key topic
Fighting long-term unemployment
Long-term unemployment refers to those people who are out of work and have been actively seeking employment for at least 12 months. Unemployment can have adverse effects on the economy and on the well-being and life satisfaction of those who are out of work. But, what factors prolong unemployment? And, which measures help shorten unemployment spells and enable people to find more stable jobs that better match their skills and qualifications?
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Measuring employment and unemployment
Should statistical criteria for measuring employment and unemployment be re-examined?
Andrea BrandoliniEliana Viviano, August 2018Measuring employment and unemployment is essential for economic policy. Internationally agreed measures (e.g. headcount employment and unemployment rates based on standard definitions) enhance comparability across time and space, but changes in real labor markets and policy agendas challenge these traditional conventions. Boundaries between different labor market states are blurred, complicating identification. Individual experiences in each state may vary considerably, highlighting the importance of how each employed or unemployed person is weighted in statistical indices.MoreLess -
Job search monitoring and assistance for the unemployed
Can job search requirements and job search assistance help the unemployed find better jobs faster?
Ioana E. Marinescu, August 2017In many countries, reducing unemployment is among the most important policy goals. In this context, monitoring job search by the unemployed and providing job search assistance can play a crucial role. However, more and more stringent monitoring and sanctions are not a panacea. Policymakers must consider possible downsides, such as unemployed people accepting less stable and lower-paying jobs. Tying “moderate” monitoring to job search assistance may be the essential ingredient to make this approach successful.MoreLess -
What effect do vocational training vouchers have on the unemployed?
Vouchers can create a market for training but may lengthen participants’ unemployment duration
Anthony Strittmatter, November 2016The objective of providing vocational training for the unemployed is to increase their chances of re-employment and human capital accumulation. In comparison to mandatory course assignment by case workers, the awarding of vouchers increases recipients’ freedom to choose between different courses and makes non-redemption a possibility. In addition, vouchers may introduce market mechanisms between training providers. However, empirical evidence suggests that voucher allocation mechanisms prolong the unemployment duration of training participants. But, after an initial period of deterioration, better long-term employment opportunities are possible.MoreLess -
Does unemployment insurance offer incentives to take jobs in the formal sector?
Unemployment insurance can protect against income loss and create formal employment
Mariano Bosch, October 2016Unemployment insurance can be an efficient tool to provide protection for workers against unemployment and foster formal job creation in developing countries. How much workers value this protection and to what extent it allows a more efficient job search are two key parameters that determine its effectiveness. However, evidence shows that important challenges remain in the introduction and expansion of unemployment insurance in developing countries. These challenges range from achieving coverage in countries with high informality, financing the scheme without further distorting the labor market, and ensuring progressive redistribution.MoreLess -
How to minimize lock-in effects of programs for unemployed workers
Appropriate timing and targeting of activation programs for the unemployed can help improve their cost-effectiveness
Conny Wunsch, September 2016Activation programs, such as job search assistance, training, or work experience programs for unemployed workers, typically initially produce negative employment effects. These so-called “lock-in effects” occur because participants spend less time and effort on job search activities than non-participants. Lock-in effects need to be offset by sufficiently large post-participation employment or earnings for the programs to be cost-effective. They represent key indirect costs that are often more important than direct program costs. The right timing and targeting of these programs can improve their cost-effectiveness by reducing lock-in effects.MoreLess -
Public or private job placement services—Are private ones more effective?
Analyzed public employment agencies were at least equally as successful as private ones in placing unemployed workers
Gesine Stephan, August 2016Expenditures on job placement and related services make up a substantial share of many countries’ GDP. Contracting out to private providers is often proposed as a more efficient alternative to the state provision of placement services. However, the responsible state agency has to design and monitor sufficiently complete contracts to ensure that the private contractors deliver the desired quality of services. None of the recent empirical evidence indicates that contracting out is necessarily more effective or more efficient than public employment services.MoreLess