Policymakers need to find the right balance
between protecting workers and promoting efficient resource allocation and
Laws on hiring and firing are intended to protect
workers from unfair behavior by employers, to counter imperfections in
financial markets that limit workers’ ability to insure themselves against
job loss, and to preserve firm-specific human capital. But by imposing costs
on firms’ adaptation to changes in demand and technology, employment
protection legislation may reduce not only job destruction but also job
creation, hindering the efficient allocation of labor and productivity
How effective are online methods of worker
recruitment and job search?
Since the internet’s earliest days, firms and
workers have used various online methods to advertise and find jobs. Until
recently there has been little evidence that any internet-based tool has had
a measurable effect on job search or recruitment outcomes. However, recent
studies, and the growing use of social networking as a business tool,
suggest workers and firms are at last developing ways to use the internet as
an effective matchmaking tool. In addition, job boards are also emerging as
important for the statistical study of labor markets, yielding useful data
for firms, workers, and policymakers.
Are fixed-term contracts a stepping stone to a
permanent job or a dead end?
Fixed-term contracts have become a major form of
employment in Europe. Available evidence about whether temporary jobs are a
stepping stone to a permanent employment or are a dead end is mixed. The
usefulness of these jobs depends on the institutional and economic
environment. Fixed-term contracts can be a pathway from unemployment to
employment, but their potential as a stepping stone to permanent employment
is undercut if there is a strong degree of segmentation in labor markets. If
that is the case, the labor flexibility motive of employers ends up
dominating the screening function in offering a fixed-term contract.
Successful implementation of a statutory minimum
wage depends on context, capacity, and institutional design
Motivations for introducing a statutory minimum
wage in developing countries include reducing poverty, advancing social
justice, and accelerating growth. Attaining these goals depends on the
national context and policy choices. Institutional capacity tends to be
limited, so institutional arrangements must be adapted. Nevertheless, a
statutory minimum wage could help developing countries advance their
development objectives, even where enforcement capacity is weak and
informality is pervasive.