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Excessive drinking is the main cause of high
male mortality rates, but the problem can be addressed
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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Trade policy is not an employment policy and
should not be expected to have major effects on overall employment
Trade regulation can create jobs in the sectors
it protects or promotes, but almost always at the expense of destroying a
roughly equivalent number of jobs elsewhere in the economy. At a
product-specific or micro level and in the short term, controlling trade
could reduce the offending imports and save jobs, but for the economy as a
whole and in the long term, this has neither theoretical support nor
evidence in its favor. Given that protection may have other—usually
adverse—effects, understanding the difficulties in using it to manage
employment is important for economic policy.
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Reducing under-reporting of salaries requires
institutional changes
In transition economies, a significant number of
companies reduce their tax and social contributions by paying their staff an
official salary, described in a registered formal employment agreement, and
an extra, undeclared “envelope wage,” via a verbal unwritten agreement. The
consequences include a loss of government income and a lack of fair play for
lawful companies. For employees, accepting under-reported wages reduces
their access to credit and their social protections. Addressing this issue
will help increase the quality of working conditions, strengthen trade
unions, and reduce unfair competition.
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Does formal work pay? Synthetic measurements of
taxes and benefits can help identify incentives and disincentives to formal
work
Evidence from transition economies shows that
formal work may not pay, particularly for low-wage earners. Synthetic
measurements of work disincentives, such as the formalization tax rate or
the marginal effective tax rate, confirm a significant positive correlation
between these measurements and the probability of informal work. These
measures are especially informative for impacts at lower wage levels, where
informality is highest. Policymakers who want to increase formal work can
use these measurements to determine optimal labor taxation rates for
low-wage earners and reform benefit design.
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Households can benefit from international trade
as it lowers the prices of consumer goods
Imported products tend to have lower prices than
locally produced ones for a variety of reasons, including lower labor costs
and better technology in the exporting country. The reduced prices may lead
to wage losses for individuals who work in the production of a local version
of the imported item. On the other hand, lower prices may be beneficial to
households if the cheaper product is in their consumption basket. These
welfare gains through consumption, on average, are found to be larger in
magnitude than the wage effect for some developing countries.
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Can the privatization of state-owned enterprises generate
a virtuous cycle between exports and employment?
The privatization of state-owned enterprises (SOE) in
transition economies has often been found to improve employment and productivity of
privatized SOEs, despite policymakers’ fears regarding possible job cuts. This positive
effect can be enhanced if privatization also promotes firms’ exports. A recent
firm-level analysis of China reveals that privatization has indeed a positive effect on
export propensity, employment, and productivity in both the short and long term. The
effect mostly stems from changes in firms’ attitudes about profits and risks due to
competitive pressure.
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Reducing informality requires better enforcement,
more reasonable regulation, and economic growth
In developing and transition economies as much as
half the labor force works in the informal sector (or “shadow economy”).
Informal firms congest infrastructure and other public services but do not
contribute the taxes needed to finance them. Informal workers are
unprotected against such negative shocks as ill-health, but for certain
groups there can be scarce opportunities to enter the formal sector meaning
informal employment is the only feasible option. Reducing informality
requires better enforcement, more reasonable regulation, and economic
growth.
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