Evidence-based policy making

While Mexico has improved the education of its labor force, maintained a stable macroeconomic environment, and been friendly to international trade, its labor market still faces many challenges. In particular, Mexico has difficulty creating high-paying jobs: the share of informal employment has remained stagnant for the last 20 years, and, by 2025, remains above 50%. These problems are particularly poignant in southern Mexico.

It is common practice to incorporate additional covariates in empirical economics. In the context of regression discontinuity (RD) designs, covariate adjustment plays multiple roles, making it essential to understand its impact on analysis and conclusions. Typically implemented via local least squares regressions, covariate adjustment can serve three main distinct purposes: (i) improving the efficiency of RD average causal effect estimators, (ii) learning about heterogeneous RD policy effects, and (iii) changing the RD parameter of interest.

The Netherlands has long been an example of a highly and centrally institutionalized labor market paying considerable attention to equity concerns. Fracturing of the labor force by the rapid demise of the single-earner model and accelerating immigration, falling union density, and reductions in welfare state provisions have shrunk labor’s market power centrally and decentrally. Wages lagged far behind productivity growth, job security strongly declined and wage inequality increased. This comes to the fore with a lack of offensive union power when after 2016 labor demand accelerated and the economy and employment quickly reached new heights after the pandemic crisis.

The Indian economy entered an ongoing process of trade liberalization, domestic deregulation, and privatization of public sector units in 1991. Since then, per capita output has increased significantly, while the overall unemployment rate has remained moderate. However, labor force participation rates fell sharply, though recovering for women since 2020. Youth unemployment remains high, an overwhelming proportion of the labor force continues to work in the informal sector, labor movement out of agriculture is slow, and there is little evidence of a sustained rise in wages for either unskilled rural or factory workers.