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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

Internal hiring or external recruitment?

The efficacy of hiring strategies hinges on a firm’s simultaneous use of other policies

Jed DeVaro

When an employer fills a vacancy with one of its own workers (through promotion or horizontal transfer), it forgoes the opportunity to fill the position with a new hire from outside the firm. Although firms use both internal and external hiring methods, they frequently favor insiders. Internal and external hires differ in observable characteristics (such as skill levels), as do the employers making the hiring decisions. Understanding those differences helps employers design and manage hiring policies that are appropriate for their organizations.

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latest articles

  • Do guest worker programs give firms too much power?

    Guest worker programs requiring employer sponsorship can expand global opportunity—and grant employers market power

    Peter Norlander, June 2021
    Guest worker programs allow migrants to work abroad legally, and offer benefits to workers, firms, and nations. Guest workers are typically authorized to work only in specific labor markets, and are sponsored by, and must work for, a specific firm, making it difficult for guest workers to switch employers. Critics argue that the programs harm host country citizens and permanent residents (“existing workers”), and allow employers to exploit and abuse vulnerable foreign-born workers. Labor market institutions, competitive pressures, and firm strategy contribute to the effects of migration that occur through guest worker programs.
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  • Income inequality and social origins Updated

    Promoting intergenerational mobility makes societies more egalitarian

    Lorenzo Cappellari, May 2021
    Income inequality has been on the rise in many countries. Is this bad? One way to decide is to look at the degree of change in incomes across generations (intergenerational mobility) and, more generally, at the extent to which income differences among individuals are traceable to their social origins. Inequalities that reflect factors largely out of an individual’s control—such as parents’ education, local schools, and communities—require attention in order to reduce income inequality. Evidence shows a negative association between income inequality and intergenerational mobility, and a positive relationship between mobility and economic performance.
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  • The impact of legalizing unauthorized immigrants Updated

    While legalization benefits most unauthorized immigrants, deciding how to regularize them is challenging

    Cynthia BansakSarah Pearlman, May 2021
    Countries have adopted a variety of legalization programs to address unauthorized immigration. Research in the US finds improved labor market outcomes for newly authorized immigrants. Findings are more mixed for European and Latin American countries where informal labor markets play a large role and programs are often small scale. Despite unclear labor market outcomes and mixed public support, legalization will likely continue to be widely used. Comprehensive legislation can address the complex nature of legalization on immigrants and on native-born residents.
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  • Immigrants in the classroom and effects on native children Updated

    Having immigrant children in the classroom may sometimes, but not always, harm educational outcomes of native children

    Peter Jensen, April 2021
    Many countries are experiencing increasing inflows of immigrant students. This raises concerns that having a large share of students for whom the host country language is not their first language may have detrimental effects on the educational outcomes of native children. However, the evidence is mixed, with some studies finding negative effects, and others finding no effects. Whether higher concentrations of immigrant students have an effect on native students differs across countries according to factors such as organization of the school system and the type of immigrants.
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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

    Gilles GrenierWeiguo Zhang, March 2021
    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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events
  • Jun 17, 2021 - Jun 18, 2021

    8th IZA Workshop: Environment, Health and Labor Markets

    Online

    The aim of the 2021 workshop of IZA's Environment, Health, and Labor Markets program area is to bring together researchers analyzing the impact of environmental factors and health policies on labor market outcomes, human capital outcomes, industrial activity, production decisions and demographic outcomes.

  • Jun 30, 2021

    4th IZA/Higher School of Economics Workshop: Thirty Years after the Fall of the Iron Curtain: The Contribution of Labor Market Adjustment to Transition and Convergence

    Online

    This is an updated call for papers as the workshop planned for 2020 was cancelled due the COVID-19 crisis. We still would like to keep the overall theme developed for 2020, but we also intend to include two sessions that deal with the impact of COVID-19 on labor markets in post-transition and emerging economies.

  • Jul 05, 2021

    First IZA Workshop: Climate Change and Labor Markets

    Online

    Despite efforts to mitigate the extent of climate change, exposure to extreme events such as heatwaves, floods, and hurricanes will become more prevalent for the entire world’s population. In addition to causing damages to the environment and human health, climate change as well as adaptation to global warming pose challenges for the functioning of labor markets. In particular, this raises questions about the implications of climate change for a range of labor market outcomes, among others human capital formation, migration decisions, location decisions of firms, labor supply and productivity of workers, and labor demand across occupations.

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