Alan Benson, Danielle Li, Kelly Shue, 24 April 2019

The Peter Principle states that organisations promote people who are good at their jobs until they reach their ‘level of incompetence’, implying that all managers are incompetent. This column examines data on worker- and manager-level performance for almost 40,000 sales workers across 131 firms and finds evidence that firms systematically promote the best salespeople, even though these workers end up becoming worse managers, and even though there are other observable dimensions of sales worker performance that better predict managerial quality. 

Christian Krekel, George Ward, Jan-Emmanuel De Neve, 21 April 2019

A growing number of companies place a high priority on the wellbeing of their workers, assuming that happier workers will lead to improved productivity. This column examines this link based on a meta-analysis of independent studies accumulated by Gallup, covering the wellbeing and productivity of nearly 2 million employees and the performance of over 80,000 business units, originating from 230 independent organisations across 49 industries in 73 countries. The results suggest a strong positive correlation between employee wellbeing, productivity, and firm performance.

Isamu Yamamoto, 14 March 2019

The adoption of new information technologies such as AI in more workplaces is influencing not just employment and wages, but worker well-being such as job satisfaction, stress, and health. Surveying approximately 10,000 workers in Japan, this column analyses the impact of new information technologies on the nature of tasks performed by workers, job satisfaction, and work-related stress. It finds that AI adoption contributes to both greater job satisfaction and increased stress, and considers approaches to maximise the positives of new technologies adoption while minimising its negative side effects.

Luc Laeven, Peter McAdam, Alexander Popov, 10 December 2018

There are good arguments both in favour and against the idea that more labour market flexibility will deliver benefits to an economy during a downturn. This column presents novel evidence on this question, using data from Spain during the 2008–09 credit crunch. The results show that credit-constrained firms grow faster if they are subject to less strict firing and hiring restrictions, as long as they are technologically able to substitute labour for capital. The findings provide an argument in favour of more flexible labour laws.

Aline Bütikofer, Sissel Jensen, Kjell G. Salvanes, 29 November 2018

A recent literature argues that a ‘motherhood penalty’ is a main contributor to the persistent gender wage gap in the upper part of the earnings distribution. Using Norwegian registry data, this column studies the effect of parenthood on the careers of high-achieving women relative to high-achieving men in a set of high-earning professions. It finds that the child earnings penalty is substantially larger for mothers with an MBA or law degree than for mothers with a STEM or medical degree.

John Ameriks, Joseph Briggs, Andrew Caplin, Minjoon Lee, Matthew D. Shapiro, Christopher Tonetti, 29 October 2018

As countries such as the US face increasingly ageing populations, policymakers face the question of whether to encourage workers to work beyond historical retirement age. Using strategic survey questions, this column gauges whether older Americans stop working due to their lack of interest in working longer or due to lack of opportunity, and finds that it may be the latter. The revealed strong willingness to work implies that job opportunities with flexible schedules are hard for older Americans to find. 

Simon Wren-Lewis, 27 June 2018

Thomas Cooley, Espen Henriksen, 11 June 2018

Demographic change represents an important contributing factor to the slowdown of long-run growth. This column explores some of the channels through which this occurs and how the effects of demographic change can be mitigated. Policies that target consumption-saving choices, labour-leisure choices, and human capital accumulation over the lifecycle are likely to be most effective.

Ravi Kanbur, 08 January 2018

Technological innovation is broadly accepted as a driving force behind diverging wage trends in the last three decades. If this is set to continue, policymakers must choose how to respond to the ensuing income inequality. This column assesses two established policy response ideas – state-sponsored formal education, and tax and transfer mechanisms – and postulates a third, namely, that the pace and distributional effects of technological change should themselves be policy goals. A policy intervention that would make innovation more labour intensive would be the most powerful response of all.

Leonardo Gasparini, Guillermo Cruces, Sebastian Galiani, Pablo Acosta, 05 January 2018

While income dispersion significantly increased over the 1990s in most Latin American countries, the 2000s were characterised by a widespread fall in socioeconomic and labour disparities. This column uses a supply-demand framework to explore changes in labour market returns to education in the region. The relative supply of skilled labour rose consistently over the period, while the wage skill premium rose then fell. Supply-side factors seem less important than demand-side factors in accounting for changes in the skill premium, especially between workers with a tertiary education and the rest.

Ricardo Caballero, Emmanuel Farhi, Pierre-Olivier Gourinchas, 13 December 2017

The US has seen a fall in real interest rates but stable real returns on productive capital in the last few decades. This column argues that these divergent trends are inherently interlinked, and arise from a combination of a rise in the capital risk premium, an increase in monopoly rents from mark-ups, and capital-biased technical change. With these secular trends unlikely to reverse anytime soon, we are likely to live in a prolonged era of low interest rates, high capital risk premia, and low labour share.

Rüdiger Bachmann, Christian Bayer, Christian Merkl, Stefan Seth, Heiko Stüber, Felix Wellschmied, 01 November 2017

Many establishments both hire and lay off within a short time window, resulting in ‘churn’. This column uses a newly constructed dataset to show that the rate of churn in Germany is high and can be up to 40% greater in booms compared to recessions. Both establishments that are shrinking and those that are growing hire more and lay off more in booms than in recessions.

David Byrne, Dan Sichel, 22 August 2017

One explanation given for the apparent recent slowdown in labour productivity growth in advanced economies is poor measurement. This column argues that while the available evidence on mismeasurement does not in fact provide an explanation for the slowdown, innovation is much more rapid than would be inferred from official measures, and on-going gains in the digital economy make the productivity slowdown even more puzzling. At the same time, this continued technical advance could provide the basis for a future pickup in productivity growth.

Thomas Le Barbanchon, Roland Rathelot, Alexandra Roulet, 27 June 2017

The generosity of unemployment insurance can influence the time and energy job seekers dedicate to searching for a job, as well as the jobs they are willing to accept. Yet we know little about how unemployment insurance affects the reservation wages of the unemployed. Using new French data, this column shows that increasing unemployment generosity does not affect the reservation wages or the ‘pickiness’ of job seekers.

Claudia Olivetti, Barbara Petrongolo, 03 June 2017

Family-oriented policies – such as parental leave, childcare support, and flexible work arrangements – are in place in all high-income countries, as well as several developing countries. This column assesses the labour market impacts of these policies, based on a review of the literature and data on 30 OECD countries over 45 years. While there is no clear consensus, a general theme is that policies that make it easier to be a working mother, such as subsidised childcare, seem to have better labour market outcomes than extending parental leave.

Ejaz Ghani, Arti Grover Goswami, Sari Pekkala Kerr, William Kerr, 06 May 2017

Developing countries around the world are implementing structural reforms and pro-competitive policies to promote growth, but the impact of this on gender equity is unclear. This column examines the case of India, one of the world’s fastest growing countries, and finds that gender equality has not improved. Policymakers must do more to eliminate gender discrimination. They have an opportunity to not only improve the allocative efficiency of factors and increase growth, but also create an environment of equal opportunity for all, by targeting domestic market competition. 

Daron Acemoğlu, Pascual Restrepo, 10 April 2017

As robots and other computer-assisted technologies take over tasks previously performed by labour, there is increasing concern about the future of jobs and wages. This column discusses evidence that industrial robots reduced employment and wages between 1990 and 2007. Estimates suggest that an extra robot per 1,000 workers reduces the employment to population ratio by 0.18-0.34 percentage points and wages by 0.25-0.5%. This effect is distinct from the impacts of imports, the decline of routine jobs, offshoring, other types of IT capital, or the total capital stock. 

Cristina Mitaritonna, Gianluca Orefice, Giovanni Peri, 03 March 2017

Despite numerous studies exploring how immigration affects local labour markets, there is limited evidence on the impact of immigrants on firms’ productivity levels. Using detailed, firm-level data from France, this column explores how firms react to an increase in the supply of immigrant workers. Provinces with a large increase in immigrant supply experienced higher productivity growth, especially among firms that were initially less productive. This suggests immigration can promote convergence in firm size and productivity levels. 

Fabrizio Coricelli, Marco Frigerio, 23 February 2017

A main source of alternative financing during credit crunches is trade credit. This column argues that small and medium-sized enterprises in Europe suffered a liquidity squeeze during the Great Recession due to the increase of their net lending to large firms. This squeeze was induced by their weak bargaining power in trade credit relationships, and had significant adverse effects on their levels of investment and employment.

Fabio Berton, Sauro Mocetti, Andrea Presbitero, Matteo Richiardi, 09 February 2017

Understanding the real effects of financial shocks is essential for the design of effective growth-restoring policies. This column uses data on job contracts matched with the universe of firms and their banks from a region of Italy to analyse the employment effects of financial shocks. Financially constrained firms – especially the least productive ones – significantly reduced employment, mostly of less-educated and lower-skilled workers with temporary contracts. While these results suggest possible distributional effects across workers, they could also reflect a productivity-enhancing reallocation function of financial shocks.

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