Labor supply and demand

  • Youth unemployment in transition economies

    Both general and age-specific policies are necessary to reduce youth unemployment in transition economies

    Marcello Signorelli, November 2017
    The 2008 financial crisis and subsequent Great Recession created a second major employment shock in less than a generation in several transition economies. In particular, youth unemployment rates, which are usually higher than adult rates in normal times, reached extremely high levels and partly tended to persist over time. Improving youth labor market performance should therefore be a top priority for policymakers in affected transition countries. Better understanding of the dynamics of national and regional youth unemployment rates and other associated indicators is particularly important for designing effective policy approaches.
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  • The changing nature of jobs in Central and Eastern Europe

    Restructuring and upskilling prevents job polarization but may leave countries vulnerable to routine-biased technical change

    Piotr Lewandowski, April 2017
    Job polarization can pose serious problems for emerging economies that rely on worker reallocation from low-skilled to middle-skilled jobs to converge toward advanced economies. Evidence from Central and Eastern European (CEE) countries shows that structural change and education expansion can prevent polarization, as they enable a shift from manual to cognitive work and prevent the “hollowing out” of middle-skilled jobs. However, in CEE countries they have also led to a high routine cognitive content of jobs, which makes such jobs susceptible to automation and computerization in the future.
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  • Childcare expansion and mothers’ employment in post-socialist countries

    A range of other policies and changes are needed for childcare expansion to increase mothers’ labor supply

    Anna Lovász, December 2016
    In 2002, the EU set targets for expanding childcare coverage, but most of the post-socialist countries are behind schedule. While childcare expansion places a heavy financial burden on governments, low participation in the labor force by mothers, especially those with children under the age of three, implies a high potential impact. However, the effectiveness of childcare expansion may be limited by some common characteristics of these countries: family policies that do not support women’s labor market re-entry, few flexible work opportunities, and cultural norms about family and gender roles shaped by the institutional and economic legacy of socialism.
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  • Encouraging women’s labor force participation in transition countries

    Government policies can stimulate female labor force participation if coherent and well thought-out

    Norberto Pignatti, June 2016
    Increasing women’s labor force participation is important to sustainable economic development, especially in economies with highly educated women and an aging population. Women’s participation varies across transition countries, driven by such economic and social factors as traditional views of gender roles and limited government support for caregivers. Still, in all countries there is clear scope for policies aimed at increasing women’s participation. In particular, in countries where women’s educational attainment is already high, policies to support a better work−life balance and female entrepreneurship look particularly promising.
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  • Skill mismatch and overeducation in transition economies

    Substantial skill shortages coexist with overeducation, affecting both young and old workers

    Olga Kupets, December 2015
    Large imbalances between the supply and demand for skills in transition economies are driven by rapid economic restructuring, misalignment of the education system with labor market needs, and underdeveloped adult education and training systems. The costs of mismatches can be large and long-lasting for workers, firms, and economies, with long periods of overeducation implying a loss of human capital for individuals and ineffective use of resources for the economy. To make informed decisions, policymakers need to understand how different types of workers and firms are affected by overeducation and skill shortages.
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  • Does corruption promote emigration?

    Corruption is a driving force of emigration, especially for high-skilled workers, but also for other workers

    Friedrich Schneider, October 2015
    Knowing whether corruption leads to higher emigration rates—and among which groups—is important because most labor emigration is from developing to developed countries. If corruption leads highly-skilled and highly-educated workers to leave developing countries, it can result in a shortage of skilled labor and slower economic growth. In turn, this leads to higher unemployment, lowering the returns to human capital and encouraging further emigration. Corruption also shifts public spending from health and education to sectors with less transparency in spending, disadvantaging lower-skilled workers and encouraging them to emigrate.
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  • New firms entry, labor reallocation, and institutions in transition economies

    In transition economies, better property rights protection and rule of law enforcement can boost job creation and growth

    Randolph L. Bruno, September 2015
    In the transition from central planning to a market economy in the 1990s, governments focused on privatizing or closing state enterprises, reforming labor markets, compensating laid-off workers, and fostering job creation through new private firms. After privatization, the focus shifted to creating a level playing field in the product market by protecting property rights, enforcing the rule of law, and implementing transparent start-up regulations. A fair, competitive environment with transparent rules supports long-term economic growth and employment creation through the reallocation of jobs in favor of new private firms.
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  • Female labor force participation in developing countries

    Improving employment outcomes for women takes more than raising labor market participation—good jobs are important too

    Sher Verick, September 2014
    While women’s labor force participation tends to increase with economic development, the relationship is not straightforward or consistent at the country level. There is considerably more variation across developing countries in labor force participation by women than by men. This variation is driven by a wide variety of economic and social factors, which include economic growth, education, and social norms. Looking more broadly at improving women’s access to quality employment, a critical policy area is enhancing women’s educational attainment beyond secondary schooling.
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  • Post-enlargement emigration and new EU members’ labor markets

    Outmigration has contributed to increasing wages and decreasing unemployment in the new EU member states but may also cause skills shortages

    Anzelika Zaiceva, August 2014
    The recent EU enlargements into Central and Eastern Europe and increased labor mobility within the Union provide a unique opportunity to evaluate the labor market effects of emigration. Outmigration has contributed to higher wages for stayers, as well as to lower unemployment in the source country. However, emigration has also exacerbated skills shortages in some sectors, as well as mismatches between skills and jobs.
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  • Worker displacement in transition economies and in China

    Knowing which workers are displaced in restructuring episodes helps governments devise the right equity- and efficiency-enhancing policies

    Hartmut Lehmann, May 2014
    Continuous enterprise restructuring is needed for the transition and emerging market economies to become and remain competitive. However, the beneficial effects of restructuring in the medium run are accompanied by large worker displacement. The costs of displacement can be large and long-lasting for some workers and for the economy. To devise the right policy interventions, governments need to fully understand which workers are displaced and what costs they bear.
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