Labor market policies, informality and misallocation

Purpose The purpose of this paper is to understand labor market regulations and their consequences for the allocation of resources. Design/methodology/approach This paper constructs a theoretical model to study labor market regulations in developing countries and how it affects the allocation of resources between the less productive informal activities and more productive formal activities. It also provides empirical support for some theoretical results using cross-country data. Findings When workers are risk-averse and the market for insurance against labor income risk is missing, regulations that provide insurance to workers (such as severance payments) reduce misallocation. However, regulations that simply create barriers to the dismissal of workers increase misallocation and end up reducing the welfare of workers. This study also provides some empirical evidence broadly consistent with the theoretical results using cross-country data. While dismissal regulations increase the share of informal employment, severance payments to workers do not. Research limitations/implications The empirical exercise is constrained by the lack of availability of good data on the informal sector. Originality/value The analysis of the alternative labor market regulations analyzed in this paper in the presence of risk-averse workers is an original contribution to the literature.

Preferences for work arrangements: A discrete choice experiment

This study investigates individual preferences for work arrangements in a discrete choice experiment. Based on sociological and economic literature, we identified six essential job attributes—earnings, job security, training opportunities, scheduling flexibility, prestige of the company, and gender composition of the work team—and mapped these into hypothetical job offers. Out of three job offers, with different specifications in the respective job attributes, respondents had to choose the offer they considered as most attractive. In 2017, we implemented our choice experiment in two large-scale surveys conducted in two countries: Germany (N = 2,659) and the Netherlands (N = 2,678). Our analyses revealed that respondents considered all six job attributes in their decision process but had different priorities for each. Moreover, we found gendered preferences. Women preferred scheduling flexibility and a company with a good reputation, whereas men preferred jobs with high earnings and a permanent contract. Despite different national labor market regulations, different target populations, and different sampling strategies for the two surveys, job preferences for German and Dutch respondents were largely parallel.

A Comparative Analysis of Competitive Balance Between a Closed and an Open League in Rugby League

League regulators aim for an equitable competition where each team has an equal chance of winning the championship, termed competitive balance. It is generally assumed that closed leagues with stricter labor market regulations should demonstrate better competitive balance than open leagues with promotion and relegation. The aim of this research was to examine the competitive balance between and within seasons in the closed Australian National Rugby League (NRL) and open English Super League using five measures of concentration and dominance. Overall, the closed NRL competition demonstrated superior competitive balance. The practical and theoretical implications of the findings are discussed.

The Reverse Gender Gap in Volunteer Activities: Does Culture Matter?

Women take on 57% (men: 43%) of all volunteering globally (UN 2018). In this paper, we follow an epidemiological approach to explore the possible role of culture in determining this reverse gender gap in the time devoted to volunteer activities. To that end, we merge data from the American Time Use Survey for the years 2006–2019 and the Gender Gap Index (GGI) of the World Economic Forum 2021. We use a sample of early-arrival first- and second-generation immigrants who live in the United States. Our empirical approach rests on the fact that all these individuals have grown up under the same host country’s labor market, regulations, laws, and institutions but differ in their cultural heritage. Thus, in this setting, gender discrepancies in the time devoted to volunteer activities can be interpreted as the effect of culture. We find that more gender-equal norms in the country of origin are associated with women devoting less time to volunteer activities relative to men. We further analyze the channels shaping the culture from the country of ancestry and the existence of horizontal (within-communities) transmission of culture. Our results are robust to the use of different subsamples and to the inclusion of demographic and socio-economic controls.

Chasing Informality: Evidence from Increasing Enforcement in Large Firms in Peru

Evasion of labor market regulations in middle income countries is systemic. This is generally known as informality. In Latin America, where less than 50% of workers are registered with social security, this is a permanent phenomenon and encompasses a variety of economic realities ranging from subsistence self-employment to evasion of certain regulations including social security contributions. In this study we analyze the role of enforcement in curbing informality in large formal firms in Peru, where informality levels are around 70%. Through the Peruvian National Labor Control Superintendence (SUNAFIL) we randomly sent 697 letters to formal Peruvian firms of more than 50 workers, indicating their obligation to enroll workers in social insurance systems (health and pensions). Two types of letters were sent, one with a deterrence message and one emphasizing the benefits of formalization. One year after the letters were sent, we found a positive and statistically significant effect on the number of workers enrolled in social security (9.8% on average). Only strict deterrence messages had a significant impact, and only in very large firms. This evidence suggests that there is room for improvement in compliance with labor regulations through more proactive monitoring and behavioral tools such as reminders, but effects could be concentrated in the largest firms.

The influence of COVID-19 on international labor migrations from Bosnia and Herzegovina to EU

The article deals with the contemporary labor migrations from Bosnia and Herzegovina to Slovenia and the other countries of European Union, specifically during the period of the COVID-19 pandemic. On the basis of fieldwork among the participants in these migrations, it seeks to identify the specifics of circumstances and situations that arose suddenly with the closure of political borders and the demands of social distancing. In these circumstances, we supposed that labor migrants found themselves to be a particularly vulnerable group of population. The case study has denied that this is completely true. On the other hand, labor migrations from Bosnia and Herzegovina to Central, Western and North European and some non-European countries have been a continuous process for the last century and at least migration flows must be taken as a fact which directions, volumes and character are greatly influenced by labor market regulations in each individual EU member and other states. Periodically, specific political and social situations also gain importance. The COVID-19 pandemic has exactly such an impact.

UNDERGROUND ECONOMY DALAM SEBUAH PERSPEKTIF

This article aims to describe the activities of underground economic actors. This article is a literature review of several empirical studies in Indonesia and the world in examining or resolving the impact of the existence of these economic activities. There are several terms used in each country from the underground economy, such as black economy, shadow economy and unofficial economy. Every country, both developed and developing countries, have experienced underground economic activity that continues to increase so that biased measurement often occurs, which is caused by indicators of underground economy that cannot be measured clearly and this economic activity can harm state revenues. The driving force of the underground economy is an increase in the tax burden (directly or indirectly), combined with labor market regulations and the quality of public goods and services, as well as properly measured economic conditions. The need for systematic oversight to reduce the number of corruption by providing convenience to the community through the E-Government program as a direction for the creation of Good Governance..

Labor Market Dynamics, Informality and Regulations in Latin America

Labor markets in Latin America and the Caribbean (LAC) are characterized by high levels of informality and relatively rigid regulation. This paper shows that these two features are related and together make the speed of adjustment of employment to shocks slower, especially when regulations are tightly enforced. Evidence suggests that strict labor market regulations also have an adverse effect on medium-term growth. While both regulations on prices (minimum wages) and quantities (employment protection) decrease the speed of adjustment to shocks, they appear to be binding in different phases of the cycle—the former affects mostly the (net) job creation margin and the latter the (net) job destruction margin. The results also highlight possible interactions between labor market regulations and the effectiveness of macro-stabilization tools—including exchange rate depreciation.

Is Being Employed Always Better for Mental Wellbeing Than Being Unemployed? Exploring the Role of Gender and Welfare State Regimes during the Economic Crisis

The growth of poor jobs related to economic crisis adds to its increase since the mid-1970s as a result of new forms of flexible employment. In Europe, there is no clear evidence on whether working in a poor-quality job is better for mental wellbeing than being unemployed. The objectives of this study were to compare mental wellbeing between the unemployed and those working in jobs with different quality levels and to examine gender and welfare state differences in Europe. We selected 8324 men and 7496 women from the European Social Survey, 2010. Hierarchical multiple logistic regression models were fitted, separated by sex and country group. No significant differences in mental wellbeing were shown between unemployed-non-active, unemployed-active, and those working in low-quality jobs in either sex. Only men from Conservative countries in low-quality jobs had better mental wellbeing than unemployed (non-active) men. Only having a good-quality job reduced the likelihood of poor mental wellbeing compared with being unemployed (non-active) among men in all countries (except Social-Democratic) and among women in Eastern and Southern European countries. No differences were observed among men or women in Social-Democratic countries, while strong gender differences were found in Conservative and Liberal countries. Our study indicates the need to take job quality into account, in addition to creating jobs during economic crises. The main mechanisms to explain the strong gender and welfare state differences identified could be social protection for unemployed, labor market regulations, and family models.