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Business consulting and supervisory skills
training can improve firm productivity and labor relations
Productivity differences across firms and
countries are surprisingly large and persistent. Recent research reveals
that the country-level distributions of productivity and quality of
management are strikingly similar, suggesting that management practices may
play a key role in the determination of worker and firm productivity.
Understanding the causal impacts of these practices on productivity and the
effectiveness of various management interventions is thus of primary policy
interest.
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Non-compliance with labor legislation is
widespread and this has critical implications for understanding labor
markets in developing countries
Compliance with minimum wage laws and non-wage
conditions of employment often depends on labor market specific factors. In
developing countries, many workers still earn less than the legal minimum
and lack access to mandated non-wage benefits. Enforcement has not kept up
with regulation growth and compliance has not been measured from a
multidimensional perspective. Such an approach would help to understand the
impact of institutional variables and country-specific approaches on the
level of labor law violation. The difference between de facto and de jure
regulation remains particularly pertinent in countries where compliance is
low.
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Exposure to foreign trade raises the skill
premium in countries with a large stock of educated workers and reduces it
in others
Liberalization of foreign trade and investment
raises the domestic ratio of skilled to unskilled wages (skill premium) if
the country has a sufficiently well-educated workforce, but lowers it
otherwise. Wide wage inequality is undesirable on equity grounds, especially
in poor countries where the bottom wage is close to the breadline; but it
gives parents an incentive to invest in their children’s education. The
incentive will be ineffective, however, if parents cannot borrow for their
child’s education because of underdeveloped credit markets or because they
are too poor to finance the investment from their own income and
savings.
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The global fight against child labor might be
better served by focusing less on existing laws and more on implementation
and enforcement
Regulation of the minimum age of employment is
the dominant tool used to combat child labor globally. If enforced, these
regulations can change the types of work in which children participate, but
minimum age regulations are not a useful tool to promote education. Despite
their nearly universal adoption, recent research for 59 developing countries
finds little evidence that these regulations influence child time allocation
in a meaningful way. Going forward, coordinating compulsory schooling laws
and minimum age of employment regulations may help maximize the joint
influence of these regulations on child time allocation, but these
regulations should not be the focus of the global fight against child
labor.
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Policies in developing countries to improve
women’s access to paid work should also consider child welfare
Engaging in paid work is generally difficult for
women in developing countries. Many women work unpaid in family businesses
or on farms, are engaged in low-income self-employment activities, or work
in low-paid wage employment. In some countries, vocational training or
grants for starting a business have been effective policy tools for
supporting women’s paid work. Mostly lacking, however, are job and business
training programs that take into account how mothers’ employment affects
child welfare. Access to free or subsidized public childcare can increase
women’s labor force participation and improve children’s well-being.
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Whether raising minimum wages reduces—or increases—poverty depends on the characteristics of the labor market and Households
Raising 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.
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Combine behavioral insights with good products to
increase formal savings in developing countries
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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