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.

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What can be expected from productive inclusion programs?

Grants and training programs are great complements to social assistance to help people out of poverty

Jamele Rigolini

Productive inclusion programs provide an integrated package of services, such as grants and training, to promote self-employment and wage employment among the poor. They show promising long-term impacts, and are often proposed as a way to graduate the poor out of social assistance. Nevertheless, neither productive inclusion nor social assistance will be able to solve the broader poverty challenge independently. Rather, the future is in integrating productive inclusion into the existing social assistance system, though this poses several design, coordination, and implementation challenges.

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  • Anonymous job applications and hiring discrimination

    Blind recruitment can level the playing field in access to jobs but cannot prevent all forms of discrimination

    Ulf Rinne, October 2018
    The use of anonymous job applications (or blind recruitment) to combat hiring discrimination is gaining attention and interest. Results from field experiments and pilot projects in European countries (France, Germany, the Netherlands, and Sweden are considered here), Canada, and Australia shed light on their potential to reduce some of the discriminatory barriers to hiring for minority and other disadvantaged groups. But although this approach can achieve its primary aims, there are also important cautions to consider.
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  • The role of cognitive and socio-emotional skills in labor markets

    Cognitive skills are more relevant in explaining earnings, socio-emotional skills in determining labor supply and schooling

    Pablo AcostaNoël Muller, October 2018
    Common proxies, such as years of education, have been shown to be ineffective at capturing cross-country differences in skills acquisition, as well as the role they play in the labor market. A large body of research shows that direct measures of skills, in particular cognitive and socio-emotional ones, provide more adequate estimations of individuals’ differences in potential productive capacity than the quantity of education they receive. Evidence shows that cognitive skills in particular are quite relevant to explain wages, while socio-emotional skills are more associated with labor force and education participation decisions.
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  • The portability of social benefits across borders

    With rising international migration, how transferable are benefits, and how can transferability be increased?

    Robert Holzmann, October 2018
    The importance of benefit portability is increasing in line with the growing number of migrants wishing to bring acquired social rights from their host country back to their country of residence. Failing to enable such portability risks impeding international labor mobility or jeopardizing individuals’ ability to manage risk across their life cycle. Various instruments may establish portability. But which instrument works best and under what circumstances is not yet well-explored.
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  • The automotive industry in Central Europe: A success?

    The automotive industry has brought economic growth, but a developmental model based on foreign capital is reaching its limits

    Lucia Mýtna Kureková, September 2018
    Central Europe has experienced one of the most impressive growth and convergence stories of recent times. In particular, this has been achieved on the back of foreign-owned, capital-intensive manufacturing production in the automotive sector. With large domestic supplier networks and high skill intensity, the presence of complex industry yields many economic benefits. However, this developmental path is now reaching its limits with the exhaustion of the available skilled workforce, limited investments in upgrading and research, and persistent regional inequalities.
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  • Big Data in economics

    New sources of data create challenges that may require new skills

    Big Data refers to data sets of much larger size, higher frequency, and often more personalized information. Examples include data collected by smart sensors in homes or aggregation of tweets on Twitter. In small data sets, traditional econometric methods tend to outperform more complex techniques. In large data sets, however, machine learning methods shine. New analytic approaches are needed to make the most of Big Data in economics. Researchers and policymakers should thus pay close attention to recent developments in machine learning techniques if they want to fully take advantage of these new sources of Big Data.
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  • How to reduce workplace absenteeism

    Financial incentives and changes in working conditions are key to many broad and tailor-made programs

    Wolter Hassink, September 2018
    Do workplace programs help reduce worker sickness absence? Many programs are based on the principle that the employee’s decision to report an absence can be influenced if it is costly to be absent. Firms can reduce absenteeism by implementing broad programs, including performance pay, general improvements of working conditions, and strengthening workers’ loyalty to the firm. Specific programs, such as grading partial absence, seem to be effective at reducing long-term absences. However, firms will be less inclined to implement such programs if they can shift the financial burden to social security programs.
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  • Compensating displaced workers

    Uncoordinated unemployment insurance and severance pay do a poor job of insuring against losses resulting from job displacement

    Donald O. Parsons, September 2018
    Job displacement poses a serious earnings threat to long-tenured workers through unemployment spells and lower re-employment wages. The prevailing method of insuring job displacement losses involves an uncoordinated combination of unemployment insurance and severance pay. Less developed countries often rely exclusively on public mandating of employer severance pay due to the administrative complexity of unemployment insurance systems. If both options are operational, systematic integration of the two is important, although perhaps not possible if severance pay is voluntarily provided.
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  • Measuring employment and unemployment

    Should statistical criteria for measuring employment and unemployment be re-examined?

    Measuring employment and unemployment is essential for economic policy. Internationally agreed measures (e.g. headcount employment and unemployment rates based on standard definitions) enhance comparability across time and space, but changes in real labor markets and policy agendas challenge these traditional conventions. Boundaries between different labor market states are blurred, complicating identification. Individual experiences in each state may vary considerably, highlighting the importance of how each employed or unemployed person is weighted in statistical indices.
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