Labour markets

Ishac Diwan, Jamal Ibrahim Haidar, 18 January 2020

Firm-level political connections are widespread. This column examines whether they affect employment decisions in Lebanon, a country where the majority of university students think that connections are important for finding jobs and many admit to having used them. While politically connected firms create more jobs than unconnected firms, the presence of such firms in a sector is correlated with lower aggregate job creation. This finding is consistent with the hypothesis that unfair competition from politically connected firms hurts unconnected competitors so much that aggregate growth in the sector is affected negatively.

Keisuke Kondo, 14 January 2020

Increasing productivity is a top priority challenge for the Japanese economy under the current population decline, and the idea of raising the minimum wage in order to spur productivity growth has piqued interest among policymakers. This column suggests two ways in which firms may respond to a minimum wage hike: some may carry out reforms to increase productivity in response to the hike, while other less-productive firms may exit the market. The overall effect on productivity will vary across countries and firms, since the relative strength of these two effects depends on a country’s firms’ characteristics and market structure.

Johan Hombert, Adrien Matray, 05 January 2020

High salaries and the opportunity to work with exciting new technologies attract many graduates to jobs in the tech sector. This column examines the long-term earnings of French high-skilled workers who started their career during the last tech boom in the late 1990s. The results point to an ‘ICT boom cohort discount’, with high-skilled workers who started in the sector ending up earning almost 7% less than workers who started careers outside of ICT. One potential explanation for this is that human capital accumulated by high-skilled workers in a booming tech sector depreciates faster than usual because of accelerating technological change.

Daniel Oesch, Giorgio Piccitto, 04 January 2020

The consensus view in economics is that labour markets are polarising as jobs are created in high-skilled and low-skilled occupations but disappear in mid-skilled ones. This column shows empirical evidence against the polarisation theory in Western Europe. Between 1992 and 2015, job growth in Germany, Spain, Sweden, and the UK was strongest in top-end occupations and, except in the UK, weakest in low-end occupations. 

Pierre Cahuc, Stéphane Carcillo, Andreea Minea, Marie-Anne Valfort, 03 January 2020

Correspondence studies are often used to detect discrimination on the part of recruiters, but they do not inform us about decisions at the interview and job-offer stages. This column describes how a correspondence study suggests that individuals of North African origin are strongly discriminated against in the French private sector, while they are treated equally in the public sector. However, survey results indicate that both public and private sector employers express discriminatory preferences and beliefs against North African candidates, and wages of young unskilled North African males are lower than those of their French compatriots in both sectors. The findings suggest that correspondence studies should be complemented with other investigation methods.

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