Labour Market Reforms Research Articles

Temporary employment and fertility in Italy: The effect of two labor market reforms in the early 2000s

Temporary employment and fertility in Italy: The effect of two labor market reforms in the early 2000s

Evaluation of the International Labor Organization project in Qatar

In April of 2018, the International Labor Organization (ILO) opened its first project office in Qatar to assist the government in reforming labor market policies to ensure compliance with international labor conventions and achieving fundamental principles and migrant worker rights. Using a policy transfer theoretical framework, this study examines the challenges, progress, and achievements of the ILO project in Qatar across five outcomes: minimum wages and wage security, labor inspection policy, occupational health and safety programs, Kafala (sponsorship) abolition, recruitment and working conditions, prevention, safeguarding, prosecution against forced labor; and promoting workers 'perspective, and access to justice. Data for this study consisted of governments and ILO administrative data and reports as well as evidence from literature review and government websites such as the Ministry of Labor, Qatar Statistics Authority, Gulf Cooperation Council (GCC) states, the ILO Arab States, International Organization for Migrations, and Regional United Nations agencies. Additionally, semi-structured interviews have been conducted with ILO Qatar experts on four progress reports 2018-2021 on labor market challenges, policies, and reforms in Qatar. The key accomplishments of the ILO and the government of Qatar include destroying the kafala system and creating a universal minimum wage for all workers. This signifies a shift toward more open, progressive migrant labor policies and an evolving acceptance of migrant rights and opportunities by the government and members of the mass culture.

Combined and distributional effects of EPL reduction and hiring incentives: an assessment using the Italian “Jobs Act”

After two decades of labour market reforms at the margin, the great recession created political scope to reduce the employment protection still benefitting the workers on open-ended contracts. To support employment levels, these policies have generally been combined with generous employment subsidies. While the theoretical and empirical literature on the two interventions taken in isolation appear generally abundant, almost nothing is known when they come combined. Analogously, no evidence is available on their distributional effects. This paper aims to fill these two gaps by means of counterfactual models estimated on high-frequency employer-employee-linked Italian data. Taking advantage of the quasi-experimental conditions created by the reforms enforced in Italy in 2015, we fit a (non-linear) difference-in-differences strategy into a competing risks duration model. We find prompt sensitivity of small firms to the incentives, while the large ones waited until they were combined with lower firing costs. Small firms substitute temporary for permanent employment, while larger ones do not seem inclined to forego fixed-term contracts, possibly for a probationary period. The reforms have benefitted domestic workers over foreigners, prime-age and older individuals over the young, and those with higher human capital. No gender effects emerge. Small firms operating in non-innovative sectors carry the bulk of heterogeneity effects. Finally, analysis on duration of newly activated open-ended contracts reveals a transitory effect, as separations jumped once the subsidies came to an end.

The Quality‐Weighted Matching Function: Did the German Labor Market Reforms Trade‐Off Efficiency against Job Quality?

AbstractWe evaluate the quantity–quality trade‐off on the labor market by estimating an augmented matching function weighting the matches by quality measures. We use the approach to evaluate the German labor market reforms conducted between 2003 and 2005. Indeed, we find a significant quantity–quality trade‐off. However, even after controlling for job quality, a good half of the positive effect of the reforms on matching efficiency remains.

The economic and social effects of skill mismatch in China: A DSGE model with skill and firm heterogeneity

This paper examines the economic and social effects of skill mismatch by analyzing its impacts on the diffusion channels of skilled labor market search and matching efficiency shock. By presenting and estimating an NK-DSGE model using the macro-data from China, we find that skill mismatch reduces the unemployment of skilled labor by exerting a significant “crowding out” effect on the employment of unskilled labor. The resulting distortion of human resource allocation has widened the income and consumption gap between groups. We also consider the possibility of skill degradation induced by skill mismatch, which reduces the welfare loss of skilled labor at the cost of welfare deterioration of the unskilled. Both skill mismatch and skill degradation weaken the industrial structure by aggravating the labor shortage of high-tech enterprises. These findings imply that China's labor market reform should aim to alleviate skill mismatch and degradation.

Drivers of Exports Competitiveness in Manufacturing: A Comparison between China and Germany

In recent years, globalization has brought significant development opportunities to various economies worldwide, including influences for export-oriented economies such as China and Germany. This paper examines the export competitiveness of China and Germany in terms of labor market conditions and non-price factors, as well as the impact of China as an emerging economy on German manufacturing export competitiveness. Labor costs, productivity, and market reforms are considered to analyze labor market competitiveness. Non-price competitiveness is examined through explorations of product innovation, quality, and high-tech products. This article found that China's manufacturing export advantage is primarily due to the low labor cost of its workers, and FDI contributes to China's technological and high-tech export advancements. The competitiveness of German exports is attributed to the labor market reforms in Germany and the innovation and high quality of its products. On the other hand, wage inequalities exist in both China's and Germany's manufacturing industries. The study also finds that while emerging economic giant China has gained significant export market share, Germany can remain competitive.

Job Protection and Mortgage Conditions: Evidence from Italian Administrative Data*

AbstractThis paper combines administrative data from the Italian social security administration and proprietary data from a major Italian commercial bank to analyse the impact of job protection legislation on mortgage conditions. An exogenous change in the degree of job protection against individual dismissals of workers with open‐ended contracts is identified by exploiting the labour market reform of 2015, the ‘Jobs Act’, which weakened the employment protection of new hires at medium‐sized and large private firms. We find that the lessening of job security led to lower mortgage amounts and a fall in leveraging capacity, as measured by the loan‐to‐value ratio. The impact of job insecurity is mitigated by the presence of co‐mortgagors; it is aggravated for young and low‐income mortgagors.

Evaluation of Active Labor Market Policy Reform: Employment Outcomes of Vocational Rehabilitation Services.

The purpose of this study is to examine the effect of the Estonian active labor market reform in 2016, which introduced a new policy concerning vocational rehabilitation services. As a research question, we investigate how such services may have affected the employment outcomes of people with mental and/or physical impairments. Our sample includes 9244 people from 2016 to 2020, with a mean age of 46years. Due to multiple entries to the services, we have more than 11,000 cases with over 100,000 monthly observations. We use propensity score matching in combination with fixed effects panel regressions to analyze how the completion of the scheduled rehabilitation plan affected monthly employment duration. Our findings indicate that completing the rehabilitation service results on average in 2.6months longer post-rehabilitation employment, compared to matched individuals who discontinued the service. This effect was larger when already employed and male participants entered the service, while weaker effects were observed in the case of individuals with only mental disabilities. Overall, we conclude that while completing the scheduled rehabilitation plan has a positive effect on employment outcomes, still maintaining employment status seems to remain a challenge, based on the relatively modest effect sizes. Thus, we question the economic arguments behind the reform.

Two paths towards job instability: Comparing changes in the distribution of job tenure duration in the United Kingdom and Germany, 1984–2014

AbstractThis study provides novel evidence on trends in job stability in the United Kingdom and Germany, two capitalist economies with distinct sets of institutions and labour market reform trajectories. While we find evidence of an increase in short‐term jobs for men in both countries, we also find important differences in the overall patterns of change in the distribution of job tenure duration. The United Kingdom follows a masked instability pattern with opposite job stability trends for men and women. On the other hand, we find evidence of a polarization of the job tenure distribution among men and women in Germany. These findings are partly consistent with expectations from the dualization literature, emphasizing a growing segmentation of the labour market between insiders and outsiders. More generally, this study highlights the existence of multiple paths towards increased job instability that appear to be rooted in institutional differences.

German labor market reform and the rise of Eastern Europe: dissecting their effects on employment

From the early 1990s until 2005 the unemployment rate rose in Germany from 7.3 to 11.7%. While the unemployment rate reached its peak in 2005, it decreased steadily in the following years. The fourth stage of the German labor market reform (Hartz IV) was implemented in 2005 with the intent to cut the unemployment rate. This paper investigates the employment and welfare effects of the Hartz IV reform. Moreover, I am interested in the employment impact of German labor market reform due the rise of the East, which is the productivity increase in Germany and Eastern Europe that has fostered joint fast-growing trade. The focus lies on the national and county level (including 402 counties). As the effects on regional labor markets differ and take time, the paper builds on the dynamic and spatial trade model of Caliendo et al. (2019). I find that the Hartz IV reform is responsible for a 25% drop in unemployment, with a particular impact on eastern German counties. The rise of the East leads to an additional positive contribution to the labor market.

Book review: K. R. Shyam Sunder (Ed.), Contemporary Reforms of Labour Market and Industrial Relations Systems in India: Ease of Doing Business versus Labour Rights: In Honour of Prof. Lalit Deshpande

K. R. Shyam Sunder (Ed.), Contemporary Reforms of Labour Market and Industrial Relations Systems in India: Ease of Doing Business versus Labour Rights: In Honour of Prof. Lalit Deshpande (New Delhi: Academic Foundation, 2018), 380 pp. US$79.95, ISBN 9789332704527 (Hardback).

Decentralization, social capital, and regional growth: The case of the Italian North-South divide

This paper aims to show how a region's constant level of social capital may have a very different impact on its economic growth depending on whether the central or the local level of government is responsible for regional policy.Our case study is the economic performance of Northern and Southern Italy in the post-World War II period, when a long phase of regional convergence came to a sudden halt in the early 1970s. We focus on the economic effects of the 1970s institutional reforms on government decentralization and wage bargaining. Our main hypothesis is that decentralization allocates the provision of public capital to institutions, the local ones, more exposed to a territory's social capital. Since social capital is lower in the Southern regions, decentralization made their developmental policies less effective from 1970 onwards, and regional inequality increased.We build an endogenous growth model augmented to include the interaction between social capital and public investment as well as the reform of the Italian labour market. We calibrate our model using data of the Italian regions for 1951–71. Our quantitative results indicate that decentralization triggered the influence of local social capital on growth and played a central role in halting the convergence path of the low-social-capital regions.

Skill and Deskilling in Two Automotive Assembly Plants in South Africa

This article presents research on skills development and workplace change complexities within two automotive assembly plants in Pretoria, South Africa. Auto assembly companies are also termed Original Equipment Manufacturers (OEMs). Since 1995, South African OEMs have become fully integrated into the global networks of their foreign parent companies. As South Africa’s leading manufacturing sector, the automotive industry’s increasing importance is reflected in its exports, investments, and contribution to the country’s gross domestic product. The two companies are global multinationals situated in one of South Africa’s most globally integrated sectors that have undergone significant mechanization and automation since the 1990s. Therefore, these companies present a relevant site for studying changes in the labor process and the tendencies of deskilling in these workplace environments.
 The research is based on a qualitative research design that used semi-structured interviews with workers, supervisors, and managers across two plants that assemble motor vehicles in South Africa. The objective of the research was to understand the nature of changes to workplace production methods that influence the character of skills amongst the workforce. This paper studies workers’ experiences on how changes in work processes have impacted their work skills and contributed to the processes of deskilling. Present studies of skills in South Africa have prioritized large-scale labor market aggregate data analysis or reforms in education and training policies of the state. This paper brings a perspective on the labor process changes that are informed by concrete analysis of the production process and how technological changes shape the character of skills formation within automotive assembly plants. The value of such an approach is that it brings to the discussion of technology and workplace change a more specific set of experiences that transcends the often speculative and mythical discussion about the impact of technology on work. This article highlights the importance of understanding workers’ voices, shift supervisors, and managers on the contested nature of skills development within capitalist enterprises. The findings illustrate the contradictory nature of technological change and skills development. This is shown by discussing the following themes that emerged from the findings: 1) worker responses to the introduction of robots in the workplace environment, 2) the deskilling challenge on the two plants, and 3) grappling with the turnover times of capitalist production. I conclude the paper by revisiting the key findings of the research and showing the implications for future studies of deskilling in contemporary capitalist enterprises. The significance of these findings ultimately points to the importance of locating labor processes and deskilling in the context of the political economy of the capitalist mode of production and how it is reshaping the content of work in modern automotive assembly plants.

What does it Take for a Successful Pension Scheme?

Labor market reform encompasses a wide range of issues aimed at increasing competitiveness, increasing productivity, and improving labor force lives. No issue, however, has been more critical than ensuring that the pension system delivers on its promises. This has been a major issue for the labor force, and it will continue to be so. Countries all over the world have made efforts to improve their pension systems. Some have privatized it in order to make it more efficient and less taxing on the government. The main objective of pension and retirement policies is to provide adequate income in old ages. Countries consider many elements to choose their pension system according to five pillar pension schemes. This paper tries to look at these different retirement plans around the world and to give an assessment of their characteristics. Using a simple model, it attempts to display the relationship between the type of pension system and its success. The findings of some simple pension reforms can be lightening the way for policymakers.

Saudi Arabia. Salman bin Abdulaziz and Mohammed bin Salman

Salman bin Abdulaziz who ascended the throne of Saudi Arabia in 2015 faced the challenge of abandoning the feudal pyramid and establishing a new power vertical. Volatility in oil prices and falling budget revenues posed a threat to social stability. Additional drivers of instability were the military involvement in the civil war in Yemen, Sunni-Shiite contradictions in the Eastern Province, and tensions with Qatar. In 2016, the Vision 2030 program, which entailed profound reforms, was adopted. It suggested the IPO of Saudi ARAMCO, the development of non-oil sectors, in particular tourism, the accelerated expansion of the private sector, labor market reforms, including greater women’s participation in labor force, and weakening the conservative control of the Wahhabi corporation over society. The first stage of the implementation of Vision 2030 provided for the expansion of cooperation with the United States, especially after the administration of D.Trump came into office, and for more political interaction with Washington, but at the same time encouraged the development of mutually beneficial ties with Russia. Inside the kingdom, the course of reforms drew both the support of a part of society interested in their implementation as it understood the urgency of significant changes, and the opposition of another part that aimed at protecting its privileges and maintaining strict Wahhabi traditions. Crown Prince Mohammed bin Salman became the personification of the new course.

Labour market reforms in brazil (2017-2021): An analysis of the effects of recent flexibilization on labor market legislation

The main objective of this work is to analyze the effects of Brazilian Labor Market Reform (BLMR) in the short run and, based on identified changes in the economy in recent decades, to verify how these changes have affected the labor market. Four methods were used in a complementary way: (i) employment quality index; (ii) panel data estimation method; (iii) synthetic control method and (iv) microdata analysis. We observed that there was no considerable increase in the quality of employment and formal employment and the rate of unemployment did not decrease after the implementation of these changes. Part of this dynamic is cyclical and related to exogenous shocks, such as the COVID pandemic on the Brazilian economy. Finally, according to econometric analysis, the rate of unemployment in Brazil is more responsive to investment rates and the business environment than to unit labor cost and changes in labor legislation.

Transformation of the Vocational Training System in the Conditions of Digitalization of The Labor Market

This article presents the main trends of changes in the labor market related to the process of digitalization. The main problems related to the issues of labor productivity growth, job cuts and ensuring effective demand are also considered. In the article, we propose to consider the process of digitalization as a way to encourage creativity in the workplace, taking into account the fact that in order to establish a modern economic order, during which services become the main product, and digital platforms and ecosystems are the main actors in the global economy. Particular attention is paid to changes in the labor market during the period of mass digitalization. When labor market and wage reforms began in the world, it was hard to imagine that the labor market would change so quickly in a few decades. A comparative analysis of the state of the labor market in Russia was carried out, which made it possible to determine the phases and types of reproduction of labor potential “narrowed”, “expanded”, “simple”, depending on the age and structure of education. The segment of the “black hole” in specialists with competencies in the digital economy is highlighted. The directions of creating an ecosystem of continuing education are proposed, which allow forming digital competencies and supporting the reproduction of labor potential during the life cycle of society. Digitization of the economy has been a global trend in the last decade and more significantly over the past five years.

Structural change, labor market and employment in brazil after the 2017 labor market reform

The objective of this study is to analyze the effects of the set of measures adopted by the labor reform of 2017 on the generation of employment and income in Brazil. The study is based on the literature that highlights the importance of structural change in employment as a key element for economic growth and development, emphasizing that in Brazil, there is still a view that the labor market should take on more flexible work relationships to advance in the improvement of jobs, levels of employment, productivity and income. Subsequently, the article summarizes and critically comments on the main measures of the labor law reforms adopted in post-2017 Brazil. Finally, it presents an analysis of the behavior of the labor market in Brazil between 2012 and 2022 based on data from the PNADC/IBGE survey. The main results of the survey confirm that the labor reform of 2017 has not shown advances in labor market indicators or in the main macroeconomic aggregates of the country. In contrast, the data suggest deterioration in the indicators of employment, income and allocation of workers in occupations with low productivity and income characteristics.

Undesired consequences of labour market reforms: From temporary to precarious jobs - the case of Spain

One of the peculiarities of the Spanish labour market has been the existence of a high share of temporary employment, a result of the 1984 labour reform which made the use of temporary contracts more flexible. Since 1994, various reforms have sought to increase the use of open-ended contracts and discourage the use of fixed-term contracts. Although these reforms, in particular the 2012 and 2021 reforms, have led to a reduction in the share of temporary workers they have also created other unintended problems, such as a reduction in the duration of fixed-term contracts, the proliferation of part-time contracts and atypical open-ended contracts, and a high share of temporary employment in public sector.

Patterns of labor market reforms: a regional approach to the Italian Jobs Act

After estimating the impact of wage subsidies and EPL reforms on open ended employment, we single out which macro characteristics are responsible for the variability of the estimated effects at the regional level. We find that the impact of incentives is higher where GDP and VA per head are higher, and the informal economy is limited. Instead, we do not find any heterogeneity and in most cases any impact for the EPL component. We conclude that regions with a stronger economy benefitted more from subsidies, which might exacerbate territorial inequality.