The World Bank Employment Policy Primer aims to provide a comprehensive, up-to-date resource on labor market policy issues. The series includes two products: short notes with concise summaries of best practice on various topics and longer papers (below) with new research results or assessments of the literature and recent experience. Please note that the papers below are also part of the Social Protection Discussion Series.
Public Employment Services, and Activation Policies (1.1mb pdf)
Social Protection Discussion Paper No. 1215; Publication Date: 05/12
by Arvo Kuddo
One of the responses to new challenges in the labor market has been the development and expansion of employment services and active labor market policies based on activation principles. The objective of this study is to document and review international experiences, predominantly from selected emerging market economies and developing countries, with the design and implementation of activation programs, provided by Public Employment Services, through the prism of incentives and sanctions.
Labor Markets in Low- and Middle-Income Countries: Trends and Implications for Social Protection and Labor Policies (1mb pdf)
Social Protection Discussion Paper No. 1207; Publication Date: 03/12
by Yoonyoung Cho, David N. Margolis, David Newhouse and David A. Robalino
This paper reviews labor market trends throughout the developing world, identifies issues and policy priorities across groups of countries, and derives implications for the World Bank’s new Social Protection and Labor Strategy. Five key issues are identified: a high and growing share of the labor force that is self-employed or working in household enterprises, exposure to income shocks with limited access to risk management systems, low female participation rates, high youth unemployment rates, and the need to manage migration flows and remittances. The paper then details a three-pronged agenda based on providing incentives and conditions for work, improving the efficiency of job creation, and managing risks / facilitating labor market transitions.
Improving Access to Jobs and Earnings Opportunities: The Role of Activation and Graduation Policies In Developing Countries (1.8mb pdf)
Social Protection Discussion Paper No. 1204; Publication Date: 03/12
by Rita Almeida, Juliana Arbelaez, Maddalena Honorati, Arvo Kuddo, Tanja Lohmann, Mirey Ovadiya, Lucian Pop, Maria Laura Sanchez Puerta and Michael Weber
Throughout the developing world there is a growing demand for advice on the design of policies to facilitate access of the most vulnerable individuals to jobs, while reducing their dependency from public income support schemes. Even though these policies are common to both the activation and graduation agendas, a separation is needed as the graduation of beneficiaries out of poverty is a much more ambitious agenda. This paper proposes a simple policy framework highlighting the most common barriers for productive employment.
Building Social Protection and Labor Systems: Concepts and Operational Implications (729kb pdf)
Social Protection Discussion Paper No. 1202; Publication Date: 03/12
by David A. Robalino, Laura Rawlings and Ian Walker
This paper presents a framework for designing and implementing social protection and labor (SP&L) systems in middle and low income countries. Although the term “system” is used to describe a country’s set of social protection programs, these tend to operate independently with little or no coordination even when they have the same policy objective and target similar population groups. The paper argues that enhancing coordination across SP&L policies, programs, and administrative tools has the potential to enhance both individual program performance as well as the overall provision of social protection across programs.
Micro-Determinants of Informal Employment in The Middle East and North Africa Region (763kb pdf)
Social Protection Discussion Paper No. 1201; Publication Date: 01/12
by Diego F. Angel-Urdinola and Kimie Tanabe
This note assesses the main micro-determinants of informal employment in the Middle East and North Africa (MENA) region from a human development stand point. It’s main purpose is to quantify the patterns of labor informality (defined as the share of all employment with no access to social security) according to age, gender, education level, employment sector, profession, marital status, employment status, and geographic area in a selected group of countries in the region.
Employment Generation in Rural Africa: Mid-term Results from an Experimental Evaluation of the Youth Opportunities Program in Northern Uganda
Social Protection Discussion Paper No. 1120; Publication Date: 12/11
by Christopher Blattman, Nathan Fiala and Sebastian Martinez
Can cash transfers promote employment and reduce poverty in rural Africa? Will lower youth unemployment and poverty reduce the risk of social instability? The authors experimentally evaluate one of Uganda’s largest development programs, which provided thousands of young people nearly unconditional, unsupervised cash transfers to pay for vocational training, tools, and business start-up costs.
International Portability of Health-Cost Coverage: Concepts and Experience (516kb pdf)
Social Protection Discussion Paper No. 1115; Publication Date: 07/11
by Martin Werding and Stuart McLennan
In this paper, full portability of health-cost coverage is taken to mean that mobile individuals can, at a minimum, find comparable continuation of coverage under a different system and that this does not impose external costs or benefits on other members of the systems in the source and destination countries. Both of these aspects needs to be addressed in a meaningful portability framework for health systems, as lacking or incomplete portability may not only lead to significant losses in coverage for an individual who considers becoming mobile – which may impede mobility that is otherwise likely to be beneficial. It may also lead to financial losses, or windfall gains, for sources of health-cost funding which can ultimately lead to a detrimental process of risk segmentation across national health systems.
Employability and Productivity among Older Workers: A Policy Framework and Evidence from Latin America (538kb pdf)
Social Protection Discussion Paper No. 1113; Publication Date: 07/11
by Edmundo Murrugarra
As Latin American and the Caribbean countries face rapid aging transitions, the economic contribution of older workers would need to be strengthened. This paper uses household data from Brazil and Mexico to characterize labor market behavior of older workers, such as participation, sectoral and type of employment, and productivity, to identify critical areas for policy intervention. The paper also discusses other social policy related issues like health, remittances, and family arrangements. This paper suggests three areas for labor policy: (i) adjusting social security incentives to extend working life and postpone formal retirement; (ii) adjustments to labor market regulations to increase employment flexibility, smoothing the transition into retirement; and (iii) addressing skill needs through (re)training to maintain productivity and employability. This paper reviews existing evidence on these policy interventions in industrial and developing countries, and suggests areas for future analytical work.
Severance Pay Programs around the World: History, Rationale, Status and Reforms (567kb pdf)
Social Protection Discussion Paper No. 1111; Publication Date: 04/11
by Robert Holzmann, Yann Pouget, Milan Vodopivec and Michael Weber
The paper examines severance pay programs around the world by providing the first ever overview of existing programs, examining their historic development, assessing their economic rationale and describing current reform attempts. While a significant part of the paper is devoted to a comprehensive 183 cross country review of existing severance arrangements and their characteristics, the paper goes beyond a mere description. It develops and empirically tests three hypotheses about the economic rationale of the program, namely severance pay being: (i) a primitive income protection program, (ii) an efficiency enhancing human resource instrument, and (iii) a job protection instrument. The paper also reviews the recent reforms of Austria, Chile, Italy and Korea.
Portability of Pension, Health, and other Social Benefits: Facts, Concepts, Issues (466kb pdf)
Social Protection Discussion Paper No. 1110; Publication Date: 05/11
by Robert Holzmann and Johannes Koettl
Portability of social benefits across professions and countries is an increasing concern for individuals and policy makers. Lacking or incomplete transfers of acquired social rights are feared to negatively impact individual labor market decisions as well as capacity to address social risks with consequences for economic and social outcomes. The paper gives a fresh and provocative look on the international perspective of the topic that has so far been dominated by social policy lawyers working within the framework of bilateral agreements; the input by economists has been very limited. It offers an analytical framework for portability analysis that suggests separating the risk pooling, (implicit or actual) pre-funding and redistributive elements in the benefit design and explores the proposed alternative approach for pensions and health care benefits. This promising approach may serve both as a substitute and complement to bi- and multilateral agreements.
Advancing Adult Learning in Eastern Europe and Central Asia (647kb pdf)
Social Protection Discussion Paper No. 1108; Publication Date: 04/11
by Christian Bodewig and Sarojini Hirshleifer
In recent years skill shortages in the labor force have become a key challenge in many countries in Eastern Europe and Central Asia (ECA), suggesting that policies for continuous upgrading of skills of the workforce are increasingly important. OECD countries have identified adult education and training as a critical part of their education policy agenda, yet in many ECA countries this issue has remained peripheral to the efforts to reform education and training systems. This paper presents available evidence on the extent and patterns of lifelong learning in ECA. It argues that advancing adult education and training in ECA is important not only to meet the new skills demands but also to respond to a rapidly worsening demographic outlook across most of the region. While it is not equally important for all ECA countries, adult education and training should be high on the agenda of those ECA economies that are closest to the technological frontier and facing a demographic decline, such as the new EU Member States and Russia. The paper lays out a framework for government action to advance adult learning in ECA through a mix consisting of policy coordination between government and the enterprise sector, a sound regulatory regime and appropriate financial incentives.
Results Readiness in Social Protection & Labor Operations: Technical Guidance Notes for Labor Markets Task Teams (384kb pdf)
Social Protection Discussion Paper No. 1103; Publication Date: 02/11
by Maddalena Honorati
The Results Readiness Review assessed progress to date on results-based management in the Social Protection & Labor (SP&L) portfolio and generated operationally relevant knowledge on how to strengthen Monitoring & Evaluation (M&E). Specifically, the Review took stock of the status and quality of M&E in the SP&L portfolio, including both investment and policy-based lending. The Review identified trends, strengths and weaknesses, and good practice M&E approaches and indicators to incorporate a better results focus in project design and implementation. This related Note provides guidance for World Bank Task Teams working in the area of Labor Markets.
Key Characteristics of Employment Regulation in the Middle East and North Africa (785kb pdf)
Social Protection Discussion Paper No. 1006; Publication Date: 07/10
by Diego F. Angel-Urdinola and Arvo Kuddo with support from Kimie Tanabe and May Wazzan
This paper provides a general background of the main features of Labor Regulation in the Middle East and North Africa (MENA) and benchmarks them against international best practices. The paper compiles information on available labor laws and other legal acts concerning employment protection regulation. Within the broader scope of labor regulation, and in order to assure regional comparability, information collected focuses on key issues in the labor law associated with commencing or terminating employment and during the period of employment (including maternity benefits). The main sources the data are the World Bank Doing Business 2010 and ILO databank. This paper is a tool to provide policymakers and international organizations with a regional diagnose of how labor regulation affects labor market outcomes in MENA and inform client governments about strategic approaches to employment creation through labor policy and reform. This activity comes as a response to regional priorities in the context of the Arab World Initiative (AWI). One of the six strategic themes of the AWI focuses explicitly on employment creation as a top priority. Part of the World Bank’s mandate under the AWI is to inform client governments about strategic approaches to employment creation through labor policy and reform.
Non-Public Provision of Active Labor Market Programs in Arab-Mediterranean Countries: An Inventory of Youth Programs (1.2mb pdf)
Social Protection Discussion Paper No. 1005; Publication Date: 07/10
by Diego F. Angel-Urdinola, Amina Semlali and Stefanie Brodmann
This paper presents and analyzes the main design features of an inventory of non-publicly provided Active Labor Market Programs (ALMPs) in Arab-Mediterranean Countries (AMCs), with a specific focus on programs targeted at youth. Despite considerable international evidence, there is little systematic analysis on the effectiveness of ALMPs in AMCs as most programs and investments remain largely un-assessed. Since most AMCs lack unemployment insurance systems or other safety nets for the unemployed, ALMPs constitute a relevant instrument to address the consequences of labor market frictions, such as high unemployment and slow school-to-work transition. Programs from nine countries are included in the inventory: Morocco, Algeria, Tunisia, Egypt, Lebanon, Syria, Jordan, West Bank and Gaza, and Yemen. Benchmarked against international best practices, assessment of the programs covered in the inventory reveals that the majority lack the necessary mix of design features that make programs effective. These findings call for urgent reforms in program design and delivery, especially given the sizeable financial investments in programs and the urgency to improve labor market outcomes among youth. This policy note constitutes a first step towards understanding and assessing provision of ALMPs in the Middle East and North Africa (MENA) region and intends to provide policy makers and financiers with options for reform to enhance efficiency of existing programs and improve the design of future interventions. In addition to specific aspects of program design and implementation, stakeholder coordination needs to be strengthened and put at the forefront of ALMP reform.
The Investment in Job Training: Why Are SMEs Lagging So Much Behind?
Social Protection Discussion Paper No. 1004; Publication Date: 05/10
by Rita K. Almeida and Reyes Aterido
This paper analyzes the link between firm size and the investment in job training by employers. Using a large firm level data set across 99 developing countries, the authors show that a strong and positive correlation in the investment in job training and firm size is a robust statistical finding both within and across countries with very different institutions and level of development. However, the findings do not support the view that this difference is mostly driven by market imperfections disproportionally affecting SMEs. Rather, the evidence is supportive of SMEs having a smaller expected return from the investment in job training than larger firms. Therefore, the findings call for caution when designing pro-SME policies fostering the investment in on the job training.
Labor Market Policy Research for Developing Countries: Recent Examples from the Literature - What do We Know and What should We Know? (289kb pdf)
Social Protection Discussion Paper No. 1001; Publication Date: 01/10
by Maria Laura Sanchez Puerta
This paper documents recent advances of research on labor market institutions, behavior, and policies in developing countries and makes suggestions for future research. The four areas of research analyzed are: i) theoretical and empirical implications of employment protection legislation on labor outcomes; ii) the issue of shifting from job to worker protection, namely, the different alternatives to severance pay: unemployment insurance and unemployment insurance savings accounts and their application to developing countries; iii) the effect of active labor market programs, particularly of training, on labor market outcomes, and iv) the causes and consequences of informality in the labor market, with special emphasis on the efforts to model the informal sector. The focus of the four sections is on theoretical and empirical work on published in the last 5 to 7 years, and each one concludes with new directions for future research.
The Korean Case Study: Past Experience and New Trends in Training Policies (855kb pdf)
Social Protection Discussion Paper No. 0931; Publication Date: 12/09
by Young-Sun Ra and Kyung Woo Shim
Korea’s skills development strategy has been highlighted as one of the key driving forces of the country’s economic development. This paper examines the main features and evolution of this strategy from the 1960s to the present. In particular, it discusses how the skills development policies have contributed to economic development and poverty reduction. The findings in the paper highlight a set of important lessons for the design and implementation of skills development policies, which could be useful for other developing countries.
Migration Pressures and Immigration Policies: New Evidence on the Selection of Migrants (576kb pdf)
Social Protection Discussion Paper No. 0930; Publication Date: 12/09
by Johanna Avato
This paper aims to better understand emigration pressures in migrant sending countries by looking at the determinants of the propensity to migrate at the individual level. The analysis is based on survey data from Albania, Moldova, Egypt and Tunisia collected by the European Training Foundation (ETF) in 2006. Within this context the study focuses on (i) the self-selection of migrants in terms of skills and (ii) the impact of selective immigration policies on the migration process. The paper finds that migration pressures, or the intent to migrate, are not subject to any self-selection. However, immigration policies exert a strong out-selection that is likely part of the reasons why positive selection is found in many studies. Further, the study confirms that the EU attracts comparatively lower skilled migrants than other destinations.
Ex-Ante Methods to Assess the Impact of Social Insurance Policies on Labor Supply with an Application to Brazil (1mb pdf)
Social Protection Discussion Paper No. 0929; Publication Date: 12/09
by David A. Robalino, Eduardo Zylberstajn, Helio Zylberstajn and Luis Eduardo Afonso
This paper solves and estimates a stochastic model of optimal inter-temporal behavior to assess how changes in the design of the unemployment benefits and pension systems in Brazil could affect savings rates, the share of time that individuals spend outside of the formal sector, and retirement decisions. Dynamics depend on five main parameters: preferences regarding consumption and leisure, preferences regarding formal versus informal work, attitudes towards risks, the rate of time preference, and the distribution of an exogenous shock that affects movements in and out of the social insurance system (given individual decisions). The yearly household survey is used to create a pseudo panel by age-cohorts and estimate the joint distribution of model parameters based on a generalized version of the Gibbs sampler.
Towards Comprehensive Training (797kb pdf)
Social Protection Discussion Paper No. 0924; Publication Date: 11/09
by Jean Fares and Olga Susana Puerto
Training programs are the most common active labor market interventions around the world. Whether designed to develop skills of young job seekers or upgrading skills of adult workers, training programs are aimed at counteracting employability barriers that hinder the integration of people into the labor markets. Training approaches vary greatly across countries and regions. Some have a focus on classroom lectures while others emphasize training in the workplace. Based on a dataset of studies of training programs from 90 countries around the world, this paper examines the incidence of different training types over time and their impact on labor market outcomes of trainees. The authors find a general pattern of transition from in-classroom training to comprehensive measures that combine classroom and workplace training with supplementary services. Moreover, this transition has paid off. Comprehensive training interventions tend to increase the probability of having positive labor market outcomes for trainees, as compared to in-classroom training only.
Pre-Employment Skills Development Strategies in the OECD (652kb pdf)
Social Protection Discussion Paper No. 0923; Publication Date: 11/09
by Yoo Jeung Joy Nam
Effective pre-employment skills development strategies are critical in preparing individuals with relevant labor market skills and competencies. Within the context of rapidly changing skills demands, this paper documents and examines recent pre-employment skills development trends within OECD countries and reviews its main success factors. Despite the increasing focus on general and higher education, we document that participation in TVET systems at the upper secondary level in OECD countries has remained at approximately 50 percent of total enrollment in recent years. In response to the growing demand for general competencies and higher-level skills, there has also been an increasing trend in OECD countries to defer vocational specialization and more effectively integrate general and vocational education. Furthermore, in an effort to combat the image of TVET as a “dead-end” pathway, OECD countries are undertaking measures to improve permeability between TVET and higher education (e.g. the establishment of national qualifications frameworks). Finally, while traditional apprenticeships are declining in popularity, OECD countries are adopting new approaches of effectively integrating workplace experience in pre-employment TVET systems.
A Review of National Training Funds (812kb pdf)
Social Protection Discussion Paper No. 0922; Publication Date: 11/09
by Richard Johanson
This review identifies over sixty countries that have – or had – pre-employment and enterprise training funds. The characteristics, advantages and limitations of each are presented as well as key design questions and examples of good practice. National training funds are an increasingly common vehicle for financing training. The review presents a typology of three main types of training funds by purpose: pre-employment training funds, enterprise training funds and equity training funds. The review points to a lack of rigorous evaluation of the impact of training funds on the skills and employability of the workforce in developing countries.
Pre-Employment Vocational Education and Training in Korea (744kb pdf)
Social Protection Discussion Paper No. 0921; Publication Date: 11/09
by ChangKyun Chae and Jaeho Chung
The Korean vocational education and training (VET) system is heralded as one of the key factors contributing to the country’s past economic growth. VET has played an important role in developing a skilled labor force during Korea’s economic development. However, with the increasing importance of higher education and general education, the status of VET in the country is declining. This paper explores recent Korean data to analyze the labor market outcomes of pre-employment VET institutions. The findings show that current vocational high school education is not associated with better labor market outcomes, in terms of employment rate, wage levels, prospect of permanent employment, and transition to the first job, when compared to general high school education. Among VET programs, we find that graduates of higher level, more comprehensive VET programs experience greater labor market achievements than graduates of less competitive, shorter programs. We also find that the VET institutes play an important role in supplying technical labor to small and medium enterprises (SMEs).
Labor Laws in Eastern European and Central Asian Countries: Minimum Norms and Practices (1.1mb pdf)
Social Protection Discussion Paper No. 0920; Publication Date: 10/09
by Arvo Kuddo
This study focuses on internationally accepted labor standards and norms governing the individual employment contract, including ILO conventions and recommendations, EU labor standards (Directives) and the European Community Social Charter (Charter of Fundamental Social Rights of Workers). The study also analyzes relevant provisions in the main labor law of each Eastern European and Central Asian (ECA) country associated with commencing or terminating employment and during the period of employment. References are made to relevant practices from EU15 countries. Overall, despite similar origin of country labor laws, the current set of labor regulations in the region provides a wide array of legal solutions. The minimum content of the employment contract in most ECA countries coincides, and goes beyond, the requirements of the labor standards even in the countries that are non-signatories of relevant treaties. Some of these entitlements, however, have the potential to adversely affect labor market participation.
Openness and Technological Innovation in East Asia: Have They Increased the Demand for Skills? (358kb pdf)
Social Protection Discussion Paper No. 0919; Publication Date: 10/09
by Rita K. Almeida
This paper asks whether the increased openness and technological innovation in East Asia have contributed to an increased demand for skills in the region. The author explores a unique firm level data set across eight countries. The results strongly support the idea that greater openness and technology adoption have increased the demand for skills, especially in middle income countries. Moreover, while the presence in international markets has been skill enhancing for most middle income countries, this has not been the case for manufacturing firms operating in China and in low-income countries. If international integration in the region intensifies further and technology continues to be skilled biased, policies aimed at mitigating skills shortages in the region should produce continual and persistent increases in skills.
Employment Services and Active Labor Market Programs in Eastern European and Central Asian Countries (736kb pdf)
Social Protection Discussion Paper No. 0918; Publication Date: 10/09
by Arvo Kuddo
The objective of this paper is to look at employment services and labor market policies in the transition countries of Eastern Europe and Central Asia, and identify key benefits and constraints of active labor market programs, as well as the main characteristics and features of successful policy interventions. Various policy options are discussed on how to enhance public employment services but also private employment agencies which might be relevant to and suitable for the countries in the region given their macroeconomic and labor market situation. Overall, this report recommends that greater resources will be needed for active labor market programs (ALMPs) in the future. However, the emphasis should be put on improving the design and effectiveness of ALMPs, rather than on increasing spending levels only.
Productivity Increases in SMEs: With Special Emphasis on In-Service Training of Workers in Korea (420kb pdf)
Social Protection Discussion Paper No. 0917; Publication Date: 10/09
by Kye Woo Lee
This paper is about the evolution of an innovative in-service training program and its effects in Korea. In many developing countries, small- and medium- scale enterprises (SMEs) play important roles in outputs, exports, and employment. Therefore, governments have used various policy instruments to promote productivity of SMEs through in-service training of their workers. However, those policy tools have not been effective to date. An exception to this general trend was found in Korea. The Government of Korea tested a pilot in-service training project and achieved significant results. The government encouraged SMEs to organize themselves into training consortiums (TCs) and provided them with institutional and technical assistance by financing employment of training specialists who manages human resources development of TC-member SMEs. Since mainstreaming, nevertheless, the progress of the TC program has been less than magnificent. Some factors responsible for the lukewarm achievements are analyzed and policy measures for reinvigorating the program have been suggested, together with some lessons learned.
Firing Cost and Firm Size: A Study of Sri Lanka's Severance Pay System (436kb pdf)
Social Protection Discussion Paper No. 0916; Publication Date: 09/09
by Babatunde Abidoye, Peter F. Orazem and Milan Vodopivec
Sri Lanka's Termination of Employment of Workmen Act (TEWA) requires that firms with 15 or more employees justify layoffs and provide generous severance pay to displaced workers, with smaller firms being exempted. Athough formally subject to TEWA, firms in Export Processing Zones (EPZs) may have been partially exempt from TEWA due to lax enforcement in that sector. A theoretical model shows that firms subject to TEWA will tend to mass at or below the threshold of 14 workers until they get an atypically large productivity shock that would propel them beyond the threshold. EPZ firms will be largely unaffected by the law. In addition, EPZ firms receive preferential tax treatment and exemptions from customs duty. Consequently, firms that anticipate rapid growth will have an incentive to locate in the EPZ sector. The authors test these predictions using 1995-2003 panel data on the universe of all private, formal sector firms in Sri Lanka. The authors find that at all sizes, EPZ firms are more likely to add employees than non-EPZ firms. Above the threshold, non-EPZ firms are more likely to shed workers while EPZ firms are more likely to add workers. Once passing the threshold, non-EPZ firms grow faster than non-EPZ firms below the threshold, consistent with a theoretical prediction that only atypically productive non-EPZ firms would cross the threshold. Finally, evidence is consistent with the the hypothesis that TEWA restrictions retard the growth of non-EPZ firms below the threshold, but only some of the evidence passes tests of statistical significance. The combined impacts of retarded growth below the threshold, the need for a large productivity shock to cross the threshold, and slower employment growth above the threshold suggest that the TEWA failed to lower unemployment. Instead, it slowed employment growth of non-EPZ firms and induced firms to seek the EPZ sector in order to evade the law.
Personal Opinions about the Social Security System and Informal Employment: Evidence from Bulgaria (468kb pdf)
Social Protection Discussion Paper No. 0913; Publication Date: 09/09
by Valeria Perotti and Maria Laura Sánchez Puerta
In this paper, the authors analyze the relationship between personal opinions about the social security system and levels of informal employment using data from a recent household survey carried out in Bulgaria. The authors compare different indicators of job informality, focusing on the lack of social security affiliation as the main indicator. Their results suggest that low value is attached to social security affiliation and that knowledge of the social security system is very limited. As a consequence, many workers seem to choose informal jobs because they think that the benefits from being affiliated with the social security system are too low compared with the costs. On the other hand, being affiliated does not seem to matter in terms of overall job satisfaction.
Savings for Unemployment in Good or Bad Times: Options for Developing Countries (435kb pdf)
Social Protection Discussion Paper No. 0913; Publication Date: 08/09
by David Robalino, Milan Vodopivec and András Bodor
The paper describes and evaluates unemployment insurance savings accounts (UISAs) – a relatively new and not well-known way of providing unemployment benefits. The UISAs reduce work disincentives by allowing recipients to keep their own unused unemployment contributions, and offer the possibility to extend coverage to informal sector workers. In addition, if integrated with mandatory pension systems (and even social pensions), UISAs can be rapidly deployed and at a low cost, thus becoming a realistic tool to protect workers from the effects of the financial crisis. Even during normal times, the integration with the pension system – and social security in general – would give more flexibility to individuals in the management of short and long term savings (i.e., pension wealth) while avoiding unnecessary administrative costs. The paper discusses issues related to incentives, redistribution, and viability, and outlines a policy framework for design and implementation. It argues that the UISAs system is especially attractive for developing countries, where the “self-policing” nature of the system is particularly important given a much larger informal sector and weaker administrative capacity in comparison to developed countries.
Social Protection for Migrants from the Pacific Islands in Australia and New Zealand (633kb pdf)
Social Protection Discussion Paper No. 0912; Publication Date: 05/09
by Geoff Woolford
This report studies the social protection for migrants from the Pacific Islands in their host countries of Australia and New Zealand. The report focuses on the access for migrants to social services in the host countries and provisions for the portability of entitlements, particularly superannuation and health benefits, between host and home countries. It describes the current legal provisions for access to social services, portability of entitlements, implementation of these provisions in the relevant countries, analyzes shortcomings, and draws policy conclusions.
Human Trafficking, Modern Day Slavery and Economic Exploitation (497kb pdf)
Social Protection Discussion Paper No. 0911; Publication Date: 05/09
by Johannes Koettl
Human trafficking, as it is defined by international law, subsumes all forms of nonconsensual exploitation. That is, whenever people are forced or lured into exploitation – no matter if movement of victims is involved – it is considered human trafficking. There is, though, a large overlap with consensual exploitation, namely when economic vulnerabilities force victims to accept exploitative work arrangements. Consensual exploitation is mostly addressed through social and labor law, which is also an area where the World Bank has ample experience, while nonconsensual exploitation is mainly addressed through criminal law. Both types of exploitation have adverse effects on equity and efficiency and are therefore obstacles to development. The World Bank could consider strengthening its efforts on nonconsensual exploitation, in particular in the area of access to justice for the poor and empowering vulnerable groups to demand justice and good governance. In addition, there is a need to enhance the knowledge on prevalence, causes, and consequences of nonconsensual exploitation. In doing so, the World Bank should seek partnerships to complement existing initiatives and expertise, but should also consider providing leadership in the fight against exploitation and human trafficking.
Unemployment Insurance Savings Accounts in Latin America: Overview and Assessment (287kb pdf)
Social Protection Discussion Paper No. 0910; Publication Date: 06/09
by Ana M. Ferrer and W. Craig Riddell
This paper examines the experience of Latin American countries that use UISAs, with the hope of highlighting the problems of the system and identifying areas for future theoretical and empirical work. In conclusion, the overall effect of UISAs depends on a vast array of specific country characteristics and program parameters. The way the system is implemented, existing labor regulation, the extent of the informal economy and the scope for collusive behavior greatly influence the success of these programs. This calls for a more extensive research effort in the area.
Definitions, Good Practices, and Global Estimates on the Status of Social Protection for International Migrants (426kb pdf)
Social Protection Discussion Paper No. 0909; Publication Date: 05/09
by Johanna Avato, Johannes Koettl, and Rachel Sabates-Wheeler
This paper analyzes the issue of social protection for migrants by looking at formal and informal social protection provisions. In particular, it presents the latest global data on the social protection status on migrants, including undocumented migrants. The paper gives special attention to lower-income countries drawing upon recent studies from the Southern African Development Community (SADC). It finds that migrants in poorer countries have very limited access to formal social protection such as social security systems, and that the legal social protection frameworks are far from making benefits portable. Rather, migrants have to rely on informal social protection, and it is often migration itself that constitutes a form of social protection for migrants and their families. This means that making migration safer for low-income migrants is vital to allow migrants to fully benefit from their migration experience and to ultimately enhance their social protection.
Regional Overview of Social Protection for Non-Citizens in the Southern African Development Community (1.1mb pdf)
Social Protection Discussion Paper No. 0908; Publication Date: 05/09
by Marius Olivier
This report gives an overview of the social security status of non-citizens in the Southern African Development Community (SADC), describes measures and efforts to support labour mobility through enhanced social security protection of non-citizens in SADC, and makes recommendations as to how to improve the social security status of the said non-citizens, including through the portability of acquired benefits and other cross-country co-ordination arrangements. After dealing with the relevant conceptual framework, the report commences with a section highlighting the current diversity of social security systems in SADC countries and the problems this diversity creates for the mobility of people in SADC and their social security status. Restrictions contained in the legal system are in particular emphasised.
Introducing Unemployment Insurance to Developing Countries (323kb pdf)
Social Protection Discussion Paper No. 0907; Publication Date: 05/09
by Milan Vodopivec
The paper identifies key labor market and institutional differences between developed and developing countries, analyzes how these differences affect the working of the standard, OECD-style unemployment insurance (UI) program, and derives a desirable design of unemployment benefit program in developing countries. It argues that these countries – faced by large informal sector, weak administrative capacity, large political risk, and environment prone to corruption – should tailor the OECD-style UI program to suit their circumstances.
Social Protection for Refugees and Asylum Seekers in the Southern Africa Development Community (332kb pdf)
Social Protection Discussion Paper No. 0906; Publication Date: 04/09
by Mpho Makhema
This report provides an overview of the provision of social protection to refugees and asylum seekers from Sub-Saharan Africa in the Southern African Development Community (SADC). This includes analyzing the legal framework and levels of implementation, as well as proposing policy directions on the national and regional levels. After giving an overview of the region’s historical and legal context, the report focuses on the case studies of Botswana and South Africa to illustrate the wide variation of social protection framework and practices in the region.
Slavery and Human Trafficking: International Law and the Role of the World Bank (456kb pdf)
Social Protection Discussion Paper No. 0904; Publication Date: 04/09
by María Fernanda Perez Solla
This paper reviews the international legal framework applicable to the World Bank and Member States on contemporary forms of slavery, in particular, trafficking. The Palermo Trafficking Protocol is specially analyzed. Moreover, the paper refers to the preventive framework constituted by human rights obligations, particularly those of international labor law. The World Bank’s mandate appears to permit preventive action. The Articles expressly refer to the goal of improving conditions of labor. On one hand, the Bank’s practice includes today work in areas linked to human rights, which reveals tacit agreement by Member States. In addition, human rights obligations have been widely accepted by the international community, though implementation is poor. Moreover, poverty causes vulnerability to slavery-like practices, and they perpetuate poverty. A modest set of recommendations and areas in which further research is needed are included. The paper encourages mainstreaming the issues analyzed strategically in the Bank’s core operations (concerning processes and results), with country-led and country specific efforts, identifying the issues important for poverty reduction and growth.
Structural Educational Reform: Evidence from a Teacher’s Displacement Program in Armenia (176kb pdf)
Social Protection Discussion Paper No. 0902; Publication Date: 01/09
by Arvo Kuddo
This paper reviews the experience of Armenia with the displacement of more than 7,000 teachers during 2003–07 as part of structural reforms in general education. In addition to supplementary severance payments, a variety of services were needed to address difficulties commonly experienced by displaced employees, including job search assistance and counseling services, provision of information on the labor market, on legal rights of job seekers, on services and service providers available, including training, relocation assistance, and so forth. The findings of the paper suggest that the staff rationalization program has resulted in significant efficiency gains: the student-teacher ratio increased from 10.8 in 2003 to 13.9 in 2006. The considerable reduction in staff positions has allowed the government to significantly increase nominal wages and salaries for teaching and non-teaching staff.
Non-performance of the Severance Pay Program in Slovenia (204kb pdf)
Social Protection Discussion Paper No. 0901; Publication Date: 01/09
by Milan Vodopivec, Lilijana Madzar and Primo┼ż Dolenc
Combining information from the Firm Survey of Labor Costs with the information about claims filed with the Guarantee Fund by workers whose employers defaulted on their severance pay obligations, the paper analyzes the so-called non-performance problem of severance pay – the fact that coverage, and thus legal entitlement, does not guarantee the actual receipt of the benefit – as experienced in Slovenia in 2000. The findings are threefold: (i) one-third of total obligations incurred by firms failed to be honored and only a small portion of defaulted severance pay claims was reimbursed by the Guarantee Fund; (ii) while both men and women seem to be equally affected, workers older than 40 were disproportionally represented among those whose severance pay claims failed to be honored; and, (iii) among firms that incurred severance pay liabilities, larger and more productive firms were more likely to observe their fiduciary obligations and pay them out. These findings corroborate the weaknesses of severance pay as an income protection program, pointing to the large scale of the non-performance problem and the inequities created by it.
Can the Introduction of a Minimum Wage in FYR Macedonia Decrease the Gender Wage Gap? (143kb pdf)
Social Protection Discussion Paper No. 0837; Publication Date: 12/08
by Diego F. Angel-Urdinola
This paper relies on simple framework to understand the gender wage gap in FYR Macedonia and then simulates how the gender wage gap would behave after the introduction of a minimum wage. First, it presents a new – albeit simple – decomposition of the wage gap into three factors: (i) a wage level factor, that measures the extent to which the gender gap is driven by differences in wage levels among low-skilled workers of opposite sex; (ii) an skills endowment factor, that quantifies the extent to which the gender wage gap is driven because the share of high-skilled workers differs by gender; and a (iii) returns to education factor, that measures the extent to which the gender gap exists is driven by differences by gender in returns to education. Second, the paper presents simple set of simulations that indicate that the introduction of a minimum wage in FYR Macedonia could contribute to decrease the gender wage gap by up to 23%. Nevertheless, in order to get a significant improvement in the wage gap a rather high minimum wage may required, which may contribute to reductions in employment.
Labor Regulations in Developing Countries: A Review of the Evidence and Directions for Future Research (328kb pdf)
Social Protection Discussion Paper No. 0833; Publication Date: 10/08
by Tito Boeri, Brooke Helppie and Mario Macis
The authors provide a critical review of the empirical evidence on the effects of labor market regulations in developing countries, and they highlight the main knowledge gaps and the directions for future research. The analysis focuses mainly on minimum wages, unemployment insurance, employer-provided benefits, and employment protection legislation. The authors pay equal attention to the efficiency and distributional effects of regulations. Even though the focus of the analysis is on the effects of labor regulations in developing countries, the authors refer to the evidence from developed countries whenever it proves relevant, and when no evidence from developing countries is available. One of the main themes of this critical survey is that the specific context of developing countries is often radically different than that of developed economies, and that neglecting these specificities in the theoretical models can lead to incorrect predictions and misguided interpretations of the empirical findings.
The Incentives to Invest in Job Training: Do Strict Labor Codes Influence this Decision? (252kb pdf)
Social Protection Discussion Paper No. 0832; Publication Date: 10/08
by Rita Almeida and Reyes Aterido
This paper studies the link between labor market regulations and the incentives of firms to invest in the human capital of their employees. The authors explore a firm level data set across several developing countries and compare the supply of formal training programs for firms exposed to different degrees of de facto labor regulations. The findings show that a more flexible labor code tends to be associated with a smaller investment in job training. However, this effect is small and heterogeneous. Reforms that simultaneously accelerate the diffusion of temporary contracts and increase the protection of permanent workers tend to generate negative effects on the firm’s investment in human capital.
Mandated Benefits, Employment, and Inequality in a Dual Economy (590kb pdf)
Social Protection Discussion Paper No. 0823; Publication Date: 08/08
by Rita Almeida and Pedro Carneiro
The authors study the effect of enforcement of labor regulation in Brazil, an economy with a large informal sector and strict labor law. Enforcement affects mainly the degree of compliance with mandated benefits (severance pay, health and safety) in the formal sector; and the registration of informal workers. The authors find that stricter enforcement leads to higher unemployment but lower income inequality. The authors also show that, at the top of the formal wage distribution, workers bear the cost of mandated benefits by receiving lower wages. This is not true at the bottom, because of downward wage rigidity. As a result, formal sector jobs at the bottom of the wage distribution become more attractive, inducing the low skilled self-employed to search for formal jobs.
The Return to Firm Investments in Human Capital (313kb pdf)
Social Protection Discussion Paper No. 0822; Publication Date: 06/08
by Rita Almeida and Pedro Carneiro
In this paper, the authors estimate the rate of return to firm investments in human capital in the form of formal job training. The authors use a panel of large firms with detailed information on the duration of training, the direct costs of training, and several firm characteristics. The author's estimates of the return to training are substantial (8.6%) for those providing training. Results suggest that formal job training is a good investment for these firms possibly yielding comparable returns to either investments in physical capital or investments in schooling.
Population Aging and the Labor Market: The Case of Sri Lanka (304kb pdf)
Social Protection Discussion Paper No. 0821; Publication Date: 08/08
by Milan Vodopivec and Nisha Arunatilake
Sri Lanka’s population is predicted to age vary fast during the next 50 years, bringing a slowdown of labor force growth and after 2030 its contraction. Based on a 2006 representative survey of old people in Sri Lanka, the paper examines labor market consequences of this process, focusing on retirement pathways and the determinants of labor market withdrawal. The paper finds that a vast majority of Sri Lankan old workers are engaged in the informal sector, work long hours, and are paid less than younger workers. Moreover, the paper shows that labor market duality carries over to old age: (i) previous employment is the most important predictor of the retirement pathway; (ii) older workers fall into two categories: civil servants and formal private sector workers, who generally stop working before they reach 60 because they are forced to do so by mandatory retirement regulations, and casual workers and the self-employed, who work until very old age (or death) due to poverty and insufficient income and who stop working primarily because of poor health; and (iii) the option of part-time work is used primarily by workers who held regular jobs in their prime age employment, but not by casual workers and self-employed.
China: Improving Unemployment Insurance (324kb pdf)
Social Protection Discussion Paper No. 0820; Publication Date: 07/08
by Milan Vodopivec and Minna Hahn Tong
Responding to the need to promote efficiency-enhancing changes in the labor market, China has been experimenting with an unemployment insurance (UI) program over the last two decades. This paper reviews recent labor market developments, describes the evolution of the UI program, and assesses the working of the UI program by analyzing its coverage, level of benefits, work incentives, provision of employment services, and financial performance. Among others, the paper uses UI program simulations for the Qingdao and Tianjin municipalities, and analyzes survival in unemployment of UI beneficiaries using individual level data from Qingdao. The paper finds that the current “no frills” program - the program that offers modest, yet important, protection against lost earnings while minimizing (re)employment disincentives - works reasonably well and fits the current stage of development of the Chinese economy. The paper concludes by identifying key challenges of the program and exploring possible policy responses to these challenges in both the short- and long-term.
Labor Regulation and Employment in India’s Retail Stores (171kb pdf)
Social Protection Discussion Paper No. 0816; Publication Date: 06/08
by Mohammad Amin
A new dataset of 1,948 retail stores in India shows that 27% of the stores find labor regulations as a problem for their business. Using these data, the authors analyze the effect of labor regulations on employment at the store level. The authors find that flexible labor regulations have a strong positive effect on job creation. The authors' estimates show that labor reforms are likely to increase employment by 22% of the current level for an average store. The authors also address the issue of informality in India’s retail sector. The findings suggest that more flexible labor laws can encourage firms to operate in the more efficient formal retail sector. According to the authors' estimates, labor reforms could reduce the level of informality by as much as 33%.
Enforcement of Labor Regulation and Firm Size (353kb pdf)
Social Protection Discussion Paper No. 0814; Publication Date: 05/08
by Rita Almeida and Pedro Carneiro
This paper investigates how enforcement of labor regulation affects firm size and other firm characteristics in Brazil. The authors explore firm level data on employment, capital, and output, city level data for economic city characteristics and new administrative data measuring enforcement of regulation at the city level. Since enforcement may be endogenous, the authors instrument this variable with the distance between the city where the firm is located and surrounding enforcement offices, while controlling for a very rich set of city characteristics (such as past levels of informality in the city). The authors present suggestive evidence of the validity of this instrument. The authors find that stricter enforcement of labor regulation constrains firm size.
Migration, Labor Markets, and Integration of Migrants: An Overview for Europe (240kb pdf)
Social Protection Discussion Paper No. 0807; Publication Date: 04/08
by Rainer Münz
For more than two centuries most countries of Western Europe have primarily been countries of emigration. During the last 60 years, all countries of Western Europe have gradually become destinations for international migrants and asylum seekers. Today all West European countries and several new member states of the European Union (EU) have a positive migration balance. And it is very likely that sooner or later this will also be the case in other new EU member states and today’s candidate countries. This paper discusses the size of Europe’s migrant population, its demographic structure, and the socio-economic position of migrants. The European Labour Force Survey (LFS) as well as Eurostat, OECD and UN migration data are used as the main databases. In most sections of the paper the geographic unit of analysis is EU15 as the so-called “old” EU Member States are home or host some 94 percent of all migrants and some 97 percent of all legal foreign residents living in EU27. But general information on stocks of international migrants and recent migration flows are given for all countries of Western, Central and South-Eastern Europe.
Is the Window of Opportunity Closing for Brazilian Youth? Labor Market Trends and Business Cycle Effects (1.2mb pdf)
Social Protection Discussion Paper No. 0806; Publication Date: 04/08
by Michael Justesen
Brazilian youth today face enormous difficulties in penetrating the labor market, a situation much different from the one 25 years ago. While females have entered the labor market and increased their employment rate many are unemployed. Youth unemployment reached 19.1 percent in 2002; up from 4.5 percent in 1978. This paper analyzes long-run trends, as well as the impact of business cycles, on Brazilian youth in the labor market. To do this, the paper uses Brazilian household data (PNAD) spanning 1978−2002 and covering 290,000−530,000 individuals per year. Two main findings are presented: First, the labor market situation for youth has deteriorated and did especially so in the 1990s. In particular, labor force participation and employment have been decreasing relatively more for youth than for adults, but also wages decreased and unemployment increased for youth. Second, Brazilian youth were adversely impacted by business cycle fluctuations. During recessions youth lost ground compared to adults in the labor market in terms of labor force participation, employment, and to some extent unemployment. During expansions youth did not catch up on adults; in fact, the gap continued to widen.
Live Longer, Work Longer: Making It Happen in the Labor Market (137kb pdf)
Social Protection Discussion Paper No. 0803; Publication Date: 11/07
by Milan Vodopivec and Primoz Dolenc
An aging population and the corresponding shrinkage of the labor force will create a significant drag on economic growth and may jeopardize the economic well-being of some of the elderly. Thus working longer is an imperative – but extending working lives has proven difficult, both because workers do not want to work longer and because employers are lukewarm about employing older workers. As measures that can be taken to motivate workers to work longer, the paper proposes providing retirement incentives and attractive, flexible working arrangements. To induce employers to hire old workers, it suggests removing the obstacles imposed by restrictive labor market institutions, an increase in the human capital of workers via life-long learning, and to addressing age-discrimination. Chances for extending working lives will also increase as the health of elderly workers is improved.
The Life-Course Perspective and Social Policies: An Issues Note (373kb pdf)
Social Protection Discussion Paper No. 0719; Publication Date: 11/07
by A.L. Bovenberg
A number of trends are changing the nature of social risks and increase the importance of human capital, adaptability and flexibility. This paper discusses the usefulness of a life-course perspective in developing proactive social policies that better fit the changing life cycles of individuals who combine formal work with other activities on transitional labor markets. It pays special attention to the accumulation and maintenance of human capital over the life course and stresses that reconciliation of work and family goes beyond child-care facilities and parental leave, and involves the entire life course. In particular, longer and deeper involvement in paid employment allows people to exploit their longer life to reconcile the two ambitions of, first, investing in the next generation as a parent and, second, pursuing a fulfilling career in paid work in which one keeps learning. Greater flexibility of working time over the life course requires more individual responsibility for financing leave. Moreover, rather than shielding older insiders through employment protection, labor-market institutions should enable parents of young children to easily enter and remain in the labor market. Finally, more activating social assistance and in-work benefits should replace the passive income support for breadwinners that results in high minimum-wage floors.
Informality and Social Protection: Preliminary Results from Pilot Surveys in Bulgaria and Colombia (671kb pdf)
Social Protection Discussion Paper No. 0717; Publication Date: 10/07
by Franco Peracchi, Valeria Perotti and Stefano Scarpetta
There is a wide agreement on the fact that a large informal economy leaves many individuals without social protection and reduces government’s tax revenue and social security contributions. However, it remains an open question what really drives informality, namely whether workers are simply trapped out of the formal sector or, at least some of them, choose it because it offers better alternatives than a formal job. The policy implications are clearly different in the two cases. In order to shed light on this important issue, the authors propose a household survey instrument to assess the links between informality and social protection. It can be implemented either through a stand-alone survey or by adding a specific module to an existing general survey such as the World Bank ’s Living Standards Measurement Study. After describing the main survey instrument, the authors present the results of two pilot surveys, carried out in Bulgaria and Colombia, to test the effectiveness of the questionnaire and improve its design.
How Labor Market Policies can Combine Workers’ Protection with Job Creation: A Partial Review of Some Key Issues and Policy Options (402kb pdf)
Social Protection Discussion Paper No. 0716; Publication Date: 10/07
by Gaëlle Pierre and Stefano Scarpetta
To what extent have macro and structural reforms in many developing countries affected the labor market? Are current policy settings in the labor market adequate to cope with the current challenges of a more dynamic but also more risky economic environment? Are there examples of successful labor reforms that have combined greater adaptability with greater workers’ protection? What can labor policy do when resources are scarce and informality looms large? These are some of the questions the authors address in this paper by presenting an in depth review of formal policy and institutional settings in the labor market of many developing and emerging economies. The authors also report some evidence of the effects of policy reforms on job creation and on the ability of workers to cope with shocks.
A Review of Interventions to Support Young Workers: Findings of the Youth Employment Inventory (548kb pdf)
Also available in French (903kb pdf) and Spanish (827kb pdf)
Social Protection Discussion Paper No. 0715; Publication Date: 10/07
by Gordon Betcherman, Martin Godfrey, Susana Puerto, Friederike Rother and Antoneta Stavreska
This paper summarizes the main findings from the Youth Employment Inventory (YEI), a compilation of 289 youth employment interventions from 84 countries in all regions of the world. The YEI was assembled to strengthen the empirical basis for policy-makers to make decisions about how to address the problem of youth employment. This paper describes the methodology for compiling the Youth Employment Inventory and then presents an analysis of the programs themselves in order to (i) document the types of interventions that have been implemented to support young workers; and (ii) identify what appears to work in terms of improving employment outcomes for youth.
Are All Labor Regulations Equal? Assessing the Effects of Job Security, Labor Dispute and Contract Labor Laws in India (310kb pdf)
Social Protection Discussion Paper No. 0713; Publication Date: 06/07
by Ahmad Ahsan and Carmen Pagés
This paper studies the economic effects of legal amendments on different types of labor laws. The authors examine the effects of amendments to labor dispute laws, and amendments to job security legislation. The authors also identify the effects of legal amendments related to the most contentious regulation of all: Chapter Vb of the Industrial Disputes Act, which stipulates that firms with 100 or more employees cannot retrench workers without government authorization. The authors find that laws that increase job security or increase the cost of labor disputes substantially reduce registered sector employment and output but do not increase the labor share. Labor-intensive industries, such as textiles, are the hardest hit by laws that increase job security while capital-intensive industries are most affected by higher labor dispute resolution costs. The authors also find that the widespread and increasing use of contract labor may have brought some output and employment gains but did not make up for the adverse effects of job security and dispute resolution laws.
Globalization and Employment Conditions Study (327kb pdf)
Social Protection Discussion Paper No. 0704; Publication Date: 04/07
by Drusilla K. Brown
This paper surveys the empirical evidence on the link between globalization and employment conditions. Topics include the connection between international trade, multinationals, FDI, wages, core labor protections, economic security, gender discrimination and child labor; export processing zones and working conditions; trade and the skill premium; and private voluntary actions and working conditions. Early empirical evidence based on cross-country comparisons suggested little impact of globalization on wages and working conditions. More recent analysis of micro-data sets has identified a stronger link with negative and positive effects. Globalization is associated with a reduction in child labor and there is little evidence of a race to the bottom in legal labor protections. By contrast, there is growing evidence that trade is increasing income disparities.
Child Labor and Youth Employment: Ethiopia Country Study (686kb pdf)
Social Protection Discussion Paper No. 0704; Publication Date: 03/07
by Lorenzo Guarcello and Furio Rosati
Ethiopia accounts for the largest youth population in Sub-Saharan Africa and the lack of employment opportunities for Ethiopian young people is among the critical developing challenges facing the country. The specific factors affecting youth employment in Ethiopia have received little research attention. There is therefore limited empirical basis for formulating policies and programs promoting youth employment and successful school to work transitions. This study is aimed at beginning to fill this gap by analyzing a set of youth employment indicators drawn primarily from the 2001 Ethiopia Labor Force Survey. The study looks specifically at the labor market outcomes of young people and key factors influencing these outcomes, including early labor market entry and human capital accumulation. It also examines the process of labor market entry, and, for those who attended school, the duration of the transition from school to work.
Aging and Demographic Change in European Societies: Main Trends and Alternative Policy Options (219kb pdf)
Social Protection Discussion Paper No. 0703; Publication Date: 03/07
by Rainer Muenz
This paper gives an overview on current demographic trends and projected population change in Europe and neighboring regions. The main focus of the analysis is on Western and Central Europe. Today this world region has a total population of 500 million. Available forecasts until the year 2050 project a decline of the population at working age, a subsequent decline of the (native) work force and a parallel increase in the number of retired people. The paper discusses policy options by demonstrating the impact of possible changes in labor force participation, higher retirement age and pro-active recruitment of migrant labor on population size and future labor force.
The Social Assimilation of Immigrants (239kb pdf)
Social Protection Discussion Paper No. 0701; Publication Date: 02/07
by Domenico de Palo, Riccardo Faini and Alessandra Venturini
Policy makers in migrant-receiving countries must often strike a delicate balance between economic needs, that would dictate a substantial increase in the number of foreign workers, and political and electoral imperatives, that typically result in highly restrictive immigration policies. Promoting integration of migrants into the host country would go a long way in alleviating the trade off between economic and political considerations. While there is a large literature on the economic assimilation of immigrants, somewhat less attention has been devoted to other – and equally crucial – dimensions of migrants’ integration, namely the process of social assimilation. The aim of this paper is to take a close look at migrants social integration into the host country. The authors rely on the European Community Household panel (ECHP), which devotes a full module to the role and relevance of social relations for both migrants and natives. An innovative feature of this analysis is that it relies on migrants perceptions about their integration rather than – as is typically the case in most opinion surveys – on natives attitudes toward migrants.
Labor Market Outcomes of Natives and Immigrants: Evidence from the ECHP (331kb pdf)
Social Protection Discussion Paper No. 0615; Publication Date: 11/06
by Franco Peracchi and Domenico Depalo
This paper analyzes the evidence provided by the European Community Household Panel (ECHP), a longitudinal household survey which covers a wide range of topics, giving comparable information across the member states of the European Union before the 2004 enlargment. The ECHP allows for following the process of integration into the European labor markets of the cohorts of immigrants that reached Western Europe before the mid-1990s.
The Relative Merits of Skilled and Unskilled Migration, Temporary and Permanent Labor Migration, and Portability of Social Security Benefits (210kb pdf)
Social Protection Discussion Paper No. 0614; Publication Date: 11/06
by Johannes Koettl under guidance of and with input from Robert Holzmann and Stefano Scarpetta
In March 2006, the G-20 established a study group on labor mobility and demographics. The World Bank’s Social Protection and Labor unit (HDNSP) was asked to provide an issues paper on the relative merits of skilled and unskilled migration, temporary and permanent labor migration, and portability of social security benefits. The objective of this paper is: (i) to highlight the relative merits of skilled and unskilled migration for both source and destination countries; (ii) to highlight the relative merits of temporary and permanent migration for source and destination countries; and (iii) to highlight the costs and benefits of enhanced portability of social security benefits and its impact on incentives for migrants and migration outcomes.
The Limited Job Prospects of Displaced Workers: Evidence from Two Cities in China (288kb pdf)
Social Protection Discussion Paper No. 0613; Publication Date: 10/06
by Gordon Betcherman and Niels-Hugo Blunch
The economic restructuring in China over the past decade has resulted in displacement of millions of workers who had been employed in the state sector. This has posed tremendous challenges economically, socially, politically, and culturally. For several years, Chinese policies attempted to cushion the shock by requiring state-owned enterprises to provide living allowances and reemployment services to workers that had been displaced. There have been relatively few empirical studies that have tracked the experiences of these displaced or xiagang workers. This study uses survey data from two large industrial cities to analyze the labor market situation of over 2,000 workers two years after they had been observed as displaced and unemployed. The findings point to the high rates of labor force withdrawal of xiagang workers and the relatively low proportion who find another wage job in the formal sector. It also documents the large number of workers who find work in the informal sector which seems to act as an important safety net. Not surprisingly, education is an important determinant of post-layoff labor market outcomes. Active labor market interventions do not seem to make a substantial difference although there is some evidence from the duration analyses that training does help workers find employment more quickly than they would have otherwise.
Unemployment Insurance in Chile: A New Model of Income Support for Unemployed Workers (308kb pdf)
Social Protection Discussion Paper No. 0612; Publication Date: 10/06
by Germán Acevedo, Patricio Eskenazi and Carmen Pagés
This paper describes the Chilean experience concerning the implementation of a new unemployment insurance (UI) program. The use of individual savings accounts and private management are essential elements. In addition, a redistributive fund (Common Fund) helps workers pool risks, distributing resources from employed to unemployed workers and from stable firms to workers with low incomes and unstable jobs. The combination of personal accounts and redistribution reduces moral hazard problems endemic to traditional UI schemes and keeps costs at manageable levels. The paper discusses the political, social, and economic context in which this program was enacted and implemented, it reviews its key characteristics, it assesses the initial performance of the system in terms of coverage and benefits and it assesses the challenges that lie ahead. Finally the paper discusses the potential of this system as a model for other middle- and low-income countries.
Youth Labor Market in Burkina Faso: Recent Trends (380kb pdf)
Social Protection Discussion Paper No. 0607; Publication Date: 07/06
by Daniel Parent
As is the case in many developing countries in Sub-Saharan Africa, a very large fraction of young individuals stop going to school very early in life and transition into the labor force. In fact, according to the 2003 Survey of Household Living Conditions (SHLS), around 20% of young Burkinabes aged 6–11 are reported to be illiterate and over 60% of those aged 10-11 report having no schooling at all. Obvious concerns then are to assess how those young people perform in the labor force, to study how their fortunes evolve through time, and to compare their labor market outcomes to those of more educated individuals. At the same time, it would be useful to assess how the households in which those young individuals live fare generally in terms of relative poverty or in terms of changing economic circumstances so as to be able to identify potential causal mechanisms linking household characteristics and youth outcomes.
Youth in the Labor Market and the Transition from School to Work in Tanzania (273kb pdf)
Social Protection Discussion Paper No. 0606; Publication Date: 07/06
by Florence Kondylis and Marco Manacorda
Although the authors are not the first to document the level of youth joblessness in Tanzania (Mjema 1997; Government of Tanzania 2003; LO/FTF 2003), this paper aims to shed some additional light on this phenomenon. First, the authors provide evidence on different dimensions of youths' labor market performance. For this exercise we can rely on micro data from the Tanzanian Integrated Labor Force Survey (ILFS) of 2000/01, a rather large household survey (approximately 11,000 households) that provides a rich array of information on employment, job search, schooling, training, and migration, together with basic information on individuals' and their households' characteristics. Second, the authors attempt to uncover the determinants of youths' labor market outcomes and to tease out significant predictors of labor market success and failure using simple regression tools.
Demographic Alternatives for Aging Industrial Countries: Increased Total Fertility Rate, Labor Force Participation, or Immigration (247kb pdf)
Social Protection Discussion Paper No. 0540; Publication Date: 12/05
by Robert Holzmann
The paper investigates the demographic alternatives for dealing with the projected population aging and low or negative growth of the population and labor force in the North. Without further immigration, the total labor force in Europe and Russia, the high-income countries of East Asia and the Pacific, China, and, to a lesser extent, North America is projected to be reduced by 29 million by 2025 and by 244 million by 2050. In contrast, the labor force in the South is projected to add some 1.55 billion, predominantly in South and Central Asia and in Sub-Saharan Africa. The demographic policy scenarios to deal with the projected shrinking of the labor forth in the North include moving the total fertility rate back to replacement levels, increasing labor force participation of the existing population through a variety of measures, and filling the demographic gaps through enhanced immigration. The estimations indicate that each of these policy scenarios may partially or even fully compensate for the projected labor force gap by 2050. But a review of the policy measures to make these demographic scenarios happen also suggests that governments may not be able to initiate or accommodate the required change.
Youth Employment in the MENA Region: A Situational Assessment (400KB PDF)
Social Protection Discussion Paper No. 0534; Publication Date: 09/05
by Nader Kabbani and Ekta Kothari
This paper investigates the youth labor market in the MENA region in order to identify factors contributing to the persistently high rates of unemployment and joblessness among MENA youth. The paper undertakes three parallel lines of inquiry. First, the authors review characteristics and trends related to the youth labor market. Second, they review findings from the research literature in order to identify determinates of labor market outcomes for youth. Third, they use survey data from Egypt and Morocco to address additional questions about the youth employment situation. While the authors do not test for causality empirically in this paper, our analysis suggests several regional factors that may be contributing to the high rates of unemployment and joblessness among MENA youth: strong labor supply pressures, rising female labor force participation rates, and labor market rigidities that may be interacting with these two factors. Public sector wage premiums and bureaucratic obstacles to the development of private sector enterprises may be especially important contributing factors. Despite many common regional trends, MENA countries also face unique circumstances suggesting unique policy prescriptions. This is especially true in comparing GCC and non-GCC countries.
Unequal Prospects: Disparities in the Quantity and Quality of Labour Supply in Sub-Saharan Africa (601KB PDF)
Social Protection Discussion Paper No. 0525; Publication Date: 06/05
by John Sender, Christopher Cramer and Carlos Oya
This paper stresses the importance of differences between and within Sub-Saharan African economies in the quantity and quality of labour supplies, and highlights the scope for policies to overcome constraints on employment prospects. The emphasis throughout the paper is on the poorest quintile of the population. The paper also provides a detailed discussion of the inadequacy of existing data on the poorest labour market entrants, especially in a context of uneven and unreliably recorded HIV/AIDS prevalence. Improved data will provide a critical foundation for more effective labour market policies.
Portability Regimes of Pension and Health Care Benefits for International Migrants: An Analysis of Issues and Good Practices (391KB PDF)
Also available in French (349KB PDF)
Social Protection Discussion Paper No. 0519; Publication Date: 05/05
by Robert Holzmann, Johannes Koettl, and Taras Chernetsky
The paper provides a first investigation into the portability of pension and health care benefits for international migrants. It is based on available literature and newly minted data, but more importantly on selective case studies from main migrant-sending and receiving countries. While exploratory, the paper achieves a better understanding of the realities on the ground and is able to distill key issues as well as identify good and best practices. The main conclusions include the following: First, only around 20 percent of migrants worldwide work in host countries where full portability of pension benefits, but not necessarily of health care benefits, to their home countries is ensured. Second, bilateral agreements are seemingly the current best practice to ensure portability for pension and health care benefits, although for the latter this is not always the case. Third, more actuarial-type structures should help to enhance portability. This is, in principle, straightforward for pensions and a defined contribution-type design. It is much more complicated for health care benefits. Last but not least, for improved benefit design and implementation, the information base needs to be broadened, including through more country case studies and tracer studies of migrants.
How Changes in Benefits Entitlement Affect Job-Finding: Lessons from the Slovenian “Experiment” (736KB PDF)
Social Protection Discussion Paper No. 0506; Publication Date: 04/05
by Jan van Ours and Milan Vodopivec
In 1998 the Slovenian UI system was drastically reformed. The reform reduced the potential duration of unemployment benefits substantially and simultaneously improved employment services offered to, and monitoring of, the recipients. The authors find that the reduction in potential benefit duration had a positive effect on the exit rate out of unemployment – both to employment and to other destinations – at various durations of unemployment spells and for many categories of unemployed workers. The authors also identify a clear spike in the exit rate out of unemployment in the month unemployment benefits expire (and a smaller spike in the month thereafter), and for males an increase of job-finding rate in the third month of unemployment, a likely consequence of a reduction of the level of benefit that occurs at that point. Interestingly, post-unemployment wages of recipients were not affected after the change of the law, suggesting that higher job-finding rates following the reduction of benefits were not produced by reduced reservation wages (higher acceptance probability) but rather more effective job-search activity.
A Guide to Multisector Labor Market Models (433KB PDF)
Social Protection Discussion Paper No. 0505; Publication Date: 04/05
by Gary S. Fields
This paper approaches labor markets through multisector modeling. The first main substantive section presents the essence of multisector modeling, in particular, the role of labor market dualism. Given that labor markets often consist of quite distinct segments, a useful and insightful analytical approach is to start with just two interrelated segments. The second main substantive section is on models of wages and employment in the formal economy. This section covers 1) the market-clearing labor market model and the presumed equilibrating forces, 2) above-market-clearing wages set institutionally, 3) above-market-clearing wages set by efficiency wage considerations, and 4) above-market-clearing wages set by worker behavior. The third main substantive section is on wages and employment in the informal economy. This section presents three characterizations of informal sector labor markets: 1) the informal economy as a free-entry sector that prospective workers enter only as a last resort, 2) the informal economy as a desirable sector that workers choose in preference to formal sector work, and 3) the informal economy with its own internal dualism, combining 1) and 2). The fourth section is on intersectoral linkages. The models here are: 1) the integrated labor market model with full market clearing, 2) crowding models, and 3) the Harris-Todaro model.
Multinational Enterprises and Training Revisited: Do International Standards Matter? (286KB PDF)
Social Protection Discussion Paper No. 0504; Publication Date: 03/05
by Niels-Hugo Blunch and Paula Castro
Several studies have examined the determinants of training in developing countries but only few have paid attention to the potential importance of international standards such as ISO 9000 or ISO 14000 on the firm’s training decision. This paper examines training determinants using recent employer surveys for four developing countries, Honduras, Indonesia, Morocco and Nicaragua. The authors find that ISO certification status is an important determinant of training, even after controlling for other characteristics such as workers’ formal schooling, firm size, industry and foreign ownership. This points towards the importance of product quality and production standards for firm training. The paper also discusses policy implications related to the findings and provides directions for further research.
Towards a Better Understanding of the Nature, Causes and Consequences of Youth Labor Market Disadvantage: Evidence for South-East Europe (615KB PDF)
Social Protection Discussion Paper No. 0502; Publication Date: 03/05
by Alexandre Kolev and Catherine Saget
The aim of this paper is to contribute to our better understanding of youth labor market disadvantage in the region. A particular attention is paid on measuring the multiple aspects of youth labor market disadvantage, and attempts are made to identify some of its causes and consequences. The paper further provides a summary of relevant studies that have looked at the impact of selected Government policies on youth labor market outcomes.
Trade Union Participation in the PRSP Process (408KB PDF)
Social Protection Discussion Paper No. 0417; Publication Date: 08/04
by Lawrence Egulu
This report notes that most unions have been invited to the discussions leading to formulation of the PRSPs but none has been included in the drafting, implementation, monitoring or evaluation. Based on findings from 23 PRSP countries, the study identifies a number of weaknesses and shortcomings which have limited the effective participation of trade unions, mainly capacity issues, time constraints, and lack of structured participatory processes. Lack of consensus on contentious issues like privatisation, pensions reforms and labor code reform, have been worrisome to some unions. The paper calls for, among other things, more dialogue between the labour movement and the IFIs, strengthening trade unions, building union capacity and more analytical work on labor market policies and core labor standards.
Disability Employment Policy (114KB PDF)
Social Protection Discussion Paper No. 0413; Publication Date: 07/04
by Daniel Mont
This paper is the first in a series aimed at analyzing disability employment policy and developing recommendations for policy reform in middle income countries. As the first paper in this series, this study provides a general overview of the relationship between disability and employment, focusing primarily on disability employment policies in OECD countries. It discusses how well these policies address the dual functions of integration and income security, and reports on recent trends. A variety of policy tools are examined: full and partial disability cash benefits, vocational rehabilitation and training, supported work, sheltered and public sector employment, hiring quotas, tax incentives for employers, and anti-discrimination laws. A general set of recommendations are offered on designing disability employment policies in emerging economies.
Child Labor, Education, and Children (121KB PDF)
Social Protection Discussion Paper No. 0412; Publication Date: 07/04
by Gordon Betcherman, Jean Fares, Amy Luinstra, and Robert Prouty
This paper reviews the international legal framework relating to child labor and access to education and provides a statistical portrait of child labor and education participation. It looks at why children work from the perspective of household decision-making. Various policy options are considered, including those which improve the incentives to education relative to labor, remove constraints to schooling, and increase education participation through legislation. Conclusions are drawn in the final section.
Boosting Productivity Via Innovation and Adoption of New Technologies: Any Role for Labor Market Institutions? (384KB PDF)
Social Protection Discussion Paper No. 0406; Publication Date: 03/04
by Stefano Scarpetta and Thierry Tressel
This paper presents empirical evidence on the determinants of industry-level multifactor productivity growth. The authors focus on "traditional factors", including the process of technological catch up, human capital and R&D as well as institutional factors affecting labor adjustment costs. The analysis is based on harmonized data for 17 manufacturing industries in 18 industrialized economies over the past two decades.
Mitigating the Social Impact of Privatization and Enterprise Restructuring (202KB PDF)
Social Protection Discussion Paper No. 0405; Publication Date: 03/04
by David H. Fretwell
This paper focuses on the role the of social programs in economic restructuring. Restructuring often results in significant downsizing of labor. When this occurs a negative social reaction can slow and/or stall restructuring. This is increasingly recognized by development agencies, governments, and enterprise managers and as a result social programs are increasingly becoming part of the design of enterprise restructuring programs. There are economic, social and political objectives for providing social support packages (SSPs) to workers displaced by restructuring and privatization of State Owned Enterprises (SOEs). Social support programs should include elements that combine to "pull" and entice excess labor to leave overstaffed enterprises, while at the same time helping "push" and assist displaced workers to quickly rejoin the labor market. These measures usually include both temporary income support and active labor programs. To be effective the measures must be carefully designed and targeted, and social monitoring of displaced workers should be an integral part of the design to ensure the services are reaching the most needy workers.
Impacts of Active Labor Market Programs: New Evidence from Evaluations with Particular Attention to Developing and Transition Countries (577KB PDF).
Executive Summary also available in French (63KB PDF) and Arabic (78KB PDF)
Social Protection Discussion Paper No. 0402; Publication Date: 01/04
by Gordon Betcherman, Karina Olivas and Amit Dar
In this paper, the authors provide an overview of the recent international experience with active labor market programs (ALMPs). Basing our evidence on the growing body of program evaluations, the authors focus on the impacts of ALMPs on the subsequent employment and earnings of participants. This paper provides an update to earlier assessments by incorporating the results of the more recent program evaluations. It also extends these previous reviews by explicitly considering the impacts of ALMPs in developing and transition countries. While most rigorous program evaluations continue to be undertaken in industrialized countries, for the first time there are a significant number of evaluations from transition and, to a lesser extent, developing countries.
Trends in the Youth Labour Market in Developing and Transition Countries (223KB PDF)
Social Protection Discussion Paper No. 0321; Publication Date: 10/03
by Niall O'Higgins
This paper looks at youth labour market trends concentrating on developing and transition countries. Questions relating to the integration of young people into decent work have in recent times once again begun to occupy a central position in Government Policy issues. Recently co-ordinated efforts also at the international level have begun to make themselves felt. This paper aims to provide a contribution to debate on the issues by giving an overview of trends in the youth labour market, principally in Transition and developing countries.
Youth Employment Policy in Developing and Transition Countries: Prevention as well as Cure (237KB PDF)
Social Protection Discussion Paper No. 0320; Publication Date: 10/03
by Martin Godfrey
There are two kinds of policy intervention – preventative and curative. A preventative intervention tries to counteract the processes that generate a problem; a curative intervention tries to deal with their consequences. In the case of poverty, for instance, a curative intervention will find out where the poor are and try to alleviate their situation; a preventative intervention will analyze the causes of poverty and devise strategies to prevent it. In the case of youth employment policy, there is a similar distinction: this paper tries to shift the emphasis from curative towards preventative interventions – from treating the symptoms to dealing with the underlying causes.
The Other Side of Self-Employment: Household Enterprises in India (147KB PDF)
Social Protection Discussion Paper No. 0318; Publication Date: 09/03
by Maitreyi Bordia Das
Based on data from the Indian National Sample Survey, 50th Round, this paper analyzes the characteristics of individuals operating non-farm household enterprises. It addresses the question – do high skilled and highly educated workers set up these enterprises or are they operated by individuals with low levels of education, working in low status occupations? To what extent are the occupations in household enterprises segregated by sex? Through descriptive, bivariate and multivariate techniques, it demonstrates that household enterprises comprise a highly heterogeneous set of occupations. In rural areas, they are likely to be absorbing the supply of educated labor from among those who do not have access to land. In urban areas, self-employment in household enterprises could be more in the nature of a survival strategy for individuals with lower levels of education. Moreover, they are segmented along religion, caste and gender. Muslims, upper caste individuals and men are more likely to be self-employed in them.
Why are Educated Women Less Likely to be Employed in India? Testing Competing Hypotheses (118KB PDF)
Social Protection Discussion Paper No. 0313; Publication Date: 05/03
by Maitreyi Bordia Das and Sonalde Desai
In this paper the authors use the Indian National Sample Survey data for 1993-94 to examine the relationship between women's education and labor force participation. While it has been recognized in the literature that education is associated with lower labor force participation for women in South Asia, the reasons behind this association are less well understood. Two competing theories potentially explain this phenomenon – one based on cultural factors and the other on labor market options. Cultural arguments suggest that women's withdrawal from labor force is associated with improvement in the social status of the family. Higher status families choose to educate their daughters, but at the same time, restrict their independence through labor force withdrawal. In contrast, structural arguments suggest that educated women – like educated men – prefer white collar jobs. Since formal sector jobs only comprise 7 percent of all jobs, opportunities for these desirable jobs is limited, resulting in labor force withdrawal of women. The authors propose empirical tests to examine whether job availability or patriarchal controls play an important role in shaping this relationship. The results suggest that cultural factors appear to be less important than lack of employment opportunities.
Politicas Y Programas De Juventud En América Latina Y El Caribe: Contexto Y Principales Caracteristicas (322KB PDF)
Social Protection Discussion Paper No. 0312; Publication Date: 04/03
Preparado por Francisco Pilotti y María Claudia Camacho
En América Latina y el Caribe existen numerosas iniciativas y programas para los jóvenes, provenientes tanto del sector gubernamental como del privado y no-gubernamental. A la heterogeneidad de estas acciones se agrega la diversidad de sus objetivos, derivados de las múltiples situaciones que afectan a la juventud, según características de género, raza, clase social, zona de residencia, empleo y otras. Además, usualmente intervienen en los programas de juventud diversos organismos internacionales que prestan variados apoyos para su desarrollo, financiamiento y ejecución. No obstante la importancia asignada al tema juventud en la mayoría de los programas de gobierno así como en las agendas de varios organismos internacionales, existe una carencia de documentos de síntesis, de facil acceso, que permitan obtener una rápida visión de conjunto sobre la problemática juvenil en América Latina y el Caribe. Por ello, el propósito de este documento es aportar al necesario esfuerzo de sistematización, para lo cual ordena aspectos relacionados con la definición de la juventud y sus principales características demográficas y socioeconómicas, los marcos de referencia que orientan las acciones de la comunidad internacional, y la identificación de los organismos nacionales e internacionales dedicados a este tema. A partir de este marco contextual, se analizan las características de 18 programas de juventud, con el propósito de detallar el funcionamiento, impacto y lecciones aprendidas de un conjunto representativo de proyectos. Se espera que las precisiones sobre las características de la población joven, el mapeo institucional, y el análisis de proyectos considerados típicos, faciliten las tareas evaluativas y el desarrollo de estrategias y políticas de juventud.
Unemployment Benefit Systems in Central and Eastern Europe: A Review of the 1990s (219KB PDF)
Social Protection Discussion Paper No. 0310; Publication Date: 03/03
by Milan Vodopivec, Andreas Wörgötter and Dhushyanth Raju
The paper reviews unemployment benefit systems in Central and Eastern Europe in the 1990s. It describes them and analyzes their costs by studying replacement rates, the shares of recipients among the unemployed, and a summary measure of benefit generosity. Moreover, it evaluates their distributive effects (via analyzing data from household income and expenditures surveys) and efficiency effects (via literature review). The evidence shows that unemployment benefits were progressive and that – in countries with broad coverage and sizeable share of benefits in household incomes – they also strongly reduced poverty. The paper also summarizes evidence about work disincentives created by unemployment benefits.
Joblessness and Precarious Work in Bulgaria: Addressing the Multiple Aspects of Vulnerability in the Labour Market (180KB PDF)
Social Protection Discussion Paper No. 0303; Publication Date: 02/03
by Alexandre Kolev
This paper uses data from the Bulgarian Integrated Household Surveys and the International Social Survey Programme (ISSP) to examine the multiple aspects of vulnerability in the labor market in Bulgaria in the late 1990s. The paper starts by examining the links between poverty and labor market outcomes, drawing a particular attention to the heterogeneity of jobs and the multiple aspects of poverty. It then identifies those groups at risk of one or more poor labor market outcomes, revealing the existence of particularly vulnerable groups who cumulate a high risk of being unemployed, of remaining longer in unemployment, and if employed, of being low-paid, and working under precarious conditions.
Effectiveness of Lending for Vocational Education and Training: Lessons from World Bank Experience (194KB PDF)
Social Protection Discussion Paper No. 0222; Publication Date: 09/02
by S. Canagarajah, A. Dar, R. Nording and D. Raju
This paper reviews the Bank involvement in the vocational education and training sub-sector in the 1990s. This paper aims to do just that by mainly seeking answers to the following questions: How has the Bank performed in its lending services to its clients in VET? How have VET projects performed in terms of meeting stated objectives? What factors led to the success or failure of Bank operations? Based on what has been learned, this paper provides suggestions about how the performance of future VET interventions can be improved. This review concerns itself primarily with implementation performance and proposes measures to improve project outcomes.
Extending Social Protection to Informal Workers in the Horticulture Global Value Chain (238KB PDF)
Social Protection Discussion Paper No. 0216; Publication Date: 07/02
by Armando Barrientos and Stephanie Ware Barrientos
This paper looks at issues surrounding the extension of social protection to workers in the horticulture sector. This sector involves a significant level of informal employment, with high levels of insecurity and social risk, but low levels of income and social protection. Workers in this sector and excluded from existing coverage or benefits. Using a global value chain approach, and a social responsibility matrix, this paper explores both the current weaknesses but also potential opportunities for extending social protection to this group of workers.
Income Support Systems for the Unemployed: Issues and Options (577KB PDF)
Social Protection Discussion Paper No. 0214; Publication Date: 05/02
by Milan Vodopivec and Dhushyanth Raju
The purpose of this report is to provide guidelines for developing countries wishing to introduce or improve income support systems for the unemployed. To arrive at such guidelines, the report summarizes the results in the literature on the performance of various income support systems viewed from four aspects: how desirable are their distributive effects; how they affect efficiency; how suitable they are to confront different types of shocks; and how resistant they are to political interference. Based on this evaluation, and taking account of countries' specific circumstances – chief among them being labor market and other institutions, the administrative capacity needed for administering income support programs, the prevalence of private transfers, cultural factors, the types of shocks typically faced, and the size of informal sector – the suitability of individual programs for developing and transition countries is then evaluated.
Social Protection @ Your Fingertips-Using Information & Communications Technologies in Social Protection (283KB PDF)
Social Protection Discussion Paper No. 0213; Publication Date: 05/02
by Knut Leipold
At the beginning of the 21st century, worldwide spending in Information & Communications Technology (ICT) has passed the threshold of US$ 2 trillions. In this context, ICT spending in low- and middle-income countries has grown faster than in the developed countries over the recent years. The World Bank has raised the awareness of the importance of using ICT for development and some 80% of Bank-financed projects include ICT components throughout all regions and sectors including the Social Protection sector. ICT offers the potential of moving from the traditional automation of existing processes and organizational structures of Social Protection agencies to transformation, i.e. aligning processes, organizational structures, and new technologies along the goals of social policies. Innovative approaches may also include the use of integrated ICT systems across government agencies and the customer-centered delivery of social services through electronic channels. Using the potential of ICT can provide value added in the process of Social Risk Management. The costs and benefits of major ICT projects may be analyzed for each project phase in order to verify the overall value and decide for the appropriate ICT system. While costs and benefits may be easily identified, they can not always be measured in terms of money value. However, non-measurable costs/benefits may have an impact on managing social risk and, therefore, be evaluated accordingly.
An Overview of Labor Markets World-Wide: Key Trends and Major Policy Issues (194KB PDF)
Social Protection Discussion Paper No. 0205; Publication Date: 04/02
by Gordon Betcherman
This paper provides an overview of labor market trends and key policy issues worldwide. It begins with a statistical overview of major indicators relating to the labor market, highlighting the diverging experiences between the high-income countries and many developing regions. It then reviews four global trends that are rapidly changing labor markets and affecting workers all over the world. These trends are the changing industrial structure which is being accompanied by rapid urbanization; global economic integration; technological change through the information and communication technology revolution; and the informalization of many economic activities. While policy responses to these developments depend on national circumstances, there are certain priorities that apply universally. These priorities – investing in human resources, social protection for workers, and labor market regulation – are reviewed in the final section of the paper.
Options of Public Income Support for the Unemployed in the Philippines (242KB PDF)
Social Protection Discussion Paper No. 0204; Publication Date: 04/02
by Jude H. Esguerra, Makoto Ogawa and Milan Vodopivec
How can the income support for the unemployed Filipino workers be improved? The study analyzes both arguments in favor of and against each of the following programs: unemployment insurance, unemployment assistance, severance pay, unemployment insurance savings accounts, public works, and self-employment programs. In doing so, it addresses the following questions: How does a candidate program interact with other labor market institutions? Does the program respond to a country's income shocks such as recessions and natural disasters? Does the country have sufficient administrative capacity to carry out a program? Does the program fit into existing formal and informal mechanisms of social risk management? Is there a risk of disrupting or displacing existing mechanisms such as transfers between family members? Is the program attuned to the prevailing norms and culture? The study concludes that all programs have certain advantages and disadvantages – an argument for the multiplicity of programs and flexibility of their use. Nonetheless, to enhance income protection for the Filipino workers, the paper proposes a two-prong approach, consisting of (i) the expansion of public works (particularly those relying on labor-based, equipment-supported technology), and (ii) the introduction of a new program – individual savings accounts, either as unemployment insurance savings accounts or comprehensive savings accounts covering other contingencies as well (such as education, health, housing, and old age).
Unemployment Insurance and Unemployment Assistance: A Comparison (155KB PDF)
Social Protection Discussion Paper No. 0203; Publication Date: 04/02
by Wayne Vroman
This report examines the two most common programs that provide cash compensation to unemployed workers: unemployment insurance (UI) and unemployment assistance (UA). It compares them in two areas: costs and labor market disincentives. The cost analysis first derives a framework for examining costs, and then applies the framework to both UI and UA programs. Costs are estimated for several countries, but particular attention is given to Australia, Canada and the United States. A major finding is that UA is not necessarily less costly than UI even though UA conditions eligibility on household income and assets. One must examine the specifics of a country's situation to make a cost comparison. The analysis of labor market disincentive effects reviews much of the relevant literature. It notes that the disincentive effects are present for both UI and UA but that the disincentives are different for the two types of unemployment protection programs.
Does Eurosclerosis Matter? Institutional Reform and Labor Market Performance in Central and Eastern European Countries in the 1990s (259KB PDF)
Social Protection Discussion Paper No. 0202; Publication Date: 03/02
by Michelle Riboud, Carolina Sánchez-Páramo and Carlos Silva-Jáuregui
This paper examines the labor market dynamics of six CEE countries over the last 10 years, paying special attention to the nature of labor market institutions these countries have adopted and their impact on labor market performance. This paper finds that, compared to EU countries, CEE countries fall in the "middle" of the flexibility scale regarding their employment protection legislation. While the effect of labor market institutions is hard to uncover, it should not be disregarded and they are likely to play an important role in the coming years.
Social Protection and the Informal Sector in Developing Countries: Challenges and Opportunities (271KB PDF)
Social Protection Discussion Paper No. 0130; Publication Date: 12/01
by Sudharshan Canagarajah and S.V. Sethuraman
This paper is aimed at identifying the sources of income insecurity and vulnerability among workers in the informal sector in developing countries and examines alternative approaches to social protection for the informal sector. This is followed by a discussion on the challenges of developing a comprehensive approach to social protection for the sector, building on the 2000/1 WDR on poverty and the 2001 Social Protection Sector Strategy Paper.
Labor Market Regulation: International Experience in Promoting Employment and Social Protection (225KB PDF)
Social Protection Discussion Paper No. 0128; Publication Date: 11/01
by Gordon Betcherman, Amy Luinstra and Makoto Ogawa
Labor market regulation involves many aspects, ranging from how employers contract for the services of workers to the nature of the exchange, including terms of conditions of employment. This area of regulation represents an important and often controversial aspect of public policy in both developed and developing countries. Approaches are dominated by opposing views, one which favors the protection of workers through labor legislation and collective bargaining and the other which emphasizes the advantages of encouraging market processes. In the end, however, what matters are the economic and social outcomes of different approaches. This primer paper reviews different regulatory options regarding hiring and firing and wage determination and summarizes the existing knowledge about their labor market effects. It also reviews two important institutional aspects of labor market regulation - enforcement and dispute resolution. In an annex to the paper, the authors summarize the statutory arrangements for various topics related to labor market regulation in 17 countries.
The Cost and Benefits of Collective Bargaining: A Survey (159KB PDF)
Social Protection Discussion Paper No. 0120; Publication Date: 09/01
by Toke Aidt and Zafiris Tzannatos
Collective bargaining and dispute resolution mechanisms facilitate coordination. Coordination is increasingly seen as an influential determinant of labor market and macroeconomic performance. This paper provides a systematic review of the relevant literature with a specific focus on the role that collective bargaining plays in shaping macroeconomic performance. the authors focus on comparative studies of labor market institutions in the OECD area that try to disentangle the impact of different institutional approaches to collective bargaining from other determinants of macroeconomic performance.
The Informal Sector Revisited: A Synthesis Across Space and Time (98KB PDF)
Social Protection Discussion Paper No. 0119; Publication Date: 07/01
by Niels-Hugo Blunch, Sudharshan Canagarajah and Dhushyanth Raju
The concept of the informal sector (IS) has recently received widespread and growing attention. Indeed, it may be fair to talk about a re-emergence of the concept in the debate related to social protection and poverty reduction. The authors argue that with this new found prominence, it is even more important that we better understand the IS. Only with an improved understanding of the issues and dimensions of the IS can we design policies and programs which effectively address the needs of workers engaged in informal sector activities. This paper is an attempt to contribute to such an increased understanding by highlighting important pieces in understanding the concept of the IS across (1) time, briefly discussing how the authors' view of the concept of the IS has evolved over time and (2) space, presenting empirical evidence and stylized features across regions. After presenting the current state of knowledge of the IS, the authors distill key aspects and issues of the IS and discuss their implications for policy design and implementation, especially in the context of fighting poverty and improving livelihoods of the poor in developing countries.
Earnings Inequality in Transition Economies of Central Europe Trends and Patterns During the 1990s (134KB PDF)
Social Protection Discussion Paper No. 0117; Publication Date: 07/01
by Jan J. Rutkowski
This paper documents trends in earnings distribution during the transition in Central Europe, and examines changes in relative wages that have underlined the rise in earnings inequality. The paper finds that the widening of earnings distribution was concentrated in the early phase of transition, and the trend towards greater inequality in most countries tapered off during the late 1990s. This suggests that a new equilibrium has been reached, or at least approached. This equilibrium is characterized by high but not exorbitant earnings dispersion. In most transitional economies of Central Europe earnings inequality is in the upper part of the OECD range, rarely beyond that range. The widening of earnings distribution has occurred at its both ends. The relative position of low-paid workers has deteriorated while the position of top paid workers has improved. At the same time the incidence of both low- and high-pay has considerably increased. High earnings dispersion is particularly pronounced in the private sector, which is a primary source of both low- and high-paying jobs. The main observable factor behind the increase in earnings inequality during the transition has been the increase in the premium to university education. Education is currently the single most important variable explaining the attained level of inequality, whereas inter-industry wage differentials are second in importance. The contribution of other factors, such as gender, labor market experience, location, is small or insignificant.
The World Bank and the Provision of Assistance to Redundant Workers:Experience with Enterprise Restructuring and Future Directions (137KB PDF)
Social Protection Discussion Paper No. 0112; Publication Date: 04/01
by Yi Chen
This paper summarizes the World Bank's experience in dealing with redundant (laid-off) workers. It identifies World Bank lending of 88 loans in 47 countries that have contained labor assistance to redundant workers related to enterprise restructuring or privatization since 1987. The paper classifies total World Bank lending into three broader categories that consist of different forms of labor and income support. The findings show that the total number of such loans more than doubled from 1994-98, and most of Bank's labor assistance goes towards long-term capacity building to develop the institutional framework needed to support redundant workers. Training, labor market mobility and severance pay programs were the three major labor programs used most frequently. The paper examines regional differences in total amount of labor assistance and regional difference in using the particular type of labor assistance. The findings also show how major type of labor assistance program changes over time, for example, severance pay program surpassed training program in 1997.
Labor Markets in Transition Economies: Recent Developments and Future Challenges (152KB PDF)
Social Protection Discussion Paper No. 0111; Publication Date: 04/01
by Mansoora Rashid and Jan Rutkowski
This paper examines how the Bank's role in labor markets in transition countries can be made more effective. The Bank should focus on ensuring that project interventions are made in a comprehensive policy framework and, where possible, follow a logical process: from sector diagnosis, towards improvements in administrative and institutional capacity and policy reform. Bank support should help develop capacity of countries to collect and evaluate information on labor market developments and the performance of labor market programs. Labor market policies should be coordinated with policy dialogue in these and other sectors, both within the Bank and the country in question and the Bank should conduct a policy dialogue that, as much as possible, involves all stakeholders.
Programmes Actifs Pour Le Marché du Travail:Un Aperçu Général des Évidences Résultant des Évaluations (323KB PDF)
Social Protection Discussion Paper No. 0105; Publication Date: 01/01
par Zafiris Tzannatos et Amit Dar
Dans ce document, nous examinons les résultats basées sur l'évaluation des programmes actifs d'emploi. Nous avons étudié environ cent évaluations. Plusieurs de ces études ont déjà été résumées par d'autres organisations (OCDE et OIT), mais nous avons également inclus un nombre important d'études individuelles. Bien que la majorité de ces études ne s'appliquent qu'aux pays de l'OCDE - principalement les Etats-Unis, le Canada, la Grande Bretagne, la Suède et l'Allemagne - nous avons ajouté des données sur les économies en transition et en développement telles que la Hongrie, la Pologne, la Tchécoslovaquie, la Turquie et le Mexique. Bien que les leçons reçues des pays développés sur l'efficacité de ces programmes peuvent ne pas être directement applicables aux pays en développement, il est peu probable que ces programmes soient plus réussis dans les pays en développement vu le manque de capacité administrative pour assurer la mise en oeuvre de ces programmes et la faiblesse des systèmes de contrôle et d'évaluation pour étudier leur efficacité.
Long-term Consequences of an Innovative Redundancy-Retraining Project: The Austrian Steel Foundation (347KB PDF)
Social Protection Discussion Paper No. 0103; Publication Date: 01/01
by Rudolf Winter-Ebmer
In the late 1980s privatization and down-sizing of nationalized steel mills and related firms in the metal industry have lead to large-scale redundancy plans. A special Steel Foundation was created as part of a social plan. This foundation acted like an independent training center, where displaced workers would spend relatively long training periods (sometimes several years), obtaining personality and orientation training, as well as formal education. The last step of the integrative program was placement assistance as well as assistance for creating one's own business. The foundation was financed by (higher) contributions from unemployment insurance funds, by the previous firms themselves, as well as by a collectively-bargained special tax on the remaining workers in the steel firms. Moreover the trainees themselves would have to support the foundation by giving up the interest accruing to their redundancy payments. The author uses combined data from Austrian social security records and from the Employment Service to look at participation decisions and on post-foundation economic performance, i.e. days worked and wage growth. As a control group he takes all displaced workers from the firms who formed the foundation, using Instrumental Variables to solve the selection problem. The results show considerable wage gains – even for a period of five years after leaving the Foundation – as well as improved employment prospects. Finally, a cost-benefit analysis is performed to assess the long-term success of the Foundation.
Worker Reallocation During Estonia's Transition to Market: How Efficient and How Equitable? (311KB PDF)
Social Protection Discussion Paper No. 0018; Publication Date: 07/00
by Milan Vodopivec
Based on consecutive labor force surveys, this study examines labor market dynamics during the first decade of the Estonian transition to market. The results show that, similar to other transition economies: (1) Estonia's employment and labor force was reduced; (2) patterns of mobility profoundly changed – labor market flows intensified and previously nonexistent transitions emerged; and (3) some groups of workers were disproportionally affected, chief among them the less educated and ethnic minorities. But Estonian liberal and radical transition reforms produced also labor market outcomes that differ significantly from those in other transition economies – above all, the intensity of worker and job flows in Estonia's transition have surpassed those in most other transition economies, thereby contributing to efficient reallocation of labor. This was achieved by deliberate policies aimed at stimulating job creation and employment, above all by low employment protection and other policies geared toward increasing employability and strengthening the incentives of workers. Moreover, under the dynamic Estonian labor market adjustment, marginal groups have fared better than those in more protective labor markets of other transition economies.
Ratcheting Labor Standards: Regulation for Continuous Improvement in the Global Workplace (133KB PDF)
Social Protection Discussion Paper No. 0011; Publication Date: 05/00
by Charles Sabel, Dara O'Rourke, Archon Fung
Ratcheting Labor Standards (RLS) is a regulatory alternative that aims to improve the social performance of firms in the global economy. Under RLS, firms disclose to a certified monitor information on their social performance, minimally including working conditions, hours, and wages. The monitors rank firms on the basis of their current social performance and their rates of improvement and make these rankings, and the methods on which they are based, accessible to the public. This process, it is argued, encourages leading firms to strive toward superior social practices. Competition among firms and monitors will help establish two kinds of standards: best practices defined by the most advanced firms and rates of improvement shown to be feasible at various levels of development. Both continually "ratchet" upward as the best practices get better still and firms find ways to accelerate improvement, in a race to the top. These and other RLS mechanisms would create incentives for firms to dedicate a portion of the ingenuity and resources now devoted to product development to the continuous improvement of labor practices.
Active Labor Market Programs: Policy Issues for East Asia (151KB PDF)
Social Protection Discussion Paper No. 0005; Publication Date: 01/00
by Gordon Betcherman, Amit Dar, Amy Luinstra and Makoto Ogawa
This paper reviews international experience with active labor market programs (ALMPs) and discusses their applicability to five East Asian countries: Indonesia, Korea, Malaysia, the Philippines, and Thailand. While ALMPs had not been an important policy tool in East Asia, many countries in the region implemented one or more of these programs in response to the crisis. On the basis of recent experience in the region and throughout the world, this paper outlines several key issues for policy makers to consider while setting a course for post-crises active labor market programs.
Labor Markets and Poverty in Bulgaria (121KB PDF)
Social Protection Discussion Paper No. 9918; Publication Date: 08/99
by Jan J. Rutkowski
Since 1995 the labor market in Bulgaria has been slack but relatively stable. The labor force participation rate has remained at a low level of 52%, reflecting in part the discouraged worker effect. The unemployment rate in June 1995 was two percentage points lower than in two years earlier. The data come from the Labor Force Survey, which in principle should cover employment in the informal sector. This fall could be deemed as an achievement, however it reflects stalled and delayed restructuring rather than a more dynamic labor market. The employment rate has not increased and is ratcheted at a low level: only 45 of working age population in Bulgaria have jobs. All these figures present a picture of a stagnant labor market with limited employment opportunities. It is not only unemployment that is a problem, but also a low labor force participation, which both signify underutilization of labor resources.
Evaluating the Impact of Active Labor Programs: Results of Cross Country Studies in Europe and Central Asia (199KB PDF)
Social Protection Discussion Paper No. 9915; Publication Date: 06/99
by David H. Fretwell, Jacob Benus and Christopher J. O'Leary
Active labor programs (ALPs), commonly found in Organization for Economic Corporation and Development (OECD) countries, are being implemented in transition and middle income economies as one ingredient of labor policy intended to assist in the redeployment of workers negatively impacted by economic restructuring. Active labor polices have both social/political and economic agendas. They are a signal from government to citizens that it cares about individuals who lose their jobs as a result of economic restructuring and wants to help them reenter the labor market. They are also intended to increase productivity, reduce the demand for public income support, and reduce poverty. The Study addresses the economic agenda of ALPs and was designed to answer the question: do active labor programs have a significant positive impact on employment and earnings, and if so for whom? This question is of considerable interest to middle income countries, which have limited resources to allocate to competing development priorities, as well as bilateral and multilateral development agencies. In addition, while there are findings from OECD research indicating that well targeted and designed ALPs may have positive impacts, there is little information available to indicate that such findings can be applied to middle income and transition economies.
Public Service Employment: A Review of Programs in Selected OECD Countries and Transition Economies (200KB PDF)
Social Protection Discussion Paper No. 9913; Publication Date: 06/99
by Sandra Wilson and David Fretwell
Unemployment and job creation are critical policy issues in both OECD and transition countries. This study examines one type of intervention that is often used to quickly create jobs: Public Service Employment programs. Such programs are characterized by the employment of unemployed persons, financed by the government, to provide services or infrastructure (public works). Specifically, this study examines public employment programs in Denmark, France, Germany, Hungary, Spain, Poland, the United Kingdom and the United States, with some additional data from the Czech Republic.
Unemployment and Unemployment Protection in Three Groups of Countries (202KB PDF)
Social Protection Discussion Paper No. 9911; Publication Date: 05/99
by Wayne Vroman
This report examines unemployment protection with emphasis on three groups of countries: 1) OECD, 2) Central-East Europe and Former Soviet Union and 3) East and South Asia. Section I notes the presence of various public social protection programs including pensions, work injury insurance, health insurance and unemployment benefits. Section II describes the measurement of unemployment in these countries and provides details of their unemployment protection programs including unemployment insurance, unemployment assistance and severance pay schemes. Section III explores the costs of providing unemployment protection. Comments of the potential costs of unemployment insurance for Asian economies are offered. Section IV examines alternatives to unemployment insurance and unemployment assistance for addressing the losses of earnings and increases in poverty associated with unemployment.
Optimal Unemploment Insurance: A Guide to the Literature (272KB PDF)
Social Protection Discussion Paper No. 9906; Publication Date: 01/99
by Edi Karni
Unemployment insurance has been the subject of numerous theoretical and empirical studies. These studies elucidate the benefits and the cost of unemployment insurance, namely, the improved the allocation of risk bearing and the reduced incentives for work. In the past two decades a branch of the literature has emerged that deals with the optimal design of unemployment insurance. This literature has been influenced by ideas and methods from the field of information economics and theories from the field of labor economics. The result is a collection of models designed to highlight a variety of issues pertaining to the provision of optimal unemployment insurance. This paper reviews these issues, summarizes the relevant literature, assesses its accomplishments, and points out problems that require further study.
The Effects of Legislative Change on Female Labour Supply: Marriage and Divorce, Child and Spousal Support, Property Division and Pension Splitting (78KB PDF)
Social Protection Discussion Paper No. 9905; Publication Date: 01/99
by Antony Dnes
Although there has been a considerable amount of legislation aimed at marital rights in several countries in recent decades, the implications for women's labour supply has been a comparatively neglected area. In this report, the authors use insights from the economics of marriage, including bargaining theories, to examine the labour-market impact of legislation covering marital and post-marital support obligations, which include child support and pension splitting. The focus will be on generic forms of such legislative change with illustrations drawn from recent UK legislative change. The approach is drawn from the economics of law.
A Bundle of Joy or an Expensive Luxury: A Comparative Analysis of the Economic Environment for Family Formation in Western Europe (197KB PDF)
Social Protection Discussion Paper No. 9903; Publication Date: 01/99
by Pierella Paci
In the Europe of the 1990s, low fertility rates are a prime concern. Contrary to the general view that associates declining fertility with increasing women's participation in paid work, this paper shows that amongst the EC-15 countries, those where women are more active in the labor market are also those where fertility rates are highest. These are not the countries where large families are a tradition. On the contrary, they are those where women's contribution to the household budget is the highest and where the State provides the strongest support to family formation and gender equality. The low cost of childbearing allows women in these countries to be both mothers and earners. The others may be forced to choose.
World Bank Lending for Labor Markets: 1991 to 1998 (198KB PDF)
Social Protection Discussion Paper No. 9902; Publication Date: 01/99
by Amit Dar and Zafiris Tzannatos
The World Bank assigns great importance to improvements in the performance of the Labor Market. The functioning of the labor market is critical for growth (efficiency) and workers' incomes (welfare) and for the Bank's overarching goal of poverty reduction. The interest of the Bank in labor markets is reflected both in its analytical work and lending operations. The Bank's analytical work on labor markets culminated this year with the publication of the World Development Report 1995: Workers in an Integrating World. Its operations on labor markets are reviewed in this paper. The findings show that, indeed, lending for labor market has increased significantly in the last four years.
Active Labor Market Programs: A Review of the Evidence from Evaluations (246KB PDF)
Social Protection Discussion Paper No. 9901; Publication Date: 01/99
by Amit Dar and Zafiris Tzannatos
In this paper, the authors survey evidence based on the evaluation of active labor market programs. They have examined about 100 evaluations. Many of these studies have already been summarized by others (such as OECD and ILO), but the authors have also included a significant number of individual studies. And though most studies apply to OECD countries – mainly the U.S., Canada, U.K., Sweden and Germany – the authors have added information on developing and transition economies such as Hungary, Poland, the Czech Republic, Turkey and Mexico. While it can be argued that the lessons from developed countries on the effectiveness of these programs may not be directly applicable to developing countries, it is unlikely that these programs will be more successful in developing countries given the scarcity of administrative capacity to implement these programs and the paucity of monitoring and evaluation experience to study their effectiveness.
Family Allowances (214KB PDF)
Social Protection Discussion Paper No. 9814; Publication Date: 03/99
by Suzanne Roddis and Zafiris Tzannatos
This paper summarizes key aspects of family allowances programs across the world and presents information on their characteristics in a cross-country comparative context. Family allowances can be universal (paid to all resident families with a specified number of children) or employment-based (whereby workers receive additional pay depending on the size/composition of their family). Their characteristics include eligibility conditions, source of funds, benefit levels and administration. These characteristics differ not only across economies but also over time in the same country as governments strive to tune unemployment policies to macro and labor conditions. Therefore, the reader should consider the information in this paper as approximately correct at the time of printing and should refer to the indicated sources for greater reliability.
Unemployment Benefits (174KB PDF)
Social Protection Discussion Paper No. 9813; Publication Date: 10/98
by Zafiris Tzannatos and Suzanne Roddis
This paper summarizes key aspects of unemployment benefit schemes across the world and presents information on their characteristics in a cross-country comparative context. Unemployment benefit schemes can be of insurance type (paid from employer/worker contributions to provide insurance against "the risk of becoming unemployed") or assistance type (means tested paid to the unemployed poor). Their characteristics include coverage, eligibility conditions, source of funds, benefit levels and administration. These characteristics differ not only across economies but also over time in the same country as governments strive to tune unemployment policies to macro and labor conditions. Therefore, the reader should consider the information in this paper as approximately correct at the time of printing and should refer to the indicated sources for greater reliability.
An Alternative Technical Education System: A Case Study of Mexico (76KB PDF)
Social Protection Discussion Paper No. 9811; Publication Date: 07/98
by Kye Woo Lee
Many developing countries have relied on the varied forms of diversified secondary technical education as the main venue for training skilled workers and mid-level technicians. But there have been numerous and strong critics against this mode of technical education. As an alternative, the Mexican Government established the CONALEP system in the late 1970s. This study tests the viability of the system by evaluating CONALEP graduates' labor market performance in comparison with other forms of education. It also supplements the scant literature on the transition from technical education to work and on the use of technical skills.
Women and Labor Market Changes in the Global Economy: Growth Helps, Inequalities Hurt and Public Policy Matters (127KB PDF)
Social Protection Discussion Paper No. 9808; Publication Date: 04/98
by Zafiris Tzannatos
The paper examines the level and changes in female and male participation rates, employment segregation and female relative to male wages across the world economy. It finds sufficient evidence to support the view that labor markets in developing countries are transformed relatively quickly in the sense that gender differentials in employment and pay are narrowing much faster than they did in industrialized countries. However, the paper evaluates the inefficiencies arising from persisting gender differentials in the labor market and finds them to be potentially significant. The estimates also indicate that the resulting deadweight losses are borne primarily by women while men gain mainly in relative terms -- there are no real winners from discrimination. The paper concludes that growth benefits women at large, inequalities can have significantly adverse effects on welfare, and market-based development alone can be a weak instrument for reducing inequality between the sexes. To break the vicious circle of women's low initial human capital endowments and inferior labor market outcomes compared to men's, the paper proposes greater access of girls to education and of women to training, enforceable equal pay and equal employment opportunities legislation, a taxation and benefits structure that treats reproduction as an economic activity and women as equal partners within households, and a better accounting of women's work to include invisible production.
Export Processing Zones: A Review in Need of Update (222KB PDF)
Social Protection Discussion Paper No. 9802; Publication Date: 01/98
by Takayoshi Kusago and Zafiris Tzannatos
This paper reviews the issues associated with EPZs such as employment creation, technology transfer, women workers and so on, and provides an update of recent developments and literature. A conclusion for this review is that EPZs are not a static phenomenon, in the sense that the economic conditions in which they operate change over time and this affects their characteristics. For example, though EPZs are initially dominated by female employment, the share of women subsequently declines, and the wage advantage or disadvantage of workers in some of EPZs (compared to wages outside them) can disappear or even be reversed over time. More generally, many findings are country and time specific as is often the case in the economic literature. The way forward seems to be for specific country research to use a multi-disciplinary approach.
World Bank Lending for Labor Markets: 1991 to 1996 (172KB PDF)
Social Protection Discussion Paper No. 9801; Publication Date: 01/98
by Amit Dar and Zafiris Tzannatos
This paper reviews the Bank's operations on labor markets. It examines World Bank projects that supported labor market activities in the last five years. Such activities may include public works, micro-enterprise development, training/retraining, labor market information and monitoring systems, employment services, pensions system reforms, labor code revisions, adjustment compensation schemes for retrenched workers or gender specific operations. The paper also examines the regional and sectoral distribution of these activities. The findings show that lending for labor markets has more than tripled during this period, from less than 10% to one-third.