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Machines’ ability to perform cognitive,
physical, and social tasks is advancing, dramatically changing jobs and
labor markets
The 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.
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Giving employees more discretion at work can
boost their satisfaction and well-being
A wide range of high involvement management
practices, such as self-managed teams, incentive pay schemes, and
employer-provided training have been shown to boost firms’ productivity and
financial performance. However, less is known about whether these practices,
which give employees more discretion and autonomy, also benefit employees.
Recent empirical research that aims to account for employee self-selection
into firms that apply these practices finds generally positive effects on
employee health and other important aspects of well-being at work. However,
the effects can differ in different institutional settings.
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Family firms offer higher job security but lower wages
than other firms
Family firms are ubiquitous in most countries. The
differences in objectives, governance, and management styles between those firms and
their non-family counterparts have several implications for the workforce, which
scholars have only recently started to investigate. Family firms offer greater job
security, employ different management practices, have a comparative advantage to avoid
conflicts when employment relations are more hostile, and provide insurance to workers
through implicit contracts when labor market regulation is limited. But all this also
comes at a cost.
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Peer pressure can affect productivity and explain why
workers’ wages and productivity depend on their co-workers’ productivity
Should one expect a worker’s productivity, and thus wage,
to depend on the productivity of his/her co-workers in the same workplace, even if the
workers carry out completely independent tasks and do not engage in team work? This may
well be the case because social interaction among co-workers can lead to productivity
spillover through knowledge spillover or peer pressure. The available empirical evidence
suggests that, due to such peer effects, co-worker productivity positively affects a
worker’s own productivity and wage, particularly in lower-skilled occupations.
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A bidirectional relationship between
informality and inequality exists; in transition and emerging countries,
higher informality decreases inequality
Higher inequality reduces capital
accumulation and increases the informal economy, which creates additional
employment opportunities for low-skilled and deprived people. As a result,
informal employment leads to beneficial effects on income distribution by
providing sources of income for unemployed and marginalized workers. Despite
this positive feedback, informality raises problems for public finances and
biases official statistics, reducing the effectiveness of redistributive
policies. Policymakers should consider the links between inequality and
informality because badly designed informality-reducing policies may
increase inequality.
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How and why do the careers of men and women
differ? What policies could reduce the differences?
The gender wage gap is largely due to men and
women holding different kinds of jobs. This job segregation is partly driven
by gender differences in careers in corporate hierarchies. Research has
shown that the careers of men and women begin to diverge immediately upon
entry into the labor market and that subsequent career progress exacerbates
the divergence. This divergence of career progress explains a large part of
the gender wage gap. Understanding how and why the careers of men and women
differ is necessary to design effective policies that can reduce the gender
differences in hierarchies.
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