Labor markets and institutions
Institutions have important consequences for the performance of households, companies, governments, and entire markets—they determine the welfare of nations. Contributions to this subject area explore the underlying mechanisms and the politico-economic determinants of such structures. Many provide background analyses that offer evidence on how new institutions and policies would affect labor markets.
Subject Editor
Sciences Po, France, and IZA, Germany
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Alternative dispute resolution Updated
Promoting accurate bargainer expectations regarding outcomes from binding dispute resolution is worth the effort
David L. Dickinson, March 2023Alternative dispute resolution procedures such as arbitration and mediation are the most common methods for resolving wage, contract, and grievance disputes, but they lead to varying levels of success and acceptability of the outcome depending on their design. Some innovative procedures, not yet implemented in the real world, are predicted to improve on existing procedures in some ways. Controlled tests of several procedures show that the simple addition of a nonbinding stage prior to binding dispute resolution can produce the best results in terms of cost (monetary and “uncertainty” costs) and acceptability.MoreLess -
The labor market in Poland, 2000−2021 Updated
Employment has been rising, but disadvantaged groups and low participation of older people pose challenges
Piotr LewandowskiIga Magda, March 2023In the early 2000s, Poland's unemployment rate reached 20%. That is now a distant memory, as employment has increased noticeably and the unemployment rate had dropped to 3.4% in 2021. The labor force participation of older workers increased following reforms aimed at prolonging careers. However, participation remains low compared to most developed countries and the reversal of the statutory retirement age in 2017 leaves Poland vulnerable to the effects of population aging. Rising immigration has eased the resulting labor shortages, but women, people with disabilities, and agricultural workers remain underemployed. During the Covid-19 pandemic the slowdown in economic growth and increase in unemployment were small.MoreLess -
Hours vs employment in response to demand shocks Updated
Evaluating the labor market effects of temporary aggregate demand shocks requires analyzing both employment and hours of work
Robert A. Hart, February 2023The responses of working hours and employment levels to temporary negative demand shocks like those caused by the Great Recession in 2007–2008 and the Covid-19 pandemic in 2020–2022 have shown that consideration of both is important. Workers’ desired rises in working hours in times of recession also serve to modify the standard measure of unemployment. During Covid-19, both jobs and earnings were temporarily protected among workers forced into short-time work schemes, providing a useful comparison with the provision of improved unemployment insurance to unemployed workers at that time.MoreLess -
Fertility postponement and labor market outcomes Updated
Postponed childbearing improves women’s labor market outcomes but may reduce overall fertility
Massimiliano Bratti, January 2023The rise in the average age of women bearing their first child is a well-established demographic trend in recent decades. Postponed childbearing can have important consequences for the mothers and, at a macro level, for the country in which they live. Research has primarily focused on the effect postponing fertility has on mothers’ labor market outcomes and on the total number of children a woman has in her lifetime. Most research finds that postponing the first birth raises a mother's labor force participation and wages but may have negative effects on overall fertility, especially in the absence of supportive family-friendly policies.MoreLess -
In-plant alliances can mitigate economic crisis impacts Updated
Decentral bargaining is an instrument to address both imminent economic crises and for increasing firm competitiveness
Lutz BellmannWerner Widuckel, December 2022In-plant alliances are plant-specific deviations from sectoral collective agreements related to wages and working time that are intended to hold down labor costs. These agreements enable firm-level reorganizations to respond to an imminent economic crisis or to improve competitiveness. They also encourage social partners to take greater responsibility for employment issues. Both unions and works councils agree to such contracts because they see them as helpful in avoiding severe employment losses. Thus, these alliances substantially unburden public employment policy.MoreLess -
Job search requirements for older unemployed workers Updated
Search requirements for the older unemployed affect their re-employment rates and their flows into states of inactivity
Hans Bloemen, November 2022Many OECD countries have, or have had, a policy that exempts older unemployed people from the requirement to search for a job. An aging population and low participation by older workers in the labor market increasingly put public finances under strain, and spur calls for policy measures that activate labor force participation by older workers. Introducing job search requirements for older unemployed workers aims to increase their re-employment rates. Abolishing the exemption from job search requirements for the older unemployed has been shown to initiate higher outflow rates from unemployment for them.MoreLess -
Firm age and job creation in the US
New businesses are essential to keep unemployment low, but start-ups need loans in order to create jobs
Henry R. Hyatt, November 2022Entrepreneurship is essential for a healthy labor market. Recent evidence shows that young businesses (at most ten years old) have, on average, accounted for all of US employment growth over the past few decades. New businesses are especially important for youth employment. However, these businesses tend to borrow a lot, and the credit constraints they face limit their ability to create jobs. Historically, much of the discussion regarding the economic importance of entrepreneurship has focused on small businesses. Empirical evidence increasingly suggests that, among small businesses, those that are young create the most jobs.MoreLess -
The labor market in Canada, 2000–2021 Updated
Covid-19 ended 20 years of stability and good labor market performance, aided in part by a strong resource boom
W. Craig Riddell, November 2022From 2000 to 2019, Canada's economy and labor market performed well. Important in this success was a strong resource boom from the late 1990s to 2014. After the boom the economy and labor market adjusted relatively smoothly, with labor and other resources exiting resource-rich regions and moving elsewhere. Strong growth in major export markets (Asia and the US) aided the adjustment. The Covid-19 downturn resulted in an unprecedented decline in employment, and a steep rise in unemployment and non-participation. Despite the severity of the Covid-19 shock, by December 2021 most key measures of labor market activity had returned to pre-pandemic levels.MoreLess -
How is new technology changing job design? Updated
Machines’ ability to perform cognitive, physical, and social tasks is advancing, dramatically changing jobs and labor markets
Michael GibbsSergei Bazylik, August 2022The IT revolution has had dramatic effects on jobs and the labor market. Many routine manual and cognitive tasks have been automated, replacing workers. By contrast, new technologies complement and create new non-routine cognitive and social tasks, making work in such tasks more productive, and creating new jobs. This has polarized labor markets: while low-skill jobs stagnated, there are fewer and lower-paid jobs for middle-skill workers, and higher pay for high-skill workers, increasing wage inequality. Advances in AI may accelerate computers’ ability to perform cognitive tasks, heightening concerns about future automation of even high-skill jobs.MoreLess -
- Migration and ethnicity
- Labor markets and institutions
- Education and human capital
- Country labor markets
The labor market in New Zealand, 2000−2021 Updated
Employment has grown steadily, unemployment is low, and the gender gap and skill premiums have fallen
David C. Maré, August 2022New Zealand is a small open economy, with large international labor flows and skilled immigrants. After the global financial crisis (GFC) employment took four years to recover, while unemployment took more than a decade to return to pre-crisis levels. Māori, Pasifika, and young workers were worst affected. The Covid-19 pandemic saw employment decline and unemployment rise but this was reversed within a few quarters. However, the long-term impact of the pandemic remains uncertain.MoreLess