Evidence-based policy making

IZA World of Labor is an online platform that provides policy analysts, journalists, academics and society generally with relevant and concise information on labor market issues. Based on the latest research, it provides current thinking on labor markets worldwide in a clear and accessible style. IZA World of Labor aims to support evidence-based policy making and increase awareness of labor market issues.

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Happiness as a guide to labor market policy Updated

Happiness is key to a productive economy, and a job is key to individual happiness

Jo Ritzen

Measures of individual happiness, or well-being, can guide labor market policies. Individual unemployment, as well as the rate of unemployment in society, have a negative effect on happiness. In contrast, employment protection and unemployment benefits can contribute to happiness—though when such policies prolong unemployment, the net effect on national happiness is negative. Active labor market policies that create more job opportunities increase happiness, which in turn increases productivity. Measures of individual happiness should therefore guide labor market policy more explicitly.

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  • Equal pay legislation and the gender wage gap Updated

    Despite major efforts at equal pay legislation, gender pay inequality still exists—how can this be put right?

    Solomon W. Polachek, October 2019
    Despite equal pay legislation dating back 50 years, American women still earn 18% less than their male counterparts. In the UK, with its Equal Pay Act of 1970, and France, which legislated in 1972, the gap is 17% and 10% respectively, and in Australia it remains around 14%. Interestingly, the gender pay gap is relatively small for the young but increases as men and women grow older. Similarly, it is large when comparing married men and women, but smaller for singles. Just what can explain these wage patterns? And what can governments do to speed up wage convergence to close the gender pay gap? Clearly, the gender pay gap continues to be an important policy issue.
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  • Do firms benefit from apprenticeship investments? Updated

    Why spending on occupational skills can yield economic returns to employers

    Robert Lerman, October 2019
    Economists have long believed that firms will not pay to develop occupational skills that workers could use in other, often competing, firms. Researchers now recognize that firms that invest in apprenticeship training generally reap good returns. Evidence indicates that financial returns to firms vary. Some recoup their investment within the apprenticeship period, while others see their investment pay off only after accounting for reduced turnover, recruitment, and initial training costs. Generally, the first year of apprenticeships involves significant costs, but subsequently, the apprentice's contributions exceed his/her wages and supervisory costs. Most participating firms view apprenticeships as offering certainty that all workers have the same high level of expertise and ensuring an adequate supply of well-trained workers to cover sudden increases in demand and to fill leadership positions.
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  • Men without work: A global well-being and ill-being comparison

    The number of prime-age males outside the labor force is increasing worldwide, with worrying results

    Carol GrahamSergio Pinto, October 2019
    The global economy is full of progress paradoxes. Improvements in technology, reducing poverty, and increasing life expectancy coexist with persistent poverty in the poorest countries and increasing inequality and unhappiness in many wealthy ones. A key driver of the latter is the decline in the status and wages of low-skilled labor, with an increasing percentage of prime-aged men (and to a lesser extent women) simply dropping out of the labor force. The trend is starkest in the US, though frustration in this same cohort is also prevalent in Europe, and it is reflected in voting patterns in both contexts.
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  • Designing labor market regulations in developing countries Updated

    Labor market regulation should aim to improve the functioning of the labor market while protecting workers

    Gordon Betcherman, September 2019
    Governments regulate employment to protect workers and improve labor market efficiency. But, regulations, such as minimum wages and job security rules, can be controversial. Thus, decisions on setting employment regulations should be based on empirical evidence of their likely impacts. Research suggests that most countries set regulations in the appropriate range. But this is not always the case and it can be costly when countries over- or underregulate their labor markets. In developing countries, effective regulation also depends on enforcement and education policies that will increase compliance.
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  • The labor market in Russia, 2000–2017

    Low unemployment and high employment, but also low, volatile pay and high inequality characterize the Russian labor market

    Vladimir Gimpelson, September 2019
    Being the largest economy in the Eurasian region, Russia's labor market affects economic performance and well-being in several former Soviet countries. Over the period 2000–2017, the Russian labor market survived several deep crises and underwent substantial structural changes. Major shocks were absorbed largely via wage adjustments, while aggregate employment and unemployment showed little sensitivity. Workers have paid the price for this rather stable employment situation in the form of volatile wages and a high risk of low pay.
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  • Public employment in the Middle East and North Africa

    Does a changing public sector workforce in the MENA region provide an opportunity for efficient restructuring?

    Public sector hiring has been an essential component of the social bargains that have maintained political stability in the Middle East and North Africa (MENA). As these bargains eroded, public sector workforces contracted in relative terms owing to a partial freeze on hiring and the promise of lifetime job security for incumbent workers. This had profound effects on the age composition of the workforce. The upcoming retirement of many workers provides an opportunity to restructure public sector hiring to emphasize meritocratic recruitment processes and performance-based compensation systems.
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  • Obesity and labor market outcomes Updated

    The hidden private costs of obesity: lower earnings and a lower probability of employment

    Susan L. Averett, August 2019
    Rising obesity is a pressing global public health problem responsible for rising health care costs and in some countries one of the leading causes of preventable deaths. There is substantial evidence that obese people are less likely to be employed and, when employed, earn lower wages. There is some evidence that the lower earnings are a result of discriminatory hiring and sorting into jobs with less customer contact. Understanding whether obesity is associated with adverse labor market outcomes and ascertaining the source of these outcomes are essential for designing effective public policy.
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  • Women in crime Updated

    Over the last 50 years women have been increasing their participation in the labor market and in the crime market

    Nadia Campaniello, July 2019
    In recent decades, women's participation in the labor market has increased considerably in most countries and is converging toward the participation rate of men. Though on a lesser scale, a similar movement toward gender convergence seems to be occurring in the criminal world, though many more men than women still engage in criminal activity. Technological progress and social norms have freed women from the home, increasing their participation in both the labor and the crime market. With crime no longer just men's business, it is important to investigate female criminal behavior to determine whether the policy prescriptions to reduce crime should differ for women.
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