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Evidence-based policy making

IZA World of Labor is an online platform that provides policy analysts, journalists, academics and society generally with relevant and concise information on labor market issues. Based on the latest research, it provides current thinking on labor markets worldwide in a clear and accessible style. IZA World of Labor aims to support evidence-based policy making and increase awareness of labor market issues, including current concerns like the impact of Covid-19, and longer-term problems like inequality.

View our content on Covid-19—Pandemics and the labor market

featured article

Parental leave and maternal labor supply
Parental leave increases the family–work balance, but prolonged leave may have negative impacts on mothers’ careers

Astrid Kunze

Numerous studies have investigated whether the provision and generosity of parental leave affects the employment and career prospects of women. Parental leave systems typically provide either short unpaid leave mandated by the firm, as in the US, or more generous and universal leave mandated by the government, as in Canada and several European countries. Key economic policy questions include whether, at the macro level, female employment rates have increased due to parental leave policies; and, at the micro level, whether the probability of returning to work and career prospects have increased for mothers after childbirth.

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latest articles

  • How should job displacement wage losses be insured?Updated

    Wage losses upon re-employment can seriously harm long-tenured displaced workers if they are not properly insured

    Donald O. Parsons, July 2023
    Job displacement represents a serious earnings risk to long-tenured workers through lower re-employment wages, and these losses may persist for many years. Moreover, this risk is often poorly insured, although not for a lack of policy interest. To reduce this risk, most countries mandate scheduled wage insurance (severance pay), although it is provided only voluntarily in others, including the US. Actual-loss wage insurance is uncommon, although perceived difficulties may be overplayed. Both approaches offer the hope of greater consumption smoothing, with actual-loss plans carrying greater promise, but more uncertainty, of success.
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  • Instruction time and educational outcomes

    The quality of instruction and the activities it replaces determine the success of increased instruction time

    Andrés Barrios Fernández, July 2023
    Increasing instruction time might seem a simple way to improve students' outcomes. However, there is substantial variation in its effects reported in the literature. When focusing on school day extensions, some studies find no effects, while others find that an additional hour of daily instruction significantly improves test scores. A similar pattern arises when examining the effect of additional days of class. These mixed findings likely reflect differences in the quality of instruction or in the activities that are being replaced by additional instruction. Hence these elements need to be considered when designing policies that increase instruction time.
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  • How to support adult caregivers?

    Caregiving for older adults is detrimental to caregivers’ well-being and requires policy interventions to support them

    Joan Costa-Font, June 2023
    Some studies estimate that the value of time spent on unpaid caregiving is 2.7% of the GDP of the EU. Such a figure exceeds what EU countries spend on formal long-term care as a share of GDP (1.5%). Adult caregiving can exert significant harmful effects on the well-being of caregivers and can exacerbate the existing gender inequalities in employment. To overcome the detrimental cognitive costs of fulfilling the duty of care to older adults, focus should be placed on the development of support networks, providing caregiving subsidies, and enhancing labor market legislation that brings flexibility and level-up pay.
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  • The widespread impacts of remittance flowsUpdated

    Remittances have the potential to lift developing economies

    Catalina Amuedo-Dorantes Susan Pozo, May 2023
    Remittances have risen spectacularly in absolute terms and in relation to traditional sources of foreign exchange, such as export revenues. Remittances can improve the well-being of family members left behind and boost growth rates of receiving economies. They can also create a culture of dependency, lowering labor force participation in recipient nations, promoting conspicuous consumption, and accelerating environmental degradation. A more thorough understanding of their impacts can help formulate policies that enable developing economies to harness the most out of these monetary inflows.
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  • Unions and investment in intangible capitalUpdated

    When workers and firms cannot commit to long-term contracts and capital investments are sunk, union power can reduce investment

    Gabriele Cardullo Giovanni Sulis, May 2023
    Although coverage of collective bargaining agreements has been declining for decades in most countries, it is still extensive, especially in non-Anglo-Saxon countries. Strong unions may influence firms' incentives to invest in capital, particularly in sectors where capital investments are sunk (irreversible), as in research-intensive sectors. Whether unions affect firms' investment in capital depends on the structure and coordination of bargaining, the preference of unions between wages and employment, the quality of labor-management relations, the structure of corporate governance, and the existence of social pacts, among other factors.
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  • Eliminating discrimination in hiring isn’t enough

    Firms interested in workplace diversity should consider the post-hiring stage and why some minority employees choose to leave

    Mackenzie Alston, May 2023
    While many firms have recognized the importance of recruiting and hiring diverse job applicants, they should also pay attention to the challenges newly hired diverse candidates may face after entering the company. It is possible that they are being assessed by unequal or unequitable standards compared to their colleagues, and they may not have sufficient access to opportunities and resources that would benefit them. These disparities could affect the career trajectory, performance, satisfaction, and retention of minority employees. Potential solutions include randomizing task assignments and creating inclusive networking and support opportunities.
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  • Maternity leave versus early childcare—What are the long-term consequences for children?Updated

    Despite increasingly generous parental leave schemes their advantages over subsidized childcare remain unclear

    Nabanita Datta Gupta Jonas Jessen, May 2023
    越来越多的协议在高呢?我的父母ncome countries that having a working mother does not harm a preschool child. Yet, research is ongoing on what the long-term effects on children are of being looked after at home (primarily by their mothers) or in childcare. Most studies find positive effects of childcare on child outcomes for children from disadvantaged backgrounds and moderate effects for children from more advantaged backgrounds. Policymakers need to improve compensation and the working environment for the sector if a high quality level is to be achieved and if the beneficial effects are to be maintained.
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  • Female education and its impact on fertilityUpdated

    Additional female educational attainment generally lowers fertility, but the relationship is complex

    Jungho Kim, May 2023
    女性教育之间的负相关and fertility has been observed across regions and time, although it is now weaker among high-income countries. Women's education level could affect fertility through its impact on women's health and their physical capacity to give birth, children's health, the number of children desired, and women's ability to control birth and knowledge of different birth control methods. Each of these mechanisms depends on the individual, institutional, and country circumstances experienced. Their relative importance may change along a country's economic development process.
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  • The Danish labor market, 2000–2022Updated

    The Danish flexicurity model has proven its resilience to large shocks, with favorable overall labor market performance

    Torben M. Andersen, April 2023
    丹麦经常被强调为“灵活福利计划”有限公司untry with lax employment protection legislation, generous unemployment insurance, and active labor market policies. This model has coped with the Great Recession and the Covid-19 pandemic, avoiding large increases in long-term and structural unemployment. The recovery from Covid-19 alongside re-openings has been swift, so labor market effects were temporary. A string of recent reforms has boosted labor supply and employment; although fiscal sustainability is ensured, demographic changes challenge the labor market. Real wage growth has been positive and responded—with some lag—to unemployment.
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  • Trust in management in organizations

    Employee trust in their managers allows a firm to delegate decision-making, aiding both productivity and profitability

    Kieron Meagher Andrew Wait, April 2023
    It is not possible for a formal employment contract to detail everything an employee should do and when. Informal relationships, in particular trust, allow managers to arrange a business in a more productive way; high-trust firms are both more profitable and faster growing. For example, if they are trusted, managers can delegate decisions to employees with confidence that employees will believe the promised rewards. This is important because employees are often better informed than their bosses. Consequently, firms that rely solely on formal contracts will miss profitable opportunities.
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  • How digital payments can benefit entrepreneursUpdated

    Digital payments can effectively connect entrepreneurs with banks, employees, suppliers, and new markets

    Leora Klapper, April 2023
    Digital payment systems can conveniently and affordably connect entrepreneurs with banks, employees, suppliers, and new markets for their goods and services. These systems can accelerate business registration and payments for business licenses and permits by reducing travel time and expenses. Digital financial services can also improve access to savings accounts and loans. Electronic wage payments to workers can increase security and reduce the time and cost of paying employees. Yet, there are challenges as many entrepreneurs and employees lack bank accounts, digital devices, and reliable technology infrastructure.
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  • Performance measures and worker productivityUpdated

    Choosing the right performance measures can inform and improve decision-making in policy and management

    Jan Sauermann, April 2023
    Measuring workers’ productivity is important for public policy and private-sector decision-making. Due to the lack of a general measure that captures workers’ productivity, firms often use one- or multi-dimensional performance measures, which can be used, for example, to analyze how different incentive systems affect workers’ behavior. The public sector itself also uses measures to monitor and evaluate personnel, such as teachers. Policymakers and managers need to understand the advantages and disadvantages of the available metrics to select the right performance measures for their purpose.
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    The Russian aggression against Ukraine has brought incredible destruction in Ukraine and suffering for the Ukrainian population. In the first two months after February 24th, 2022, economic activities came to a standstill for most Ukrainian workers and firms. However, as time passed, the Ukrainian population has shown its resilience and tremendous courage as economic activity slowly but steadily recovered. Like in many prior conflicts, labor markets and economic production have continued to exist in Ukraine.

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