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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.
Shai Bernstein, Emanuele Colonnelli, Mr. Davide Malacrino, and Tim McQuade
New firm formation is a critical driver of job creation, and an important contributor to the responsiveness of the economy to aggregate shocks. In this paper we examine the characteristics of the individuals who become entrepreneurs when local opportunities arise due to an increase in local demand. We identify local demand shocks by linking fluctuations in global commodity prices to municipality level agricultural endowments in Brazil. We find that the firm creation response is almost entirely driven by young and skilled individuals, as measured by their level of experience, education, and past occupations involving creativity, problem-solving and managerial roles. In contrast, we find no such response within the same municipalities among skilled, yet older individuals, highlighting the importance of lifecycle considerations. These responsive individuals are younger and more skilled than the average entrepreneur in the population. The entrepreneurial response of young individuals is larger in municipalities with better access to finance, and in municipalities with more skilled human capital. These results highlight how the characteristics of the local population can have a significant impact on the entrepreneurial responsiveness of the economy.
Benjamin Hilgenstock and Zsoka Koczan
The paper examines the evolution and drivers of labor force participation in European regions, focusing on the effects of trade and technology. As in the United States, rural regions within European countries saw more pronounced declines (or smaller increases) in participation than urban regions. Unlike in the United States, however, trade and technology, captured here using novel measures of initial exposures to routinization and offshoring, did not result in detachment from the workforce in European regions. Instead, regions with high initial exposures to routinization and offshoring experienced so-far larger increases in participation, likely driven by an added second worker effect.
Benjamin Hilgenstock and Zsoka Koczan
The paper examines the potential effects of international migration on labor force participation in advanced economies in Europe. It documents that migration played a significant role in alleviating aging pressures on labor supply by affecting the age composition of receiving countries’ populations. However, micro-level analysis also points to differences in average educational levels, as well as differences in the effects of any given level of education on participation across migrants and natives. Difficulties related to the recognition of educational qualifications appear to be associated with smaller effects of education on the odds of participation for migrants, especially women.
Mai Dao, Davide Furceri, and Mr. Prakash Loungani
We examine patterns of regional adjustments to shocks in the US during the past four decades. We find that the response of interstate migration to relative labor market conditions has decreased, while the role of the unemployment rate as absorber of regional shocks has increased. However, the response of net migration to regional shocks is stronger during aggregate downturns and increased particularly during the Great Recession. We offer a potential explanation for the cyclical pattern of migration response based on the variation in consumption risk sharing.
Mr. Ippei Shibata
Despite its low unemployment rate, the recent shift in the Japanese Beveridge curve indicates increased labor mismatch. This paper quantifies the age, employment-type (full or part-time), and occupational mismatch in the Japanese labor market following Sahin and others (2013). Between April 2000 and April 2013, the age mismatch has steadily declined while the occupational and employmenttype mismatch has shown a countercyclical pattern, showing a sharp increase during the global financial crisis. Occupational mismatch accounted for approximtely 20-40 percent of the recent rise in the unemployment rate in Japan. The magnitude was comparable to that of the U.K. and the U.S.
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.