rss_2.0IZA Journal of Labor Policy FeedSciendo RSS Feed for IZA Journal of Labor Policy Journal of Labor Policy Feed the Global Competitiveness Index by the World Economic Forum a reliable tool for the design of labor market policies? Evidence from Latin American countries<abstract> <title style='display:none'>Abstract</title> <p>Most of the competitiveness gap in Latin America is due to its labor market, one of the areas with the highest rates of subjective indicators in the Global Competitiveness Index (GCI). This paper analyzes the subjective component of the GCI in the labor market area and discusses its accuracy for policy advice. We focus on the set of countries that highly rely on the GCI for policy advice and highlight that the perception of business executives of the labor market as rigid contrasts with the significant experience of flexibilization policies undertaken in the region over the past 3 decades. We show that the GCI has been largely constructed with opinion data from large firms, a business sector that accounts for &lt;5% of total firms in the countries of study. Furthermore, the questionnaire exhibits obvious flaws. Thus, we do not find that the GCI provides a solid base for policy advice.</p> </abstract>ARTICLEtrue and the COVID-19 crisis: potential and actual prevalence of remote work across Europe<abstract> <title style='display:none'>Abstract</title> <p>This paper develops a conceptual analysis to identify the jobs that can be done from home and those that cannot, and on this basis quantifies the fraction of employees that are in teleworkable occupations across EU countries. Using detailed data on occupational tasks, we construct two teleworkability indices. The first core technical teleworkability index, based on the prominence of physical tasks, implies that 36% of dependent employment in the EU is technically teleworkable. However, our second social interaction index shows that only one third of teleworkable employment is in occupations that require limited social interactions, thus ideally suited to telework. To validate our approach, we compare our measures of teleworkability with data on the actual prevalence of telework before and during the COVID-19 outbreak. We show that our measures correlate with the observed increase in telework across countries and occupations in the EU during the outbreak. However, the prevalence of telework among employees appears to have remained below its full potential in 2020, as measured by our technical teleworkability index. This is especially the case for lower-level white-collar occupations as well as for countries with limited previous experience with teleworking. These patterns suggests that, despite the rapid increase in teleworking, the same barriers that prevented the diffusion of telework before the outbreak – lack of ICT infrastructure, fears of losing managerial control, position in the occupational hierarchy, limited workforce's digital skills, awkwardness of remote social interaction – are likely to continue playing an important role in shaping the diffusion of telework after the outbreak.</p> </abstract>ARTICLEtrue first: A comparative study of company responses to paid care leave programs in the COVID-19 pandemic<abstract> <title style='display:none'>Abstract</title> <p>Despite established positive associations of paid care leave (PCL) policies on labor market outcomes such as wage replacement and job continuity, the United States is a notable outlier as the only advanced nation without a federal paid leave program. Assuming PCL programs are costly, my study examines employer perceptions and responses to PCL regulations in the US during the COVID-19 pandemic in 2020. Using a policy experiment around the 500-employee cutoff associated with the Families First Coronavirus Response Act (FFCRA), logistic regressions are used on a newly-created dataset constructed from a survey administered to 306 business managers in New York and Boston. The analysis ultimately seeks to evaluate if PCL cost concerns predict 19 different business outcomes such as changes in headcount or employee benefits. In general, while 54.6 percent of firms report cost concerns with PCL laws, the results find firms with such concerns are more likely to engage in non-employee focused operational changes such as increases in prices instead of employee-oriented outcomes such as layoffs or wage decreases. Furthermore, the policy experiment yields that large companies are more likely to increase internal paid leave, while small companies are more likely to increase the number of independent contractors at the company. My study confirms companies react to government PCL regulation in dynamic ways, dependent on the unique circumstances and culture of each company.</p> </abstract>ARTICLEtrue effects of more intensive counseling for disadvantaged unemployed youth<abstract> <title style='display:none'>Abstract</title> <p>Many European countries are facing the key challenge of integrating low-skilled jobless young people into the labor market. From 2018 to 2020, the Public Employment Service (PES) in Vienna tested a new model of intensified support (“case management”). The target group consisted of young unemployed persons with low formal qualifications who were drawing on social assistance. Based on the pilot project and a propensity matching approach, we show that the increase in staff significantly increased the intensity of the counseling. It led to an increase in job proposals and active labor market program participation, as well as sanctions in the form of benefit suspensions for failure to keep PES appointments. In line with the goal, more of the young people were encouraged to take part in training and further education instead of being quickly placed in an unskilled job. However, in the three-year follow-up period, the intensified counseling did not (yet) have a significant effect on the overall extent of integration into employment. Regarding post-unemployment job quality, we find no effects on wages at the start of a job.</p> </abstract>ARTICLEtrue the Evolution of Job Tenure in Europe, 1995–2020<abstract> <title style='display:none'>Abstract</title> <p>During the last quarter century, job tenure in Europe has shortened. Using data from Eurostat Labor Force Surveys of 29 countries from 1995 to 2020 and applying an age-period-cohort decomposition to analyze changes in tenure for specific birth cohorts, we show that tenure has shrunk for cohorts born in more recent years. To account for compositional changes within cohorts, we estimate the probability of holding jobs of different durations, conditional on individual and employment-related characteristics. The estimations demonstrate that, over time, the likelihood of having a medium- or long-term job decreased and holding a short-term job increased. We also find that stricter job protection legislation appears to decrease the probability of holding a short-term job, and higher trade openness and ICT-related technological change are correlated with an increase of that probability.</p> </abstract>ARTICLEtrue Protection — It is Good to be an Insider<abstract> <title style='display:none'>Abstract</title> <p>This study develops a search and matching model for labour markets with temporary and permanent contracts. It matches empirical patterns of higher matching rates and lower surplus for temporary workers and predicts an increase in separation taxes leads to a fall in the number of new permanent jobs, an increase in their wages, and stable separation rates because temporary workers shield permanent workers from adverse shocks. We find empirical support using a regional French policy experiment, the “Contrat de Transition Professionelle”, which increased separation taxes for recently hired permanent workers in firms with fewer than 1,000 workers.</p> </abstract>ARTICLEtrue distributional effects of the pension system reform in Poland<abstract> <title style='display:none'>Abstract</title> <p>This paper quantifies the effect of Poland's 1999 pension reform on the inequality of future pension benefits. The reform increases inequality, both in the upper and lower parts of the distribution. The estimates, based on the 2012 Polish Household Budget Survey, show that the Gini coefficient reaches 0.27 once the full effect of the reform has materialized. Had the pre-reform system continued unchanged, the Gini coefficient would not be &gt;0.19. The increased inequality of pension benefits is the result of the system gradually moving from a more redistributive defined benefit pension system to a system in which benefits are strongly linked to earnings. We show to what extent minimum pension benefits mitigate the increase in inequality under different scenarios.</p> </abstract>ARTICLEtrue wage and collective bargaining shocks: a narrative database for advanced economies<abstract> <title style='display:none'>Abstract</title> <p>This paper presents and describes a new database of major minimum wage and collective bargaining (CB) shocks covering 26 advanced economies over the period 1970–2020. The main advantage of this dataset is the precise identification of the nature and date of major shocks, which is valuable in many empirical applications. Based on the dataset, we observe that major changes in minimum wages have been more frequent than in CB in the last decades, and the majority of these were implemented during the 1980s and 1990s. In our empirical application, we find that minimum wage policy reductions have a medium-run positive impact on labor productivity and they lead to a fall in the unemployment rate. CB policy liberalizations do not seem to affect either productivity or capital formation, but they have a clear medium-term effect on the labor market. Moreover, CB policy liberalizations are characterized by a greater sensitivity to the prevailing business cycle conditions at the time of the shock (vis-à-vis minimum wage reforms).</p> </abstract>ARTICLEtrue World’s Oldest Profession? Employment-Age Profiles from the Transactional Sex Market<abstract><title style='display:none'>Abstract</title><p>Standard labor market models predict that the likelihood of employment increases, hours worked increase, and individuals transition from less-skilled and temporary jobs to more skilled and more stable employment as they age. I examine the association between age and transactional sex work using national household surveys from Zambia, one of the few settings with general population surveys asking women about transactional sex and a relatively high documented prevalence of employment in transactional sex. My results indicate that the likelihood of employment in transactional sex sharply falls with age. Increased employment opportunities outside of transactional sex do not appear to explain the transactional sex employment-age profile and marital status appears to explain only a portion of it. These findings are consistent with the hypothesis that clients prefer younger transactional sex workers and suggest that policymakers implement interventions designed to reduce client demand for younger females.</p></abstract>ARTICLEtrue of Overeducation in Europe: The Role of Field of Study<abstract><title style='display:none'>Abstract</title><p>This study investigates the incidence of overeducation among graduate workers in 21 European Union countries and its underlying factors based on the European Labor Force Survey 2016. Although controlling for a wide range of covariates, the particular interest lies in the role of fields of study for vertical educational mismatch. The study reveals country differences in the impact of these factors. Compared to Social sciences, male graduates from, for example, Education, Health and welfare, Engineering, and ICT (Information and Communication Technologies) are less and those from Services and Natural sciences are more at risk in a clear majority of countries. These findings are robust against changes of the standard education. Moreover, some fields show gender-specific risks. We suggest that occupational closure, productivity signals and gender stereotypes answer for these cross-field and cross-country differentials. Moreover, country fixed effects point to relevant structural differences between national labor markets and between educational systems.</p></abstract>ARTICLEtrue Impact of Parental Leave Policy on Child-Rearing and Employment Behavior: The Case of Germany<abstract><title style='display:none'>Abstract</title><p>Parental leave and child care are important instruments of family policies to improve work–family balance. This paper studies the impact of the substantial change in Germany’s parental leave system on maternal employment. The aim of the reform was to decrease birth-related maternal employment breaks by providing more generous parental benefits for a shorter period of time. Using the German Socio-Economic Panel data for 2002–2015, I exploited quasi-experimental variation in the benefits to estimate the impact of the reform. I incorporated the mother’s decision to substitute her care time with the public child care. To control for the availability of child care, I used spatial and temporal variation in the availability of childcare slots. Overall, I did not find significant changes in maternal employment during the first three years of motherhood after the reform implementation. Only for high-income mothers, the reform produced a significant decrease in the employment participation during the first year of leave and an increase in employment probability after the benefits expired. The empirical findings suggest that the restriction in the childcare availability became an important constraint for the employment effect of the reform.</p></abstract>ARTICLEtrue assault versus incremental change: A comparison of collective bargaining in Portugal and the Netherlands<abstract><title style='display:none'>Abstract</title><p>Collective bargaining has come under renewed scrutiny, especially in Southern European countries, which rely predominantly on sectoral bargaining supported by administrative extensions of collective agreements. Following the global financial crisis, some of these countries have implemented substantial reforms in the context of adjustment programmes, seen by some as a ‘frontal assault’ on collective bargaining. This paper compares the recent top-down reforms in Portugal with the more gradual evolution of the system in the Netherlands. While the Dutch bargaining system shares many of the key features that characterise the Portuguese system, it has shown a much greater ability to adjust to new challenges through concerted social dialogue. This paper shows that the recent reforms in Portugal have brought the system more in line with Dutch practices, including in relation to the degree of flexibility in sectoral collective agreements at the worker and firm levels, the criteria for administrative extensions, and the application of retro- and ultra-activity. However, it remains to be seen to what extent the top-down approach taken in Portugal will change bargaining practices, and importantly, the quality of industrial relations.</p></abstract>ARTICLEtrue Economic Effects of Providing Legal Status to DREAMers<abstract><title style='display:none'>Abstract</title><p>This study quantifies the economic effects of two major immigration policies aimed at legalizing undocumented individuals that entered the United States as children and completed high school: Deferred Action for Childhood Arrivals (DACA) and the DREAM Act. The former offers only temporary legal status to eligible individuals, whereas the latter provides a track to legal permanent residence. Our analysis is based on a general equilibrium model that allows for shifts in participation between work, college, and non-employment. The model is calibrated to account for productivity differences across workers of different skills and documentation status, and a rich pattern of complementarities across different types of workers. We estimate that DACA increased gross domestic product (GDP) by almost 0.02% (about $3.5 billion), or $7,454 per legalized worker. Passing the DREAM Act would increase GDP by around 0.08% (or $15.2 billion), which amounts to an average of $15,371 for each legalized worker. The larger effects of the DREAM Act stem from the expected larger take-up and the increased incentive to attend college among DREAMers with a high school degree. We also find substantial wage increases for individuals obtaining legal status, particularly those that increase their educational attainment. Because of the small size of the DREAMer population, and their skill distribution, legalization entails negligible effects on the wages of US-born workers.</p></abstract>ARTICLEtrue for the Devil? Exploring Flexicurity Win–Win Promises<abstract><title style='display:none'>Abstract</title><p>Flexicurity is the combination of more flexibility for employers and more security for workers. It is a complex and multifaceted phenomenon that lacks a well-developed monitoring framework or a statistically consistent grouping of the indicators. First, this paper proposes a conceptual framework by building upon the <xref ref-type="bibr" rid="j_izajolp-2019-0009_ref_027_w2aab3b7b9b1b6b1ab1b7c27Aa">Wilthagen and Tros (2004)</xref> flexicurity matrix and the Danish Golden Triangle. It constructs flexicurity “drivers” by pooling together variables that are conceptually related to each other and a specific type of flexibility or security. Then, it obtains statistically consistent aggregate measures for each driver and selects three drivers that represent the three corners of the Danish “golden triangle”: external numerical flexibility, employment security, and income security. It conducts an empirical analysis on the evolution of the selected flexicurity drivers over time and across European Union (EU) countries and on the relationship between selected flexicurity drivers and social outcomes from the Social Scoreboard of the European Pillar of Social Rights. It finds evidence of convergence on external numerical flexibility and polarization on employment and income security across the EU. It finds that higher flexibility at the onset of the crisis contributed to a reduction in the unemployment rates after the crisis, while a more generous welfare system contributed to reducing poverty. Employment security, however, appears to be linked to the presence of higher levels of income inequality after the crisis.</p></abstract>ARTICLEtrue with Criminal Records and Racial Disparity in Labor Markets<abstract><title style='display:none'>Abstract</title><sec id="j_izajolp-2019-0002_s_007_w2aab3b7b2b1b6b1aab1c14b1Aa"><title style='display:none' id="d843614e15473_w2aab3b7b2b1b6b1aab1c14b1aAa">Background</title><p>Although unemployment rates are at historical lows, there is still a persistent gap between unemployment rates in black and white population. Some have proposed that part of the gap for men can be explained by the higher rate of criminal records in the black population.</p></sec><sec id="j_izajolp-2019-0002_s_008_w2aab3b7b2b1b6b1aab1c14b2Aa"><title style='display:none' id="d843614e15481_w2aab3b7b2b1b6b1aab1c14b2aAa">Methods</title><p>This analysis aims to use negative binomial regressions and the detailed crime data available from the National Longitudinal Survey of Youth 1997 survey to determine if black men with criminal records appear to be the driving force behind the gap.</p></sec><sec id="j_izajolp-2019-0002_s_009_w2aab3b7b2b1b6b1aab1c14b3Aa"><title style='display:none' id="d843614e15489_w2aab3b7b2b1b6b1aab1c14b3aAa">Results</title><p>The author finds that there are significant deviations in labor market outcomes depending on race and ethnicity, even when controlling for a criminal record and premarket skills.</p></sec><sec id="j_izajolp-2019-0002_s_010_w2aab3b7b2b1b6b1aab1c14b4Aa"><title style='display:none' id="d843614e15497_w2aab3b7b2b1b6b1aab1c14b4aAa">Conclusions</title><p>Lowering the disproportionate rate at which black men are incarcerated will not in itself eliminate the unemployment gap between white and black men.</p></sec></abstract>ARTICLEtrue Impact of Product and Labor Market Regulation: Evidence from European Countries<abstract><title style='display:none'>Abstract</title><p>This paper provides robust estimates of the impact of both product and labor market regulations on unemployment using data from 24 European countries over the period 1998–2013. Controlling for country fixed effects, endogeneity, and a large set of covariates, results show that product market deregulation overall reduces the unemployment rate. This finding is robust across all specifications and in line with theoretical predictions. However, not all types of reforms have the same effect: deregulation of state controls and in particular involvement in business operations tend to push up the unemployment rate. Labor market deregulation, proxied by the employment protection legislation index, is detrimental to unemployment in the short run, while a positive impact (i.e., a reduction in the unemployment rate) occurs only in the long run. Analysis by sub-indicators shows that reducing protection against collective dismissals helps in reducing the unemployment rate. The unemployment rate equation is also estimated for different categories of workers. Although men and women are equally affected by product and labor market deregulations, workers distinguished by age and educational attainment are affected differently. In terms of employment protection, young workers are almost twice as strongly affected as older workers. Regarding product market deregulation, highly educated individuals are less impacted than low- and middle-educated workers.</p></abstract>ARTICLEtrue of Artificial Intelligence: Implications for the Future of Work<abstract><title style='display:none'>Abstract</title><p>The current wave of technological change based on advancements in artificial intelligence (AI) has created widespread fear of job loss and further rises in inequality. This paper discusses the rationale for these fears, highlighting the specific nature of AI and comparing previous waves of automation and robotization with the current advancements made possible by a widespread adoption of AI. It argues that large opportunities in terms of increases in productivity can ensue, including for developing countries, given the vastly reduced costs of capital that some applications have demonstrated and the potential for productivity increases, especially among the low skilled. At the same time, risks in the form of further increases in inequality need to be addressed if the benefits from AI-based technological progress are to be broadly shared. For this, skills policies are necessary but not sufficient. In addition, new forms of regulating the digital economy are called for that prevent further rises in market concentration, ensure proper data protection and privacy, and help share the benefits of productivity growth through the combination of profit sharing, (digital) capital taxation, and a reduction in working time. The paper calls for a moderately optimistic outlook on the opportunities and risks from AI, provided that policymakers and social partners take the particular characteristics of these new technologies into account.</p></abstract>ARTICLEtrue effective are hiring subsidies in reducing long-term unemployment among prime-aged jobseekers? Evidence from Belgium<abstract> <title style='display:none'>Abstract</title> <p>Hiring subsidies are widely used to create (stable) employment for the long-term unemployed. This paper exploits the abolition of a hiring subsidy targeted at long-term unemployed jobseekers older than 45 years of age in Belgium to evaluate its effectiveness in the short and medium run. Based on a triple-difference methodology, the hiring subsidy is shown to increase the job-finding rate by 13% without any evidence of spillover effects. This effect is driven by a positive effect on individuals with at least a bachelor's degree. However, the hiring subsidy mainly creates temporary short-lived employment: eligible jobseekers are not more likely to find employment that lasts at least 12 consecutive months compared with ineligible jobseekers.</p> </abstract>ARTICLEtrue effect of time-saving household appliance ownership on outcomes for children and married women: evidence from India<abstract> <title style='display:none'>Abstract</title> <p>We use microlevel data from the India Human Development Survey to test our hypothesis that ownership of time-saving household appliances results in the following: an increase in employment rates for married women; an increase in school enrollment rates; and a decrease in employment rates for children. We address the concern of endogeneity of appliance ownership by instrumenting household ownership of time-saving appliances by two family-specific <italic>time-using</italic> household assets and (1) average ownership rate among single women living in the same primary sampling unit (for the adult female sample) or (2) average ownership among households with no children living in the same primary sampling unit (for the child sample). Our results suggest a <italic>decrease</italic> in married women's and children's employment when ownership of time-saving appliances increases. Disaggregating our measure of employment, we find that married women use time-saving appliances as a substitute for human capital and increase their probability of working in more productive employment outside of the household.</p> </abstract>ARTICLEtrue young dropouts via SMS: evidence from a field experiment<abstract> <title style='display:none'>Abstract</title> <p>Although short message services (SMS) are constantly used to transmit information, little is known about the use of SMS by public institutions to direct people. This paper presents a field experiment in France about the effectiveness of SMS in directing disadvantaged people toward public services. Two types of treatment SMS were provided: one type had its content written in a formal style; the second type SMS style was much informal. All the SMS were individualized and included specific information about the agencies. Results indicate that the SMS had no significant effect on enrollment. There is also no apparent heterogeneous effect according to individual, agency, or location characteristics. In line with other academic evidence, these findings suggest that SMS have very limited effectiveness in directing this population toward public services.</p> </abstract>ARTICLEtrue