Labour Market Regulation Research Articles

THE IMPACT OF LABOUR MARKET REGULATIONS ON THE MACROECONOMIC PERFORMANCE OF TÜRKİYE: AN ARDL BOUNDS TEST APPROACH

The relationship between labour market regulations and macroeconomic performance is accepted as a complex and controversial issue in the economics literature. The research investigates the effect of labour market regulations on Türkiye’s macroeconomic performance during the period of 1980–2021, using the Labour Market Regulations Index (LMRI), which reflects the flexibility or rigidity of the labour market regulations and based on seven dimensions, and the Macroeconomic Performance Index (MPI) measured by the Magic Hypercube (MH) method, incorporating four aspects of economic performance which are economic growth, current account, inflation, and unemployment. The research employs the Autoregressive Distributed Lag (ARDL) model to examine the existence and direction of cointegration relationship between LMRI and MPI and finds out that there is a cointegration between them. Still, when checked in detail, it seems that labour market regulations do not have a statistically important long-term effect on Türkiye’s macroeconomic performance.

Informality and aggregate productivity: The case of Mexico

This paper develops and estimates a quantitative model to analyze the aggregate productivity consequences of informality in Mexico. While informality is typically viewed as prevailing solely among small firms, we use rich census data to document a high and rising share of large informal firms between 1998 and 2013. The model is quantified using the observed size and productivity distributions of both informal and formal firms. We use the model to assess the role of changes in labor market regulations, entry costs and enforcement in contributing to the rise in informality and decline in TFP in Mexico from 1998 to 2013. We find that the factors most important for the decline in aggregate productivity were not important drivers of the increase in informality, and conversely, the factors most important for the increase in informality had little impact on aggregate productivity. Regulatory changes during the 2000s contributed to over a third of the observed rise in the informal employment share, but with small aggregate productivity consequences. In contrast, rising entry costs account for a third of the decline in TFP from 1998 to 2013, but had little impact on informality.

How regions diversify into new jobs: from related industries or related occupations?

ABSTRACT This paper adds a multidimensional perspective to the study of related diversification. We examine how regions diversify into new jobs – defined as unique industry-occupation combinations – asking whether they do so from related industries or related occupations. We use linked employer-employee data for all labour market regions in Norway, covering the time period 2009–2014. Diversification into new jobs is more likely in the presence of related occupations and industries in a region. Furthermore, occupational and industrial relatedness have complementary effects on diversification. Occupational relatedness and its interaction with industrial relatedness are particularly important for diversification into more complex activities.

THE ANALYSIS OF UNEMPLOYMENT IN SIBERIA AT AN INITIAL STAGE OF COVID-19

Labor market processes reflect the economic situation both at regional and national levels. The large-scale economic shock caused by the COVID-19 pandemic showed the need for conceptual changes both in terms of analysis and forecasting of labor market. In particular, the demand for research aimed at finding higher-frequency proxy indicators for modeling a short-term situation on the labor market increased sharply. Scientific literature accumulated certain experience in using it for research of different economic segments, including the labor market, at national and international levels. However, there is lack of knowledge in the mesoeconomic context. In this paper, we incorporated search data into econometric models to analyze the regional labor market in Siberia during the COVID-19 pandemic in 2020. We selected such keywords as «job» and “employment service” from Yandex as the main proxy indicators. In this research, we construct a set of models based on panel data: pooled regression model, model with random effects, model with fixed effects, dynamic panel data model. The findings show that the search data can be used as a significant factor for modeling regional unemployment. The use of dynamic models improved the accuracy by including the lags of dependent variable - unemployment rate. The applied logic can be utilized to analyze the impact of a wider range of shocks.

Unraveling wage inequality: tangible and intangible assets, globalization and labor market regulations

In this paper, we study the asymmetric effects of different types of capital-embodied technological change, as proxied by tangible and intangible assets, on relative wages (high- to medium-skilled, high- to low-skilled and medium- to low-skilled workers), relying upon the technology-skill complementarity and polarization of the labor force frameworks. We also consider two additional major channels that contribute to shaping wage differentials: globalization (in terms of trade openness and global value chains participation) and labor market institutions. The empirical analysis is carried out using a panel dataset comprising 17 mostly advanced European economies and 5 industries, with annual observations spanning the period 2008–2017. Our findings suggest that software and databases—as a proxy for intangible technologies—exert downward pressure on low-skilled wages, while robotics is associated with a polarization of the wage distribution at the expense of middle-skilled labor. Additionally, less-skilled workers’ relative wages are negatively affected by trade openness and global value chain participation, but positively influenced by sector-specific labor market regulations.

Rise of remote work across borders: opportunities and implications for migrant-sending countries.

Contact restrictions imposed during the COVID-19 pandemic have contributed to the rapid expansion of remote work. With this expansion, new opportunities arise for the typical migrant-sending countries in Central and Eastern Europe to remotely involve their diaspora in their labor market. The aim of this paper is, by using the case study of Latvia, to show the potential of cross-border remote work for alleviating human capital losses caused by emigration. We assess the main obstacles and necessary adjustments in taxes, social benefits, labor market regulation and other areas to facilitate the labor market transition and show what incentives the country can use to become a place of choice for performing remote work for the diaspora. Combining the perspectives of employers, employees and the government, this study sheds new light on the challenges and opportunities related to the rise of remote work for countries suffering from emigration. The comprehensive analysis builds on triangulating secondary data, analysis of policy documents, a survey of employers, as well as a survey and in-depth interviews with cross-border remote workers.

REGIONAL COMPREHENSIVE ECONOMIC PARTNERSHIP: REGULATION OF FOREIGN TRADE

The world's largest free trade area in terms of GDP and population – the Comprehensive Regional Economic Partnership (CEP) – has been operating since January 2022. It includes 15 countries of the Asia-Pacific region: China, Japan, the Republic of Korea, all ASEAN countries, Australia and New Zealand. The main agreements within the framework of the VREP relate to the liberalization of foreign trade in goods with the prospect of liberalizing the services market, mutual investments and labor market regulation. The VREP maintains import tariffs in trade between member countries for 20 years. The exception is Singapore, where there are no import duties. The agreement details the procedures for determining the origin of the goods. It provides for an acceleration in the rate of tariff reduction and a departure to previously reached agreements in the case if the existing level threatens the interests of the national economy. The article considers the specifics of regulating tariff policy in the trade of fuel, ferrous metals and clothing, as well as import tariffs on basic foodstuff (cereals and meat) for the most densely populated countries of the European Economic Area. It is noted that import tariffs are absent or reduced for raw materials (coal, oil), but remain the same for manufacturing products (petroleum products, rolled products and ferroalloys). In terms of clothing, both developing and developed countries defend certain positions. There are positions on food (rice, chicken meat) protected by most member countries. The author notes that the interests of food security are more important than the requirements of trade liberalization.

The impact of capital goods trade liberalization on regional labor market in China

The impact of trade liberalization on regional employment dynamics remains a topic of ongoing debate and scrutiny. This study aims to provide a nuanced understanding by focusing specifically on the effects of imported capital goods trade. Our study analysis reveals that capital goods trade liberalization predominantly leads to a substitution effect between capital and labor, resulting in a reduction in overall regional employment levels. However, we also find complementary effects between capital and high-skilled labor, alongside substitution effects on low-skilled labor, which collectively influence the regional labor market's skill structure. Furthermore, our study identifies the heterogeneous spillover effects of capital goods trade liberalization on regional labor markets, varying across different regions and city scales. We argue that investing in region skill development resources can help align the workforce with global factors, fostering positive interaction between regions.

Zunehmende Fachkräfteengpässe – Warum sind ländliche Räume besonders betroffen?

Abstract Over the past decade, firms’ recruitment problems have increased significantly in Germany. We show that skill shortages have been more pronounced in rural areas and that the gap between rural and urban regions has slightly increased. The intensity of a local skill shortage is linked to regional labour market conditions, the occupational composition and the share of small establishments. However, the most important factor is a more advanced demographic change in rural areas. Of all factors considered, the proportion of older workers correlates most strongly with the regional vacancy rate.

WORK OF SOCIAL WORKERS WITH YOUNG PEOPLE IN THE STATE EMPLOYMENT SERVICE

The article highlights the peculiarities of the work of social workers with young people inthe State Employment Service. It is established that social workers working in the Employment Center play an important role in job search. The functions of social workers in this center are listed. It is established that the State Employment Service is coordinated by the Ministry of Economy of Ukraine. The rights of the employed population guaranteed by the state during employment are listed. The types of services provided by the Khrystynivka District Employment Center to employers are described. Statistics of persons registered with the Khrystynivka District Employment Center are presented.Ukraine has many problems, and they have become even more numerous since the start of the war. These events have created a number of difficulties in both the economic and social spheres. Unemployment is one of the most important problems of our time. The State Employment Service (SES) is one of the most important institutions both in developing employment policy and labor market regulation at the national level and in stimulating employment in the regions. Building the capacity of the State Employment Service at the national, regional and local levels is one of the important prerequisites for improving the quality and efficiency of services to the unemployed and employers.Social workers play an important role in helping people who come to the employment center, acting not only as intermediaries between employers and young people, but also as active participants in the process of creating favorable conditions for labor self-realization and career development of young people. In this context, it is important to consider the aspects of social workers’ work aimed at fostering social responsibility, developing skills, and increasing the competitiveness of young people in the labor market.

Poverty and the Rise and Fall of the Welfare State in Britain, 1900 to the Present

Poverty in the UK has recently risen to levels and created conditions not seen since c.1900. Then, the poverty revealed in major surveys by Booth and Rowntree created shock and proposals for change leading to the first measures of what became the Welfare State. Then, as now, a major cause of poverty was inadequate pay for precarious work, though another significant cause now is the decline of the Welfare State. State welfare expanded gradually from 1906 to 1945, then much faster, along with full employment and labour market regulation, especially under Labour governments until the late 1970s. Poverty declined but never disappeared. Under Thatcher’s Conservative government, 1979–1990, state welfare was severely cut and poverty shot up. After some respite under New Labour, 1997–2010, a period of successive Conservative governments since 2010 has witnessed significant cuts to social welfare and an increase in poverty causing serious deprivation comparable with the early 1900s. But there are fewer proposals for reform now than then, though they are urgently needed.

Noncompete agreements in a rigid labor market: the case of Italy

Abstract Noncompete agreements limiting the mobility of workers have been found to be widespread in the United States, a flexible and lightly regulated labor market. We explore the use of noncompete agreements in a rigid and highly regulated labor market, where labor mobility is low, and the labor market is highly regulated via legislation and collective bargaining. Based on a novel survey of Italian workers and an analysis of the regulatory framework, our study shows how trends and patterns in the use of noncompete agreements are not specific to a flexible labor market. Even in a rigid and highly regulated labor market, noncompete agreements are widespread, and often do not comply with the minimum legal requirements, and yet workers are not aware of their enforceability. This suggests that institutions and labor market regulations are not enough per se, especially when targeted groups are not properly informed, and incentives to comply are minimal.

Spatial-temporal assessment of regional labor market differentiation

Abstract The purpose of this article is a comparative analysis of regional and temporal labor market differentiation. In the study, the following voivodeships were taken as comparative objects. In accordance, following the administrative division, the voivodeships were adopted, while the research period was taken as the years 2011–2021. To study the differentiation of the voivodeship labor markets, the classical method of share shifts and the analysis of share shifts were used. The number of employed people and the registered unemployed by gender were chosen as the measures of differentiation on which the study was based. The results of the analyses made it possible to examine changes in the structure and assess the development of regional labor markets over time.

Accelerating the sustainability transition of brown regions: Unlocking the speed factor

Green innovations aim to improve and reduce the environmental impact of economic activities. Thus far, research focus on the positive trajectories of green transition. Continuing in this direction we focus on brown regions (i.e. specialized in fossil-fuel technologies) and the challenges that they face to become sustainable. Taking as example German Labour Market Regions we identify brown regions and measure their transition using an innovative approach based on Social Network Analysis and Knowledge Spaces. We find that the technological relatedness to green technologies, having a high life satisfaction in the region and the presence of the green party in the local government facilitate the transition. However, strong economic structures based on brown activities do not generally increase the transition speed. Our findings imply that technological and socio-economic characteristics influence the speed of transition, a dimension not yet accounted for in the sustainability transition literature.

Oil boom, rent sharing, job prospects and human capital investment: Evidence from Chad

A large body of literature shows that the drop in educational attainment resulting from the resource boom is one of the major drivers of the so-called resource curse. This paper explores how upstream actions can avoid this resource curse and promote human capital development at the local level. Specifically, I examine how a rent-sharing model and the employment opportunities induced by an oil boom for native populations affect secondary education decisions in Chad’s oil region. Using a synthetic control method, I find that these measures increased secondary school attendance in the region. Similar results were obtained using a difference-in-differences approach. In terms of mechanisms, the results show that labor market opportunities and regulations were more effective in promoting investment in education than the rent-sharing model. Finally, I note that these measures reduced dropouts rather than increasing attendance at all levels.

Global Flow of Foreign Aid and Change in Recipients’ Local Labor Institutions

How does foreign aid affect recipient countries’ labor institutions? Extant empirical evidence is sparse due to ambiguous theoretical predictions and potential endogeneity issues. This study uses data detailing aid flow and institutional functions to mitigate such inconclusiveness and displays originality by constructing a concise theoretical framework in which foreign aid contributes to the improvement of the labor institutions in recipient countries through two mechanisms—economic growth purpose and expected aid attraction. The findings indicate that only aid to enhance local economic growth provides incentives to change domestic labor markets. Such effects have a more crucial influence on labor institutions of minimum wage, collective bargaining rights, and working hours than those related to hiring and firing regulations, mandated costs for worker dismissal, and conscription. For comparison with the actual aid level, we construct forecasted proxies to capture exogenous fluctuations in aid, determining that domestic labor markets can also change via a novel mechanism, as the recipient voluntarily mimics the funder’s labor policies in anticipation of receiving future aid, with exact amounts derived from the noninstitutional characteristics of pairs of bilateral recipient and giver economies. Therefore, we provide policy implications for the aid giver on how to secure a continued and increased aid flow and for the aid receivers on which aspects of reforming measures are most effective in enhancing the labor market regulations.

‘You are less credible in life, less reliable… people don’t want to give you a chance’ - a qualitative study on the experience of inferiority among non-standard workers in Belgium

ABSTRACT Workers in non-standard employment arrangements are often perceived as belonging to the periphery of the labour market. Consequently, many suffer from feelings of inferiority. This study explores how inferiority is expressed and experienced in the work life of non-standard workers and beyond. Interviews with 38 non-standard workers from Belgium were analysed thematically. Inferiority expresses itself through a series of metaphors: a jack of all trades, disposable product, and outsider. In addition, not having financial independence feeds into feelings of inferiority. Moreover, the labour market and social security regulations have created disparities between standard and non-standard workers that have accordingly fed experiences of inferiority as well. Finally, inferiority is perpetuated beyond the work context, for example, in the form of discrimination on the housing market and in the general image of non-standard employment as inferior by many people in society. This study highlights that governments and employers need to increase their efforts to equalise the rights and treatment between non-standard and standard workers. This could decrease non-standard workers’ feelings of inferiority and consequently improve their overall well-being.

Labor market in rural areas of Akmola region of Kazakhstan: regional aspect

The goal is to identify the features and determine quantitative parameters of the regional labor market in the Akmola region. Methods – analytical and statistical industry information is systematized and summarized using economic-statistical, balance sheet and abstract-logical methods from open access sources and scientific literature. Results - the features were studied and characteristics of labor potential of the region were given, analysis of absolute and relative indicators characterizing the dynamics of region's population movement was carried out, which made it possible to identify the main trends in its change in recent years. Demographic factors affecting the formation of labor force are shown. The volumes of socio-demographic load were calculated. Conclusions - it has been established that proportion of village residents tends to decrease both in absolute value and in the structure of total number. The main criteria are population migration and decrease in its natural increase. The reduction in the number of economically active residents of rural areas is explained by negative balance of difference between people who have entered active age and those who have retired, as well as migration processes that have their own specifics. It is noted that the level of the region’s labor resources is directly related to demographic development of the given territory. The deterioration of the demographic situation has a negative impact on quantitative and qualitative dimensions characterizing the regional labor market. The youth segment remains rather unbalanced, the areas of employment of young specialists are closely related to low levels of income and labor productivity, the persistent gap between professional orientation of youth and the labor needs of enterprises becomes one of the barriers to the employment of young people.

A Precarious Path to Partnership? The Moderating Effects of Labour Market Regulations on the Relationship Between Unstable Employment and Union Formation in Europe

Rising employment uncertainty featured by higher risks of being temporarily employed or unemployed is often seen as the driving force behind delayed and declined partnering in Western countries. However, such an employment–partnering relationship is contextualized by labour market institutions and thus could diverge across countries over time. This paper aims to investigate how country-level variations in labour market regulations moderate individual-level effects of unstable employment on union formation, including the transitions into marriage or cohabitation unions. Using comparative panel data for 26 countries from the European Union Statistics on Income and Living Conditions (the years 2010–2019), our multilevel fixed effects models showed that temporary employment and unemployment negatively affected the probability of union formation for single women and men in Europe. Moreover, the negative relationship between unstable employment and union formation was reinforced when labour market reforms were stimulating insider–outsider segregations or decreasing welfare provisions. Specifically, stricter employment protection legislations and higher coverage rates of collective bargaining agreements could reinforce the negative effects of temporary employment and unemployment on union formation, while more generous provisions of unemployment benefits could buffer such negative effects.

The influence of Japanese automotive industry investment in East Nógrád

This study explores Japanese-Hungarian economic relations, specifically focusing on foreign direct investments (FDI) in Hungary. The analysis delves into the historical development and current state of Japanese capital flow into Hungary, with a particular emphasis on the automotive industry. Foreign direct investments are shown to enhance productivity throughtechnology transfer and foster positive impacts on corporate relationships, contributing to economic growth. The study demonstrates the mutual benefits of Japanese FDI in the Hungarian automotive industry and includes a case study on the activities of a Japanese company in Hungary, examining its role in the regional labour market.