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Better understanding of skills mismatch is essential to finding effective policy options
Evidence suggests that productivity would be much higher and unemployment much lower if the supply of and demand for skills were better matched. As a result, skills mismatch between workers (supply) and jobs (demand) commands the ongoing attention of policymakers in many countries. Policies intended to address the persistence of skills mismatch focus on the supply side of the issue by emphasizing worker education and training. However, the role of the demand side, that is, employers’ rigid skill requirements, garners comparatively little policy attention.
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Vouchers can create a market for training but
may lengthen participants’ unemployment duration
The objective of providing vocational training
for the unemployed is to increase their chances of re-employment and human
capital accumulation. In comparison to mandatory course assignment by case
workers, the awarding of vouchers increases recipients’ freedom to choose
between different courses and makes non-redemption a possibility. In
addition, vouchers may introduce market mechanisms between training
providers. However, empirical evidence suggests that voucher allocation
mechanisms prolong the unemployment duration of training participants. But,
after an initial period of deterioration, better long-term employment
opportunities are possible.
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Staffing agencies could play a more prominent
role in the provision of training for the low qualified and previously
unemployed
Temporary work agencies use training as a
recruitment and retention argument when qualified labor is scarce. However,
short job assignments present a major obstacle for employers and employees
to increase investment in training. As temporary agency workers are mainly
low-qualified and often previously unemployed, paid work in combination with
training should lead to more sustainable employment. Adjustments in labor
market institutions could make the provision of training more attractive for
both staffing agencies and temporary agency workers.
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Secondary and higher education are windows of
opportunity for boosting students’ life skills
Life skills, sometimes referred to as
noncognitive skills or personality traits (e.g. conscientiousness or locus
of control—the belief to influence events and their outcomes), affect labor
market productivity. Policymakers and academics are thus exploring whether
such skills should be taught at the high school or college level. A small
portfolio of recent studies shows encouraging evidence that education could
strengthen life skills in adolescence. However, as no uniform approach
exists on which life skills are most important and how to best measure them,
many important questions must be answered before life skill development can
become an integral part of school curricula.
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Increasing the availability of high-quality job
opportunities can reduce recidivism among released prisoners
The majority of individuals released from prison
face limited employment opportunities and do not successfully reintegrate
into society. The inability to find stable work is often cited as a key
determinant of failed re-entry (or “recidivism”). However, empirical
evidence that demonstrates a causal impact of job opportunities on
recidivism is sparse. In fact, several randomized evaluations of
employment-focused programs find increases in employment but little impact
on recidivism. Recent evidence points to wages and job quality as important
determinants of recidivism among former prisoners.
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Choosing the right performance measures can
inform and improve decision-making in policy and management
Measuring workers’ productivity is important
for public policy and private-sector decision-making. Due to the lack of a
general measure that captures workers’ productivity, firms often use one- or
multi-dimensional performance measures, which can be used, for example, to
analyze how different incentive systems affect workers’ behavior. The public
sector itself also uses measures to monitor and evaluate personnel, such as
teachers. Policymakers and managers need to understand the advantages and
disadvantages of the available metrics to select the right performance
measures for their purpose.
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Moonlighting responds to economic needs, but can generate new skills and careers
Multiple job-holding, or “moonlighting”, is an important form of atypical employment in most economies. New forms of work, driven by digitalization, may enable its future growth. However, many misconceptions exist, including the belief that multiple job-holders are only low-skilled individuals who moonlight primarily for financial reasons, or that the practice increases during economic downturns. Recent literature highlights the significant links between moonlighting and job mobility. Multiple job-holding allows for the development of workers’ skills and spurs entrepreneurship.
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Training programs that meet the learning needs
of older workers can improve their employability
The labor market position of older workers is
cause for concern in many industrialized countries. Rapid population aging
is challenging pension systems. The recent economic crisis has forced many
older adults out of the workforce, into either pre-retirement or
non-employment. Encouraging people to work longer and fostering the
employability of older workers have become priorities for policymakers.
Training specifically designed for older workers might help attain these
goals, since it may refresh human capital and reduce the pay–productivity
gap. Training older workers might also benefit employers and society as a
whole.
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Cost–benefit surveys of employers help design
more effective training policies
Apprenticeship training programs typically last
several years and require substantial investments by training firms, largely
due to the associated labor costs for participants and instructors.
Nevertheless, apprentices also add significant value in the workplace. One
tool to measure the costs and benefits of training for firms is employer
surveys, which were first introduced in the 1970s in Germany. Such
cost–benefit surveys (CBS) help to better understand a firm's demand for
apprentices and to identify market failures. Therefore, CBS are an important
tool for designing effective training policies.
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Job search training and occupational skills
training are both effective
Time plays an important role in both the design
and interpretation of evaluation studies of training programs. While the
start and duration of a training program are closely linked to the evolution
of job opportunities, the impact of training programs in the short and
longer term changes over time. Neglecting these “dynamics” could lead to an
unduly negative assessment of the effects of certain training schemes.
Therefore, a better understanding of the dynamic relationship between
different types of training and their respective labor market outcomes is
essential for a better design and interpretation of evaluation studies.
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