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April 30, 2015

The FutureWork Opinion Series - Klaus F. Zimmermann

In this opinion series, part of our FutureWork campaign, we are asking key figures from the IZA World of Labor community to speculate on the future of the global labor economic landscape. Our Director, Professor Klaus F. Zimmermann, gives his responses.

1. What do you see as the most significant trends for the world of work in the next five years?
As automation and digitalization increasingly become reality, there is great nervousness all around. Workers may be replaced by robots and computers at virtually all skill levels, and the question anxiously raised now is: Will we run out of work? Remarkably, this worry actually unites much of the world, both developed and developing. Although there will be no “end of work”, it will probably take on very different forms. Innovations are required to balance the positives and negatives of our changing world. Individual risks and informality will increase, but the coming changes will also provide many opportunities we cannot even imagine today.

2. What is the biggest policy challenge facing decision makers in your field and in your region?
Migration flows are on the rise globally. This process will continue: With the inescapable progress of globalization, labor markets are bound to become more integrated. Additionally, the impending demographic disruptions will set in with full force in many countries. However, the observation that open and flexible labor markets foster growth and development is by no means universally accepted. Instead, a “protectionist” mentality is spreading—and as a growing trend, this is worrying. It is therefore more important than ever to openly discuss the determinants of labor mobility and to highlight its value for economic prosperity.

3. Why is more evidence-based debate and policy making needed?
Policy measures affect the welfare of nations. In this context, evidence-based policy making gives weight to hard empirical facts and restrictions. It thus ultimately yields better economic outcomes. The time for ideological views dominating economic policy has ended. The new era should not just be characterized by day-to-day business and the right balance of interests in distributional matters. Evidence-based policy making can guarantee long-term orientation, sustainability, transparency and focus on efficiency gains. As policy making is experimenting with the truth, the effectiveness of policy measures must be constantly evaluated and corrected or adjusted them over time.

4. What are the biggest barriers to policy makers adopting evidence-based decision making and how can they be overcome?
Typically, academic science is not immediately focused on policy advice. As a consequence, the evidence published in the form of scientific studies rarely fulfills the usability requirements of policy advice. In many cases, research findings have to be “translated” and made “transparent” to policymakers. Our ambitious IZA World of Labor project that started one year ago explicitly fills this gap. As an independent service provider for evidence-based policymaking, IZA World of Labor condenses the available state-of-the-art knowledge on key labor market issues in a practical format and derives functional policy recommendations and insights of value to society from the existing evidence.

5. What are the biggest opportunities of wider adoption of evidence-based policy making?
Politics is about the perception of interests and the balance of those interests. Consequently, it is primarily about distribution and redistribution. Efficiency, in the sense of increasing welfare through the accumulation of goods, has a much lower priority in the process of allocating economic resources. Politicians like to ignore economic constraints, although this is impossible to keep up in the long term and may even be counterproductive to planned policy interventions. When adopting evidence-based policy making, politics can move beyond this frontier. The options and their consequences are much clearer for politicians, who must ultimately still make their own decisions.

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Please note:
We recognize that IZA World of Labor articles may prompt discussion and possibly controversy. Opinion pieces, such as the one above, capture ideas and debates concisely, and anchor them with real-world examples. Opinions stated here do not necessarily reflect those of the IZA.