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Evidence-based policy making

IZA World of Labor is an online platform that provides policy analysts, journalists, academics and society generally with relevant and concise information on labor market issues. Based on the latest research, it provides current thinking on labor markets worldwide in a clear and accessible style. IZA World of Labor aims to support evidence-based policy making and increase awareness of labor market issues, including current concerns like the impact of Covid-19, and longer-term problems like inequality.

View our content on Covid-19—Pandemics and the labor market

featured article

Corporate income taxes and entrepreneurship

Updated

The type, quality, and quantity of entrepreneurship are influenced significantly by corporate income taxes—though only slightly

Jörn Block

企业所得税影响的数量and type of entrepreneurship, which in turn affects economic development. Empirical evidence shows that higher corporate income tax rates reduce business density and entrepreneurship entry rates and increase the capital size of new firms. The progressivity of tax rates increases entrepreneurship entry rates, whereas highly complex tax codes reduce them. Policymakers should understand the effects and underlying mechanisms that determine how corporate income taxation influences entrepreneurship in order to provide a favorable business environment.

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latest articles

  • Is the post-communist transition over?

    Support for economic liberalization reforms is essential, but it grows stronger only where societies experience the effects of reversing these reforms

    Elodie Douarin Tomasz Mickiewicz, June 2022
    An extensive program of economic liberalization reforms, even when it generates positive outcomes, does not automatically generate support for further reforms. Societies respond with strong support only after experiencing the effects of reversing these reforms (i.e. corruption, inequality of opportunity). This point is illustrated through the example of the post-communist transformation in Eastern Europe and Central Asia—arguably a context where the end point of reforms was never clearly defined, and even successful reforms are now associated with a degree of reform suspicion.
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  • Should unemployment insurance cover partial unemployment?Updated

    Time-limited benefits may yield significant welfare gains and help underemployed part-time workers move to full-time employment

    Susanne Ek Spector, June 2022
    A considerable share of the labor force consists of underemployed part-time workers: employed workers who, for various reasons, are unable to work as much as they would like to. Offering unemployment benefits to part-time unemployed workers is controversial. On the one hand, such benefits can strengthen incentives to take a part-time job rather than remain fully unemployed, thus raising the probability of obtaining at least some employment. On the other hand, these benefits weaken incentives for part-time workers to look for full-time employment. It is also difficult to distinguish people who work part-time by choice from those who do so involuntarily.
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  • Determinants of inequality in transition countries

    Market changes and limited redistribution contributed to high income and wealth inequality growth in Eastern Europe

    Michal Brzezinski Katarzyna Salach, June 2022
    High levels of economic inequality may lead to lower economic growth and can have negative social and political impacts. Recent empirical research shows that income and wealth inequalities in Eastern Europe since the fall of socialism increased significantly more than previously suggested. Currently, the average Gini index (a common measure) of inequality in Eastern Europe is about 3 percentage points higher than in the rest of Europe. This rise in inequality was initially driven by privatization, liberalization, and deregulation reforms, and, more recently, has been amplified by technological change and globalization coupled with relatively ungenerous income and wealth redistribution policies.
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  • Does employee ownership improve performance?Updated

    Employee ownership generally increases firm performance and worker outcomes

    Douglas Kruse, May 2022
    Employee ownership has attracted growing attention for its potential to improve economic outcomes for companies, workers, and the economy in general, and help reduce inequality. Over 100 studies across many countries indicate that employee ownership is generally linked to better productivity, pay, job stability, and firm survival—though the effects are dispersed and causation is difficult to firmly establish. Free-riding often appears to be overcome by worker co-monitoring and reciprocity. Financial risk is an important concern but is generally minimized by higher pay and job stability among employee owners.
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  • Measuring poverty within the household

    Standard poverty measures may drastically understate the problem; the collective household model can help

    Caitlin Brown Rossella Calvi Jacob Penglase Denni Tommasi, May 2022
    A key element of anti-poverty policy is the accurate identification of poor individuals. However, measuring poverty at the individual level is difficult since consumption data are typically collected at the household level. Per capita measures based on household-level data ignore both inequality within the household and economies of scale in consumption. The collective household model offers an alternative and promising framework to estimate poverty at the individual level while accounting for both inequality within the household and economies of scale in consumption.
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  • How to attract international students?Updated

    Studying abroad benefits the students, the host country, and those remaining at home

    Arnaud Chevalier, May 2022
    In knowledge-based economies, attracting and retaining international students can help expand the skilled workforce. Empirical evidence suggests that open migration policies and labor markets, whereby students can remain in the host country post-study, as well as good quality higher education institutions are crucial for successfully attracting international students. Student migration can positively affect economic growth in both sending and receiving countries, even though migrants themselves reap most of the gains, mainly through higher earnings.
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  • Presenteeism at the workplace

    Working when sick is a widespread phenomenon with serious consequences for workers, firms, and society

    Claus Schnabel, May 2022
    Many workers admit that at times they show up for work even though they feel sick. This behavior, termed “presenteeism,” is puzzling since most workers do not incur financial losses when staying home sick. The various reasons behind presenteeism are person-related (e.g. individuals’ health or job attitude) or work-related (e.g. job demands and constraints on absence from work). Working when sick can have positive and negative consequences for workers’ performance and health, but it also affects co-workers’ well-being and firms’ productivity. There are various strategies as to how firms can address presenteeism.
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  • Gross domestic product: Are other measures needed?Updated

    GDP summarizes only one aspect of a country’s condition; other measures in addition to GDP would be valuable

    Barbara M. Fraumeni, April 2022
    Gross domestic product (GDP) is the key indicator of the health of an economy and can be easily compared across countries. But it has limitations. GDP tells what is going on today, but does not inform about sustainability of growth. The majority of time is spent in home production, yet the value of this time is not included in GDP. GDP does not measure happiness, so residents can be dissatisfied even when GDP is rising. In addition, GDP does not consider environmental factors, reflect what individuals do outside paid employment, or even measure the current or future potential human capital of a country. Hence, complementary measures may help to show a more comprehensive picture of an economy.
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  • Economic effects of natural disasters

    Natural disasters cause significant short-term disruptions, but longer-term economic impacts are more complex

    Tatyana Deryugina, April 2022
    Extreme weather events are increasing in frequency and intensity, threatening lives and livelihoods around the world. Understanding the short- and long-term effects of such events is necessary for crafting optimal policy. The short-term economic impacts of natural disasters can be severe, suggesting that policies that better insure against consumption losses during this time would be beneficial. Longer-term economic impacts are more complex and depend on the characteristics of the affected population and the affected area, changes in migration patterns, and public policy.
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  • Employment and wage effects of extending collective bargaining agreementsUpdated

    Sectoral collective contracts reduce inequality but may lead to job losses among workers with earnings close to the wage floors

    Ernesto Villanueva Effrosyni Adamopoulou, April 2022
    In many countries, the wage floors and working conditions set in collective contracts negotiated by a subset of employers and unions are subsequently extended to all employees in an industry. Those extensions ensure common working conditions within the industry, mitigate wage inequality, and reduce gender wage gaps. However, little is known about the so-called bite of collective contracts and whether they limit wage adjustments for all workers. Evidence suggests that collective contract benefits come at the cost of reduced employment levels, though typically only for workers earning close to the wage floors.
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  • Is there an optimal school starting age?Updated

    It depends: older children perform better on standardized tests, but evidence of older school starting ages on long-term outcomes is mixed

    Elizabeth Dhuey Kourtney Koebel, April 2022
    有一个普遍认为年纪大的学生,by virtue of being more mature and readier to learn at school entry, may have better academic, employment, and earnings outcomes compared to their younger counterparts. There are understated, albeit important, costs to starting school later, however. Compulsory school-attendance laws may allow these same older pupils to drop out of high school earlier, which could adversely impact their employment; entering the workforce later also has implications for lifetime earnings and remittances to governments. Overall, research suggests that school-age entry policies can improve student achievement in the short term, but the long-term impacts are currently not well-understood.
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  • Youth extracurricular activities and the importance of social skills for supervisors

    Social skills developed during extracurricular activities in adolescence can be highly valuable in managerial occupations

    Vasilios D. Kosteas, March 2022
    Youth participation in extracurricular activities is associated with a variety of benefits, ranging from higher concurrent academic performance to better labor market outcomes. In particular, these activities provide avenues through which youth can develop the interpersonal and leadership skills that are crucial to succeed as a manager. A lack of opportunity to participate in extracurricular activities for many youths, particularly those from lower-income backgrounds, may have negative consequences for developing the next generation of managers and business leaders.
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  • Does emigration increase the wages of non-emigrants in sending countriesUpdated

    Emigration can increase the wages of non-emigrants, but may eventually lead to lower productivity and wage losses

    Benjamin Elsner, March 2022
    How migration affects labor markets in receiving countries is well understood, but less is known about how migration affects labor markets in sending countries, particularly the wages of workers who do not emigrate. Most studies find that emigration increases wages in the sending country but only for non-emigrants with substitutable skills similar to those of emigrants; non-emigrants with different (complementary) skills lose. These wage reactions are short-term effects, however. If a country loses many highly educated workers, the economy can become less productive altogether, leading to lower wages for everyone in the long term.
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  • The quantity–quality fertility–education trade-offUpdated

    Policies to reduce fertility in developing countries generally boost education levels, but only slightly

    Haoming Liu Li Li, March 2022
    At the national level, it has long been observed that a country's average education level is negatively associated with its total fertility rate. At the household level, it has also been well documented that children's education is negatively associated with the number of children in the family. Do these observations imply a causal relationship between the number of children and the average education level (the quantity–quality trade-off)? A clear answer to this question will help both policymakers and researchers evaluate the total benefit of family planning policies, both policies to lower fertility and policies to boost it.
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  • Ethnic enclaves and immigrant economic integrationUpdated

    High-quality enclave networks encourage labor market success for newly arriving immigrants

    Simone Schüller Tanika Chakraborty, March 2022
    移民倾向于住在集群内部主机公司untries. Does clustering in ethnic enclaves explain the persistent differences in skill, employment rates, and earnings between immigrants and the native population? Empirical studies consistently find that residing in an enclave can increase earnings. While it is ambiguous whether employment probabilities are also affected or whether earnings benefits accrue to all immigrants, irrespective of their skill levels, it is clear that effects are driven by enclave “quality” (in terms of income, education, and employment) rather than enclave size.
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  • Informal employment in emerging and transition economiesUpdated

    Reducing informality requires better enforcement, more reasonable regulation, and economic growth

    Fabián Slonimczyk, March 2022
    In developing and transition economies as much as half the labor force works in the informal sector (or “shadow economy”). Informal firms congest infrastructure and other public services but do not contribute the taxes needed to finance them. Informal workers are unprotected against such negative shocks as ill-health, but for certain groups there can be scarce opportunities to enter the formal sector meaning informal employment is the only feasible option. Reducing informality requires better enforcement, more reasonable regulation, and economic growth.
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events
  • Jun 28, 2022 - Jul 01, 2022

    EAERE 27th annual conference

    Rimini, Italy

    The Conference activities include keynote speeches and policy panels, theDavid Pearce Lectures, paper presentations, discussions and round tables, a book exhibition involving the most well-known publishers of environmental economic issues and a job market where universities, public and private institutes and corporations may interview the best young environmental economists for employment.

  • Jul 20, 2022 - Jul 22, 2022

    5th IZA Labor Statistics Workshop: The Measurement of Incomes, Living Costs and Standards of Living

    Online

    The purpose of the 2022 workshop of IZA’s “Labor Statistics” program area is to bring together senior and junior researchers to discuss their recent empirical research related to incomes, living costs, and standards of living.

  • Jul 22, 2022

    7th World Congress of the International Society of Business Economics and Ethics

    Bilbao, Spain

    You are cordially invited to (re-)submit proposals for the 7th ISBEE World Congress in Bilbao, Spain, to participate in the discourse on how we may re-invent globalization, the role of local communities, virtues and values, and the power of purpose.

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