Labor supply and demand

  • Aggregate labor productivity

    Labor productivity is generally seen as bringing wealth and prosperity; but how does it vary over the business cycle?

    Michael C. Burda, April 2018
    Aggregate labor productivity is a central indicator of an economy’s economic development and a wellspring of living standards. Somewhat controversially, many macroeconomists see productivity as a primary driver of fluctuations in economic activity along the business cycle. In some countries, the cyclical behavior of labor productivity seems to have changed. In the past 20–30 years, the US has become markedly less procyclical, while the rest of the OECD has not changed or productivity has become even more procyclical. Finding a cogent and coherent explanation of these developments is challenging.
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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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  • 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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  • 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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  • Female labor force participation and development Updated

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

    Sher Verick, December 2018
    The relationship between female labor force participation and economic development is far more complex than often portrayed in both the academic literature and policy debates. Due to various economic and social factors, such as the pattern of growth, education attainment, and social norms, trends in female labor force participation do not conform consistently with the notion of a U-shaped relationship with GDP. Beyond participation rates, policymakers need to focus on improving women’s access to quality employment.
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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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  • One-company towns: Scale and consequences

    One-company towns concentrate employment but their ability to adapt to adverse events is often very limited

    Simon Commander, March 2018
    One-company towns are a relatively rare phenomenon. Mostly created in locations that are difficult to access, due to their association with industries such as mining, they have been a marked feature of the former planned economies. One-company towns typically have high concentrations of employment that normally provide much of the funding for local services. This combination has proven problematic when faced with shocks that force restructuring or even closure. Specific policies for the redeployment of labor and funding of services need to be in place instead of subsidies simply aimed at averting job losses.
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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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  • Returns to language skills in transition economies

    Speaking English has its benefits in transition countries but can it supersede Russian?

    Astghik Mavisakalyan, December 2017
    In many transition countries, the collapse of communism ushered in language reforms to adapt to the newfound independence from the Soviet Union and openness to the rest of the world. Such reforms may have implications for individuals’ economic opportunities, since foreign language proficiency may enhance or signal productivity in the labor market. Recent empirical evidence documents positive labor market returns to English language skills in transition countries. However, Russian language proficiency also remains economically valuable, and nationalist language policies may lead to future loss of economic opportunities.
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