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.
Do schooling reforms improve long-term health?
It is difficult to find consistent evidence that schooling reforms provide health benefits
A statistical association between more education and better health outcomes has long been observed, but in the absence of experimental data researchers have struggled to find a causal effect. Schooling reforms such as raising school leaving age, which have been enacted in many countries, can be viewed as a form of natural experiment and provide a possible method of identifying such an effect. However, the balance of evidence so far is that these reforms have had little impact on long-term health. Thus, policymakers should be cautious before anticipating a health effect when introducing reforms of this nature.
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Fertility decisions and alternative types of childcare Updated
Relative costs and family characteristics determine the effectiveness of different forms of childcare
Increasing population age and low fertility rates, which characterize most modern societies, compromise the balance between people who can participate in the labor market and people who need care. This is a demographic and social issue that is likely to grow in importance for future generations. It is therefore crucial to understand what factors can positively influence fertility decisions. Policies related to the availability and costs of different kinds of childcare (e.g. formal care, grandparents, childminders) should be considered after an evaluation of their effects on the probability of women having children.MoreLess -
The shadow economy in industrial countries Updated
Reducing the size of the shadow economy requires reducing its attractiveness while improving official institutions
Dominik H. Enste , October 2024The shadow (underground) economy has a major impact on society and economy in many countries. People evade taxes and regulations by working in the shadow economy or by employing people illegally. On the one hand, this unregulated economic activity can result in reduced tax revenue and fewer public goods and services, lower tax morale and less tax compliance, higher control costs, and lower economic growth rates. But on the other hand, the shadow economy can be a powerful force fostering institutional change and boosting the overall production of goods and services in an economy. The shadow economy has implications on the political order and institutional change.MoreLess -
Entrepreneurs and their impact on jobs and economic growth Updated
Productive entrepreneurs can invigorate the economy by creating jobs and new technologies, and increasing productivity
Alexander S. Kritikos , October 2024Entrepreneurs, creators of new firms, are a rare species. Even in innovation-driven economies, only 1–2% of the work force starts a business in any given year. Yet entrepreneurs, particularly innovative entrepreneurs, are vital to the competitiveness of the economy and may establish new jobs. The gains of entrepreneurship are only realized, however, if the business environment is receptive to innovation. In addition, policymakers need to prepare for the potential job losses that can occur in the medium term through “creative destruction” as entrepreneurs strive for increased productivity.
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Using instrumental variables to establish causality Updated
Even with observational data, causality can be recovered with the help of instrumental variables estimation
Grigory AleksinSascha O. Becker , September 2024Randomized control trials are often considered the gold standard to establish causality. However, in many policy-relevant situations, these trials are not possible. Instrumental variables affect the outcome only via a specific treatment; as such, they allow for the estimation of a causal effect. However, finding valid instruments is difficult. Moreover, instrumental variables (IV) estimates recover a causal effect only for a specific part of the population. While those limitations are important, the objective of establishing causality remains; and instrumental variables are an important econometric tool to achieve this objective.MoreLess -
Estimating the return to schooling using the Mincer equation Updated
The Mincer equation gives comparable estimates of the average monetary Returns of one additional year of education
Harry Anthony Patrinos , August 2024The Mincer equation—arguably the most widely used in empirical work—can be used to explain a host of economic, and even non-economic, phenomena. One such application involves explaining (and estimating) employment earnings as a function of schooling and labor market experience. The Mincer equation provides estimates of the average monetary returns of one additional year of education. This information is important for policymakers who must decide on education spending, prioritization of schooling levels, and education financing programs such as student loans.MoreLess -
Does increasing the minimum wage reduce poverty in developing countries? Updated
Whether raising minimum wages reduces—or increases—poverty depends on the characteristics of the labor market and Households
T. H. Gindling , August 2024Raising 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 place.MoreLess -
Sexual harassment in the workplace Updated
The #MeToo movement brought heightened attention to sexual harassment and a search for new approaches to combat it
Joni Hersch , July 2024Workplace sexual harassment is internationally condemned as sex discrimination and a violation of human rights, and more than 140 countries have enacted legislation prohibiting it. Sexual harassment increases absenteeism and turnover and lowers productivity and job satisfaction. Yet, it remains pervasive and underreported, as the #MeToo movement starkly revealed in October 2017. Standard workplace policies such as training and a complaints process have proven inadequate. Initiatives such as bans on confidential settlements and measures that support market incentives for deterrence may offer the most promise.MoreLess -
Unemployment benefits and unemployment Updated
The challenge of unemployment benefits is to protect workers while minimizing undesirable side effects
Robert MoffittWonsik Ko , June 2024All developed economies have unemployment benefit programs to protect workers against major income losses during spells of unemployment. By enabling unemployed workers to meet basic consumption needs, the programs protect workers from having to sell their assets or accept jobs below their qualifications. The programs also help stabilize the economy during recessions. If benefits are too generous, however, the programs can lengthen unemployment and raise the unemployment rate. The policy challenge is to protect workers while minimizing undesirable side effects.MoreLess -
The effects of public sector employment on the economy Updated
The size and wage level of the public sector affect overall employment volatility and the economy
Vincenzo CaponiSimone Nobili , June 2024Public sector jobs are established by governments to directly provide goods and services. Governments may also choose to regulate the size of the public sector in order to stabilize targeted national employment levels. However, economic research suggests that these effects are uncertain and critically depend on how public wages are determined. Rigid public sector wages lead to perverse effects on private employment, while flexible public wages lead to a stabilizing effect. Public employment also has important productivity and redistributive effects.MoreLess -
Public or private job placement services — Are private ones more effective? Updated
Outsourcing to the private sector can only be effective if the service quality can be contracted on
Gesine Stephan , May 2024Expenditures on job placement and related services make up a substantial share of many countries’ gross domestic products. Contracting out to private providers is often proposed as a cost-efficient alternative to the state provision of placement services. However, the responsible state agency has to be able and willing to design and monitor sufficiently complete contracts to ensure that the private contractors deliver the desired service quality. None of the empirical evidence indicates that contracting-out is necessarily more effective or more cost-efficient than public employment services.MoreLess -
Entrepreneurship for the poor in developing countries Updated
Well-designed entrepreneurship programs show promise for improving earnings and livelihoods of poor workers
Yoonyoung Cho , May 2024Can entrepreneurship programs be successful labor market policies for the poor? A large share of workers in developing countries are self-employed (mostly own-account workers without paid employees, often interchangeably used as micro entrepreneurs). Their share among all workers has not changed much over the past two decades in the developing world. Entrepreneurship programs provide access to finance (or assets) and advisory and networking services as well as business training with the aim of boosting workers’ earnings and reducing poverty. Programs vary in design, which can affect their impact on outcomes. Recent studies have identified some promising approaches that are yielding positive results, such as combining training and financial support.MoreLess -
The labor market in Brazil, 2001–2022 Updated
Brazil’s long-lasting recession has hurt the poor and has reversed inequality trends
Sergio Pinheiro FirpoAlysson Lorenzon Portella , April 2024In the first decade of the 21st century, the Brazilian economy experienced an important expansion followed by a significant decline in inequality. The minimum wage increased rapidly, reducing inequality with no negative effects on employment or formality. This resulted from economic growth and greater supply of skilled labor. However, from 2014-2021, real wages were stagnant, and unemployment rates surged. Inequality rose again, although only marginally. Some positive signs emerged in 2022, although it is still too early to know whether they mark a return to past trends or a recovery from the pandemic.MoreLess -
The importance of informal learning at work Updated
On-the-job learning is more important for workers’ human capital development than formal training
Andries De Grip , March 2024Although early human capital theory recognized the relevance of workers’ experience, its focus was on education and formal training. More recent studies show that much of the performance of newly hired workers is driven by learning by doing or learning from peers or supervisors in the workplace. Descriptive data show that workers learn a lot from the various tasks they perform on the job. Informal learning at work seems to be relevant for all age groups, although it is more meaningful for younger workers’ performance. Informal learning is far more important for workers’ human capital development than formal training courses.MoreLess -
Compensating displaced workers Updated
Job displacement is a serious earnings risk and the displaced are typically poorly insured
Donald O. Parsons , February 2024Job displacement is a serious earnings risk to long-tenured workers, both through spells of unemployment and through reduced wages on subsequent jobs. Less developed countries often rely exclusively on government mandated employer-provided severance pay to protect displaced workers. Higher income countries usually rely on public unemployment insurance and mandated severance pay. Beyond these options, more administratively demanding plans have been proposed, including UI savings accounts and “actual loss” wage insurance, though real-world experience on either model is lacking.MoreLess -
Trans people, well-being, and labor market outcomes Updated
Transitioning across gender is related to greater life and job satisfaction but also affects acceptance in one’s society
Nick Drydakis , January 2024Acceptance of one’s gender identity and congruence between one’s gender identity and outward appearance are associated with less adverse mental health symptoms, and greater life and job satisfaction. However, trans people are subject to human rights violations, hate crimes, and experience higher unemployment and poverty than the general population. Trans people often feel that they are citizens who are not allowed to be themselves and practice their authentic identity. Many biased treatments of trans people could be attenuated if legal protections and inclusive workplace practices were in place.MoreLess -
Labor market institutions and policies in old and new EU members Updated
After three recessions, a new emphasis on the importance of collective institutions and social dialogue is emerging
Riccardo Rovelli , January 2024Old and new EU member states still adopt quite different labor market institutions and policies: convergence has been partial and limited. Nevertheless, a new agreement is spreading on the importance of well-developed, coordinated institutions, supported by social dialogue, in view of the increasing challenges posed by the macro economy and by the increasing fragmentation of labor markets.MoreLess -
Multiple job-holding: Career pathway or dire straits? Updated
Moonlighting responds to economic needs, but can generate new skills and careers
Konstantinos PouliakasWieteke S. Conen , December 2023Multiple job-holding, or “moonlighting”, is an important form of atypical employment in most economies. New forms of work, driven by digitalization, may enable its future growth. However, many misconceptions exist, including the belief that multiple job-holders are only low-skilled individuals who moonlight primarily for financial reasons, or that the practice increases during economic downturns. Recent literature highlights the significant links between moonlighting and job mobility. Multiple job-holding allows for the development of workers’ skills and spurs entrepreneurship.MoreLess -
Rethinking the skills gap Updated
Better understanding of skills mismatch is essential to finding effective policy options
Evidence suggests that productivity would be much higher and unemployment much lower if the supply of and demand for skills were better matched. As a result, skills mismatch between workers (supply) and jobs (demand) commands the ongoing attention of policymakers in many countries. Policies intended to address the persistence of skills mismatch focus on the supply side of the issue by emphasizing worker education and training. However, the role of the demand side, that is, employers’ rigid skill requirements, garners comparatively little policy attention.MoreLess -
Climate change, natural disasters, and migration Updated
The relationship between climate change, natural disasters, and migration is not straightforward and presents many complexities
Linguère Mously MbayeAssi Okara , November 2023The relationship between climatic shocks, climate related 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 natural disasters.MoreLess -
Employers and the gender wage gap
Sorting across workplaces, and unequal rewards within them, are major causes of the gender wage gap
John ForthNikolaos Theodoropoulos , October 2023In most developed countries, women have closed the gap in educational attainment and labor market experience, yet gender wage gaps persist. This has led to an increased focus on the role of employers and employment practices. In particular, research has focused on the types of workplace where men and women work, their promotion prospects and the extent to which they are rewarded differently for similar work. Understanding the relative importance of these features, and the mechanisms that generate them, is necessary to design effective policy responses.MoreLess -
How are minimum wages set? Updated
Countries set minimum wages in different ways, and some countries set different wages for different groups of workers
Richard Dickens , September 2023The minimum wage has never been as high on the political agenda as it is today, with politicians in Germany, the UK, the US, and other OECD countries implementing substantial increases in the rate. One reason for the rising interest is the growing consensus among economists and policymakers that minimum wages, set at the right level, may help low paid workers without harming employment prospects. But how should countries set their minimum wage rate? The processes that countries use to set their minimum wage rate and structure differ greatly, as do the methods for adjusting it. The different approaches have merits and shortcomings.MoreLess -
Should the earned income tax credit rise for childless adults? Updated
The earned income tax credit boosts income and work effort among low-income parents, especially single mothers, and has contributed to the steep rise in employment among single mothers in the 1990s.
Harry J. Holzer , September 2023The earned income tax credit provides important benefits to low-income families with children. At substantial costs (over $70 billion to the US federal government), it increases the incomes of such families while encouraging parents to work more by subsidizing their incomes. But low-income adults without children and non-custodial parents receive very low payments under the program in most years. Many of these adults are less-educated men, whose labor force participation rates and relative wages have been declining for years. They might benefit significantly from a more generous earned income tax credit for childless adults.MoreLess -
Do institutions matter for entrepreneurial development? Updated
In post-Soviet countries, well-functioning institutions are needed to foster productive entrepreneurial development and growth
Ruta Aidis , August 2023Since the collapse of the Soviet Union, the differing impact of institutions on entrepreneurship development is undeniable. Several post-Soviet countries benefitted from early international integration by joining the EU, adopting the euro, and becoming OECD members. This process enabled entrepreneurship to develop within institutional contexts where democratic and free market principles were strengthened. In general, however, post-Soviet economies continue to be characterized by higher levels of corruption, complex business regulations, weak rule of law, uncertain property rights and often, lack of political will for institutional change.MoreLess -
How should job displacement wage losses be insured? Updated
Wage losses upon re-employment can seriously harm long-tenured displaced workers if they are not properly insured
Donald O. Parsons , July 2023Job displacement represents a serious earnings risk to long-tenured workers through lower re-employment wages, and these losses may persist for many years. Moreover, this risk is often poorly insured, although not for a lack of policy interest. To reduce this risk, most countries mandate scheduled wage insurance (severance pay), although it is provided only voluntarily in others, including the US. Actual-loss wage insurance is uncommon, although perceived difficulties may be overplayed. Both approaches offer the hope of greater consumption smoothing, with actual-loss plans carrying greater promise, but more uncertainty, of success.MoreLess -
Instruction time and educational outcomes
The quality of instruction and the activities it replaces determine the success of increased instruction time
Andrés Barrios Fernández , July 2023Increasing instruction time might seem a simple way to improve students' outcomes. However, there is substantial variation in its effects reported in the literature. When focusing on school day extensions, some studies find no effects, while others find that an additional hour of daily instruction significantly improves test scores. A similar pattern arises when examining the effect of additional days of class. These mixed findings likely reflect differences in the quality of instruction or in the activities that are being replaced by additional instruction. Hence these elements need to be considered when designing policies that increase instruction time.MoreLess -
How to support adult caregivers?
Caregiving for older adults is detrimental to caregivers’ well-being and requires policy interventions to support them
Joan Costa-Font , June 2023Some studies estimate that the value of time spent on unpaid caregiving is 2.7% of the GDP of the EU. Such a figure exceeds what EU countries spend on formal long-term care as a share of GDP (1.5%). Adult caregiving can exert significant harmful effects on the well-being of caregivers and can exacerbate the existing gender inequalities in employment. To overcome the detrimental cognitive costs of fulfilling the duty of care to older adults, focus should be placed on the development of support networks, providing caregiving subsidies, and enhancing labor market legislation that brings flexibility and level-up pay.MoreLess -
The widespread impacts of remittance flows Updated
Remittances have the potential to lift developing economies
Catalina Amuedo-DorantesSusan Pozo , May 2023Remittances have risen spectacularly in absolute terms and in relation to traditional sources of foreign exchange, such as export revenues. Remittances can improve the well-being of family members left behind and boost growth rates of receiving economies. They can also create a culture of dependency, lowering labor force participation in recipient nations, promoting conspicuous consumption, and accelerating environmental degradation. A more thorough understanding of their impacts can help formulate policies that enable developing economies to harness the most out of these monetary inflows.MoreLess -
Unions and investment in intangible capital Updated
When workers and firms cannot commit to long-term contracts and capital investments are sunk, union power can reduce investment
Gabriele CardulloGiovanni Sulis , May 2023Although coverage of collective bargaining agreements has been declining for decades in most countries, it is still extensive, especially in non-Anglo-Saxon countries. Strong unions may influence firms' incentives to invest in capital, particularly in sectors where capital investments are sunk (irreversible), as in research-intensive sectors. Whether unions affect firms' investment in capital depends on the structure and coordination of bargaining, the preference of unions between wages and employment, the quality of labor-management relations, the structure of corporate governance, and the existence of social pacts, among other factors.MoreLess -
Eliminating discrimination in hiring isn’t enough
Firms interested in workplace diversity should consider the post-hiring stage and why some minority employees choose to leave
Mackenzie Alston , May 2023While many firms have recognized the importance of recruiting and hiring diverse job applicants, they should also pay attention to the challenges newly hired diverse candidates may face after entering the company. It is possible that they are being assessed by unequal or unequitable standards compared to their colleagues, and they may not have sufficient access to opportunities and resources that would benefit them. These disparities could affect the career trajectory, performance, satisfaction, and retention of minority employees. Potential solutions include randomizing task assignments and creating inclusive networking and support opportunities.MoreLess -
Maternity leave versus early childcare—What are the long-term consequences for children? Updated
Despite increasingly generous parental leave schemes their advantages over subsidized childcare remain unclear
Nabanita Datta GuptaJonas Jessen , May 2023There is growing agreement among parents in high-income countries that having a working mother does not harm a preschool child. Yet, research is ongoing on what the long-term effects on children are of being looked after at home (primarily by their mothers) or in childcare. Most studies find positive effects of childcare on child outcomes for children from disadvantaged backgrounds and moderate effects for children from more advantaged backgrounds. Policymakers need to improve compensation and the working environment for the sector if a high quality level is to be achieved and if the beneficial effects are to be maintained.MoreLess -
Female education and its impact on fertility Updated
Additional female educational attainment generally lowers fertility, but the relationship is complex
Jungho Kim , May 2023The negative correlation between women's education and fertility has been observed across regions and time, although it is now weaker among high-income countries. Women's education level could affect fertility through its impact on women's health and their physical capacity to give birth, children's health, the number of children desired, and women's ability to control birth and knowledge of different birth control methods. Each of these mechanisms depends on the individual, institutional, and country circumstances experienced. Their relative importance may change along a country's economic development process.MoreLess -
The Danish labor market, 2000–2022 Updated
The Danish flexicurity model has proven its resilience to large shocks, with favorable overall labor market performance
Torben M. Andersen , April 2023Denmark is often highlighted as a “flexicurity” country with lax employment protection legislation, generous unemployment insurance, and active labor market policies. This model has coped with the Great Recession and the Covid-19 pandemic, avoiding large increases in long-term and structural unemployment. The recovery from Covid-19 alongside re-openings has been swift, so labor market effects were temporary. A string of recent reforms has boosted labor supply and employment; although fiscal sustainability is ensured, demographic changes challenge the labor market. Real wage growth has been positive and responded—with some lag—to unemployment.MoreLess -
Trust in management in organizations
Employee trust in their managers allows a firm to delegate decision-making, aiding both productivity and profitability
Kieron MeagherAndrew Wait , April 2023It is not possible for a formal employment contract to detail everything an employee should do and when. Informal relationships, in particular trust, allow managers to arrange a business in a more productive way; high-trust firms are both more profitable and faster growing. For example, if they are trusted, managers can delegate decisions to employees with confidence that employees will believe the promised rewards. This is important because employees are often better informed than their bosses. Consequently, firms that rely solely on formal contracts will miss profitable opportunities.MoreLess -
How digital payments can benefit entrepreneurs Updated
Digital payments can effectively connect entrepreneurs with banks, employees, suppliers, and new markets
Leora Klapper , April 2023Digital payment systems can conveniently and affordably connect entrepreneurs with banks, employees, suppliers, and new markets for their goods and services. These systems can accelerate business registration and payments for business licenses and permits by reducing travel time and expenses. Digital financial services can also improve access to savings accounts and loans. Electronic wage payments to workers can increase security and reduce the time and cost of paying employees. Yet, there are challenges as many entrepreneurs and employees lack bank accounts, digital devices, and reliable technology infrastructure.MoreLess -
Performance measures and worker productivity Updated
Choosing the right performance measures can inform and improve decision-making in policy and management
Jan Sauermann , April 2023Measuring workers’ productivity is important for public policy and private-sector decision-making. Due to the lack of a general measure that captures workers’ productivity, firms often use one- or multi-dimensional performance measures, which can be used, for example, to analyze how different incentive systems affect workers’ behavior. The public sector itself also uses measures to monitor and evaluate personnel, such as teachers. Policymakers and managers need to understand the advantages and disadvantages of the available metrics to select the right performance measures for their purpose.MoreLess -
Does it pay to be beautiful? Updated
Physically attractive people can earn more, particularly in customer-facing jobs, and the rewards for men are higher than for women
Eva SierminskaKaran Singhal , March 2023It is a well-established view amongst economists that good-looking people have a better chance of employment and can earn more than those who are less physically attractive. A “beauty premium” is particularly apparent in jobs where there is a productivity gain associated with good looks, though this varies for women and men, and varies across countries. People sort into occupations according to the relative returns to their physical and other characteristics; good-looking people take jobs where physical appearance is deemed important while less-attractive people steer away from them, or they are required to be more productive for the same wage.MoreLess -
Should countries auction immigrant visas? Updated
Selling the right to immigrate to the highest bidders would allocate visas efficiently but might raise ethical concerns
Madeline Zavodny , March 2023Many immigrant destination countries face considerable pressure to change their immigration policies. One of the most innovative policies is auctioning the right to immigrate or to hire a foreign worker to the highest bidders. Visa auctions would be more efficient than current ways of allocating visas, could boost the economic contribution of immigration to the destination country, and would increase government revenues. However, visa auctions might weaken the importance of family ties in the migration process and create concerns about fairness and accessibility. No country has yet auctioned visas, although several have considered doing so.MoreLess -
Alternative dispute resolution Updated
Promoting accurate bargainer expectations regarding outcomes from binding dispute resolution is worth the effort
David L. Dickinson , March 2023Alternative dispute resolution procedures such as arbitration and mediation are the most common methods for resolving wage, contract, and grievance disputes, but they lead to varying levels of success and acceptability of the outcome depending on their design. Some innovative procedures, not yet implemented in the real world, are predicted to improve on existing procedures in some ways. Controlled tests of several procedures show that the simple addition of a nonbinding stage prior to binding dispute resolution can produce the best results in terms of cost (monetary and “uncertainty” costs) and acceptability.MoreLess -
The labor market in Poland, 2000−2021 Updated
Employment has been rising, but disadvantaged groups and low participation of older people pose challenges
Piotr LewandowskiIga Magda , March 2023In the early 2000s, Poland's unemployment rate reached 20%. That is now a distant memory, as employment has increased noticeably and the unemployment rate had dropped to 3.4% in 2021. The labor force participation of older workers increased following reforms aimed at prolonging careers. However, participation remains low compared to most developed countries and the reversal of the statutory retirement age in 2017 leaves Poland vulnerable to the effects of population aging. Rising immigration has eased the resulting labor shortages, but women, people with disabilities, and agricultural workers remain underemployed. During the Covid-19 pandemic the slowdown in economic growth and increase in unemployment were small.MoreLess -
Evaluating apprenticeship training programs for firms
Cost–benefit surveys of employers help design more effective training policies
Samuel MuehlemannHarald Pfeifer , March 2023Apprenticeship training programs typically last several years and require substantial investments by training firms, largely due to the associated labor costs for participants and instructors. Nevertheless, apprentices also add significant value in the workplace. One tool to measure the costs and benefits of training for firms is employer surveys, which were first introduced in the 1970s in Germany. Such cost–benefit surveys (CBS) help to better understand a firm's demand for apprentices and to identify market failures. Therefore, CBS are an important tool for designing effective training policies.MoreLess -
Hours vs employment in response to demand shocks Updated
Evaluating the labor market effects of temporary aggregate demand shocks requires analyzing both employment and hours of work
Robert A. Hart , February 2023The responses of working hours and employment levels to temporary negative demand shocks like those caused by the Great Recession in 2007–2008 and the Covid-19 pandemic in 2020–2022 have shown that consideration of both is important. Workers’ desired rises in working hours in times of recession also serve to modify the standard measure of unemployment. During Covid-19, both jobs and earnings were temporarily protected among workers forced into short-time work schemes, providing a useful comparison with the provision of improved unemployment insurance to unemployed workers at that time.MoreLess -
Air pollution and worker productivity Updated
Higher levels of air pollution reduce worker productivity, even when air quality is generally low
Matthew NeidellNico Pestel , February 2023Environmental regulations are typically considered to be a drag on the economy. However, improved environmental quality may actually enhance productivity by creating a healthier workforce. Evidence suggests that improvements in air quality lead to improvements in worker productivity at the micro level across a range of sectors, including agriculture, manufacturing, and the service sectors, as well as at more aggregate macro levels. These effects also arise at levels of air quality that are below pollution thresholds in countries with the highest levels of environmental regulation. The findings suggest a new approach for understanding the consequences of environmental regulations.MoreLess -
Temperature, productivity, and income
Rising temperatures due to climate change could dampen productivity growth for decades
Olivier Deschenes , February 2023Climate change is rapidly deteriorating environmental conditions through droughts and floods, hurricanes, wildfires, rising temperatures, and more frequent and longer heatwaves. A growing literature has shown how higher temperatures reduce worker productivity and economic output. These effects are more pronounced in poorer countries and in climate-exposed economic sectors like agriculture, construction, and manufacturing. The development of new technologies that mitigate exposure to heat among workers, combined with better temperature control in the workplace, will be essential to reduce the economic burden of climate change.MoreLess -
Female poverty and intrahousehold inequality in transition economies Updated
An unequal distribution of resources within the family is a special concern for female poverty
Luca Piccoli , February 2023Transition to a market economy is accompanied by a period of greater economic uncertainty. Women are likely to suffer substantial disadvantages from this uncertainty compared to men as they are, for example, more likely to lose their job. This not only implies a monetary loss for the entire family, but also degrades female bargaining power within the household, possibly further aggravating their well-being. When intrahousehold inequality—an unequal distribution of resources among family members—exists, female poverty might be significantly larger than what can be deduced using standard household-based poverty measures.MoreLess -
Covid-19 and the youth-to-adult unemployment gap
Is the youth labor market bearing the brunt of the pandemic?
Francesco Pastore , January 2023The Covid-19 pandemic has produced unprecedented negative effects on the global economy, affecting both the demand and supply side. Its consequences in terms of job losses have been important in many European countries. A large number of firms have been forced to dismiss at least part of their workforce or to close down all together. Considering that young people are usually penalized more than their adult counterparts during economic crises due to the so-called “last-in-first-out” principle, it is worthwhile to evaluate if the youth will also end up paying the highest price during this pandemic-induced recession.MoreLess -
Does government spending crowd out voluntary labor and donations? Updated
There is little evidence that government spending crowds out private charitable donations of time and money
Julia BredtmannFernanda Martinez Flores , January 2023Private charitable contributions play an essential role in most economies. From a policy perspective, there is concern that comprehensive government spending might crowd out private charitable donations. If perfect crowding out occurs, then every dollar spent by the government will lead to a one-for-one decrease in private spending, leaving the total level of welfare unaltered. Understanding the magnitude and the causes of crowding out is crucial from a policy perspective, as crowding out represents a hidden cost to public spending and can thus have significant consequences for government policies toward public welfare provision.MoreLess -
Fertility postponement and labor market outcomes Updated
Postponed childbearing improves women’s labor market outcomes but may reduce overall fertility
Massimiliano Bratti , January 2023The rise in the average age of women bearing their first child is a well-established demographic trend in recent decades. Postponed childbearing can have important consequences for the mothers and, at a macro level, for the country in which they live. Research has primarily focused on the effect postponing fertility has on mothers’ labor market outcomes and on the total number of children a woman has in her lifetime. Most research finds that postponing the first birth raises a mother's labor force participation and wages but may have negative effects on overall fertility, especially in the absence of supportive family-friendly policies.MoreLess -
In-plant alliances can mitigate economic crisis impacts Updated
Decentral bargaining is an instrument to address both imminent economic crises and for increasing firm competitiveness
Lutz BellmannWerner Widuckel , December 2022In-plant alliances are plant-specific deviations from sectoral collective agreements related to wages and working time that are intended to hold down labor costs. These agreements enable firm-level reorganizations to respond to an imminent economic crisis or to improve competitiveness. They also encourage social partners to take greater responsibility for employment issues. Both unions and works councils agree to such contracts because they see them as helpful in avoiding severe employment losses. Thus, these alliances substantially unburden public employment policy.MoreLess -
Does working from home work in developing countries?
Infrastructure constraints are major obstacles for working from home in developing countries
Mariana Viollaz , December 2022Work-from-home possibilities are lower in developing than in developed countries. Within countries, not all workers have equal chances of transitioning from the usual workplace to work-from-home. Moreover, infrastructure limitations and lack of access to certain services can limit the chances of effectively working from home. Having a home-based job can affect, positively or negatively, work–life balance, levels of job satisfaction and stress, and productivity. The differential chances of working from home may end up increasing the levels of income inequality between workers who can and those who cannot work from home.MoreLess -
Temporary migration entails benefits, but also costs, for sending and receiving countries
There are important trade-offs between temporary and permanent migration
Joseph-Simon GörlachKatarina Kuske , November 2022Many migrants do not stay in their host countries permanently. On average, 15% of migrants leave their host country in a given year, many of whom will return to their home countries. Temporary migration benefits sending countries through remittances, investment, and skills accumulation. Receiving countries benefit via increases in their prime-working age populations while facing fewer social security obligations. These fiscal benefits must be balanced against lower incentives to integrate and invest in host country specific skills for temporary migrants.MoreLess -
Incentivizing sleep?
Insufficient sleep affects employment and productivity
Joan Costa-Font , November 2022Spending time sleeping not only improves individuals’ well-being, but it can influence employment outcomes and productivity. Sleep can be disrupted by company schedules and deadlines, extended working times, and several individual and household decisions. Labor market regulation and corporate strategies should factor in the immediate effect of insufficient sleep on employee fatigue and cognitive performance, and the associated effects on employment disruption and productivity loss. Sleep can be influenced by “sleep friendly” employment regulations, technology nudges, monetary incentives, and subsidies for sleeping.MoreLess -
Job search requirements for older unemployed workers Updated
Search requirements for the older unemployed affect their re-employment rates and their flows into states of inactivity
Hans Bloemen , November 2022Many OECD countries have, or have had, a policy that exempts older unemployed people from the requirement to search for a job. An aging population and low participation by older workers in the labor market increasingly put public finances under strain, and spur calls for policy measures that activate labor force participation by older workers. Introducing job search requirements for older unemployed workers aims to increase their re-employment rates. Abolishing the exemption from job search requirements for the older unemployed has been shown to initiate higher outflow rates from unemployment for them.MoreLess -
Firm age and job creation in the US
New businesses are essential to keep unemployment low, but start-ups need loans in order to create jobs
Henry R. Hyatt , November 2022Entrepreneurship is essential for a healthy labor market. Recent evidence shows that young businesses (at most ten years old) have, on average, accounted for all of US employment growth over the past few decades. New businesses are especially important for youth employment. However, these businesses tend to borrow a lot, and the credit constraints they face limit their ability to create jobs. Historically, much of the discussion regarding the economic importance of entrepreneurship has focused on small businesses. Empirical evidence increasingly suggests that, among small businesses, those that are young create the most jobs.MoreLess -
The labor market in Canada, 2000–2021 Updated
Covid-19 ended 20 years of stability and good labor market performance, aided in part by a strong resource boom
W. Craig Riddell , November 2022From 2000 to 2019, Canada's economy and labor market performed well. Important in this success was a strong resource boom from the late 1990s to 2014. After the boom the economy and labor market adjusted relatively smoothly, with labor and other resources exiting resource-rich regions and moving elsewhere. Strong growth in major export markets (Asia and the US) aided the adjustment. The Covid-19 downturn resulted in an unprecedented decline in employment, and a steep rise in unemployment and non-participation. Despite the severity of the Covid-19 shock, by December 2021 most key measures of labor market activity had returned to pre-pandemic levels.MoreLess -
The labor market consequences of impatience Updated
Some people would be happier if they were required to stay in school longer or search harder for a job while unemployed
Brian C. CadenaBenjamin J. Keys , October 2022Standard economic theory suggests that individuals know best how to make themselves happy. Thus, policies designed to encourage more forward-looking behaviors will only reduce people's happiness. Recently, however, economists have explored the role of impatience, especially difficulties with delaying gratification, in several important economic choices. There is strong evidence that some people have trouble following through on investments that best serve their long-term interests. These findings open the door to policies encouraging or requiring more patient behaviors, which would allow people to enjoy the eventual payoff from higher initial investment.MoreLess -
Gender differences in risk attitudes Updated
Belief in the existence of gender differences in risk attitudes is stronger than the evidence supporting them
Antonio Filippin , October 2022Many experimental studies and surveys have shown that women consistently display more risk-averse behavior than men when confronted with decisions involving risk. These differences in risk preferences, when combined with gender differences in other behavioral traits, such as fondness for competition, have been used to explain important phenomena in labor and financial markets. Recent evidence has challenged this consensus, however, finding gender differences in risk attitudes to be smaller than previously thought and showing greater variation of results depending on the method used to measure risk aversion.MoreLess -
Income-contingent loans in higher education financing Updated
Internationally, there has been a student financing revolution toward income-contingent loans
Bruce ChapmanLorraine Dearden , October 2022Around ten countries currently use a variant of a national income-contingent loans (ICL) scheme for higher education tuition. Increased international interest in ICL validates an examination of its costs and benefits relative to the traditional financing system, time-based repayment loans (TBRLs). TBRLs exhibit poor economic characteristics for borrowers: namely high repayment burdens (loan repayments as a proportion of income) for the disadvantaged and default. The latter both damages credit reputations and can be associated with high taxpayer subsidies through continuing unpaid debts. ICLs avoid these problems as repayment burdens are capped by design, eliminating default.MoreLess -
Gender differences in corporate hierarchies Updated
How and why do the careers of men and women differ? What policies could reduce the differences?
Antti Kauhanen , October 2022The gender wage gap is largely due to men and women holding different kinds of jobs. This job segregation is partly driven by gender differences in careers in corporate hierarchies. Research has shown that the careers of men and women begin to diverge immediately upon entry into the labor market and that subsequent career progress exacerbates the divergence. This divergence of career progress explains a large part of the gender wage gap. Understanding how and why the careers of men and women differ is necessary to design effective policies that can reduce the gender differences in hierarchies.MoreLess -
Offshoring and labor markets in developing countries
Lessons learned and questions remaining about offshoring and labor markets in developing countries
Arnab K. BasuNancy H. Chau , September 2022Developing countries are often seen as unquestionable beneficiaries in the phenomenal rise of global value chains in international trade. Offshoring—the cross-border trade in intermediate goods and services which facilitate country-level specialization in subsets of production tasks—enables an early start in global trade integration even when the requisite technology and knowhow for cost-effective production from scratch to finish are not yet acquired. A growing economics literature suggests a more nuanced view, however. Policymakers should be mindful of issues related to inequality across firms and wages, labor standards, and effects of trade policy.MoreLess -
Digital leadership: Motivating online workers
Which leadership techniques and tools should digital leaders use to communicate effectively with remote teams and gig workers?
Petra Nieken , September 2022Remote work and digital collaborations are prevalent in the business world and many employees use digital communication tools routinely in their jobs. Communication shifts from face-to-face meetings to asynchronous formats using text, audio, or video messages. This shift leads to a reduction of information and signals leaders can send and receive. Do classical leadership and communication techniques such as transformational or charismatic leadership signaling still work in those online settings or do leaders have to rely on transactional leadership techniques such as contingent reward and punishment tools in the remote setting?MoreLess -
How is new technology changing job design? Updated
Machines’ ability to perform cognitive, physical, and social tasks is advancing, dramatically changing jobs and labor markets
Michael GibbsSergei Bazylik , August 2022The IT revolution has had dramatic effects on jobs and the labor market. Many routine manual and cognitive tasks have been automated, replacing workers. By contrast, new technologies complement and create new non-routine cognitive and social tasks, making work in such tasks more productive, and creating new jobs. This has polarized labor markets: while low-skill jobs stagnated, there are fewer and lower-paid jobs for middle-skill workers, and higher pay for high-skill workers, increasing wage inequality. Advances in AI may accelerate computers’ ability to perform cognitive tasks, heightening concerns about future automation of even high-skill jobs.MoreLess -
- Migration and ethnicity
- Labor markets and institutions
- Education and human capital
- Country labor markets
The labor market in New Zealand, 2000−2021 Updated
Employment has grown steadily, unemployment is low, and the gender gap and skill premiums have fallen
David C. Maré , August 2022New 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.MoreLess -
Demographic and economic determinants of migration Updated
Push and pull factors drive the decision to stay or move
Nicole B. Simpson , July 2022There 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.MoreLess -
The gender gap in time allocation
Gender inequalities in daily time allocation may have detrimental effects on earnings and well-being
Jose Ignacio Gimenez-NadalJose Alberto Molina , July 2022Many 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.MoreLess -
Parental leave and maternal labor supply Updated
Parental leave increases the family–work balance, but prolonged leave may have negative impacts on mothers’ careers
Astrid Kunze , June 2022Numerous 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.MoreLess -
Is the post-communist transition over?
Support for economic liberalization reforms is essential, but it grows stronger only where societies experience the effects of reversing these reforms
Elodie DouarinTomasz Mickiewicz , June 2022An 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.MoreLess -
Should unemployment insurance cover partial unemployment? Updated
Time-limited benefits may yield significant welfare gains and help underemployed part-time workers move to full-time employment
Susanne Ek Spector , June 2022A 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.MoreLess -
Determinants of inequality in transition countries
Market changes and limited redistribution contributed to high income and wealth inequality growth in Eastern Europe
Michal BrzezinskiKatarzyna Salach , June 2022High 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.MoreLess -
Does employee ownership improve performance? Updated
Employee ownership generally increases firm performance and worker outcomes
Douglas Kruse , May 2022Employee 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.MoreLess -
Measuring poverty within the household
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.MoreLess -
How to attract international students? Updated
Studying abroad benefits the students, the host country, and those remaining at home
Arnaud Chevalier , May 2022In 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.MoreLess -
Presenteeism at the workplace
Working when sick is a widespread phenomenon with serious consequences for workers, firms, and society
Claus Schnabel , May 2022Many workers admit that at times they show up for work even though they feel sick. This behavior, termed “presenteeism,” is puzzling since most workers do not incur financial losses when staying home sick. The various reasons behind presenteeism are person-related (e.g. individuals’ health or job attitude) or work-related (e.g. job demands and constraints on absence from work). Working when sick can have positive and negative consequences for workers’ performance and health, but it also affects co-workers’ well-being and firms’ productivity. There are various strategies as to how firms can address presenteeism.MoreLess -
Gross domestic product: Are other measures needed? Updated
GDP summarizes only one aspect of a country’s condition; other measures in addition to GDP would be valuable
Barbara M. Fraumeni , April 2022Gross domestic product (GDP) is the key indicator of the health of an economy and can be easily compared across countries. But it has limitations. GDP tells what is going on today, but does not inform about sustainability of growth. The majority of time is spent in home production, yet the value of this time is not included in GDP. GDP does not measure happiness, so residents can be dissatisfied even when GDP is rising. In addition, GDP does not consider environmental factors, reflect what individuals do outside paid employment, or even measure the current or future potential human capital of a country. Hence, complementary measures may help to show a more comprehensive picture of an economy.MoreLess -
Economic effects of natural disasters
Natural disasters cause significant short-term disruptions, but longer-term economic impacts are more complex
Tatyana Deryugina , April 2022Extreme weather events are increasing in frequency and intensity, threatening lives and livelihoods around the world. Understanding the short- and long-term effects of such events is necessary for crafting optimal policy. The short-term economic impacts of natural disasters can be severe, suggesting that policies that better insure against consumption losses during this time would be beneficial. Longer-term economic impacts are more complex and depend on the characteristics of the affected population and the affected area, changes in migration patterns, and public policy.MoreLess -
Employment and wage effects of extending collective bargaining agreements Updated
Sectoral collective contracts reduce inequality but may lead to job losses among workers with earnings close to the wage floors
Ernesto VillanuevaEffrosyni Adamopoulou , April 2022In many countries, the wage floors and working conditions set in collective contracts negotiated by a subset of employers and unions are subsequently extended to all employees in an industry. Those extensions ensure common working conditions within the industry, mitigate wage inequality, and reduce gender wage gaps. However, little is known about the so-called bite of collective contracts and whether they limit wage adjustments for all workers. Evidence suggests that collective contract benefits come at the cost of reduced employment levels, though typically only for workers earning close to the wage floors.MoreLess -
Is there an optimal school starting age? Updated
It depends: older children perform better on standardized tests, but evidence of older school starting ages on long-term outcomes is mixed
Elizabeth DhueyKourtney Koebel , April 2022There is a widely held belief that older students, by virtue of being more mature and readier to learn at school entry, may have better academic, employment, and earnings outcomes compared to their younger counterparts. There are understated, albeit important, costs to starting school later, however. Compulsory school-attendance laws may allow these same older pupils to drop out of high school earlier, which could adversely impact their employment; entering the workforce later also has implications for lifetime earnings and remittances to governments. Overall, research suggests that school-age entry policies can improve student achievement in the short term, but the long-term impacts are currently not well-understood.MoreLess -
Youth extracurricular activities and the importance of social skills for supervisors
Social skills developed during extracurricular activities in adolescence can be highly valuable in managerial occupations
Vasilios D. Kosteas , March 2022Youth participation in extracurricular activities is associated with a variety of benefits, ranging from higher concurrent academic performance to better labor market outcomes. In particular, these activities provide avenues through which youth can develop the interpersonal and leadership skills that are crucial to succeed as a manager. A lack of opportunity to participate in extracurricular activities for many youths, particularly those from lower-income backgrounds, may have negative consequences for developing the next generation of managers and business leaders.MoreLess -
Does emigration increase the wages of non-emigrants in sending countries Updated
Emigration can increase the wages of non-emigrants, but may eventually lead to lower productivity and wage losses
Benjamin Elsner , March 2022How migration affects labor markets in receiving countries is well understood, but less is known about how migration affects labor markets in sending countries, particularly the wages of workers who do not emigrate. Most studies find that emigration increases wages in the sending country but only for non-emigrants with substitutable skills similar to those of emigrants; non-emigrants with different (complementary) skills lose. These wage reactions are short-term effects, however. If a country loses many highly educated workers, the economy can become less productive altogether, leading to lower wages for everyone in the long term.MoreLess -
The quantity–quality fertility–education trade-off Updated
Policies to reduce fertility in developing countries generally boost education levels, but only slightly
Haoming LiuLi Li , March 2022At the national level, it has long been observed that a country's average education level is negatively associated with its total fertility rate. At the household level, it has also been well documented that children's education is negatively associated with the number of children in the family. Do these observations imply a causal relationship between the number of children and the average education level (the quantity–quality trade-off)? A clear answer to this question will help both policymakers and researchers evaluate the total benefit of family planning policies, both policies to lower fertility and policies to boost it.MoreLess -
Ethnic enclaves and immigrant economic integration Updated
High-quality enclave networks encourage labor market success for newly arriving immigrants
Simone SchüllerTanika Chakraborty , March 2022Immigrants tend to live in clusters within host countries. Does clustering in ethnic enclaves explain the persistent differences in skill, employment rates, and earnings between immigrants and the native population? Empirical studies consistently find that residing in an enclave can increase earnings. While it is ambiguous whether employment probabilities are also affected or whether earnings benefits accrue to all immigrants, irrespective of their skill levels, it is clear that effects are driven by enclave “quality” (in terms of income, education, and employment) rather than enclave size.MoreLess -
Informal employment in emerging and transition economies Updated
Reducing informality requires better enforcement, more reasonable regulation, and economic growth
Fabián Slonimczyk , March 2022In developing and transition economies as much as half the labor force works in the informal sector (or “shadow economy”). Informal firms congest infrastructure and other public services but do not contribute the taxes needed to finance them. Informal workers are unprotected against such negative shocks as ill-health, but for certain groups there can be scarce opportunities to enter the formal sector meaning informal employment is the only feasible option. Reducing informality requires better enforcement, more reasonable regulation, and economic growth.MoreLess -
The labor market impact of Covid-19 on immigrants
Job loss from Covid-19 was greater among immigrants than the native-born in most developed countries
Hugh Cassidy , February 2022The labor market disruptions due to the Covid-19 pandemic and lockdowns impacted immigrant workers more severely than native-born workers in the US, Canada, Australia, and most EU countries. Immigrant workers in most of these countries were more vulnerable to the pandemic since they were more likely to be employed in jobs that are not as easy to perform remotely. The labor market recovery for both groups in the US was rapid, and by Fall 2020, the employment gaps between immigrant and native-born workers, both for men and women, had returned to pre-pandemic levels.MoreLess -
The transformations of the French labor market, 2000–2021 Updated
The workforce is now much better educated, but crises have magnified unemployment, underemployment, and low-income work
Philippe Askenazy , February 2022France has the second largest population of countries in the EU. Since 2000, the French labor market has undergone substantial changes resulting from striking trends, some of which were catalyzed by the Great Recession and the Covid-19 crisis. The most interesting of these changes have been the massive improvement in the education of the labor force (especially of women), the resilience of employment during recessions, and the dramatic emergence of very-short-term employment contracts (less than a week) and low-income independent contractors, which together have fueled earnings inequality.MoreLess -
Can cash transfers reduce child labor? Updated
Cash transfers can reduce child labor if structured well and if they account for the reasons children work
Furio C. Rosati , February 2022Cash transfers are a popular and successful means of tackling household vulnerability and promoting human capital investment. They can also reduce child labor, especially when it is a response to household vulnerability, but their efficacy is very variable. If not properly designed, cash transfers that promote children's education can increase their economic activities in order to pay the additional costs of schooling. The efficacy of cash transfers may also be reduced if the transfers enable investment in productive assets that boost the returns to child labor. The impact of cash transfers must thus be assessed as part of the whole incentive system faced by the household.MoreLess -
Women’s labor force participation Updated
Family-friendly policies increase women’s labor force participation, benefiting them, their families, and society at large
Anne E. Winkler , February 2022Female labor force participation is mainly driven by the value of their market wages versus the value of their non-market time. Labor force participation varies considerably across countries. To understand this international variation, it is important to further consider differences across countries in institutions, non-economic factors such as cultural norms, and public policies. Such differences provide important insights into what actions countries might take to further increase women's participation in the labor market.MoreLess -
Refugee children’s earnings in adulthood
Refugee status and country of origin shape the economic outcomes of newcomer children later in life
The number of refugees has increased worldwide, and about half of them are children and youth. These refugee children arrive in resettlement countries with a unique set of challenges caused by, for instance, extreme stress and trauma that call for specific policies to address their needs. Yet, the long-term effect of refugee status on newcomer children's economic trajectories varies by country of origin, signaling the need for effective resettlement support and initiatives to tackle broader systemic barriers for newcomer children, beyond refugees. Such findings challenge the commonly held notion of refugees as a distinctive, relatively homogeneous group with similar trajectories.MoreLess -
Performance-related pay and productivity Updated
Do performance-related pay and financial participation schemes have an effect on firms’ performance?
Claudio LuciforaFederica Origo , January 2022A growing number of firms offer compensation packages that link pay to performance. The aim is to motivate workers to be more efficient while also increasing their attachment to the company, thereby reducing turnover and absenteeism. The effects of performance-related pay on productivity depend on the scheme type and design, with individual incentives showing the largest effect. Governments often offer tax breaks and financial incentives to promote performance-related pay, though their desirability has been questioned due to large deadweight losses involved. The diffusion of remote work will increase the relevance of performance-related pay.MoreLess -
Firms, sorting, and the immigrant–native earnings gap
The immigrant–native earnings gap is due in part to firm-specific factors resulting from differential sorting of workers into firms
Benoit Dostie , January 2022Recent research has tried to quantify how firms contribute to the immigrant–native earnings gap. Findings from several countries show that around 20% of the gap is due to firm policies that lead to a systematic underrepresentation of immigrants at higher-paying firms. Results also show that some of the closing of the gap over time is attributable to the reallocation of immigrants toward higher-paying employers. This pattern is especially pronounced for immigrants coming from disadvantaged countries, who face several barriers at initial entry, including language difficulties and lack of recognition of their educational credentials.MoreLess -
The relationship between recessions and health Updated
Economic recessions seem to reduce overall mortality rates, but increase suicides and mental health problems
Nick Drydakis , December 2021Recessions are complex events that affect personal health and behavior via various potentially opposing mechanisms. While recessions are known to have negative effects on mental health and lead to an increase in suicides, it has been proven that they reduce mortality rates. A general health policy agenda in relation to recessions remains ambiguous due to the lack of consistency between different individual- and country-level approaches. However, aggregate regional patterns provide valuable information, and local social planners could use them to design region-specific policy responses to mitigate the negative health effects caused by recessions.MoreLess -
Should divorce be easier or harder? Updated
The evidence, though weak, favors legal, easy, unilateral divorce
Libertad GonzalezAlicia de Quinto , December 2021Many countries have enacted legislation over the past few decades making divorce easier. Some countries have legalized divorce where it had previously been banned, and many have eased the conditions required for a divorce, such as allowing unilateral divorce (both spouses do not have to agree on the divorce). Divorce laws can regulate the grounds for divorce, division of property, child custody, and child support or maintenance payments. Reforms can have a range of social effects beyond increasing the divorce rate. They can influence female labor supply, marriage and fertility rates, child well-being, household saving, and even domestic violence and crime.MoreLess -
The dynamics of training programs for the unemployed Updated
Job search training and occupational skills training are both effective
Aderonke Osikominu , December 2021Time plays an important role in both the design and interpretation of evaluation studies of training programs. While the start and duration of a training program are closely linked to the evolution of job opportunities, the impact of training programs in the short and longer term changes over time. Neglecting these “dynamics” could lead to an unduly negative assessment of the effects of certain training schemes. Therefore, a better understanding of the dynamic relationship between different types of training and their respective labor market outcomes is essential for a better design and interpretation of evaluation studies.MoreLess -
Who benefits from return migration to developing countries? Updated
Despite returnees being a potential resource, not all low- and middle-income countries benefit from their return
Jackline Wahba , December 2021Return migration can have multiple benefits. It allows migrants who have accumulated savings abroad to ease credit constraints at home and set up a business. Also, emigrants from low- and middle-income countries who have invested in their human capital may earn higher wages when they return. However, whether the home country benefits from return migrants depends on the migrant's success in accumulating savings and human capital and on the home country's ability to make use of returnees’ skills and investment. To benefit from returnees, home countries need policies that encourage returnees’ investment and labor market reintegration.MoreLess -
Gender differences in competitiveness Updated
To what extent can different attitudes toward competition for men and women explain the gender gap in labor markets?
Mario Lackner , November 2021Differences in labor market outcomes for women and men are highly persistent. Apart from discrimination, one frequently mentioned explanation could be differences in the attitude toward competition for both genders. Abundant empirical evidence indicates that multiple influences shape attitudes toward competition during different periods of the life cycle. Gender differences in competitiveness will not only influence outcomes during working age, but also during early childhood education. In order to reduce the gender gap in educational and labor market outcomes, it is crucial to understand when and why gender gaps in competitiveness arise and to study their consequences.MoreLess -
Labor market policies, unemployment, and identity Updated
Policies to help the unemployed can affect feelings of identity and well-being, so measures need to be evaluated carefully
Ronnie Schöb , November 2021Unemployment not only causes material hardship but can also affect an individual's sense of identity (i.e. their perception of belonging to a specific social group) and, consequently, feelings of personal happiness and subjective well-being. Labor market policies designed to help the unemployed may not overcome their misery: wage subsidies can be stigmatizing, measures that require some work or attendance for training from those receiving benefits (workfare) may not provide the intended incentives, and a combination of an unregulated labor market and policy measures that bring people who became unemployed quickly back to work (flexicurity) may increase uncertainty. Policies aimed at bringing people back to work should thus take the subjective well-being of the affected persons more into consideration.MoreLess -
Do rising returns to education justify “helicopter” parenting?
Increased stakes in educational achievement explain why today’s anxious parents engage in intensive parenting styles
Matthias DoepkeFabrizio Zilibotti , November 2021Parents now engage in much more intensive parenting styles compared to a few decades ago. Today’s parents supervise their children more closely, spend more time interacting with them, help much more with homework, and place more emphasis on educational achievement. More intensive parenting has also led to more unequal parenting: highly educated parents with high incomes have increased their parenting investments the most, leading to a growing “parenting gap” in society. These trends can contribute to declining social mobility and further exacerbate rising inequality, which raises the question of how policymakers should respond.MoreLess -
The labor market in the US, 2000–2020 Updated
Covid-19 ended the longest US economic expansion, pushing unemployment to its highest level with a slow and incomplete recovery
Daniel S. Hamermesh , October 2021As 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, reflecting the Great Recession and the Covid 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 full recovery of unemployment after 2010 and its skyrocketing in 2020; and the little-known continuing growth in post-inflation average earnings.MoreLess -
How immigration affects investment and productivity in host and home countries Updated
Immigration may boost foreign direct investment, productivity, and housing investment
Volker Grossmann , October 2021Migration policies need to consider how immigration affects investment behavior and productivity, and how these effects vary with the type of migration. College-educated immigrants may do more to stimulate foreign direct investment and research and development than low-skilled immigrants, and productivity effects would be expected to be highest for immigrants in scientific and engineering fields. By raising the demand for housing, immigration also spurs residential investment. However, residential investment is unlikely to expand enough to prevent housing costs from rising, which has important distributional implications.MoreLess -
Can market mechanisms solve the refugee crisis? Updated
The combination of tradable quotas and matching would benefit host countries as well as refugees
Jesús Fernández-Huertas MoragaMartin Hagen , October 2021Ever since the major inflow of refugees (the “refugee crisis”) in 2015 and 2016, there has been heated debate about the appropriate distribution of refugees in the EU. Current policies revolve around mandatory quotas, which disregard the preferences of EU members and refugees alike. This problem can be addressed with two market mechanisms. First, tradable quotas minimize the cost of asylum provision for host countries. Second, a matching system gives refugees more discretion over where they are sheltered. While this proposal is theoretically appealing, it has yet to be tested in practice.MoreLess -
Cash wage payments in transition economies: Consequences of envelope wages Updated
Reducing under-reporting of salaries requires institutional changes
Ioana Alexandra HorodnicColin C. Williams , October 2021In transition economies, a significant number of companies reduce their tax and social contributions by paying their staff an official salary, described in a registered formal employment agreement, and an extra, undeclared “envelope wage,” via a verbal unwritten agreement. The consequences include a loss of government income and a lack of fair play for lawful companies. For employees, accepting under-reported wages reduces their access to credit and their social protections. Addressing this issue will help increase the quality of working conditions, strengthen trade unions, and reduce unfair competition.MoreLess -
The minimum wage versus the earned income tax credit for reducing poverty Updated
Enhancing the earned income tax credit would do more to reduce poverty, at less cost, than increasing the minimum wage
Richard V. BurkhauserKevin Corinth , September 2021Minimum wage increases are not an effective mechanism for reducing poverty. And there is little causal evidence that they do so. Most workers who gain from minimum wage increases do not live in poor (or near-poor) families, while some who do live in poor families lose their job as a result of such increases. The earned income tax credit is an effective way to reduce poverty. It raises only the after-tax wage rates of workers in low- and moderate-income families, the tax credit increases with the number of dependent children, and evidence shows that it increases labor force participation and employment in these families.MoreLess -
Early-life medical care and human capital accumulation Updated
Medical care and public health interventions in early childhood may improve human capital accumulation as well as child health
N. Meltem DaysalJonas Cuzulan Hirani , September 2021Ample empirical evidence links adverse conditions during early childhood (the period from conception to age five) to worse health outcomes and lower academic achievement in adulthood. Can early-life medical care and public health interventions ameliorate these effects? Recent research suggests that both types of interventions may benefit not only child health but also long-term educational outcomes. In some cases, the effects of interventions may spillover to other family members. These findings can be used to design policies that improve long-term outcomes and reduce economic inequality.MoreLess -
Noncompete agreements in employment contracts
Can regulation ensure that noncompete agreements benefit both workers and firms?
Kurt Lavetti , September 2021Labor market institutions that may weaken workers’ bargaining leverage have received increased scrutiny in recent years. One example is noncompete agreements, which prevent workers from freely moving across employers, potentially weakening earnings growth. New data sources and empirical evidence have led policymakers to consider sharp restrictions on their use, especially among lower-income workers. These restrictions take many different forms, each of which has unique tradeoffs between the desire to protect workers while allowing firms to use noncompetes in cases where they may create social value.MoreLess -
Interaction between technology and recruiting practices
While technology has improved sharing and managing information, there are legitimate concerns about the quality of information and its use in recruitment
Vera Brencic , August 2021Employers are steadily increasing their reliance on technology when recruiting. On the one hand, this technology enables the wide dissemination of information and the management of large quantities of data at a relatively low cost. On the other hand, it introduces new costs and risks. The ease with which information can be shared, for example, can lead to its unauthorized use and obsolescence. Recruiting technologies are also susceptible to misuse and to biases built into their underlying algorithms. Better understanding of these trade-offs can inform government policies aiming to reduce search frictions in the labor market.MoreLess -
Alcoholism and mortality in Eastern Europe Updated
Excessive drinking is the main cause of high male mortality rates, but the problem can be addressed
Evgeny Yakovlev , August 2021Eastern European countries, particularly former Soviet Union economies, traditionally have the highest rates of alcohol consumption in the world. Consequently, they also have some of the highest male mortality rates in the world. Regulation can be effective in significantly decreasing excessive drinking and its related negative effects, such as low labor productivity and high rates of mortality. Understanding the consequences of specific regulatory measures and what tools should be used to combat excessive alcohol consumption is essential for designing effective policies.MoreLess -
Is training effective for older workers? Updated
Training programs that meet the learning needs of older workers can improve their employability
Matteo Picchio , July 2021The labor market position of older workers is cause for concern in many industrialized countries. Rapid population aging is challenging pension systems. The recent economic crisis has forced many older adults out of the workforce, into either pre-retirement or non-employment. Encouraging people to work longer and fostering the employability of older workers have become priorities for policymakers. Training specifically designed for older workers might help attain these goals, since it may refresh human capital and reduce the pay–productivity gap. Training older workers might also benefit employers and society as a whole.MoreLess -
Corporate income taxes and entrepreneurship Updated
The type, quality, and quantity of entrepreneurship are influenced significantly by corporate income taxes—though only slightly
Jörn Block , July 2021Corporate income taxation influences the quantity and type of entrepreneurship, which in turn affects economic development. Empirical evidence shows that higher corporate income tax rates reduce business density and entrepreneurship entry rates and increase the capital size of new firms. The progressivity of tax rates increases entrepreneurship entry rates, whereas highly complex tax codes reduce them. Policymakers should understand the effects and underlying mechanisms that determine how corporate income taxation influences entrepreneurship in order to provide a favorable business environment.MoreLess -
Do in-work benefits work for low-skilled workers? Updated
To boost the employment rate of the low-skilled trapped in inactivity is it sufficient to supplement their earnings?
Bruno Van der Linden , June 2021High risk of poverty and low employment rates are widespread among low-skilled groups, especially in the case of some household compositions (e.g. single mothers). “Making-work-pay” policies have been advocated for and implemented to address these issues. They alleviate the above-mentioned problems without providing a disincentive to work. However, do they deliver on their promises? If they do reduce poverty and enhance employment, is it possible to determine their effects on indicators of well-being, such as mental health and life satisfaction, or on the acquisition of human capital?MoreLess -
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 2021Guest 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.MoreLess -
Income inequality and social origins Updated
Promoting intergenerational mobility makes societies more egalitarian
Lorenzo Cappellari , May 2021Income 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.MoreLess -
The impact of legalizing unauthorized immigrants Updated
While legalization benefits most unauthorized immigrants, deciding how to regularize them is challenging
Cynthia BansakSarah Pearlman , May 2021Countries 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.MoreLess -
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 2021Many 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.MoreLess -
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 2021Higher 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.MoreLess -
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 2021Low-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.MoreLess -
Disability and labor market outcomes Updated
Disability is associated with labor market disadvantage; evidence points to this being a causal relationship
Melanie Jones , March 2021In 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.MoreLess -
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 2021In 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.MoreLess -
Do labor costs affect companies’ demand for labor? Updated
Overtime penalties, payroll taxes, and other labor policies alter costs and change employment and output
Daniel S. Hamermesh , February 2021Higher labor costs (higher wage rates and employee benefits) make workers better off, but they can reduce companies’ profits, the number of jobs, and the hours each person works. The minimum wage, overtime pay, payroll taxes, and hiring subsidies are just a few of the policies that affect labor costs. Policies that increase labor costs can substantially affect both employment and hours, in individual companies as well as in the overall economy.MoreLess -
Statistical profiling of unemployed jobseekers
The increasing availability of big data allows for the profiling of unemployed jobseekers via statistical models
Statistical models can help public employment services to identify factors associated with long-term unemployment and to identify at-risk groups. Such profiling models will likely become more prominent as increasing availability of big data combined with new machine learning techniques improve their predictive power. However, to achieve the best results, a continuous dialogue between data analysts, policymakers, and case workers is key. Indeed, when developing and implementing such tools, normative decisions are required. Profiling practices can misclassify many individuals, and they can reinforce but also prevent existing patterns of discrimination.MoreLess -
Correspondence testing studies Updated
What is there to learn about discrimination in hiring?
Dan-Olof Rooth , January 2021Anti-discrimination policies play an important role in public discussions. However, identifying discriminatory practices in the labor market is not an easy task. Correspondence testing provides a credible way to reveal discrimination in hiring and provide hard facts for policies, and it has provided evidence of discrimination in hiring across almost all continents except Africa. The method involves sending matched pairs of identical job applications to employers posting jobs—the only difference being a characteristic that signals membership to a group.MoreLess -
Individual and family labor market impacts of chronic diseases
Chronic diseases worsen labor market outcomes, but firms’ hiring and retention policies can reduce them
Amanda Gaulke , January 2021Chronic health conditions are a global concern and can impact labor market outcomes of those diagnosed and their caregivers. Since the global prevalence of many chronic health conditions is on the rise, it is important to know what firms can do to retain and hire workers who are impacted. Firms can improve hiring by addressing biases against potential employees with chronic health conditions. Furthermore, firms can retain impacted workers by offering workplace flexibility such as partial sick leave, work hour flexibility, and part-time work options.MoreLess -
The effect of overtime regulations on employment Updated
Strictly controlling overtime hours and pay does not boost employment—it could even lower it
Ronald L. OaxacaGaliya Sagyndykova , December 2020Regulation of standard workweek hours and overtime hours and pay can protect workers who might otherwise be required to work more than they would like to at the going rate. By discouraging the use of overtime, such regulation can increase the standard hourly wage of some workers and encourage work sharing that increases employment, with particular advantages for female workers. However, regulation of overtime raises employment costs, setting in motion economic forces that can limit, neutralize, or even reduce employment. And increasing the coverage of overtime pay regulations has little effect on the share of workers who work overtime or on weekly overtime hours per worker.MoreLess -
Health effects of job insecurity Updated
Job insecurity adversely affects health, but employability policies and otherwise better job quality can mitigate the effects
Francis Green , December 2020The fear of unemployment has increased around the world in the wake of Covid-19. Research has shown that job insecurity affects both mental and physical health, though the effects are lower when employees are easily re-employable. The detrimental effects of job insecurity could be partly mitigated if employers improved other aspects of job quality that support better health. But as job insecurity is felt by many more people than just the unemployed, the negative health effects during recessions are multiplied and extend through the majority of the population. This reinforces the need for effective, stabilising macroeconomic policies, most especially at this time of pandemic.MoreLess -
Do immigrants improve the health of native workers? Updated
Immigration crowds native workers out of risky jobs and into less strenuous work, with consequent benefits to their health
Osea Giuntella , December 2020Public debate on immigration focuses on its effects on wages and employment, yet the discussion typically fails to consider the effects of immigration on working conditions that affect workers’ health. There is growing evidence that immigrants are more likely than natives to work in risky jobs. Recent studies show that as immigration rises, native workers are able to work in less demanding jobs. Such market adjustments lead to a reduction in native occupational risk and thus an improvement in native health.MoreLess -
Encouraging women’s labor force participation in transition countries Updated
Government policies can stimulate female labor force participation if coherent and well thought-out
Norberto Pignatti , November 2020Increasing women's labor force participation is important to sustainable economic development, especially in economies with highly educated women and an aging population. Women's participation varies across transition countries, driven by such economic and social factors as traditional views of gender roles and limited government support for caregivers. Still, in all countries there is clear scope for policies aimed at increasing women's participation. In particular, in countries where women's educational attainment is already high, policies to support a better work–life balance and female entrepreneurship look particularly promising.MoreLess -
Impacts of regulation on eco-innovation and job creation Updated
Do regulation-induced environmental innovations affect employment?
Jens Horbach , November 2020New environmental technologies (environmental/eco-innovations) are often regarded as potential job creators—in addition to their positive effects on the environment. Environmental regulation may induce innovations that are accompanied by positive growth and employment effects. Recent empirical analyses show that the introduction of cleaner process innovations, rather than product-based ones, may also lead to higher employment. The rationale is that cleaner technologies lead to cost savings, which helps to improve firms’ competitiveness, thereby inducing positive effects on their market shares.MoreLess -
Public sector outsourcing Updated
The desirability of outsourcing the provision of public services depends on their characteristics and market conditions
Panu PoutvaaraHenrik Jordahl , November 2020The decision to outsource public provision of services is multifaceted and context dependent. Doing so tends to lower labor intensity and increase its efficiency. Costs are usually lower, but quality problems can affect services like health care, though consumer choice has stimulated innovation and quality in both education and health care. Natural monopolies are less suitable for outsourcing, while network services (public transportation) may be outsourced through public tenders. Though some jobs may be lost in the short term, the long-term effects are generally positive for a wide variety of activities.MoreLess -
Racial wage differentials in developed countries Updated
The variation of racial wage gaps across and within groups requires differing policy solutions
Simonetta Longhi , October 2020In many developed countries, racial and ethnic minorities are paid, on average, less than the native white majority. While racial wage differentials are partly the result of immigration, they also persist for racial minorities of second and further generations. Eliminating racial wage differentials and promoting equal opportunities among citizens with different racial backgrounds is an important social policy goal. Inequalities resulting from differences in opportunities lead to a waste of talent for those who cannot reach their potential and to a waste of resources if some people cannot contribute fully to society.MoreLess -
What is the economic value of literacy and numeracy? Updated
Basic skills in literacy and numeracy are essential for success in the labor market
Gemma CherryAnna Vignoles , October 2020Even in OECD countries, where an increasing proportion of the workforce has a university degree, the value of basic skills in literacy and numeracy remains high. Indeed, in some countries the return for such skills, in the form of higher wages, is sufficiently large to suggest that they are in high demand and that there is a relative scarcity. Policymakers need robust evidence in order to devise interventions that genuinely improve basic skills, not just of new school leavers entering the market, but also of the existing workforce. This would lead to significant improvements in the population that achieves a minimum level of literacy and numeracy.MoreLess -
Sports at the vanguard of labor market policy
Lessons from sports can allow managers to develop better policies at “normal” workplaces
Kerry L. Papps , October 2020Economic theory has many predictions regarding how workers should be paid and how workplaces should be organized. However, economists’ attempts to test these in the real world have been hampered by a lack of consistent information about workers’ productivity levels. Professional sports offer a potential solution, since the performance of individual sportspeople is easily observed and yet many of the same problems faced by managers in workplaces still apply. In many ways, sportspeople may be less atypical of the modern workforce than farm laborers, doctors, or other groups of workers that are often scrutinized by economists.MoreLess -
Integrating refugees into labor markets Updated
Economic integration of refugees into their host country is important and benefits both parties
Pieter Bevelander , September 2020Refugee migration has increased considerably since the Second World War, and amounts to more than 50 million refugees. Only a minority of these refugees seek asylum, and even fewer resettle in developed countries. At the same time, politicians, the media, and the public are worried about a lack of economic integration. Refugees start at a lower employment and income level, but subsequently “catch up” to the level of family unification migrants. However, both refugees and family migrants do not “catch up” to the economic integration levels of labor migrants. A faster integration process would significantly benefit refugees and their new host countries.MoreLess -
European asylum policy before and after the migration crisis
The European migration crisis of 2015–2016 exposed weaknesses in the asylum system that have been only partly addressed
Tim Hatton , September 2020The migration crisis of 2015–2016 threw the European asylum system into disarray. The arrival of more than two million unauthorized migrants stretched the system to its breaking point and created a public opinion backlash. The existing system is one in which migrants risk life and limb to gain (often unauthorized) entry to the EU in order to lodge claims for asylum, more than half of which are rejected. Reforms introduced during the crisis only partially address the system's glaring weaknesses. In particular, they shift the balance only slightly away from a regime of spontaneous asylum-seeking to one of refugee resettlement.MoreLess -
Recruiting intensity Updated
Recruiting intensity is critical for understanding fluctuations in the labor market
R. Jason Faberman , July 2020When hiring new workers, employers use a wide variety of different recruiting methods in addition to posting a vacancy announcement, such as adjusting education, experience, or technical requirements, or offering higher wages. The intensity with which employers make use of these alternative methods can vary widely depending on a firm’s performance and with the business cycle. In fact, persistently low recruiting intensity partly helps to explain the sluggish pace of job growth in the US economy following the Great Recession, and the historically subpar wage growth during the subsequent expansion.MoreLess -
Who benefits from firm-sponsored training? Updated
Firm-sponsored training benefits both workers and firms through higher wages, increased productivity and innovation
Benoit Dostie , July 2020Workers participating in firm-sponsored training receive higher wages as a result. But given that firms pay the majority of costs for training, shouldn’t they also benefit? Empirical evidence shows that this is in fact the case. Firm-sponsored training leads to higher productivity levels and increased innovation, both of which benefit the firm. Training can also be complementary to, and enhance, other types of firm investment, particularly in physical capital, such as information and communication technology (ICT), and in organizational capital, such as the implementation of high-performance workplace practices.MoreLess -
Bonuses and performance evaluations
Individual bonuses do not always raise performance; it depends on the characteristics of the job
Dirk Sliwka , July 2020Economists have for a long time argued that performance-based bonuses raise performance. Indeed, many firms use bonuses tied to individual performance to motivate their employees. However, there has been heated debate among human resources professionals recently, and some firms have moved away from individual performance bonuses toward fixed wages only or collective performance incentive schemes such as profit-sharing or team incentives. The appropriate approach depends on each company's unique situation, and managers need to realize that individual bonus plans are not a panacea to motivate employees.MoreLess -
Labor market performance and the rise of populism
Automation, globalization, and crisis-driven spikes in unemployment have contributed to rising populism in advanced economies
Sergei Guriev , July 2020The recent rise of populism in advanced economies reveals major voter discontent. To effectively respond to voters’ grievances, researchers and policymakers need to understand their drivers. Recent empirical research shows that these drivers include both long-term trends (job polarization due to automation and globalization) and the rise in unemployment due to the recent global financial crisis. These factors have undermined public trust in the political establishment and have contributed to increased governmental representation for anti-establishment parties.MoreLess -
Are workers motivated by the greater good? Updated
Workers care about employers’ social causes, but the public sector does not attract particularly motivated employees
Mirco Tonin , July 2020Employees are more willing to work and put effort in for an employer that genuinely promotes the greater good. Some are also willing to give up part of their compensation to contribute to a social cause they share. Being able to attract a motivated workforce is particularly important for the public sector, where performance is usually more difficult to measure, but this goal remains elusive. Paying people more or underlining the career opportunities (as opposed to the social aspects) associated with public sector jobs is instrumental in attracting a more productive workforce, while a proper selection process may mitigate the negative impact on intrinsic motivation.MoreLess -
Skill-based immigration, economic integration, and economic performance Updated
Benefiting from highly skilled immigrants requires a complementary mix of immigrant selection and economic integration policies
Abdurrahman B. Aydemir , June 2020There is increasing global competition for high-skilled immigrants, as countries intensify efforts to attract a larger share of the world's talent pool. In this environment, high-skill immigrants are becoming increasingly selective in their choices between alternative destinations. Studies for major immigrant-receiving countries that provide evidence on the comparative economic performance of immigrant classes (skill-, kinship-, and humanitarian-based) show that skill-based immigrants perform better in the labor market. However, there are serious challenges to their economic integration, which highlights a need for complementary immigration and integration policies.MoreLess -
The labor market in Norway, 2000–2018 Updated
Negative consequences of falling oil prices were offset by real wage flexibility, reduced immigration, and labor reallocation
Øivind A. Nilsen , June 2020Norway has a rather high labor force participation rate and a very low unemployment rate. Part of the reason for this fortunate situation is the so-called “tripartism”: a broad agreement among unions, employers, and government to maintain a high level of coordination in wage bargaining. This has led to downward real wage flexibility, which has lessened the effects of negative shocks to the economy. Reduced net immigration, especially from neighboring countries, also mitigated the negative effects of the oil price drop in 2014. A potential drawback of tripartism is the difficulty of reducing employee absences and disability.MoreLess -
What is the nature and extent of student–university mismatch?
Students do worse if their abilities fail to match the requirements of the institutions where they matriculate
Gillian WynessRichard Murphy , June 2020A growing body of research has begun to examine the match between student ability and university quality. Initial research focused on overmatch—where students are lower attaining than their college peers. However, more recently, attention has turned to undermatch, where students attend institutions with lower attaining peers. Both have been shown to matter for student outcomes; while in theory overmatch could be desirable, there is evidence that overmatched students are less likely to graduate college. Undermatched students, meanwhile, have been shown to experience lower graduate earnings.MoreLess -
The impact of monitoring and sanctioning on unemployment exit and job-finding rates Updated
Job search monitoring and benefit sanctions generally reduce unemployment duration and boost entry to employment in the short term
Duncan McVicar , June 2020Unemployment benefits reduce incentives to search for a job. Policymakers have responded to this behavior by setting minimum job search requirements, by monitoring to check that unemployment benefit recipients are engaged in the appropriate level of job search activity, and by imposing sanctions for infractions. Empirical studies consistently show that job search monitoring and benefit sanctions reduce unemployment duration and increase job entry in the short term. However, there is some evidence that longer-term effects of benefit sanctions may be negative.MoreLess -
The determinants of housework time Updated
Boosting the efficiency of household production could have large economic effects
Leslie S. Stratton , May 2020The time household members in industrialized countries spend on housework and shopping is substantial, amounting to about half as much as is spent on paid employment. Women bear the brunt of this burden, driven in part by the gender wage differential. Efforts to reduce the gender wage gap and alter gendered norms of behavior should reduce the gender bias in household production time and reduce inefficiency in home production. Policymakers should also note the impact of tax policy on housework time and its market substitutes, and consider ways to reduce the distortions caused by sales and income taxes.MoreLess -
Internal hiring or external recruitment? Updated
The efficacy of hiring strategies hinges on a firm’s simultaneous use of other policies
Jed DeVaro , May 2020When 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.MoreLess -
Migration and human capital accumulation in China
Migration may generate detrimental long-term impacts by widening the urban–rural educational gap
John GilesYang Huang , May 2020The difference in educational attainment between China's urban- and rural-born populations has widened in recent years, and the relatively low educational attainment of the rural-born is a significant obstacle to raising labor productivity. Rural-to-urban migration does not create incentives to enroll in higher education as the availability of low-skill employment in urban areas makes remaining in school less attractive. In addition, the child-fostering and urban schooling arrangements for children of migrants further inhibit human capital accumulation.MoreLess -
Overeducation, skill mismatches, and labor market outcomes for college graduates Updated
Concerns exist that overeducation damages employee welfare; however it is overeducation combined with overskilling that is the real problem
Peter J. SloaneKostas Mavromaras , May 2020Evidence shows that many college graduates are employed in jobs for which a degree is not required (overeducation), and in which the skills they learned in college are not being fully utilized (overskilling). Policymakers should be particularly concerned about widespread overskilling, which is likely to be harmful to both the welfare of employees and the interests of employers as both overeducation and overskilling can lead to frustration, lower wages, and higher quitting rates while also being a waste of government money spent on education.MoreLess -
The labor market in Switzerland, 2000–2018 Updated
The Swiss labor market has proven resilient to several recent shocks, with unemployment remaining stable and real wages steadily increasing
Rafael LaliveTobias Lehmann , April 2020Switzerland is a small country with rich cultural and geographic diversity. The Swiss unemployment rate is low, at around 4%. The rate has remained at that level since the year 2000, despite a massive increase in the foreign labor force, the Great Recession, and a currency appreciation shock, demonstrating the Swiss labor market's impressive resiliency. However, challenges do exist, particularly related to earnings and employment gaps between foreign and native workers, as well as a narrowing but persistent gender pay gap. Additionally, regional differences in unemployment are significant.MoreLess -
Naturalization and citizenship: Who benefits? Updated
Liberalizing access to citizenship improves the economic and social integration of immigrants
Christina GathmannOle Monscheuer , April 2020The perceived lack of economic or social integration by immigrants in their host countries is a key concern in the public debate. Research shows that the option to naturalize has considerable economic and social benefits for eligible immigrants, even in countries with a tradition of restrictive policies. First-generation immigrants who naturalize have higher earnings and more stable jobs. Gains are particularly large for immigrants from poorer countries. Moreover, citizenship encourages additional investment in skills and enables immigrants to postpone marriage and fertility. A key question is: does naturalization promote successful integration or do only those immigrants most willing to integrate actually apply?MoreLess -
The labor market in South Africa, 2000–2017
The legacy of apartheid and demand for skills have resulted in high, persistent inequality and high unemployment
Jacqueline MosomiMartin Wittenberg , April 2020The South African economy was on a positive growth trajectory from 2003 to 2008 but, like other economies around the world, it was not spared from the effects of the 2008 global financial crisis. The economy has not recovered and employment in South Africa has not yet returned to its pre-crisis levels. Overall inequality has not declined, and median wages seem to have stagnated in the post-apartheid period. Labor force participation has been stable and although progress has been made, gender imbalances persist.MoreLess -
The labor market in Iceland, 2000–2018
A flexible labor market that was put to the test in the Great Recession
Katrín Ólafsdóttir , April 2020The Icelandic labor market is characterized by high union density and the Icelanders’ willingness to work, as labor force participation is high, the work week long, and people retire late. The resilience and flexibility of the Icelandic labor market was put to the test in the Great Recession as a large share of employees in the labor market experienced a fall in work hours and a fall in nominal wages, while unemployment rose less than expected. In recent years there has been a strong influx of foreign workers, mostly from Eastern Europe. Studies have shown that their labor force participation is no lower than that of Icelanders.MoreLess -
Public attitudes toward immigration—Determinants and unknowns
Sociopsychological factors are much more important than economic issues in shaping attitudes toward immigration
Mohsen Javdani , March 2020Public attitudes toward immigration play an important role in influencing immigration policy and immigrants’ integration experience. This highlights the importance of a systematic examination of these public attitudes and their underlying drivers. Evidence increasingly suggests that while a majority of individuals favor restrictive immigration policies, particularly against ethnically different immigrants, there exists significant variation in these public views by country, education, age, and so on. In addition, sociopsychological factors play a significantly more important role than economic concerns in driving these public attitudes and differences.MoreLess -
The labor market in Finland, 2000–2018 Updated
The economy has finally started to recover from an almost decade-long economic stagnation
Tomi KyyräHanna Pesola , March 2020Finland's population is aging rapidly by international comparison. The shrinking working-age population means that the burden of increasing pension and health care expenditures is placed on a smaller group of employed workers, while the scope for economic growth through increased labor input diminishes. Fiscal sustainability of the welfare state calls for a high employment rate among people of working age. Recent increases in employment contribute favorably to public finances, but high overall unemployment and a large share of the long-term unemployed are serious concerns.MoreLess -
The labor market in Spain, 2002–2018 Updated
Youth and long-term unemployment, which skyrocketed during the Great Recession, were still very high in 2018
Anna Sanz-de-GaldeanoAnastasia Terskaya , March 2020Spain, the fourth largest eurozone economy, was hit particularly hard by the Great Recession, which made its chronic labor market problems more evident. Youth and long-term unemployment escalated during the crisis and, despite the ongoing recovery, in 2018 were still at very high levels. The aggregate rate of temporary employment declined during the recession, but grew among youth. Most interesting have been the narrowing of the gender gap in labor force participation, the decline in the share of immigrants in employment and the labor force, and the overall increase in wage inequality.MoreLess -
Understanding the global decline in the labor income share
Why did labor’s share of income decline among low-skilled workers but increase among the high-skilled?
Saumik Paul , March 2020Globally, the share of income going to labor (the “labor income share”) is declining. However, this aggregate decline hides more than it reveals. While the labor income share has decreased for low-skilled workers, this has been concurrent with an increase for high-skilled workers. Globalization leading to a growing skill premium and an increasing complementarity between capital and skill through the advancement of technology explains the polarization of labor income shares across the skill spectrum.MoreLess -
International trade regulation and job creation Updated
Trade policy is not an employment policy and should not be expected to have major effects on overall employment
L. Alan WintersMattia Di Ubaldo , February 2020Trade regulation can create jobs in the sectors it protects or promotes, but almost always at the expense of destroying a roughly equivalent number of jobs elsewhere in the economy. At a product-specific or micro level and in the short term, controlling trade could reduce the offending imports and save jobs, but for the economy as a whole and in the long term, this has neither theoretical support nor evidence in its favor. Given that protection may have other—usually adverse—effects, understanding the difficulties in using it to manage employment is important for economic policy.MoreLess -
Tax evasion, market adjustments, and income distribution Updated
Market adjustments to tax evasion alter factor and product prices, which determine the true impacts and beneficiaries of tax evasion
James AlmMatthias Kasper , February 2020How does tax evasion affect the distribution of income? In the standard analysis of tax evasion, all the benefits are assumed to accrue to tax evaders. However, tax evasion has other impacts that determine its true effects. As factors of production move from tax-compliant to tax-evading (informal) sectors, these market adjustments generate changes in relative prices of products and factors, thereby affecting what consumers pay and what workers earn. As a result, at least some of the gains from evasion are shifted to consumers of goods produced by tax evaders, and at least some of the returns to tax evaders are competed away via lower wages.MoreLess -
The consequences of trade union power erosion Updated
Declining union power would not be an overwhelming cause for concern if not for rising wage inequality and the loss of worker voice
John T. Addison , February 2020The micro- and macroeconomic effects of the declining power of trade unions have been hotly debated by economists and policymakers, although the empirical evidence does little to suggest that the impact of union decline on economic aggregates and firm performance is an overwhelming cause for concern. That said, the association of declining union power with rising earnings inequality and the loss of an important source of dialogue between workers and their firms have proven more worrisome if no less contentious. Causality issues dog the former association and while the diminution in representative voice seems indisputable any depiction of the non-union workplace as an authoritarian “bleak house” is more caricature than reality.MoreLess -
The labor market in the UK, 2000–2019 Updated
Unemployment rose only modestly during the Great Recession and fell strongly since, with productivity and wages lagging behind
Benedikt HerzThijs van Rens , February 2020Experiences during the Great Recession support the view that the UK labor market is relatively flexible. Unemployment rose less and recovered faster than in most other European economies. However, this success has been accompanied by a stagnation of productivity and wages; an open question is whether this represents a cyclical phenomenon or a structural problem. In addition, the effects of the planned exit of the UK from the EU (Brexit), which is quite possibly the greatest current threat to the stability of the UK labor market, are not yet visible in labor market statistics.MoreLess -
The gig economy
Non-traditional employment is a great opportunity for many, but it won’t replace traditional employment
Paul Oyer , January 2020The number of people holding non-traditional jobs (independent contractors, temporary workers, “gig” workers) has grown steadily as technology increasingly enables short-term labor contracting and fixed employment costs continue to rise. For many firms that need less than a full-time person for short-term work and for many workers who value flexibility this has created a great deal of surplus. During slack economic periods, non-traditional work also serves as an alternative safety net. Non-traditional jobs will continue to become more common, though policy changes could slow or accelerate the trend.MoreLess -
The labor market in Ireland, 2000–2018 Updated
A remarkable turnaround in the labor market went hand in hand with economic recovery
Ireland was hit particularly hard by the global financial crisis, with severe impacts on the labor market. Between 2007 and 2013, the unemployment rate increased dramatically, from 5% to 15.5%, and the labor force participation rate declined by almost five percentage points between 2007 and 2012. Outward migration re-emerged as a safety valve for the Irish economy, helping to moderate impacts on unemployment via a reduction in overall labor supply. As the crisis deepened, long-term unemployment escalated. However, since 2013, there is clear evidence of a recovery in the labor market with unemployment, both overall and long-term, dropping rapidly.MoreLess -
The labor market in South Korea, 2000–2018 Updated
The labor market stabilized quickly after the 1998 Asian crisis, but rising inequality and demographic change are challenges
Jungmin Lee , January 2020South Korea has boasted one of the world's most successful economies since the end of World War II. The South Korean labor market has recovered quickly from the depths of the Asian crisis in 1998, and has since remained surprisingly sound and stable. The unemployment rate has remained relatively low, and average real earnings have steadily increased. The South Korean labor market was resilient in the wake of the global financial crisis. However, there are issues that require attention, including high earnings inequality, an aging labor force, increasing part-time jobs, and rising youth unemployment rates.MoreLess -
How labor market institutions affect job creation and productivity growth Updated
Key labor market institutions, and the policies that shape them, affect the restructuring that leads to economic growth
Magnus Henrekson , January 2020Economic growth requires factor reallocation across firms and continuous replacement of technologies. Labor market institutions influence economic dynamism by their impact on the supply of a key factor, skilled workers to new and expanding firms, and the shedding of workers from declining and failing firms. Growth-favoring labor market institutions include portable pension plans and other job tenure rights, health insurance untied to the current employer, individualized wage-setting, and public income insurance systems that encourage mobility and risk-taking in the labor market.MoreLess -
Employment effects of green energy policies Updated
Does a switch in energy policy toward more renewable sources create or destroy jobs in an industrial country?
Nico Pestel , December 2019Many industrial countries are pursuing so-called green energy policies, which typically imply the replacement of conventional fossil fuel power plants with renewable sources. Such a policy shift may affect employment in different ways. On the one hand, it could create new and additional “green jobs” in the renewables sector; on the other hand, it could crowd out employment in other sectors. An additional consideration is the potential increase in energy prices, which has the potential to stifle labor demand in energy-intensive sectors and reduce the purchasing power of private households.MoreLess -
Language proficiency and immigrants’ economic integration
It is vital to measure language proficiency well, as it crucially determines immigrants’ earnings
Over recent decades, Western countries have admitted many immigrants from non-traditional regions (e.g. Philippines, India, China), which has coincided with poor economic integration. Language proficiency is an important determinant of economic integration; in addition to being a component of human capital, it plays a key role in facilitating the transmission of other components of human capital. Examining the strengths and weaknesses of objective and subjective measures of language proficiency is crucial for good integration policy, as is understanding the relationship between these measures and earnings, a key indicator of economic integration.MoreLess -
Using natural resource shocks to study economic behavior
Natural resource shocks can help studying how low-skilled men respond to changes in labor market conditions
Dan A. Black , December 2019In the context of growing worldwide inequality, it is important to know what happens when the demand for low-skilled workers changes. Because natural resource shocks are global in nature, but have highly localized impacts on labor prospects in resource extraction areas, they offer a unique opportunity to evaluate low-skilled men's behavior when faced with extreme variations in local labor market conditions. This situation can be utilized to evaluate a broad range of outcomes, from education and income, to marital and fertility status, to voting behavior.MoreLess -
The labor market in Germany, 2000–2018 Updated
The transformation of a notoriously rigid labor market into a role model of its own style is essentially complete
Hilmar SchneiderUlf Rinne , December 2019The EU's largest economy, Germany, has managed to find an effective and unique combination of flexibility and rigidity in its labor market. Institutions that typically characterize rigid labor markets are effectively balanced by flexibility instruments. Important developments since 2000 include steadily decreasing unemployment rates (since 2005), increasing participation rates, and (since 2011) moderately increasing labor compensation. The German labor market was remarkably robust to the impacts of the Great Recession, thus providing a useful case study for other developed countries.MoreLess -
Understanding teacher effectiveness to raise pupil attainment
Teacher effectiveness has a dramatic effect on student outcomes—how can it be increased?
Simon Burgess , December 2019Teacher effectiveness is the most important component of the education process within schools for pupil attainment. One estimate suggests that, in the US, replacing the least effective 8% of teachers with average teachers has a present value of $100 trillion. Researchers have a reasonable understanding of how to measure teacher effectiveness; but the next step, understanding the best ways to raise it, is where the research frontier now lies. Two areas in particular appear to hold the greatest promise: reforming hiring practices and contracts, and reforming teacher training and development.MoreLess -
Enforcement and illegal migration Updated
Enforcement deters immigration but with unintended consequences
Pia Orrenius , November 2019Border enforcement of immigration laws raises the costs of illegal immigration, while interior enforcement also lowers its benefits. Used together, border and interior enforcement therefore reduce the net benefits of illegal immigration and should lower the probability that an individual will decide to illegally migrate. While empirical studies find that border and interior enforcement serve as deterrents to illegal immigration, immigration enforcement is costly and carries unintended consequences, such as a decrease in circular migration, an increase in smuggling, and higher prevalence of off-the-books employment and use of fraudulent and falsified documents.MoreLess -
Intergenerational return to human capital Updated
Better educated parents invest more time and money in their children, who are more successful in the labor market
Paul J. Devereux , November 2019Governments invest a lot of money in education, so it is important to understand the benefits of this spending. One essential aspect is that education can potentially make people better parents and thus improve the educational and employment outcomes of their children. Interventions that encourage the educational attainment of children from poorer families will reduce inequality in current and future generations. In addition to purely formal education, much less expensive interventions to improve parenting skills, such as parental involvement programs in schools, may also improve child development.MoreLess -
The impact of energy booms on local workers
Energy booms create widespread short-term benefits for local workers, but appropriate policy requires consideration of a broad array of factors
Grant D. Jacobsen , November 2019One of the primary considerations in policy debates related to energy development is the projected effect of resource extraction on local workers. These debates have become more common in recent years because technological progress has enabled the extraction of unconventional energy sources, such as shale gas and oil, spurring rapid development in many areas. It is thus crucial to discuss the empirical evidence on the effect of “energy booms” on local workers, considering both the potential short- and long-term impacts, and the implications of this evidence for public policy.MoreLess -
Effect of international activity on firm performance Updated
Trade liberalization benefits better performing firms and contributes to economic growth
Joachim Wagner , November 2019There is evidence that better performing firms tend to enter international markets. Internationally active firms are larger, more productive, and pay higher wages than other firms in the same industry. Positive performance effects of engaging in international activity are found especially in firms from less advanced economies that interact with partners from more advanced economies. Lowering barriers to the international division of labor should therefore be part of any pro-growth policy.MoreLess -
Transparency in empirical economic research
Open science can enhance research credibility, but only with the correct incentives
Cristina Blanco-PerezAbel Brodeur , November 2019The open science and research transparency movement aims to make the research process more visible and to strengthen the credibility of results. Examples of open research practices include open data, pre-registration, and replication. Open science proponents argue that making data and codes publicly available enables researchers to evaluate the truth of a claim and improve its credibility. Opponents often counter that replications are costly and that open science efforts are not always rewarded with publication of results.MoreLess -
The effect of early retirement schemes on youth employment Updated
Keeping older workers in the workforce longer not only doesn’t harm the employment of younger workers, but might actually help both
René BöheimThomas Nice , October 2019The fiscal sustainability of state pensions is a central concern of policymakers in nearly every advanced economy. Policymakers have attempted to ensure the sustainability of these programs in recent decades by raising retirement ages. However, there are concerns that keeping older workers in the workforce for longer might have negative consequences for younger workers. Since youth unemployment is a pressing problem throughout advanced and developing countries, it is important to consider the impact of these policies on the employment prospects of the young.MoreLess -
Retirement plan type and worker mobility
Selection and incentives in retirement plans affect job transitions
Colleen Flaherty Manchester , October 2019The relationship between retirement plan type and job mobility is more complex than typically considered. While differences in plan features and benefit structure may directly affect employees’ mobility decisions (“incentive effect”), the type of plan offered may also affect the types of employees a given employer attracts (“selection effect”), thereby affecting mobility through a second, indirect channel. At the same time, some employees may not be able to accurately assess differences between plan types due to limited financial literacy. These factors have implications for policymakers and employers considering retirement plan offerings.MoreLess -
Equal pay legislation and the gender wage gap Updated
Despite major efforts at equal pay legislation, gender pay inequality still exists—how can this be put right?
Solomon W. Polachek , October 2019Despite equal pay legislation dating back 50 years, American women still earn 18% less than their male counterparts. In the UK, with its Equal Pay Act of 1970, and France, which legislated in 1972, the gap is 17% and 10% respectively, and in Australia it remains around 14%. Interestingly, the gender pay gap is relatively small for the young but increases as men and women grow older. Similarly, it is large when comparing married men and women, but smaller for singles. Just what can explain these wage patterns? And what can governments do to speed up wage convergence to close the gender pay gap? Clearly, the gender pay gap continues to be an important policy issue.MoreLess -
Do firms benefit from apprenticeship investments? Updated
Why spending on occupational skills can yield economic returns to employers
Robert Lerman , October 2019Economists have long believed that firms will not pay to develop occupational skills that workers could use in other, often competing, firms. Researchers now recognize that firms that invest in apprenticeship training generally reap good returns. Evidence indicates that financial returns to firms vary. Some recoup their investment within the apprenticeship period, while others see their investment pay off only after accounting for reduced turnover, recruitment, and initial training costs. Generally, the first year of apprenticeships involves significant costs, but subsequently, the apprentice's contributions exceed his/her wages and supervisory costs. Most participating firms view apprenticeships as offering certainty that all workers have the same high level of expertise and ensuring an adequate supply of well-trained workers to cover sudden increases in demand and to fill leadership positions.MoreLess -
Men without work: A global well-being and ill-being comparison
The number of prime-age males outside the labor force is increasing worldwide, with worrying results
Carol GrahamSergio Pinto , October 2019The global economy is full of progress paradoxes. Improvements in technology, reducing poverty, and increasing life expectancy coexist with persistent poverty in the poorest countries and increasing inequality and unhappiness in many wealthy ones. A key driver of the latter is the decline in the status and wages of low-skilled labor, with an increasing percentage of prime-aged men (and to a lesser extent women) simply dropping out of the labor force. The trend is starkest in the US, though frustration in this same cohort is also prevalent in Europe, and it is reflected in voting patterns in both contexts.MoreLess -
Designing labor market regulations in developing countries Updated
Labor market regulation should aim to improve the functioning of the labor market while protecting workers
Gordon Betcherman , September 2019Governments regulate employment to protect workers and improve labor market efficiency. But, regulations, such as minimum wages and job security rules, can be controversial. Thus, decisions on setting employment regulations should be based on empirical evidence of their likely impacts. Research suggests that most countries set regulations in the appropriate range. But this is not always the case and it can be costly when countries over- or underregulate their labor markets. In developing countries, effective regulation also depends on enforcement and education policies that will increase compliance.MoreLess -
The labor market in Russia, 2000–2017
Low unemployment and high employment, but also low, volatile pay and high inequality characterize the Russian labor market
Vladimir Gimpelson , September 2019Being the largest economy in the Eurasian region, Russia's labor market affects economic performance and well-being in several former Soviet countries. Over the period 2000–2017, the Russian labor market survived several deep crises and underwent substantial structural changes. Major shocks were absorbed largely via wage adjustments, while aggregate employment and unemployment showed little sensitivity. Workers have paid the price for this rather stable employment situation in the form of volatile wages and a high risk of low pay.MoreLess -
Public employment in the Middle East and North Africa
Does a changing public sector workforce in the MENA region provide an opportunity for efficient restructuring?
Ragui AssaadGhada Barsoum , August 2019Public sector hiring has been an essential component of the social bargains that have maintained political stability in the Middle East and North Africa (MENA). As these bargains eroded, public sector workforces contracted in relative terms owing to a partial freeze on hiring and the promise of lifetime job security for incumbent workers. This had profound effects on the age composition of the workforce. The upcoming retirement of many workers provides an opportunity to restructure public sector hiring to emphasize meritocratic recruitment processes and performance-based compensation systems.MoreLess -
Obesity and labor market outcomes Updated
The hidden private costs of obesity: lower earnings and a lower probability of employment
Susan L. Averett , August 2019Rising obesity is a pressing global public health problem responsible for rising health care costs and in some countries one of the leading causes of preventable deaths. There is substantial evidence that obese people are less likely to be employed and, when employed, earn lower wages. There is some evidence that the lower earnings are a result of discriminatory hiring and sorting into jobs with less customer contact. Understanding whether obesity is associated with adverse labor market outcomes and ascertaining the source of these outcomes are essential for designing effective public policy.MoreLess -
Women in crime Updated
Over the last 50 years women have been increasing their participation in the labor market and in the crime market
Nadia Campaniello , July 2019In recent decades, women's participation in the labor market has increased considerably in most countries and is converging toward the participation rate of men. Though on a lesser scale, a similar movement toward gender convergence seems to be occurring in the criminal world, though many more men than women still engage in criminal activity. Technological progress and social norms have freed women from the home, increasing their participation in both the labor and the crime market. With crime no longer just men's business, it is important to investigate female criminal behavior to determine whether the policy prescriptions to reduce crime should differ for women.MoreLess -
The labor market in Japan, 2000–2018 Updated
Despite a plummeting working-age population, Japan has sustained its labor force size because of surging employment among women
Daiji KawaguchiHiroaki Mori , July 2019As the third-largest economy in the world and a precursor of global trends in population aging, Japan's recent experiences provide important lessons regarding how demographic shifts affect the labor market and individuals’ economic well-being. On the whole, the labor market showed a remarkable stability during the financial crisis, despite decades of economic stagnation and sluggish real wage growth. Rapid population aging, however, has brought substantial changes to individuals in the labor market, most notably women, by augmenting labor demand in the healthcare services industry.MoreLess -
Measuring income inequality
Summary measures of inequality differ from one another and give different pictures of the evolution of economic inequality over time
Ija Trapeznikova , July 2019Economists use various metrics for measuring income inequality. Here, the most commonly used measures—the Lorenz curve, the Gini coefficient, decile ratios, the Palma ratio, and the Theil index—are discussed in relation to their benefits and limitations. Equally important is the choice of what to measure: pre-tax and after-tax income, consumption, and wealth are useful indicators; and different sources of income such as wages, capital gains, taxes, and benefits can be examined. Understanding the dimensions of economic inequality is a key first step toward choosing the right policies to address it.MoreLess -
Sexual orientation and labor market outcomes Updated
Sexual orientation seems to affect job access and satisfaction, earning prospects, and interaction with colleagues
Nick Drydakis , July 2019Studies from countries with laws against discrimination on the basis of sexual orientation suggest that gay and lesbian employees report more incidents of harassment and are more likely to report experiencing unfair treatment in the labor market than are heterosexual employees. Both gay men and lesbians tend to be less satisfied with their jobs than their heterosexual counterparts. Gay men are found to earn less than comparably skilled and experienced heterosexual men. For lesbians, the patterns are ambiguous: in some countries they have been found to earn less than their heterosexual counterparts, while in others they earn the same or more.MoreLess -
The importance and challenges of measuring work hours Updated
Measuring work hours correctly is important, but different surveys can tell different stories
Jay StewartHarley Frazis , July 2019Work hours are key components in estimating productivity growth and hourly wages as well as being a useful cyclical indicator in their own right, so measuring them correctly is important. The US Bureau of Labor Statistics (BLS) collects data on work hours in several surveys and publishes four widely used series that measure average weekly hours. The series tell different stories about average weekly hours and trends in those hours but qualitatively similar stories about the cyclical behavior of work hours. The research summarized here explains the differences in levels, but only some of the differences in trends.MoreLess -
Impact of privatization on employment and earnings Updated
Workers and policymakers may fear that privatization leads to job losses and wage cuts, but what’s the empirical evidence?
John S. EarleSolomiya Shpak , June 2019Conventional wisdom and prevailing economic theory hold that the new owners of a privatized firm will cut jobs and wages. But this ignores the possibility that new owners will expand the firm’s scale, with potentially positive effects on employment, wages, and productivity. Evidence generally shows these forces to be offsetting, usually resulting in small employment and earnings effects and sometimes in large, positive effects on productivity and scale. Foreign ownership usually has positive effects, and the effects of domestic privatization tend to be larger in countries with a more competitive business environment.MoreLess -
Measuring individual risk preferences
Incentivized measures are considered to be the gold standard in measuring individuals’ risk preferences, but is that correct?
Catherine C. Eckel , June 2019Risk aversion is an important factor in many settings, including individual decisions about investment or occupational choice, and government choices about policies affecting environmental, industrial, or health risks. Risk preferences are measured using surveys or incentivized games with real consequences. Reviewing the different approaches to measuring individual risk aversion shows that the best approach will depend on the question being asked and the study's target population. In particular, economists’ gold standard of incentivized games may not be superior to surveys in all settings.MoreLess -
Immigrants and entrepreneurship Updated
Business ownership is higher among immigrants, but promoting self-employment is unlikely to improve outcomes for the less skilled
Magnus LofstromChunbei Wang , June 2019Immigrants are widely perceived to be highly entrepreneurial, contributing to economic growth and innovation, and self-employment is often viewed as a means of enhancing labor market integration and success among immigrants. Accordingly, many countries have established special visas and entry requirements to attract immigrant entrepreneurs. Research supports some of these stances, but expectations may be too high. There is no strong evidence that self-employment is an effective tool of upward economic mobility among low-skilled immigrants. More broadly prioritizing high-skilled immigrants may prove to be more successful than focusing on entrepreneurship.MoreLess -
Compliance with labor laws in developing countries Updated
Non-compliance with labor legislation is widespread and this has critical implications for understanding labor markets in developing countries
Compliance with minimum wage laws and non-wage conditions of employment often depends on labor market specific factors. In developing countries, many workers still earn less than the legal minimum and lack access to mandated non-wage benefits. Enforcement has not kept up with regulation growth and compliance has not been measured from a multidimensional perspective. Such an approach would help to understand the impact of institutional variables and country-specific approaches on the level of labor law violation. The difference between de facto and de jure regulation remains particularly pertinent in countries where compliance is low.MoreLess -
University study abroad and graduates’ employability Updated
There is a positive association between study abroad and graduates’ job prospects, though it is unclear if the link is causal
Giorgio Di Pietro , May 2019In recent decades, the number of university students worldwide who have received some part of their education abroad has been rising rapidly. Despite the popularity of international student exchange programs, however, debate continues over what students actually gain from this experience. A major advantage claimed for study abroad programs is that they can enhance employability by providing graduates with the skills and experience employers look for. These programs are also expected to increase the probability that graduates will work abroad, and so may especially benefit students willing to pursue an international career. However, most of the evidence is qualitative and based on small samples.MoreLess -
Gender diversity in teams Updated
Greater representation of women may better represent women’s preferences but may not help economic performance
Ghazala Azmat , May 2019Women's representation on corporate boards, political committees, and other decision-making teams is increasing, this is in part because of legal mandates. Evidence on team dynamics and gender differences in preferences (for example, risk-taking behavior, taste for competition, prosocial behavior) shows how gender composition influences group decision-making and subsequent performance. This works through channels such as investment decisions, internal management, corporate governance, and social responsibility.MoreLess -
Short-time work compensation schemes and employment Updated
Temporary government schemes can have a positive economic effect
Pierre Cahuc , May 2019Government schemes that compensate workers for the loss of income while they are on short hours (known as short-time work compensation schemes) make it easier for employers to temporarily reduce hours worked so that labor is better matched to output requirements. Because the employers do not lay off these staff, the schemes help to maintain permanent employment levels during recessions. However, they can create inefficiency in the labor market, and might limit labor market access for freelancers and those looking to work part-time.MoreLess -
Do school inputs crowd out parents’ investments in their children?
Public education tends to crowd out parents’ time and money, but careful policy design may mitigate this
Birgitta Rabe , May 2019Many countries around the world are making substantial and increasing public investments in children by providing resources for schooling from early years through to adolescence. Recent research has looked at how parents respond to children’s schooling opportunities, highlighting that public inputs can alternatively encourage or crowd out parental inputs. Most evidence finds that parents reduce their own efforts as schooling improves, dampening the efficiency of government expenditure. Policymakers may thus want to focus government provision on schooling inputs that are less easily substituted.MoreLess -
Does substance use affect academic performance? Updated
Substance use reduces the academic performance of university students
Daniel I. Rees , April 2019A non-trivial portion of traffic fatalities involve alcohol or illicit drugs. But does substance use—which is linked to depression, suicide, and criminal activity—also reduce academic performance? Recent studies suggest that the consumption of alcohol has a negative effect on the grades of university students. Likewise, there is evidence that marijuana use reduces the academic performance of university students. Although students who use illicit substances are more likely to drop out of high school than those who do not, this may reflect the influence of other, difficult-to-measure factors at the individual level, such as personality.MoreLess -
Can immigrants ever earn as much as native workers? Updated
Immigrants initially earn less than natives; the wage gap falls over time, but for many immigrant groups it never closes
Zhen HuangKathryn H. Anderson , April 2019Immigrants contribute to the economic development of the host country, but they earn less at entry and it takes many years for them to achieve parity of income. For some immigrant groups, the wage gap never closes. There is a wide variation across countries in the entry wage gap and the speed of wage assimilation over time. Wage assimilation is affected by year of entry, immigrant skill, ethnicity, and gender. Policies that facilitate assimilation of immigrant workers provide support for education, language, and employment. Such policies can also reduce barriers to entry, encourage naturalization, and target selection of immigrants.MoreLess -
Why do STEM immigrants do better in one country than another?
Where STEM immigrants were educated strongly influences their economic success and possibly their impact on innovation
Garnett PicotFeng Hou , April 2019Canada, the US, and most Western countries are looking to STEM (science, technology, engineering, and mathematics) immigrants to boost innovation and economic growth. Canada in particular has welcomed many STEM immigrants over the past quarter of a century. In the US, there is an ongoing debate about whether the H–1B visa program is being used effectively to attract more STEM immigrants. Interestingly, significant differences exist between the two countries in earnings and likely the innovation activity of highly educated immigrants, which highlights the likely role of immigration policy in determining such outcomes.MoreLess -
- Labor markets and institutions
- Transition and emerging economies
- Development
- Demography, family, and gender
Redesigning pension systems Updated
The institutional structure of pension systems should follow population developments
Marek Góra , April 2019For decades, pension systems were based on the rising revenue generated by an expanding population (the so-called demographic dividend). As changes in fertility and longevity created new population structures, however, the dividend disappeared, but pension systems failed to adapt. They are kept solvent by increasing redistributions from the shrinking working-age population to retirees. A simple and transparent structure and individualization of pension system participation are the key preconditions for an intergenerationally just old-age security system.MoreLess -
Self-employment and poverty in developing countries Updated
The right policies can help the self-employed to boost their earnings above the poverty level and earn more for the work they do
Gary S. Fields , March 2019A key way for the world’s poor to escape poverty is to earn more for their labor. Most of the world’s poor people are self-employed, but because there are few opportunities in most developing countries for them to earn enough to escape poverty, they are working hard but working poor. Two key policy planks in the fight against poverty should be: raising the returns to self-employment and creating more opportunities to move from self-employment into higher paying wage employment.MoreLess -
Enforcement of labor regulations in developing countries
Enforcement improves legal compliance, but its impact on welfare is country specific and unclear
Lucas Ronconi , March 2019More than half of private sector employees in the developing world do not receive legally mandated labor benefits. These regulations have typically been enacted by democratically elected governments, and are valued by both formal and informal workers. Increasing public enforcement (e.g. inspections, fines, and workers’ access to the judiciary) can be a powerful tool to reduce violations (e.g. increase the number of employees earning above the minimum wage). Which factors determine enforcement, and whether enforcement produces more social benefits than costs, are, however, unanswered questions.MoreLess -
Does accession to the EU affect firms’ productivity?
State capture and uneven infrastructure development due to foreign direct investment can outweigh productivity gains
Jens HӧlscherPeter Howard-Jones , March 2019Firms in the new EU member states of Eastern Europe are more productive than those in other transition economies, but with a diminishing advantage. The least productive firms benefit the most from membership, although the situation is reversed in the case of foreign-owned firms. Foreign direct investment fails to promote knowledge and technology spillovers beyond the receiving firms. The dominance of multinational enterprises in the new EU member states enhances the threat of corporate state capture and asymmetric infrastructure development, whilst access to finance remains a constricting issue for all firms.MoreLess -
Is unconditional basic income a viable alternative to other social welfare measures? Updated
Countries give basic education and health care to everyone, and for good reasons—why not basic income?
Ugo Colombino , March 2019Globalization and automation have brought about a tremendous increase in productivity, with enormous benefits, but also a dramatic reallocation of jobs, skills, and incomes, which might jeopardize the full realization of those benefits. Current social policies may not be adequate to successfully redistribute the gains from automation and globalization or to advance the reallocation of jobs and skills. Under certain circumstances, an unconditional basic income might be a better alternative for achieving these goals. It is simple, transparent, and has low administrative costs, though it may require higher taxes or a cut/reallocation of other public expenditures.MoreLess -
Improvement in European labor force participation
Do structural reforms or educational expansion drive higher employment and participation rates?
Daniel Gros , February 2019Employment and labor force participation (LFP) rates have increased throughout Europe since the 1990s, with little interruption from the Great Recession. While many credit labor market reforms for this progress, ongoing educational expansion might actually be more important. This implies that the overall employment rate of an economy can change if the share of the population with tertiary education increases, even in the absence of any labor market reforms or effects of the business cycle. Taking this compositional effect into account makes it possible to disentangle the impact of reforms.MoreLess -
Market competition and executive pay Updated
Increased competition affects the pay incentives firms provide to their managers and may also affect overall pay structures
Priscila Ferreira , February 2019Deregulation and managerial compensation are two important topics on the political and academic agenda. The former has been a significant policy recommendation in light of the negative effects associated with overly restrictive regulation on markets and the economy. The latter relates to the sharp increase in top executives’ pay and the nature of the link between pay and performance. To the extent that product-market competition can affect the incentive schemes offered by firms to their executives, the analysis of the effects of competition on the structure of compensation can be informative for policy purposes.MoreLess -
Efficient markets, managerial power, and CEO compensation Updated
CEO pay, often contentious, is the product of many forces
Michael L. Bognanno , February 2019The escalation in chief executive officer (CEO) pay over recent decades, both in absolute terms and in relation to the earnings of production workers, has generated considerable attention. The pay of top executives has grown noticeably in relation to overall firm profitability. The pay gap between CEOs in the US and those in other developed countries narrowed substantially during the 2000s, making top executive pay an international concern. Researchers have taken positions on both sides of the debate over whether the level of CEO pay is economically justified or is the result of managerial power.MoreLess -
Social protection programs for women in developing countries Updated
How to design social protection programs that poor women can benefit from
Lisa Cameron , February 2019Women are more likely than men to work in the informal sector and to drop out of the labor force for a time, such as after childbirth, and to be impeded by social norms from working in the formal sector. This work pattern undermines productivity, increases women's vulnerability to income shocks, and impairs their ability to save for old age. Many developing countries have introduced social protection programs to protect poor people from social and economic risks, but despite women's often greater need, the programs are generally less accessible to women than to men.MoreLess -
Happiness as a guide to labor market policy Updated
Happiness is key to a productive economy, and a job remains key to individual happiness, also under robotization
Jo Ritzen , January 2019Measures of individual happiness, or well-being, can guide labor market policies. Individual unemployment, as well as the rate of unemployment in society, have a negative effect on happiness. In contrast, employment protection and un-employment benefits or a basic income can contribute to happiness—though when such policies prolong unintended unemployment, the net effect on national happiness is negative. Active labor market policies that create more job opportunities increase happiness, which in turn increases productivity. Measures of individual happiness should therefore guide labor market policy more explicitly, also with substantial robotization in production.MoreLess -
Crime and immigration Updated
Do poor labor market opportunities lead to migrant crime?
Brian Bell , January 2019Immigration is one of the most important policy debates in Western countries. However, one aspect of the debate is often mischaracterized by accusations that higher levels of immigration lead to higher levels of crime. The evidence, based on empirical studies of many countries, indicates that there is no simple link between immigration and crime, but legalizing the status of immigrants has beneficial effects on crime rates. Crucially, the evidence points to substantial differences in the impact on property crime, depending on the labor market opportunities of immigrant groups.MoreLess -
Intergenerational income persistence Updated
Measures of intergenerational persistence can be indicative of equality of opportunity, but the relationship is not clear-cut
Jo Blanden , January 2019A 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.MoreLess -
Bosses matter: The effects of managers on workers’ performance
What evidence exists on whether bad bosses damage workers’ performance, or good bosses enhance it?
Kathryn L. Shaw , January 2019A 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.MoreLess -
Labor market consequences of the college boom around the world Updated
Better information on university quality may reduce underemployment and overeducation in developing countries
Gustavo A. YamadaPablo Lavado , December 2018As 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.MoreLess -
Female labor force participation and development Updated
Improving outcomes for women takes more than raising labor force participation—good jobs are important too
Sher Verick , December 2018The 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.MoreLess -
Employment effects of minimum wages Updated
When minimum wages are introduced or raised, are there fewer jobs?
David Neumark , December 2018The 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.MoreLess -
School tracking and intergenerational social mobility Updated
Postponing school tracking can increase social mobility without significant adverse effects on educational achievement
Tuomas Pekkarinen , December 2018The 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 postponed.MoreLess -
Do higher levels of education and skills in an area benefit wider society? Updated
Education benefits individuals, but the societal benefits are likely even greater
John V. Winters , December 2018Formal 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.MoreLess
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Nov 13, 2024
Fewer exam retakes, better results?
Policy change at the University of Bologna improved academic performance and reduced dropout rates -
Nov 11, 2024
Rising temperatures hurt Europe’s economy
New study highlights the productivity impact of global warming -
Nov 04, 2024
Air pollution cuts job seekers’ wage demands
New study links poor air quality to reduced job search effort -
Oct 31, 2024
Do salary history bans really help level the playing field?
Voluntary disclosure of past salaries undermines efforts to close pay gaps and promote wage equality in the U.S.
The hidden cost of teacher selection reform in Colombia
Do productivity signals reduce disability-related hiring discrimination?
How education drives the economic success of immigrants from China in the US
Unintended consequences: How Pinochet’s policies empowered Chilean women
The long-run effects of affirmative action bans
How fast internet is shaping local culture and harmful traditional norms?
Effects of parental death on labor market outcomes and gender inequalities
Are employers eager to hire the unemployed?
The surprising effects of education on family dynamics for men and women
Decoding gender bias: The role of personal interaction
10 years of IZA World of Labor
How political connections shape firm outcomes in Germany
Escaping the debt trap: Long-run effects of individual debt relief
Empowering local talent
ChatGPT in the workplace: Who's adopting and what's holding others back?
Small children, big problems
How perceived inequality shapes well-being
Reducing presenteeism
Essential yet vulnerable
Working from home increases work-home distances
Intergenerational mobility and credit
Mental health at scale
Parental investments
How differences in job search drive the gender earnings gap
From steel to skills
How human capital reshapes religious affiliation
From refugees to citizens
Transforming societies through education
The impact of abortion bans on birth rates
Reaching for gold!
Seasonal allergies and accidents
Redefining aging
Navigating innovation
Is vocational education and training (VET) an option to increase education and employment?
The parenthood penalty in mental health
How female leaders are transforming workplace dynamics
Managerial stress accelerates aging and increases mortality among CEOs
Traumas of the past
How Many Layoffs Could Be Avoided by Pay Cuts?