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.
Entrepreneurship and the business cycle
Nascent entrepreneurship can have some predictive power over the business cycle
Entrepreneurship has a cyclical component, raising two questions. Is the entrepreneurship cycle related to the business cycle? And is there causality? A two-way relationship between entrepreneurship and the business cycle would be in line with the two faces of entrepreneurs: as agents of change creating upswings (opportunity entrepreneurship) and as rational actors escaping unemployment by setting up a business (necessity entrepreneurship). Nascent entrepreneurship can indeed be precyclical, implying that the two faces of entrepreneurship also show up in the business cycle, with promising policy implications.
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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
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Oct 08, 2024
50 years of breakthroughs and barriers: Women in economics, policy, and leadership
Study shows persistent gender gaps and the complex factors hindering women’s advancement in top roles -
Oct 02, 2024
Apply now for a postdoc position at IZA
Candidates should work in applied and/or behavioral economics -
Oct 01, 2024
Matching workers and jobs online
IZA workshop discusses new research on virtual job market -
Sep 30, 2024
Introducing the IZA/Fable SWIPE Consumption Index
Real-time insights into German consumer spending
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