Search

We analyze for the first time the welfare effects of unemployment benefits (UBs) in a context of high informality, exploiting matched administrative and survey data with individual-level information on UB receipt, formal and informal employment, wages and consumption. Using a difference-in-differences approach, we find that dismissal from a formal job causes a large drop in consumption, which is between three to six times larger than estimates for developed economies. This is generated by a permanent shift of UB recipients towards informal employment, where they earn substantially lower wages. We then exploit a kink in benefits and show that more generous UBs delay program exit through a substitution of formal with informal employment. However, the disincentive effects are small and short-lived. Because of the high insurance value and the low efficiency costs, welfare effects from increasing UBs are positive for a range of values of the coefficient of relative risk aversion.

We investigate the macroeconomic impact of public expenditure in active labor market policies (ALMPs) and passive labor market policies (PLMPs) on main employment indicators (i.e., unemployment, employment, and labor force participation) for a large and novel panel database of 121 countries (36 developed, 64 emerging and 21 developing economies). Compared to previous studies, we include for the first time evidence from developing and emerging economies and explicitly examine the possible presence of complementarities between active and passive policies. We find that the interaction between interventions is crucial, as the effect of spending in either of the two policies is more favorable the more is spent on the other. Even the detrimental labor market effects of passive policies disappear on the condition that sufficient amounts are spent on active interventions. This complementarity seems even more important for emerging and developing economies.

There is an increasing recognition in the policy debate of the importance of providing support to unemployed individuals through a combination of income support and active labour market policies. However, very little evidence exists on the effectiveness of this policy approach (and possible trade-offs) beyond developed economies. We provide one of the first evaluations of these schemes in the context of an emerging economy by looking at a public works programme implemented in Uruguay between 2005 and 2007 as part of a comprehensive cash transfer intervention that reached around 10 per cent of households in the country during a major recession. Exploiting specific eligibility criteria for participation in the cash transfer programme, we use rich administrative data of panel nature to study the effects of (i) participating in the public works programme (active component), (ii) receiving the cash transfer (income-support component) and, (iii) of benefiting of both the active and income-support programmes. We find that participation in the active programme has positive (albeit only marginally significant) effects on the employment probability, but non-significant effects on the quality of the job found. The positive employment effect does not generate displacement effects from participants to non-participants within the same household. However, the effect fades away when participants receive the cash transfer. Finally, the programme did not have any effect on measures of civic engagement and social integration.

We present a systematic collection and assessment of impact evaluations of active labour market programmes (ALMP) in Latin America and the Caribbean (LAC). The paper delineates the strategy to compile a novel meta database and provides a narrative review of 51 studies. Based on these studies, the quantitative analysis extracts a sample of 296 impact estimates, and uses meta regression models to analyse systematic patterns in the data. In addition to analysing earnings and employment outcomes as in previous meta analyses, we also code and investigate measures of job quality, such as the effects on hours worked and formality. We find that ALMPs in LAC are particularly effective in increasing the probability of having a formal job, compared to other outcomes. Our results also show that training programmes are slightly more effective than other types of interventions. Moreover, when looking at the sample of training programmes alone, we observe that formal employment is also the outcome category that is most likely to be impacted positively by these programmes. In terms of targeting, we find that ALMPs in the region work better for women than for men, and for youth compared to prime-age workers. Finally, medium-run estimates are not more likely to be positive than short-run estimates, while programmes of short duration (4 months or less) are significantly less likely to produce positive effects compared to longer interventions.

Chapter 4 reviews changes in employment regulation in 63 countries over the past two decades, focusing on changes in the regulation of different forms of employment (in particular agency, fixed-term, and part-time work) and employment protection law (EPL). The most distinct changes, globally and especially in Europe, have been the increases in the relative strength of labour regulation that requires equal treatment for workers in agency, fixed-term and part-time work. Since the crisis, however, the relative strength of EPL fell in both developing countries and the EU. In the EU, decreases were driven largely by changes to notice periods for dismissal, and to the calculation of redundancy compensation. In the same period, on average, other advanced and emerging economies continued to slightly increase their overall level of EPL. The chapter also analyses the effects of labour regulation and changes in regulation on key labour market indicators including the unemployment rate, the labour force participation rate and the employment to population ratio. The analysis presented in the chapter highlights that there are no negative effects from increased labour regulation. This also confirms the findings of previous studies that showed there was no statistically significant effect between the strength of labour regulation and employment levels.

The chapter gives a global overview of recent labour market developments and short- and medium-term projections for employment and wages. The chapter discusses recent changes in occupational employment and how they affect inequality and wages. The chapter also highlights the importance of rising youth unemployment for social unrest across major world regions.

The chapter gives a detailed overview of recent labour market trends across eight major world regions. The chapter discusses each one of them, highlighting the divergent trends both within and across regions. In particular, the continuous improvement in some major advanced economies contrasts sharply with the ongoing difficulties in many European countries and the first signs of slowdown in key emerging markets.

The chapter analyses factors influencing medium-term employment growth, highlighting the importance of labour force participation, occupational changes and income inequality as key determinants. The chapter also discusses the role of manufacturing employment for overall job creation and challenges that the early decline in manufacturing employment in a series of emerging economies poses for their future economic and social development.

We present a systematic collection and assessment of impact evaluations of active labour market programmes (ALMP) in Latin America and the Caribbean (LAC). The paper delineates the strategy to compile a novel meta database and provides a narrative review of 51 studies. Based on these studies, the quantitative analysis extracts a sample of 296 impact estimates, and uses meta regression models to analyse systematic patterns in the data. In addition to analysing earnings and employment outcomes as in previous meta analyses, we also code and investigate measures of job quality, such as the effects on hours worked and formality.We find that ALMPs in LAC are particularly effective in increasing the probability of having a formal job, compared to other outcomes. Our results also show that training programmes are slightly more effective than other types of interventions. Moreover, when looking at the sample of training programmes alone, we observe that formal employment is also the outcome category that is most likely to be impacted positively by these programmes. In terms of targeting, we find that ALMPs in the region work better for women than for men, and for youth compared to prime-age workers. Finally, medium-run estimates are not more likely to be positive than short-run estimates, while programmes of short duration (4 months or less) are significantly less likely to produce positive effects compared to longer interventions.

The paper analyses the determinants and short-term effects of labour market reforms, using information from a novel policy compendium that covers 110 developed and developing economies between 2008 and 2014. We find that the approval of reforms is positively associated with the unemployment rate, the simultaneous implementation of fiscal consolidation measures and the presence of a fixed exchange rate regime. Differences in the results are explored by looking at the direction of reforms (i.e. increasing or decreasing legislation), temporal horizon (i.e. temporary or permanent measures) and coverage (i.e. complete or two-tier reforms); while also analysing separately reforms’ determinants across domains of labour legislation (e.g. permanent contracts, collective dismissals). Finally, we find that deregulatory labour market reforms tend to increase the unemployment rate in the short run when they are approved during contractionary periods—while they have a non-significant effect when approved during periods of economic stability or expansion. JEL Classification: J20, J52, J38, J48, J58, K31