IZA World of Labor - Search Result For

September 2018

Article

Big Data in economics

New sources of data create challenges that may require new skills

Matthew Harding Jonathan Hersh

Big Data refers to data sets of much larger size, higher frequency, and often more personalized information. Examples include data collected by smart sensors in homes or aggregation of tweets on Twitter. In small data sets, traditional econometric methods tend to outperform more complex techniques. In large data sets, however, machine learning methods shine. New analytic approaches are needed to make the most of Big Data in economics. Researchers and policymakers should thus pay close attention to recent developments in machine learning techniques if they want to fully take advantage of these new sources of Big Data.

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November 2015

Article

Google search activity data and breaking trends

Google search activity data are an unconventional survey full of unbiased, revealed answers in need of the right question

Nikolaos Askitas

Using Google search activity data can help detect, in real time and at high frequency, a wide spectrum of breaking socio-economic trends around the world. This wealth of data is the result of an ongoing and ever more pervasive digitization of information. Search activity data stand in contrast to more traditional economic measurement approaches, which are still tailored to an earlier era of scarce computing power. Search activity data can be used for more timely, informed, and effective policy making for the benefit of society, particularly in times of crisis. Indeed, having such data shifts the relation between theory and the data to support it.

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May 2015

Article

Who owns the robots rules the world

Workers can benefit from technology that substitutes robots or other machines for their work by owning part of the capital that replaces them

Richard B. Freeman

Robots, that is any sort of machinery from computers to artificial intelligence programs that provides a good substitute for work currently performed by humans, can increasingly replace workers, even highly skilled professionals, and thus reduce opportunities for good jobs and pay. But, with appropriate policies, the higher productivity due to robots can improve worker well-being by raising incomes and creating greater leisure for workers. Consider the way Google reduces the need for reference librarians and research assistants, or the way massive open online courses reduce the need for professors and lecturers. How these new technologies affect worker well-being and inequality depends on who owns them.

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December 2018

Article

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. Yamada Pablo Lavado

As 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.

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November 2022

Article

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

Entrepreneurship 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.

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November 2015

Article

Does return migration influence fertility at home?

Migrants encounter different fertility norms while abroad, which they can bring back upon returning home

Simone Bertoli

Demographic factors in migrant-sending countries can influence international migration flows. But when migrants move across borders, they can also influence the pace of demographic transition in their countries of origin. This is because migrants, who predominantly move on a temporary basis, encounter new fertility norms in their host countries and then bring them back home. These new fertility norms can be higher or lower than those in their country of origin. So the new fertility norms that result from migration flows can either accelerate or slow down a demographic transition in migrant-sending countries.

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August 2021

Article

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

Employers 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.

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August 2018

Article

Defining informality vs mitigating its negative effects

More important than defining and measuring informality is focusing on reducing its detrimental consequences

Elizabeth Ruppert Bulmer

There are more informal workers than formal workers across the globe, and yet there remains confusion as to what makes workers or firms informal and how to measure the extent of it. Informal work and informal economic activities imply large efficiency and welfare losses, in terms of low productivity, low earnings, sub-standard working conditions, and lack of social insurance coverage. Rather than quibbling over definitions and measures of informality, it is crucial for policymakers to address these correlates of informality in order to mitigate the negative efficiency and welfare effects.

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October 2014

Article

Products and policies to promote saving in developing countries

Combine behavioral insights with good products to increase formal savings in developing countries

Jessica Goldberg

Poor people in developing countries can benefit from saving to take advantage of profitable investment opportunities, to smooth consumption when income is uneven and unpredictable, and to insure against emergencies. Despite the benefits of saving, only 41% of adults in developing countries have formal bank accounts, and many who do rarely use their accounts. Improving the design and marketing of financial products has the potential to increase savings among this population.

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September 2019

Article

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

Governments 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.

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April 2023

Article

How digital payments can benefit entrepreneurs Updated

Digital payments can effectively connect entrepreneurs with banks, employees, suppliers, and new markets

Leora Klapper

Digital 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.

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August 2014

Article

Post-enlargement emigration and new EU members’ labor markets

Outmigration has contributed to increasing wages and decreasing unemployment in the new EU member states but may also cause skills shortages

Anzelika Zaiceva

The recent EU enlargements into Central and Eastern Europe and increased labor mobility within the Union provide a unique opportunity to evaluate the labor market effects of emigration. Outmigration has contributed to higher wages for stayers, as well as to lower unemployment in the source country. However, emigration has also exacerbated skills shortages in some sectors, as well as mismatches between skills and jobs.

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October 2015

Article

Migrant well-being after leaving transition economies

Evidence is mixed on whether quality of life improves for migrants from post-socialist economies

Milena Nikolova

Most comparative research suggests that immigrants from post-socialist countries earn less than natives, work in jobs for which they are overqualified, and may experience unhappiness compared with natives, other immigrants, and non-migrants. In contrast, one study presents causal evidence which shows that moving from transition economies to live in the West increases the incomes, life satisfaction, and freedom perceptions of those who move. Credibly assessing whether leaving transition economies improves movers’ quality of life remains a challenging empirical question.

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November 2017

Article

Political connectedness and formal finance in transition economies

Policies to increase formal finance to smaller firms requires improving the functioning of government bureaucracies

Kobil Ruziev

Although small- and medium-sized enterprises (SMEs) represent more than 90% of all enterprises and play an important role in employment generation, they lack access to affordable formal finance. Conventionally, market failures and information imperfections are seen as major causes of this misallocation. However, the role of social and political factors in resource allocation, including access to formal finance, has recently become more widely accepted. Firm-level evidence from post-communist economies, for example, shows that political connectedness improves access to bank credit, but is not associated with enterprise growth.

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March 2022

Article

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

How 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.

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September 2015

Article

New firms entry, labor reallocation, and institutions in transition economies

In transition economies, better property rights protection and rule of law enforcement can boost job creation and growth

Randolph L. Bruno

In the transition from central planning to a market economy in the 1990s, governments focused on privatizing or closing state enterprises, reforming labor markets, compensating laid-off workers, and fostering job creation through new private firms. After privatization, the focus shifted to creating a level playing field in the product market by protecting property rights, enforcing the rule of law, and implementing transparent start-up regulations. A fair, competitive environment with transparent rules supports long-term economic growth and employment creation through the reallocation of jobs in favor of new private firms.

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April 2016

Article

Financing high-potential entrepreneurship

Government should create an enabling environment—for entrepreneurs and investors—rather than try to pick “winners”

Ramana Nanda

Entrepreneurship is essential to job creation and to productivity growth and therefore is an important matter for government policy. However, policymakers face a difficult challenge because successful growth for a few firms—which cannot easily be identified in advance—is accompanied by widespread failure for most other new firms. Predicting which firms will fail and which will succeed is nearly impossible. Instead of futilely trying to pick winners, governments can play a useful role in facilitating the growth of the most promising firms by setting the conditions for efficient trial-and-error experimentation across firms.

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March 2017

Article

For long-term economic development, only skills matter

Economic growth determines a nation’s long-term economic well-being and crucially depends on skills

Eric A. Hanushek

Politicians typically focus on short-term economic issues; but, a nation’s long-term economic well-being is directly linked to its rate of economic growth. In turn, its growth rate is directly linked to the economically relevant skills of its population. Until recently, however, economists have found it hard to confirm this through empirical analysis because of difficulties in measuring the skills of different societies. International tests of mathematics and science achievement now offer reliable measures of a population’s relevant cognitive skills.

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February 2019

Article

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

Deregulation 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.

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April 2018

Article

Working in family firms

Family firms offer higher job security but lower wages than other firms

Thomas Breda

Family firms are ubiquitous in most countries. The differences in objectives, governance, and management styles between those firms and their non-family counterparts have several implications for the workforce, which scholars have only recently started to investigate. Family firms offer greater job security, employ different management practices, have a comparative advantage to avoid conflicts when employment relations are more hostile, and provide insurance to workers through implicit contracts when labor market regulation is limited. But all this also comes at a cost.

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January 2023

Article

Covid-19 and the youth-to-adult unemployment gap

Is the youth labor market bearing the brunt of the pandemic?

Francesco Pastore

The 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.

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May 2017

Article

Can diversity encourage entrepreneurship in transition economies?

Harnessing the benefits of diversity is essential for encouraging entrepreneurship in the transition region

Elena Nikolova

Entrepreneurship is an important lever for spurring transition in the economies of the former Soviet Union and Central and Eastern Europe. Utilizing diversity, in terms of religion or gender, can positively affect entrepreneurial development. Programs that encourage entrepreneurial initiatives (such as business start-ups) in culturally diverse localities should rank high on the policy agenda. Prompting women to start a business, along with female-friendly measures (including targeted legislation), can positively affect entrepreneurial behaviour and the performance of existing enterprises.

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October 2014

Article

Happiness and the emigration decision

Happy people are an asset to society, and happiness may be a determinant of emigration

Artjoms Ivlevs

Happy people are healthier and more creative, productive, and sociable. Because of these positive effects of happiness, it is in the interest of countries to attract and retain happy people. With respect to the decision to migrate, the central question becomes whether people who are happier and more satisfied with their lives are more or less likely to migrate. The evidence so far is mixed. Correlational studies find that prospective migrants are less happy than people who are not intending to migrate, while one study controlling for reverse causality suggests that the desire to migrate increases with life satisfaction.

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August 2021

Article

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

Eastern 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.

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October 2018

Article

The portability of social benefits across borders

With rising international migration, how transferable are benefits, and how can transferability be increased?

Robert Holzmann

The importance of benefit portability is increasing in line with the growing number of migrants wishing to bring acquired social rights from their host country back to their country of residence. Failing to enable such portability risks impeding international labor mobility or jeopardizing individuals’ ability to manage risk across their life cycle. Various instruments may establish portability. But which instrument works best and under what circumstances is not yet well-explored.

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Search the site

New sources of data create challenges that may require new skills

Google search activity data are an unconventional survey full of unbiased, revealed answers in need of the right question

Workers can benefit from technology that substitutes robots or other machines for their work by owning part of the capital that replaces them

Labor market consequences of the college boom around the world Updated

Better information on university quality may reduce underemployment and overeducation in developing countries

New businesses are essential to keep unemployment low, but start-ups need loans in order to create jobs

Migrants encounter different fertility norms while abroad, which they can bring back upon returning home

While technology has improved sharing and managing information, there are legitimate concerns about the quality of information and its use in recruitment

More important than defining and measuring informality is focusing on reducing its detrimental consequences

Combine behavioral insights with good products to increase formal savings in developing countries

Designing labor market regulations in developing countries Updated

Labor market regulation should aim to improve the functioning of the labor market while protecting workers

How digital payments can benefit entrepreneurs Updated

Digital payments can effectively connect entrepreneurs with banks, employees, suppliers, and new markets

Outmigration has contributed to increasing wages and decreasing unemployment in the new EU member states but may also cause skills shortages

Evidence is mixed on whether quality of life improves for migrants from post-socialist economies

Policies to increase formal finance to smaller firms requires improving the functioning of government bureaucracies

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

In transition economies, better property rights protection and rule of law enforcement can boost job creation and growth

Government should create an enabling environment—for entrepreneurs and investors—rather than try to pick “winners”

Economic growth determines a nation’s long-term economic well-being and crucially depends on skills

Market competition and executive pay Updated

Increased competition affects the pay incentives firms provide to their managers and may also affect overall pay structures

Family firms offer higher job security but lower wages than other firms

Is the youth labor market bearing the brunt of the pandemic?

Harnessing the benefits of diversity is essential for encouraging entrepreneurship in the transition region

Happy people are an asset to society, and happiness may be a determinant of emigration

Alcoholism and mortality in Eastern Europe Updated

Excessive drinking is the main cause of high male mortality rates, but the problem can be addressed

With rising international migration, how transferable are benefits, and how can transferability be increased?