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Job-to-job transitions, sorting, and wage growth

David Jinkins and Annaïg Morin.

Labour Economics, 55. 2018.

In this paper we measure the relative contribution of firm effects and match quality to wage growth experienced by workers moving between jobs. We provide evidence that firm effects only explain a small share of the observed wage dynamics. We also show that standard assumptions on match quality used to estimate fixed-effect wage models are not well supported in Danish data.

We propose an alternative strategy to estimate an additive model of wage changes that includes a freely-varying match effect for all but a subset of job changers. Using estimates from Danish linked worker-firm data, we find that 44% of the wage growth experienced by job-to-job movers is attributable to an improvement in the quality of the worker-firm match, and 66% of the variance of wage growth is explained by the variance of the change in match effects.

URL: https://www.sciencedirect.com/science/article/pii/S092753711830112X

Courtesy: sciencedirect


Culture, financial constraints, and retirement decision

Lionel Cottier.

Labour Economics, 53. 2018.

This paper investigates the interaction between cultural effects and financial constraints. I study how culture affects male labor supply near retirement before and after reforms that introduced early access to pension benefits. Variation in the cultural dimension arises from different cultural groups across state borders in Switzerland.

Results show that the impact of culture over time follows changes in financial constraints resulting from the reforms. While individuals from the two cultural groups had identical labor force participation rates near retirement in 1970, they differ by almost three percent in 2000.

I argue that the introduction of early access to pension benefits in the 1980s and 1990s loosened financial constraints and gave more room for culture to affect labor force participation.

URL: https://www.sciencedirect.com/science/article/pii/S092753711830037X

Courtesy: Sciencedirect

The International Labour Organization and Globalization: Fundamental Rights, Decent Work and Social Justice

Emmanuel Reynaud.

ILO Research paper No. 21.

This paper discusses how the ILO reacted to the challenges to its raison d’être posed by the end of the Cold War and the new globalization era. It shows that its continued relevance was attained in three main stages: the adoption of the 1998 Declaration, the development of the “decent work” concept and the adoption of the 2008 Declaration.

The paper examines the Declaration on Fundamental Principles and Rights at Work, its adoption, its logic, achievements and limitations. It then discusses the definition and the promotion of the “decent work” concept, and its inclusion in the UN system and the international arena.

Thereafter, it covers the 2008 Declaration on Social Justice for a Fair Globalization, the intricate process towards its adoption, its objectives, principles and potential. Finally, the paper shows how the ILO has reinforced the notion of “social justice” as a central aim of national and international policies.

URL: https://www.ilo.org/global/research/publications/papers/WCMS_648620/lang–en/index.htm

Courtesy: ILO

South Asia Economic Focus, Spring 2018 : Jobless Growth?

World Bank, 2018

South Asia is again the fastest growing region in the world. And growth should further strengthen to 7.1 percent on average in 2019-20, reflecting an improvement across most of the region. But are countries generating enough jobs? The demographic transition is swelling the ranks of the working-age population across most of South Asia.

For this report, crucial information about employment in South Asia is extracted in a transparent and replicable way from over 60 surveys and censuses covering the period from 2001 onwards. The analysis of this information reveals that employment does respond to economic growth in the short term, implying that growth is not jobless.

It also appears that countries in South Asia have created large numbers of jobs over the years. However, the nature of the jobs created is not fully encouraging, and the analysis shows that rapid growth alone will not be sufficient to bring South Asian employment rates to the levels observed elsewhere in the developing world.

In addition to high growth, more and better jobs need to be created for every percentage point of growth. The results in this chapter call for better employment data, and for a focus on the economic policies that can boost job creation.

URI : http://hdl.handle.net/10986/29650

Courtesy : World Bank Open Knowledge Repository

Asian Women at Work

Angana Banerji, Albe Gjonbalaj, Sandile Hlatshwayo, and Anh Van Le.
Finance & Development, 55(3 ). 2018.

As women advance in Asia’s labor force, Vietnam is a standout.
Rosie the Riveter’s 21st century legacy is alive in Vietnam.

url – https://www.imf.org/external/pubs/ft/fandd/2018/09/female-labor-force-participation-in-vietnam-banerji.htm
courtesy – IMF

World Development Report 2019 : The Changing Nature of Work

The World Bank. 2018.

Work is constantly reshaped by technological progress. New ways of production are adopted, markets expand, and societies evolve. But some changes provoke more attention than others, in part due to the vast uncertainty involved in making predictions about the future. The 2019 World Development Report will study how the nature of work is changing as a result of advances in technology today.

Technological progress disrupts existing systems. A new social contract is needed to smooth the transition and guard against rising inequality. Significant investments in human capital throughout a person’s lifecycle are vital to this effort. If workers are to stay competitive against machines they need to train or retool existing skills. A social protection system that includes a minimum basic level of protection for workers and citizens can complement new forms of employment.

Improved private sector policies to encourage startup activity and competition can help countries compete in the digital age. Governments also need to ensure that firms pay their fair share of taxes, in part to fund this new social contract. The 2019 World Development Report presents an analysis of these issues based upon the available evidence.

URI : http://hdl.handle.net/10986/30435

Courtesy : World Bank Open Knowledge Repository

Friedman and Phelps on the Phillips curve viewed from a half century’s perspective

Robert J. Gordon.
Review of Keynesian Economics, 2018.

In the late 1960s the stable negatively sloped Phillips curve was overturned by the Friedman–Phelps natural rate model. Their Phillips curve was vertical in the long run at the natural unemployment rate, and their short-run curve shifted up whenever unemployment was pushed below the natural rate. This paper criticizes the underlying assumption of the Friedman–Phelps approach that the labor market continuously clears and that changes in unemployment down or up occur only in response to ‘fooling’ of workers, firms, or both. A preferable and resolutely Keynesian approach explains quantity rationing by inertia in price and wage setting.

The positive correlation of inflation and unemployment in the 1970s and again in the 1990s is explained by joining the negatively sloped Phillips curve with a positively sloped dynamic demand curve. For any given growth of nominal GDP, higher inflation implies slower real GDP growth and higher unemployment. This ‘triangle’ model based on demand, supply, and inertia worked well to explain why inflation and unemployment were both positively and negatively correlated between the 1960s and 1990s, but in the past decade the slope of the short-run Phillips curve has flattened as inflation exhibited a muted response to high unemployment in 2009–2013 and low unemployment in 2016–2018.

url – https://doi.org/10.4337/roke.2018.04.03
courtesy – Edward Elgar