Measures of intergenerational persistence can be
indicative of equality of opportunity, but the relationship is not
A strong association between incomes across
generations—with children from poor families likely to be poor as adults—is
frequently considered an indicator of insufficient equality of opportunity.
Studies of such “intergenerational persistence,” or lack of
intergenerational mobility, measure the strength of the relationship between
parents’ socio-economic status and that of their children as adults.
However, the association between equality of opportunity and common measures
of intergenerational persistence is not as clear-cut as is often assumed. To
aid interpretation researchers often compare measures across time and space
but must recognize that reliable measurement requires overcoming important
data and methodological difficulties.
What evidence exists on whether bad bosses damage workers’ performance, or good bosses enhance it?
A good boss can have a substantial positive effect on the productivity of a typical worker. While much has been written about the peer effects of working with good peers, the effects of working with good bosses appear much more substantial. A good boss can enhance the performance of their employees and can lower the quit rate. This may also be relevant in situations where it is challenging to employ incentive pay structures, such as when quality is difficult to observe. As such, firms should invest sufficiently in the hiring of good bosses with skills that are appropriate to their role.
Better information on university quality may
reduce underemployment and overeducation in developing countries
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.
Improving outcomes for women takes more than
raising labor force participation—good jobs are important too
The relationship between female labor force
participation and economic development is far more complex than often
portrayed in both the academic literature and policy debates. Due to various
economic and social factors, such as the pattern of growth, education
attainment, and social norms, trends in female labor force participation do
not conform consistently with the notion of a U-shaped relationship with
GDP. Beyond participation rates, policymakers need to focus on improving
women’s access to quality employment.
When minimum wages are introduced or raised, are
there fewer jobs?
The potential benefits of higher minimum wages
come from the higher wages for affected workers, some of whom are in poor or
low-income families. The potential downside is that a higher minimum wage
may discourage firms from employing the low-wage, low-skill workers that
minimum wages are intended to help. If minimum wages reduce employment of
low-skill workers, then minimum wages are not a “free lunch” with which to
help poor and low-income families, but instead pose a trade-off of benefits
for some versus costs for others. Research findings are not unanimous, but
especially for the US, evidence suggests that minimum wages reduce the jobs
available to low-skill workers.
Postponing school tracking can increase social
mobility without significant adverse effects on educational achievement
The goal of school tracking (assigning students
to different types of school by ability) is to increase educational
efficiency by creating more homogeneous groups of students that are easier
to teach. However, there are concerns that, if begun too early in the
schooling process, tracking may improve educational attainment at the cost
of reduced intergenerational social mobility. Recent empirical evidence
finds no evidence of an efficiency–equality trade-off when tracking is
Education benefits individuals, but the societal benefits are
likely even greater
Formal schooling increases earnings and provides other
individual benefits. However, societal benefits of education may exceed individual benefits.
Research finds that higher average education levels in an area are correlated with higher
earnings, even for local residents with minimal education. Science, technology, engineering,
and mathematics (STEM) graduates appear to generate especially strong external effects, due to
their role in stimulating innovation and economic growth. Several strategies to test for
causality find human capital externalities do exist.
Gender quotas for women on boards of directors
improve female share on boards but firm performance effects are mixed
Arguments for increasing gender diversity on
boards of directors by gender quotas range from ensuring equal opportunity
to improving firm performance. The introduction of gender quotas in a number
of countries has increased female representation on boards. Current research
does not justify gender quotas on grounds of economic efficiency. In many
countries the number of women in top executive positions is limited, and it
is not clear from the evidence that quotas lead to a larger pool of female
top executives, who are the main pipeline for boards of directors. Thus,
other supplementary policies may be necessary if politicians want to
increase the number of women in senior management positions.
Studies of independent contractors suggest that
workers’ effort may be more responsive to wage incentives than previously
A fundamental question in economic policy is how
labor supply responds to changes in remuneration. The responsiveness of
labor supply determines the size of the employment impact and efficiency
loss of progressive income taxation. It also affects predictions about the
impacts of policies ranging from fiscal responses to business cycles to
government transfer programs. The characteristics of jobs held by
independent contractors provide an opportunity to overcome problems faced by
earlier studies and help answer this fundamental question.
Whether raising minimum wages reduces—or
increases—poverty depends on the characteristics of the labor market
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