tool for developing countries?

    Increasing teacher certification in developing countries is widely believed to improve student performance; yet the evidence suggests otherwise

    Todd Pugatch, April 2017
    Teachers are perhaps the most important determinant of education quality. But what makes a teacher effective? Developing countries expend substantial resources on certifying teachers and retaining those who become certified; moreover, policymakers and aid donors prioritize increasing the prevalence of certified teachers. Yet there is little evidence that certification improves student outcomes. In fact, augmenting a school's teaching corps with contract teachers hired outside the civil service and without formal qualifications may be more effective in boosting student performance.
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  • Does homeownership affect education outcomes?

    Homeownership facilitates investment in human capital, though direct effects on education outcomes are unclear

    Stephen Whelan, April 2017
    Homeownership has important economic implications for society and individuals. At the social level is the greater civic engagement that homeowners tend to exhibit, while at the individual level an important outcome associated with housing tenure is better education outcomes, especially for children. The causal impact of tenure, in particular of homeownership, on education is mediated through a range of mechanisms. Evidence for the direct benefit of homeownership itself is less clear, though positive impacts associated with homeownership are stronger for low-income households.
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  • Climate change, natural disasters, and migration

    The relationship between migration and natural events is not straightforward and presents many complexities

    The relationship between climatic shocks, natural disasters, and migration has received increasing attention in recent years and is quite controversial. One view suggests that climate change and its associated natural disasters increase migration. An alternative view suggests that climate change may only have marginal effects on migration. Knowing whether climate change and natural disasters lead to more migration is crucial to better understand the different channels of transmission between climatic shocks and migration and to formulate evidence-based policy recommendations for the efficient management of the consequences of disasters.
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  • How effective is compulsory schooling as a policy instrument?

    Changes in compulsory schooling laws have significant effects on certain population groups, but are costly to implement

    Colm P. Harmon, March 2017
    Compulsory schooling laws are a common policy tool to achieve greater participation in education, particularly from marginalized groups. Raising the compulsory schooling requirement forces students to remain in school which, on balance, is good for them in terms of labor market outcomes such as earnings. But the usefulness of this approach rests with how the laws affect the distribution of years of schooling, and the wider benefits of the increase in schooling. There is also evidence that such a policy has an intergenerational impact, which can help address persistence in poverty across generations.
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