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121. Building Back Better: A National Jobs Strategy

Author:
Mary Alive McCarthy, Carl Van Horn, and Michael Prebil
Publication Date:
02-2021
Content Type:
Working Paper
Institution:
Aspen Institute
Abstract:
The United States has a jobs problem. When the COVID-19 pandemic plunged the economy back into recession in early 2020, it laid bare a fragile and profoundly inequitable labor market. In the absence of a robust and coordinated recovery strategy focused on increasing the supply of good jobs, the same labor market pathologies that plagued the last recovery will re-emerge: the long-term unemployed will struggle to land jobs and many will give up; private sector job growth will be slow and uneven; many new jobs will be worse than those they replace; unemployment among Black and Latinx workers will remain elevated; and income and wealth gaps will widen. This recovery must be different. The Biden-Harris administration has an historic opportunity to lay the foundation for an economy built on good jobs, one that ensures the benefits of economic growth are broadly and fairly shared This publication provides a set of concrete recommendations to help guide an all-of-government jobs strategy, including three goals to guide a national jobs agenda, a suite of distinct but reinforcing strategies to achieve them, and a framework for coordinating activities across government.
Topic:
Security, National Security, Infrastructure, Governance, Job Creation, and Labor Market
Political Geography:
North America and United States of America

122. Analysis of Global Value Chain Participation and the Labour Market in Thailand: A Micro-level Analysis

Author:
Upalat Korwatanasakul and Youngmin Baek
Publication Date:
05-2020
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
This study assesses the links between global value chain (GVC) participation and the labour market to examine the relatively unexplored employment-related distribution effects of GVC integration. Based on the Mincer wage model, we examine the relationship between GVC participation and worker productivity and wages at the individual level. Our main estimation method is a simple ordinary least squares estimation using pooled cross-sectional data from the Thai Labour Force Survey for the period 1995–2011. We also separately examine the effects of forward and backward GVC participation on wages and wage distributions. Our results show that GVC participation induces higher monthly wages for individuals and increases productivity in the labour market through either the forward linkage or backward linkage. We even find that GVC participation can help mitigate inequality. Our findings show that GVC participation promotes inclusive job creation and provides more job opportunities for rural, female, and low-skilled workers. Policies to support leveraging the existing strong industries through upgrading, smoothing labour movements while improving agricultural productivity, and preparing to move towards a services economy can help prepare Thailand, and other developing countries in general, to upgrade to higher value chains. Although GVC participation may be a catalyst for higher wages, greater labour productivity, and more inclusive job creation, its employment effects are complicated. An unbalanced policy framework might contribute to uneven income distributions and exclusive job creation as participating in GVCs through different linkages can benefit different stakeholders in varying ways. Therefore, a policy framework that balances the benefits among stakeholders in terms of wage distributions and job inclusion is ideal.
Topic:
Labor Issues, Work Culture, Global Value Chains, and Labor Market
Political Geography:
Asia and Thailand

123. The Value-Added Tax Reform and Labour Market Outcomes: Firm Level Evidence from China

Author:
Yuxiang Yang and Hongyong Zhang
Publication Date:
08-2020
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
The tax incentives designed to stimulate firm investment may have a large impact on labour market outcomes. Using a comprehensive data set containing more than 1 million Chinese manufacturing firms during the period 2000–2013 with a difference-in-difference approach, we examine the impact of the value-added tax reform in 2004–2008 on the firm-level labour market outcomes. We find that firms in eligible industries and regions (treated firms) enjoying lower costs of purchasing fixed assets under the reform tended to increase capital investment and reduce employment relative to firms that did not have tax incentives (the control firms). Compared with the control firms, the treated firms became more capital intensive and had an increase in average wage but a decline in labour income share. We also provide evidence that the substitutions of labour input by capital input is associated with increases in firm productivity and the share of skilled workers, but not imported capital goods.
Topic:
Labor Issues, Reform, Tax Systems, and Labor Market
Political Geography:
China and Asia

124. Labor Market Nationalization Policies and Firm Outcomes: Evidence from Saudi Arabia

Author:
Patricia Cortes, Semiray Kasoolu, and Carolina Pan
Publication Date:
07-2020
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
Saudi Arabia is home to the world’s third largest migrant population. Under mounting pressure to increase the private sector employment of Saudis during the last decade, a series of nationalization policies on the labor force have been imposed since late 2011. In this paper, we study how the first nationalization policy, Nitaqat, affected the overall labor market and non-oil firms in the private sector, especially exporting firms. Our rich and novel data allow us to assess the effect of the policy on a wide set of outcomes: employment decisions by composition and size, the output and productivity of exporting firms, labor costs, and exit from the market. Using a difference-in-difference analysis, we compare the 2011 to 2012 change in outcomes between firms above and firms below the threshold required for the minimum share of Saudi workers in a firm. Our results suggest that the policy succeeded in encouraging firms to increase the share of Saudis in private firms. It also increased the share of Saudi women in the workforce, suggesting that the policy had a positive effect on increasing female labor force participation. However, these gains came at a very high cost to firms: our findings suggest that the policy led to a reduced firm size, reduced productivity and output of exporting firms, increased wage bill, increased share of low-skilled Saudi workers, and higher firm exit rates.
Topic:
Business, Labor Market, and Nationalization
Political Geography:
Saudi Arabia and Gulf Nations

125. The Great Separation: Top Earner Segregation at Work in High-Income Countries

Author:
Olivier Godechot, Paula Apascaritei, István Boza, Lasse Folke Henriksen, and Are Skeie Hermansen
Publication Date:
06-2020
Content Type:
Research Paper
Institution:
Max Planck Sciences Po Center on Coping with Instability in Market Societies (MaxPo)
Abstract:
Analyzing linked employer-employee panel administrative databases, we study the evolving isolation of higher earners from other employees in eleven countries: Canada, Czechia, Denmark, France, Germany, Hungary, Japan, Norway, Spain, South Korea, and Sweden. We find in almost all countries a growing workplace isolation of top earners and dramatically declining exposure of top earners to bottom earners. We compare these trends to segregation based on occupational class, education, age, gender, and nativity, finding that the rise in top earner isolation is much more dramatic and general across countries. We find that residential segregation is also growing, although more slowly than segregation at work, with top earners and bottom earners increasingly living in different distinct municipalities. While work and residential segregation are correlated, statistical modeling suggests that the primary causal effect is from work to residential segregation. These findings open up a future research program on the causes and consequences of top earner segregation.
Topic:
Economics, Political Economy, Labor Issues, Income Inequality, Class, and Labor Market
Political Geography:
Europe

126. Inclusive growth: how to encourage persons with disabilities into the labour market

Author:
Gan Siew Wei, Vengadeshvaran Sarma, and Tang Yu Hoe
Publication Date:
03-2020
Content Type:
Policy Brief
Institution:
Asia Research Institute, University of Nottingham
Abstract:
Persons with disabilities (PWDs) are regularly discriminated against in the labour market and have little opportunity to participate in employment and entrepreneurship. In Southeast Asia, the lack of data masks the severity of their exclusion. This brief draws on an impact-evaluation of a multicountry corporate social responsibility project in the region. Policy makers should consider the collection of a centralised database and the implementation of new training and mentoring to support PWDs.
Topic:
Discrimination, Disability, Corporations, and Labor Market
Political Geography:
Asia

127. Supporting full participation of mothers in the labour market: Childcare-related leave policy lessons from East Asian economies

Author:
Ruby Chau and Sam Yu
Publication Date:
03-2020
Content Type:
Policy Brief
Institution:
Asia Research Institute, University of Nottingham
Abstract:
Policy makers should implement alterations to the law in order to support women and families in getting back into the workforce. This policy brief reviews how governments in Hong Kong, Japan, South Korea and Taiwan use paid childcare-related leave policies in supporting women to stay in the labour market. It shows that these policies have not been very successful for two main reasons: 1. The leave is not long enough to cover the whole period from birth to the time when the child is entitled to universal state childcare services or school education. 2. These policies do not address the issue of the gender pay gap and hence overlook the financial loss a family may suffer if the father, instead of the mother, takes a substantial period of time off to look after the children.
Topic:
Gender Issues, Children, Women, Family, Labor Market, and Childcare
Political Geography:
Japan, Taiwan, South Korea, and Hong Kong

128. Foreign Direct Investment and Labour Market Dynamics in a Developing Country: Evidence from Indonesian Plant-Level Data

Author:
Toshiyuki Matsuura and Hisamitsu Saito
Publication Date:
02-2020
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
This study examines the impact of inward foreign direct investment on the wages and employment of skilled and unskilled workers in Indonesian manufacturing plants. Entry of multinational enterprises affects local labour markets through spillovers as well as labour and product market competition. Our results show that spillovers increase the labour demand of local plants for unskilled workers, but increased wages due to severe labour market competition reduce the demand for skilled workers. We also find that product market competition causes resource reallocation from low- to high-productivity plants. Thus, attracting inward foreign direct investment effectively enhances aggregate productivity growth, but may retard the transition to skill-intensive production in Indonesian manufacturing.
Topic:
Development, Foreign Direct Investment, Manufacturing, and Labor Market
Political Geography:
Indonesia and Asia

129. Defined Contribution Funded Social Security and Labor Supply: Focus on Mexican Social Security Reform in 1997

Author:
Sungwoo Hong
Publication Date:
07-2020
Content Type:
Working Paper
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
Countries adopting a defined benefit pay-as-you-go (DB PAYG) regime have two options to solve the issue of financial unsustainability: (1) a parametric reform, which alters policies within DB PAYG regime, and (2) a structural reform, which changes the regime from DB PAYG to a defined contribution funded (DC) system. In this study, focusing on the structural reform of Mexico in 1997, I investigate whether structural social security reform affects labor supply. The findings suggest that the change in the social security regime increased both labor force participation and work hours per week. However, in the case of the elderly, the intensive margin effect on labor supply was not statistically significant.
Topic:
Reform, Tax Systems, Social Security, and Labor Market
Political Geography:
Asia, Korea, and Mexico

130. Determinants of Korean Outward Foreign Direct Investment: How Do Korean Firms Respond to the Labor Costs of Host Countries?

Author:
Hanbyul Ryu and Young Sik Jeong
Publication Date:
09-2020
Content Type:
Working Paper
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
Low cost of labor has been one of the major incentives that foreign firms invest in many developing countries. Yet, many developing countries including China and ASEAN have recently experienced a rapid increase in labor costs. Using the wage information provided by JETRO, this study examines how Korean FDI outflow is affected by the increase in labor costs of the manufacturing industry in host countries. The results indicate that the worker’s and engineer’s wages in Asian developing countries, who accumulated at least 3 and 5 years of work experience, have generally a negative impact on Korean FDI outflow. However, there exist positive relationships between the wages and FDI when the wages stay at very low levels. We do not find evidence that labor costs make a significant impact on Korean FDI outflow to European or Developed countries.
Topic:
Development, Foreign Direct Investment, and Labor Market
Political Geography:
China, Asia, and Korea