Labour markets

Juan J. Dolado, Etienne Lalé, Nawid Siassi, 30 January 2016

The dual labour markets of Southern Europe and France create a ‘revolving door’ through which many workers – especially youths – rotate between dead-end jobs and unemployment. The problem lies in the difference between the costs of firing workers on permanent versus temporary contracts. This column proposes a framework for evaluating what the optimal single contract should look like taking account of transitional issues and political economy constraints.

Adriana Kugler, Maurice Kugler, Juan Saavedra, Luis Herrera, 28 January 2016

Vocational training programmes offer a second chance to those who drop out of the formal education system. Most studies of the success of such programmes, however, typically only analyse outcomes directly after participation. This column examines the medium- and long-term outcomes of a vocational training programme in Colombia. Results suggest that vocational training and formal education are complementary investments and that there are educational spillover effects for family members, in particular among applicants with high baseline educational attainment.

Nauro F. Campos, Jeffrey B Nugent, 28 January 2016

Labour market liberalisation is both one of the most important structural reforms and one of the least well understood. This is partly due to a lack of data. This column introduces a new index of labour market regulations rigidity covering over 140 countries from 1950 onwards. Trade liberalisation and per capita income are shown to be more powerful explanations of the dynamics of labour market reform than ‘legal origins’.

John Gibson, David McKenzie, Halahingano Rohorua, Steven Stillman, 26 January 2016

Wage differences across countries offer individuals the possibility of huge wage gains through moving abroad. This column uses data on lottery-selected migrants from Tonga to New Zealand to assess the effect on productivity and wages for workers moving from a poor country to a rich country. These randomly selected workers appear to be immediately more productive, and their wage gains are stable over time. It seems that cross-country wage differences are due to better institutions, higher quality capital, and other factors in rich countries that serve to raise the productivity of all workers, whether natives or migrants.

David Cesarini, Erik Lindqvist, Matthew Notowidigdo, Robert Östling, 24 January 2016

Cash welfare programmes are widely thought to discourage work because unearned income reduces the labour supply even when it does not alter work incentives. This column discusses recent evidence from Swedish lottery players suggesting that this ‘income effect’ is economically significant, but modest in magnitude and surprisingly similar across various demographic groups. Introducing ‘unconditional basic income’ programmes in developed countries may reduce the labour supply across a broad cross-section of the population.

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