Labour markets

M. Ayhan Kose, Franziska Ohnsorge, Shu Yu, 27 January 2022

Informality compounded the damage of the Covid-19 pandemic in emerging market and developing economies, and it is now threatening to hold back the recovery. This column argues that policymakers need to employ innovative measures, tailored to country circumstances, to help the informal sector cope with the consequences of the pandemic. Policies to better reach informal workers, such as online platforms and databases, as well as progress in digitalisation and financial inclusion can all help support vulnerable populations during times of crisis. 

Leonardo Baccini, Matteo Fiorini, Bernard Hoekman, Marco Sanfilippo, 25 January 2022

The servicification of economic activity occurring across Africa has implications for the continent’s future. Using per capita nightlight luminosity as a proxy for economic development, this column finds a strong positive association between higher-skill services and economic growth that varies according to geography,  institutions, technology, and market conditions. Data on the structure of employment in African economies reveal significant shifts in the composition of employment towards services across and within countries, and towards growth in service-related occupations across all sectors of the economy.

Robert Kaestner, Ofer Malamud, 21 January 2022

The persistence of the gender wage gap suggests it may have roots extending back into childhood. Using data from a US longitudinal survey, this column examines how gender differences in adult earnings correspond to various childhood behaviours. Results indicate that women (but not men) who exhibited headstrong behaviour as children incurred significant earnings penalties as adults, while men (but not women) who exhibited more dependent behaviour as children were penalised. Whether these patterns are the result of nonconformity to gender norms and stereotypes warrants further attention and study. 

Juan Dolado, Etienne Lalé, Hélène Turon, 20 January 2022

Zero-hours contracts are the subject of heated debate in the UK. While some point to the benefits of flexible contracts under fluctuating demand, others have raised concerns about potential exploitation. This column uses a structural model to examine their equilibrium and welfare effects. The findings suggest that zero-hours contracts should be restricted to job matches where workers opt for such a contract when offered a choice; access to zero-hours contracts should be prioritised for workers employed in small rather than large firms; and the way flexibility over hours is shared between workers and firms should be regulated.

Pierre Cahuc, Pauline Carry, Franck Malherbet, Pedro S. Martins, 20 January 2022

In 2009, Portugal restricted the use of fixed-term contracts by firms with over 750 employees. This column finds that while the reform was successful in reducing the number of fixed-term jobs, it did not increase the number of permanent contracts and it decreased employment in large firms. Despite positive spillovers on small firms, the reform reduced total employment and had negative effects on the welfare of employees and unemployed workers.

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