Employment protection and unemployment benefits: On technology adoption and job creation in a matching model
NIPE Working Paper 03/2012. (With Kjell Erik Lommerud and Steinar Vagstad)
We analyse the effects of different labour market policies -- employment protection, unemployment benefits and payroll... more We analyse the effects of different labour market policies -- employment protection, unemployment benefits and payroll taxes -- on job creation and technology choices in a model where firms are randomly matched with workers of different productivity and wages are determined by ex-post bargaining. In this setting, unemployment benefits are unambiguously detrimental to both job creation and technology adoption while the effects of employment protection are mixed, as higher firing costs stifle job creation but stimulate technology investments. This suggests that a `flexicurity' policy, with low employment protection and high unemployment benefits, might have the adverse effect of slowing down technological progress and job growth. Indeed, our analysis of the optimal policy solution suggests that flexicurity is often not optimal, and may be optimal only in conjunction with payroll subsidies.
Privatization and corporate restructuring
NIPE Working Paper 10/2012. (With Paulo Bastos and Natália P. Monteiro)
We examine corporate restructuring following privatization using uncommonly rich data on the population of Portuguese... more We examine corporate restructuring following privatization using uncommonly rich data on the population of Portuguese firms from 1991-2009. We find that privatization leads to sizable job losses, reflecting reductions in both the number of establishments and in the number of workers per establishment. We find no robust evidence of impacts on the structure of the workforce. The estimated job losses following privatization are consistent with a theory in which the shift in ownership increases the degree of profit orientation and leads to lower job security.
Regional unemployment and industrial restructuring in Poland
Co-authored with Andrew Newell.
Eastern European Economics, 2006, 44(3): 5-28.
(also available as IZA DP, n. 194, November 2000, University of Sussex DP, n. 63, May 2000, e CELPE DP, n. 51, February 2000)
This paper studies regional unemployment inequality in Poland. We find that regions experiencing greater change in... more This paper studies regional unemployment inequality in Poland. We find that regions experiencing greater change in industrial structure have higher unemployment rates. We also find that high-unemployment regions have higher inflow rates to unemployment rather than longer spells of unemployment. These findings suggest that regional unemployment varies importantly with job destruction in Poland. Econometric analysis of the determinants of employment to unemployment flows reinforces this impression. We use our estimates to assess the extent to which regional unemployment variation is due to economic restructuring. We show that this cannot be done unambiguously, and offer reasons why many previous attempts to separate out the effects of restructuring on unemployment have been unsuccessful.
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Seen by:Trade unions reject World Cup-related Qatar labor measures and threaten global boycott
By James M. Dorsey
International trade unions this week rejected World Cup-related Qatari proposals to meet... more
By James M. Dorsey
International trade unions this week rejected World Cup-related Qatari proposals to meet concerns about worker rights, including health and safety that violate international human and labor rights as well as principles the Gulf state had adopted as a member of the International Labor Organization ILO.
The unions said they were moving ahead with plans for a global campaign this summer under the motto 'No World Cup in Qatar without labor rights’, to deprive Qatar of its right to host the 2022 World Cup if it failed to align its labor legislation and workers’ condition with international standards.
“It is not too late to change the venue of the World Cup. This is not an industrial skirmish about wages; this is a serious breach in regard to human and labor rights. The country is incredibly wealthy and is portraying itself as a model country. That is simply not true. Our members are football fans and they don’t want to see the game played in a country that practices slavery,” Sharan Burrow, General Secretary of the International Trade Union Confederation (ITUC), which represents 175 million workers in 153 countries, said in a telephone interview.
A spokesman for the Qatar 2022 Supreme Committee declined to comment on Ms. Burrow’s statements.
The looming confrontation between Qatar and the international workers’ movement comes at a sensitive time for the six-nation Gulf Cooperation Council (GCC) that incorporates Saudi Arabia, Qatar, the United Arab Emirates, Kuwait, Bahrain and Oman. The GCC is preparing for a summit in Riyadh later this month to discuss a political union that would allow Saudi Arabia to pressure the smaller states to fall in line with its more conservative social and foreign policies at a time that the Middle East and North Africa are experiencing popular revolts in demand of greater freedom.
The issue of labor rights is also sensitive because several Gulf states have populations that are in majority foreign. Beyond the commercial and economic advantages of a cheap pool of labor, discussion of any kind of rights for non-locals raises the specter of the minority Gulf population in countries like Qatar, the UAE, and Kuwait no longer having a country that is theirs and which they control.
“It’s a real problem. Everybody knows that,” said a source close to Qatari and Gulf thinking on the issue against the backdrop of the UAE and Bahrain alongside Qatar seeking to project themselves as global sports hubs. An attempt by Bahrain to project an image of business as normal and distract attention from continuing popular discontent despite the suppression of last year’s revolt by letting Formula 1 go ahead last month backfired with protests overshadowing the race.
Ms. Burrow said the unions were seeking an urgent Qatari acceptance and implementation of international human and labor rights because the Gulf state was about to start construction of World Cup-related infrastructure.
Qatar’s 2022 Supreme Committee this week issued a second tender for the project, design, commercial and construction management of one of the 12 stadiums it is planning for the tournament, nine of which will be newly built. The three remaining stadiums already exist but need to be refurbished. The committee earlier tendered the contract for a master planning and lead design consultant for the stadiums.
“Gradual change is not good enough. The urgency is because the stadiums are about to be constructed in a serious way. Companies are gearing up their supply chains and costing infrastructure on a model of modern day slavery. We want that to change and companies might have to adjust their costing and pricing accordingly,” Ms. Burrow said.
Qatar with a majority expatriate population expects to import up to one million foreign workers to complete infrastructure needed both for the World Cup and the development of the energy-rich nation.
In a statement, the ITUC said it had requested an urgent meeting with Qatari labor minister Sultan bin Hassan, charging that “workers are dying in Qatar as they build World Cup stadiums and infrastructure, and suffer large scale exploitation every day.” Ms. Burrow said she had yet to receive a reply to the letter, which was also sent to world soccer body FIFA.
The union leader said that some 200 Nepalese died last year in Qatar, a favored destination for the country’s low skilled expat labor; 30 of them while on a construction job while another approximately 70 as a result of the country’s brutal summer temperatures that rise above 40 degrees Celsius. It was not clear whether any of these deaths were directly related to World Cup-related construction. “We quite confidently predict that more people will die off the field than there are players on the field,” Ms. Burrow said. She said she would soon be travelling to Nepal for discussions with the government and trade unions.
A spokeswoman for Ms. Burrow pointed to a report in The Himalaya Times that described Qatar, the UAE, Saudi Arabia and Malaysia as “graveyards for young Nepali workers in the 25-42 years age group.”
The unions in a meeting with FIFA last November gave the soccer body and FIFA six months to ensure that workers in Qatar have “the legal right to organize themselves in free, independent trade unions without punishment or interference from authorities” that could “collectively bargain” with employers.
“Construction workers, the majority who are migrant workers are risking their lives today as they work in poor and unsafe conditions with low wages. They need trade union rights today to protect them", the ITUC statement quoted Ambet Yuson, General Secretary of Building and Wood Workers International, as saying.
Ms. Burrow said the fight for workers’ rights in Qatar was a battle for labor rights in the region. She said of the three GCC states – Oman, Bahrain and Kuwait – that legally allow trade unions only Bahrain had enshrined international standards in its legislation. She said Bahrain’s progress had however been marred by last year’s Saudi-backed brutal repression of a popular uprising in which teachers, nurses, doctors and others were detained and tortured for demanding basic democratic rights.
“Bahrain was on track until it came under pressure. The prime minister admitted to us that there were concerns from the Gulf states around them, Saudi Arabia in particular but also Qatar etc. Bahrain at least had public recognition of the rights if not realization of those rights in their totality because of the pressure of the Gulf states,” Ms. Burrow said.
She said a Qatari proposal for the creation of a labor committee and abolishment of its controversial system of sponsorship of foreign labor was a “far cry” from union demands for a free and independent trade union and equitable and human working conditions. Qatar is seeking to project itself as a show case member of the global community, “yet it is so far outside the basic human framework of human and labor rights” that it need to choose between being part of the international community or a model of 21st century slavery, Ms. Burrow said.
Qatari media this week quoted Labor Undersecretary Hussain Al Mulla as saying that the country’s emir was considering a plan to establish a Qatari-led labor committee that would represent workers’ interests as well as an abolition of the sponsorship system that would stop short of allowing foreigners to freely change jobs. Qatar recently abandoned the requirement that foreign workers surrender their passports to their Qatari employers. Mr. Al Mulla said the plan had already been endorsed by the Qatari prime minister.
Denouncing conditions of foreign workers in Qatar as 21st century slavery, Ms. Burrow said unions were demanding not only improved health and safety conditions but also the ability to live freely in the community, bring their families and move freely in and out of the country. “Current conditions are absolute enslavement to the employer,” Ms. Burrow said.
She said Mr. Al Mulla’s proposal for a labor committee involved creation of a government controlled body rather than an independent trade union. The way Qatar planned to abolish the sponsorship system failed to create a level playing field or guarantee workers’ freedom of movement, she said.
Qatar 2022 Supreme Committee Secretary General Hassan Al Thawadi pledged early this year in a speech at Carnegie Mellon University’s campus in Doha that the Gulf state would adhere to international labor standards.
"Major sporting events shed a spotlight on conditions in countries. There are labor issues here in the country, but Qatar is committed to reform. We will require that contractors impose a clause to ensure that international labor standards are met. Sport and football in particular, is a very powerful force. Certainly we can use it for the benefit of the region." Mr. Al Thawadi said.
James M. Dorsey is a senior fellow at the S. Rajaratnam School of International Studies at Nanyang Technological University in Singapore and the author of the blog, The Turbulent World of Middle East Soccer.
Wage effects of recruitment methods: The case of the italian social service sector
Co-authored with Michele Mosca
In S. Destefanis and M. Musella, Paid and Unpaid Labour in Social Utility Services, Physica Verlag, Heidelberg (also available as IZA dp, n. 3422).
This paper uses a unique data set containing detailed micro-information on organisations, managers, workers and... more This paper uses a unique data set containing detailed micro-information on organisations, managers, workers and volunteers belonging to public, private forprofit and private nonprofit institutions delivering social services in Italy. The analysis aims to estimate the determinants of wages across organisations at a sector level focusing on the role of hiring and job search methods, including informal networks. We find that, independent of the organisation type, being hired through public competitions brings with it a substantial wage premium (ranging from 7 to 32%). Informal networks bring with them a wage penalty (-6.5%) in the state sector, where formal hiring methods are common, and a wage premium (6.3%) in social cooperatives and religious institutions, where formal hiring methods are not common. Interestingly, the differences in hiring and in job search methods between state and private organisations explain from 50% to 100% of the conditional wage differentials across organisation types. Our interpretation of these findings is that nonprofit organisations prefer informal recruitment methods not for nepotistic reasons, but to better select the most motivated workers, those who share the nonprofit mission. This paper adds to the previous literature by suggesting that in addition to lower than average monetary compensations, informal recruitment methods are part of the process of self-selection of motivated workers in nonprofit organisations.
Discrepancies in Public and Private Sector Pay in Jordan, Qatar and the UAE
by Abed Ayyad
A paper concerned with the economic structures of a number of selected Arab countries, published by the Arab Center for Research and Policy Studies. The author is a Jordanian economist who earned his PhD in Germany in 2005.
This study examines the challenges the labor market faces in a number of Arab countries with rentier economies -... more
This study examines the challenges the labor market faces in a number of Arab countries with rentier economies - namely, Jordan, the United Arab Emirates and Qatar. One of the major challenges the labor market in these countries faces is the local population's weak involvement in the labor market: the notably low participation of women and the high levels of unemployment, especially in Jordan and the United Arab Emirates. This is particularly significant in light of increasing job opportunities in the aforementioned countries that would be capable of resolving the issue of unemployment if these job opportunities were engaging the local workforce.
Moreover, despite the noticeable development of the job market in all three countries - both in terms of diversifying production and the increased participation of the private sector in the economy - this study demonstrates that the workforce is concentrated in the public (government) sector. This is evident in the high level of demand for public sector jobs in comparison to private sector jobs and jobseekers' preference for governmental positions as opposed to private sector employment.
Are real entry wages rigid over the business cycle?
Stüber, Heiko (2012): Are real entry wages rigid over the business cycle? Empirical evidence for Germany from 1977 to 2009. IAB-Discussion Paper, 06/2012.
So far little empirical evidence exists on how real wages of newly hired workers react to business cycle conditions.... more So far little empirical evidence exists on how real wages of newly hired workers react to business cycle conditions. This paper aims at filling this gap for Germany by analyzing the cyclical behavior of real wages of newly hired workers while controlling for 'cyclical upgrading' and 'cyclical downgrading' in employee/employer matches over the cycle. The analysis is undertaken for the 1977 to 2009 period using administrative longitudinal matched employer-employee wage data. I find that an increase in the unemployment rate of one percentage point decreases the real wages of job entries within given firm-jobs by about 1.27 percent. In light of the magnitude of the entry-wage cyclicality it seems that introducing wage rigidity in the Mortensen-Pissarides model in order to amplify realistic volatility of unemployment is not supported by the data. Further I show that the procyclicality of the employment/ population ratio is identical to the procyclicality of real entry wages. This counters the view of many macroeconomists that wages are much less cyclical than employment and unemployment."
The distribution of wages in Belarus
Co-authored with Alina Verashchagina.
Revised version published in: Comparative Economic Studies, 2006, 48 (3), 351-376.
This paper uncovers evidence on the distribution of wages in Belarus in the second half of the 1990s. The returns to... more
This paper uncovers evidence on the distribution of wages in Belarus in the second half of the 1990s. The returns to education and work experience are high and stable. While the former is a typical finding of transition studies, the latter is not.
This might be due to the pervasive role of the state in fixing wages in the dominant budget sector, rather than to market forces coming into play. Women experience a small, though largely unexplained wage gap coupled with higher than average
returns to education. A wage curve effect is found, which is similar in size to that of other transition countries, but much higher than in market economies.
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Seen by:[2012] Capitalism, Illegality and Subversion: The Pre-Figurative Politics of the 2-Hour Work Day
published in Unrest Magazine, Issue 6 March/April 2012.
Though this essay does not seek to apologize for the management and owning class, it does attempt to pose a more... more Though this essay does not seek to apologize for the management and owning class, it does attempt to pose a more challenging question about our relationship to work and survival: What about those of us who make our way through capitalism by exploiting not our neighbors or coworkers, but the outside margins of ‘less than fully regulated’ economies? What about those who seek to work less, yet earn more because they choose to operate in a sphere of employment that exists in between legal and illegal, regulated and unregulated, socially accepted and stigmatized?
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Seen by:Mind the gap: Unemployment in the new EU regions
Co-authored with Anna Maria Ferragina.
Journal of Economic Surveys, 22(1): 73-113 (also available as IZA DP, n. 1565, April).
The paper surveys the theoretical and empirical literature on regional unemployment during transition in Central and... more The paper surveys the theoretical and empirical literature on regional unemployment during transition in Central and Eastern Europe. The focus is on optimal speed of transition (OST) models and on comparison of them with the neo-classical tradition. In the typical neo-classical models, spatial differences essentially arise as a consequence of supply side constraints and institutional rigidities. Slow-growth, high-unemployment regions are those with backward economic structures and constraints on factors mobility contribute to making differences persistent. However, such explanations leave the question unanswered of how unemployment differences arise in the first place. Economic transition provides an excellent testing ground to answer this question. Pre-figuring an empirical law, the OST literature finds that the high degree of labour turnover of high unemployment regions is associated with a high rate of industrial restructuring and, consequently, that low unemployment may be achieved by implementing transition more gradually. Moreover, international trade, foreign direct investment and various agglomeration factors help explain the success of capital cities compared to peripheral towns and rural areas in achieving low unemployment. The evidence of the empirical literature on supply side factors suggests that wage flexibility in Central and Eastern Europe is not lower than in other EU countries, while labour mobility seems to reinforce rather than change the spatial pattern of unemployment.
54 views
Seen by: and 9 moreNot So Sweet History of Sugar Unions in South Africa
by Jason Hickel
2009. South African Labour Bulletin 33(3).
Sweatshop Sugar: Labour Exploitation in South Africa's Cane Fields
by Jason Hickel
2011. The Africa Report.
Subaltern Consciousness in South Africa’s Labor Movement: ‘Workerism’ in the KwaZulu-Natal Sugar Industry
by Jason Hickel
2012. South African Historical Journal 64(3).
Labour turnover and the spatial distribution of unemployment. A panel data analysis using employment registry data
Co-augthored with Joanna Tyrowicz-
Paper presented at the XXV AIEL Conference, University of Chieti and Pescara, 2010.
This paper aims to study whether the local variation in unemployment rates is related to labour turnover and what is... more This paper aims to study whether the local variation in unemployment rates is related to labour turnover and what is the sign of such relationship. In addition, the paper aims to assess the relative impact of inflow and outflow from unemployment on the dynamics of the local unemployment rate. The empirical analysis is based on a newly available unique dataset from the employment registry of a transition economy (Poland), encompassing nine years of monthly data (from 2000 to 2008) at a county (poviat) level. We find that turnover, as well as inflows and outflows separately, are ceteris paribus positively related to the unemployment level. This general conclusion is robust to sub-sampling that addresses potential heterogeneity of the analysed local labour markets. It is also robust to the use of different panel estimators, such as fixed effect and alternative GMM specifications, as well as for spatial clustering of poviats. Nonetheless, point estimators differ, reflecting the diverse adjustment patterns. We also find that elasticity is larger in the case of the inflow rate than for the outflow rate. Finally, we demonstrate that the effect is stronger in low unemployment regions.
67 views
Seen by: and 12 moreThe Brain Drain: Implications for Regional Economic Integration in the Expanding European Union.
Jelavic, M. (2012). The brain drain: Implications for regional economic integration in the expanding European Union. In B. Chapalet, & M. Le Berre (Eds.), Producing New Knowledge on Innovation Management. Presses Universitaires de Grenoble, 99 – 111.
This paper provides a review and conceptual analysis of issues surrounding regional economic integration and the... more This paper provides a review and conceptual analysis of issues surrounding regional economic integration and the potential for inter-country brain drain within the expanding European Union (EU). As the EU expands eastward, it absorbs millions of highly skilled knowledge workers and opens opportunities for western European organisations to capitalise on this workforce. The migration of these skilled workers is a macro-exercise in eastern European knowledge management, and could have far-reaching implications at the regional, industry and organisational levels. This paper explores the context and implications of knowledge worker movement across fading borders.

