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Employment has grown steadily, unemployment is
low, and the gender gap and skill premiums have fallen
New Zealand is a small open economy, with large
international labor flows and skilled immigrants. After the global financial
crisis (GFC) employment took four years to recover, while unemployment took
more than a decade to return to pre-crisis levels. Māori, Pasifika, and
young workers were worst affected. The Covid-19 pandemic saw employment
decline and unemployment rise but this was reversed within a few quarters.
However, the long-term impact of the pandemic remains uncertain.
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Push and pull factors drive the decision to stay
or move
There are a myriad of economic and non-economic
forces behind the decision to migrate. Migrants can be “pushed” out of their
home countries due to deteriorating economic conditions or political unrest.
Conversely, migrants are often “pulled” into destinations that offer high
wages, good health care, strong educational systems, or linguistic
proximity. In making their decision, individuals compare the net benefits of
migration to the costs. By better understanding what forces affect specific
migrant flows (e.g. demographic characteristics, migrant networks, and
economic conditions), policymakers can set policy to target (or reduce)
certain types of migrants.
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Gender inequalities in daily time allocation may
have detrimental effects on earnings and well-being
Many countries experience gender differences, of
various magnitudes, in the time devoted to paid work (e.g. market work time)
and unpaid work (e.g. housework and childcare). Since household
responsibilities influence the participation of women, especially mothers,
in the labor market, the unequal sharing of unpaid work, with women bearing
the brunt of housework and childcare, is one of the main drivers of gender
inequality in the labor market. Understanding the factors behind these
gender inequalities is crucial for constructing policies aimed at promoting
gender equality and combating gender-based discrimination.
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Parental leave increases the family–work
balance, but prolonged leave may have negative impacts on mothers’
careers
Numerous studies have investigated whether the
provision and generosity of parental leave affects the employment and career
prospects of women. Parental leave systems typically provide either short
unpaid leave mandated by the firm, as in the US, or more generous and
universal leave mandated by the government, as in Canada and several
European countries. Key economic policy questions include whether, at the
macro level, female employment rates have increased due to parental leave
policies; and, at the micro level, whether the probability of returning to
work and career prospects have increased for mothers after childbirth.
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Support for economic liberalization reforms is
essential, but it grows stronger only where societies experience the effects
of reversing these reforms
An extensive program of economic liberalization
reforms, even when it generates positive outcomes, does not automatically
generate support for further reforms. Societies respond with strong support
only after experiencing the effects of reversing these reforms (i.e.
corruption, inequality of opportunity). This point is illustrated through
the example of the post-communist transformation in Eastern Europe and
Central Asia—arguably a context where the end point of reforms was never
clearly defined, and even successful reforms are now associated with a
degree of reform suspicion.
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Time-limited benefits may yield significant
welfare gains and help underemployed part-time workers move to full-time
employment
A considerable share of the labor force consists
of underemployed part-time workers: employed workers who, for various
reasons, are unable to work as much as they would like to. Offering
unemployment benefits to part-time unemployed workers is controversial. On
the one hand, such benefits can strengthen incentives to take a part-time
job rather than remain fully unemployed, thus raising the probability of
obtaining at least some employment. On the other hand, these benefits weaken
incentives for part-time workers to look for full-time employment. It is
also difficult to distinguish people who work part-time by choice from those
who do so involuntarily.
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Market changes and limited redistribution
contributed to high income and wealth inequality growth in Eastern
Europe
High levels of economic inequality may lead to
lower economic growth and can have negative social and political impacts.
Recent empirical research shows that income and wealth inequalities in
Eastern Europe since the fall of socialism increased significantly more than
previously suggested. Currently, the average Gini index (a common measure)
of inequality in Eastern Europe is about 3 percentage points higher than in
the rest of Europe. This rise in inequality was initially driven by
privatization, liberalization, and deregulation reforms, and, more recently,
has been amplified by technological change and globalization coupled with
relatively ungenerous income and wealth redistribution policies.
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Employee ownership generally increases firm
performance and worker outcomes
Employee ownership has attracted growing
attention for its potential to improve economic outcomes for companies,
workers, and the economy in general, and help reduce inequality. Over 100
studies across many countries indicate that employee ownership is generally
linked to better productivity, pay, job stability, and firm survival—though
the effects are dispersed and causation is difficult to firmly establish.
Free-riding often appears to be overcome by worker co-monitoring and
reciprocity. Financial risk is an important concern but is generally
minimized by higher pay and job stability among employee owners.
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Standard poverty measures may drastically
understate the problem; the collective household model can help
A key element of anti-poverty policy is the
accurate identification of poor individuals. However, measuring poverty at
the individual level is difficult since consumption data are typically
collected at the household level. Per capita measures based on
household-level data ignore both inequality within the household and
economies of scale in consumption. The collective household model offers an
alternative and promising framework to estimate poverty at the individual
level while accounting for both inequality within the household and
economies of scale in consumption.
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Studying abroad benefits the students, the host
country, and those remaining at home
In knowledge-based economies, attracting and
retaining international students can help expand the skilled workforce.
Empirical evidence suggests that open migration policies and labor markets,
whereby students can remain in the host country post-study, as well as good
quality higher education institutions are crucial for successfully
attracting international students. Student migration can positively affect
economic growth in both sending and receiving countries, even though
migrants themselves reap most of the gains, mainly through higher
earnings.
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