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Arina Viseth
This paper uses census and household survey data on Cameroon, Ghana, and South Africa to examine immigration’s impact in the context of a segmented labor market in Sub-Saharan Africa. We find that immigration affects (i) employment (ii) employment allocation between informal and formal sectors, and (iii) the type of employment within each sector. The direction of the impact depends on the degree of complementarity between immigrants and native workers’ skills. Immigration is found to be productivity-enhancing in the short to near term in countries where, the degree of complementarity between immigrants and native workers’ skill sets is the highest.
Mr. Benedicte Baduel, Carolin Geginat, and Ms. Gaelle Pierre
This paper examines the extent to which firms in selected MENA countries reported being constrained by the business environment around the time of the Arab Spring and the extent to which these constraints affected their employment performance. The results suggest that small firms in MENA faced more structural constraints than similar firms in other regions. We also find that MENA firms’ weaker job creation can be explained in great part by the macroeconomic environment and structural constraints. Low GDP growth, falling external competitiveness, corruption, lack of access to finance and poor access to electricity are found to explain a significant part of the lack of employment growth in MENA firms compared to their peers.
Mariya Brussevich, Ms. Era Dabla-Norris, Christine Kamunge, Pooja Karnane, Salma Khalid, and Ms. Kalpana Kochhar
New technologies?digitalization, artificial intelligence, and machine learning?are changing the way work gets done at an unprecedented rate. Helping people adapt to a fast-changing world of work and ameliorating its deleterious impacts will be the defining challenge of our time. What are the gender implications of this changing nature of work? How vulnerable are women’s jobs to risk of displacement by technology? What policies are needed to ensure that technological change supports a closing, and not a widening, of gender gaps? This SDN finds that women, on average, perform more routine tasks than men across all sectors and occupations?tasks that are most prone to automation. Given the current state of technology, we estimate that 26 million female jobs in 30 countries (28 OECD member countries, Cyprus, and Singapore) are at a high risk of being displaced by technology (i.e., facing higher than 70 percent likelihood of being automated) within the next two decades. Female workers face a higher risk of automation compared to male workers (11 percent of the female workforce, relative to 9 percent of the male workforce), albeit with significant heterogeneity across sectors and countries. Less well-educated and older female workers (aged 40 and above), as well as those in low-skill clerical, service, and sales positions are disproportionately exposed to automation. Extrapolating our results, we find that around 180 million female jobs are at high risk of being displaced globally. Policies are needed to endow women with required skills; close gender gaps in leadership positions; bridge digital gender divide (as ongoing digital transformation could confer greater flexibility in work, benefiting women); ease transitions for older and low-skilled female workers.
Mr. Tom Krebs and Mr. Martin Scheffel
This paper studies the effect of two labor market institutions, unemployment insurance (UI) and job search assistance (JSA), on the output cost and welfare cost of recessions. The paper develops a tractable incomplete-market model with search unemployment, skill depreciation during unemployment, and idiosyncratic as well as aggregate labor market risk. The theoretical analysis shows that an increase in JSA and a reduction in UI reduce the output cost of recessions by making the labor market more fluid along the job finding margin and thus making the economy more resilient to macroeconomic shocks. In contarst, the effect of JSA and UI on the welfare cost of recessions is in general ambiguous. The paper also provides a quantitative appliation to the German labor market reforms of 2003-2005, the so-called Hartz reforms, which improved JSA (Hartz III reform) and reduced UI (Hartz IV reform). According to the baseline calibration, the two labor market reforms led to a substantial reduction in the output cost of recessions and a moderate reduction in the welfare cost of recessions in Germany.
Ms. Andrea De Michelis, Mr. Marcello M. Estevão, and Ms. Beth Anne Wilson
Traditionally, shocks to total factor productivity (TFP) are considered exogenous and the employment response depends on their effect on aggregate demand. We raise the possibility that in response to labor supply shocks firms adjust efficiency, rendering TFP endogenous to firms’ production decisions. We present robust cross-country evidence of a strong negative correlation between growth in TFP and labor inputs over the medium to long run. In addition, when using instruments to capture changes in hours worked that are independent of TFP shocks, we find that cross-country increases in labor input cause reductions in TFP growth. These results have important policy implications, including that low productivity growth in some countries may partly be a side effect of strong labor market performance. By the same token, countries facing a declining workforce, say, because of aging, may see accelerating TFP as firms find better ways of employing workers.
Mr. Alberto Behar
This paper draws on existing empirical literature and an original theoretical model to argue that globalization and skill supply affect the extent to which technology adoption in developing countries favors skilled workers. Developing countries are experiencing technical change that is skill-biased because skill-biased technologies are becoming relatively cheaper. Increased skill supply further biases technical change in favor of skilled labor. Free trade induces technology that favors skilled workers in skill-abundant developing countries and that favors unskilled workers in skill-scarce developing countries, and therefore amplifies the predicted wage effects of trade liberalization. These features aid our understanding of the observed rises in inequality within developing countries and the absence of a significant downward effect of expanded educational attainment on skill premia. They also help account for the large and differential effects of trade liberalization on inequality. These findings are pertinent for the Middle East and North Africa because of its recent increase in trade openness and remarkable rise in educational attainment.
Mr. Cyril Pouvelle and Ms. Pritha Mitra
Labor productivity levels in Bulgaria lag well behind that in the EU, weighing on the convergence process. Stronger productivity growth would allow Bulgaria to close the income gap with the EU average more quickly and to alleviate the structural problems in its labor market, reflected in its high long–term and youth unemployment. Our analysis of the drivers of labor productivity suggest that for Bulgaria closing the gap with EU standards in the areas of institutional and infrastructure quality, goods market efficiency, higher education, and innovation would permanently boost productivity growth by a total of 1 percentage point a year. This would be enough to close the income gap with the EU average by 2040, compared to the status quo where it would take an additional 10 years.
Mr. H. Takizawa
Using a search and matching labor market equilibrium model, this paper quantifies lost labor productivity and consumption per worker that emerges from the restrictions on dismissals. Dismissal restrictions hamper the efficient reallocation of workers, with workers remaining longer in jobs. But the restrictions also tend to induce job-specific investments. A calibration exercise applied to Portugal suggests that the restrictions on dismissal slow the pace of worker reallocation and cause substantial losses of labor productivity and consumption. Although lower worker mobility induces job-specific investment that offsets part of the labor productivity and consumption losses, the size of this offsetting effect is, at most, modest.
Wenli Li, Ms. Zuzana Brixiova, and Tarik Yousef
The transition from plan to market has hinged on the development of a dynamic private sector that would serve as the engine of growth and employment creation. This paper examines the link between the availability of skilled workers and the creation of new private firms. Using a dynamic search model, it shows how the lack of skilled workers inhibits entrepreneurship and depresses the rate of firm creation, slowing the recovery of aggregate output and labor productivity during the transition. The paper also shows how policies designed to encourage skill acquisition by workers have a positive impact on the economy.
International Monetary Fund
This Selected Issues paper and Statistical Appendix constructs an index of human capital for the Spanish labor force over 1977–97, and projects it over the next decade on the basis of likely demographic developments. The methodology by which the index is constructed considers both educational attainments resulting from formal schooling and improvements in workers’ productivity resulting from experience, or “learning by doing.” The results suggest that the gains from increases in formal schooling can be large, although they are translated into higher economic growth only gradually.