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The labor market stabilized quickly after the
1998 Asian crisis, but rising inequality and demographic change are
challenges
South Korea has boasted one of the world's most
successful economies since the end of World War II. The South Korean labor
market has recovered quickly from the depths of the Asian crisis in 1998,
and has since remained surprisingly sound and stable. The unemployment rate
has remained relatively low, and average real earnings have steadily
increased. The South Korean labor market was resilient in the wake of the
global financial crisis. However, there are issues that require attention,
including high earnings inequality, an aging labor force, increasing
part-time jobs, and rising youth unemployment rates.
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Despite a plummeting working-age population,
Japan has sustained its labor force size because of surging employment among
women
As the third-largest economy in the world and
a precursor of global trends in population aging, Japan's recent experiences
provide important lessons regarding how demographic shifts affect the labor
market and individuals’ economic well-being. On the whole, the labor market
showed a remarkable stability during the financial crisis, despite decades
of economic stagnation and sluggish real wage growth. Rapid population
aging, however, has brought substantial changes to individuals in the labor
market, most notably women, by augmenting labor demand in the healthcare
services industry.
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The institutional structure of pension systems
should follow population developments
For decades, pension systems were based on the
rising revenue generated by an expanding population (the so-called
demographic dividend). As changes in fertility and longevity created new
population structures, however, the dividend disappeared, but pension
systems failed to adapt. They are kept solvent by increasing redistributions
from the shrinking working-age population to retirees. A simple and
transparent structure and individualization of pension system participation
are the key preconditions for an intergenerationally just old-age security
system.
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With rising international migration, how
transferable are benefits, and how can transferability be increased?
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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A mix of policies could be the solution to
reducing discrimination in the labor market
Discrimination is a complex, multi-factor
phenomenon. Evidence shows widespread discrimination on various grounds,
including ethnic origin, sexual orientation, gender identity, religion or
beliefs, disability, being over 55 years old, or being a woman. Combating
discrimination requires combining the strengths of a range of
anti-discrimination policies while also addressing their weaknesses. In
particular, policymakers should thoroughly address prejudice (taste-based
discrimination), stereotypes (statistical discrimination), cognitive biases,
and attention-based discrimination.
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Young people experience worse labor market
outcomes than adults worldwide but the difference varies greatly
internationally
In Germany, young people are no worse off than
adults in the labor market, while in southern and eastern European
countries, they fare three to four times worse. In Anglo-Saxon countries,
both youth and adults fare better than elsewhere, but their unemployment
rates fluctuate more over the business cycle. The arrangements developed in
each country to help young people gain work experience explain the striking
differences in their outcomes. A better understanding of what drives these
differences in labor market performance of young workers is essential for
policies to be effective.
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Dialects show regional cultural variation, making the idea of standardized national labor markets misleading
Countries are not perfectly integrated market
areas. Even if institutional differences are much smaller within than
between countries, there are persistent local cultural differences. These
differences act as barriers that reduce economic exchange: bilateral
migration, trade, and knowledge diffusion flows are smaller, and individuals
discriminate against unfamiliar dialects. They also act as natural limits to
the degree of integration of a labor market, and they cannot (and perhaps
should not) be easily affected by policy. Local dialects, shaped over
centuries, provide a unique opportunity to measure these barriers.
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Hot weather can worsen reproductive health and decrease later
birth rates
Research finds that hot weather causes a fall in birth rates
nine months later. Evidence suggests that this decline in births is due to hot weather harming
reproductive health around the time of conception. Birth rates only partially rebound after
the initial decline. Moreover, the rebound shifts births toward summer months, harming infant
health by increasing third trimester exposure to hot weather. Worse infant health raises
health care costs in the short term as well as reducing labor productivity in the longer term,
possibly due to lasting physiological harm from the early life injury.
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