-
Disability is associated with labor market
disadvantage; evidence points to this being a causal relationship
In Europe, about one in eight people of working
age report having a disability; that is, a long-term limiting health
condition. Despite the introduction of a range of legislative and policy
initiatives designed to eliminate discrimination and facilitate retention of
and entry into work, disability is associated with substantial and enduring
labor market disadvantage in many countries. Identifying the reasons for
this is complex, but critical to determine effective policy solutions that
reduce the extent, and social and economic costs, of disability-related
disadvantage.
MoreLess
-
Key labor market institutions, and the policies
that shape them, affect the restructuring that leads to economic growth
Economic growth requires factor reallocation
across firms and continuous replacement of technologies. Labor market
institutions influence economic dynamism by their impact on the supply of a
key factor, skilled workers to new and expanding firms, and the shedding of
workers from declining and failing firms. Growth-favoring labor market
institutions include portable pension plans and other job tenure rights,
health insurance untied to the current employer, individualized
wage-setting, and public income insurance systems that encourage mobility
and risk-taking in the labor market.
MoreLess
-
Selection and incentives in retirement plans
affect job transitions
The relationship between retirement plan type
and job mobility is more complex than typically considered. While
differences in plan features and benefit structure may directly affect
employees’ mobility decisions (“incentive effect”), the type of plan offered
may also affect the types of employees a given employer attracts (“selection
effect”), thereby affecting mobility through a second, indirect channel. At
the same time, some employees may not be able to accurately assess
differences between plan types due to limited financial literacy. These
factors have implications for policymakers and employers considering
retirement plan offerings.
MoreLess
-
Temporary government schemes can have a
positive economic effect
Government schemes that compensate workers for
the loss of income while they are on short hours (known as short-time work
compensation schemes) make it easier for employers to temporarily reduce
hours worked so that labor is better matched to output requirements. Because
the employers do not lay off these staff, the schemes help to maintain
permanent employment levels during recessions. However, they can create
inefficiency in the labor market, and might limit labor market access for
freelancers and those looking to work part-time.
MoreLess
-
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.
MoreLess
-
Uncoordinated unemployment insurance and
severance pay do a poor job of insuring against losses resulting from job
displacement
Job displacement poses a serious earnings threat
to long-tenured workers through unemployment spells and lower re-employment
wages. The prevailing method of insuring job displacement losses involves an
uncoordinated combination of unemployment insurance and severance pay. Less
developed countries often rely exclusively on public mandating of employer
severance pay due to the administrative complexity of unemployment insurance
systems. If both options are operational, systematic integration of the two
is important, although perhaps not possible if severance pay is voluntarily
provided.
MoreLess
-
Wage losses upon re-employment can seriously harm
long-tenured displaced workers if they are not properly insured
Job displacement represents a serious earnings risk to
long-tenured workers through lower re-employment wages, and these losses may persist for
many years. Moreover, this risk is often poorly insured, although not for a lack of
policy interest. To reduce this risk, most countries mandate scheduled wage insurance
(severance pay), and it is voluntarily provided in others. Actual-loss wage insurance is
uncommon, although perceived difficulties may be overplayed. Both approaches offer the
hope of greater consumption smoothing, with actual-loss plans carrying greater
promise.
MoreLess
-
Jobs can change quickly from full- to part-time
status, especially during economic downturns
The share of workers employed part-time
increases substantially in economic downturns. How should this phenomenon be
interpreted? One hypothesis is that part-time jobs are more prevalent in
sectors that are less sensitive to the business cycle, so that recessionary
changes in the sectoral composition of employment explain the increase in
part-time employment. The evidence shows, however, that this hypothesis only
accounts for a small part of the story. Instead, the growth of part-time
work operates mainly through reductions in working hours in existing
jobs.
MoreLess
-
EU supranational policies should be more active
at promoting institutional reforms that reduce unemployment
Unemployment in Europe is excessively high on
average, and is divergent across countries and population groups within
countries. On the one hand, over the past decades, national governments have
implemented incomplete institutional reforms to amend dysfunctional labor
markets. On the other hand, EU supranational policies—those that transcend
national boundaries and governments—have offered only limited financial
support for active labor market policies, instead of promoting structural
reforms aimed at improving the functioning of European labor markets. Better
coordination and a wider scope of EU supranational policies is needed to
fight unemployment more effectively.
MoreLess
-
Unemployment insurance can protect against
income loss and create formal employment
Unemployment insurance can be an efficient tool
to provide protection for workers against unemployment and foster formal job
creation in developing countries. How much workers value this protection and
to what extent it allows a more efficient job search are two key parameters
that determine its effectiveness. However, evidence shows that important
challenges remain in the introduction and expansion of unemployment
insurance in developing countries. These challenges range from achieving
coverage in countries with high informality, financing the scheme without
further distorting the labor market, and ensuring progressive
redistribution.
MoreLess