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Sticky Feet: How Workers’ Reluctance to Move Can Reduce Gains from Trade

Elizabeth Ruppert Bulmer's picture

When economists think about price shocks, they consider how a change in price will affect the supply and demand of a product. But when that product is human – i.e., a worker – interpreting the impact of a price – or wage – shock is no longer cut and dried.

Just consider: If your wage was suddenly cut, would you remain in your current job despite the loss in earnings? Would you quit immediately, or look for a new job while continuing to work? How long could you survive on your lower earnings? Would you be forced to sell your house or other assets? How much money and effort would you invest in finding a better job? Would your personal circumstances allow you to take a better job in a distant location? Would you uproot your family for this job? 

Thinking Twice Before Having Children in Poland

The first thirty minutes of Elzbieta’s day are the most precious.
 
Between five and five-thirty in the morning is the only time she gets to herself, which she uses to work out, or read a book. After that, the grind of everyday life in Poland’s countryside takes over. She cooks, washes, cleans, irons, and cooks for her seven children, aged two to fifteen. And it doesn’t stop until late at night.
 
Elzbieta’s family and other families with multiple children are rather unique in Poland, which has one of the lowest fertility rates in the world. When asked why they didn’t have children in a recent country-wide survey, 71 percent of Poles said unstable employment and difficulties in balancing work and family life were big factors.
 
Their fears are not without reason -- with each child, the risk of poverty increases tremendously -- families with three or more children are more likely to be in the lowest income group, with 26.6 percent of households with four children living in poverty in Poland, according to the Main Statistical Office.
 
Even buying clothes for children is a daunting task, in such cases. “We have started participating in lotteries organized by local clothes stores, with no luck so far,” Elzbieta said. “We do it because taxes for children’s clothes and shoes were recently raised, and families like ours are most affected. Families with children are just not given a chance.”
 
Elzbieta talked to me as she picked flowers in a nearby field, while watching her five-year old daughter. The flowers she collected would later be dried on a bench outside her rural home and used for making herbal teas for the family. Even buying tea is a financial challenge for Elzbieta’s family, whose income, a total of PLN 3,280 (about $1,100) comes from social assistance for children, including a disabled child (PLN 2,000) and her husband’s income – after the payment of a home renovation loan – of PLN1, 280.
 
The Face of Poverty in Europe and Central Asia

 
But hospitality is not to be spared.

Egypt Development Marketplace Awards Grants!

Dougg Jimenez's picture

The Egypt Development Marketplace 2013 grantees, partners and DM team.Thirty-five organizations will be awarded $800,000 by the Egypt Development Marketplace (DM) funded by The World Bank Group (WBG) and its local and international partners. Each of the grantees will receive $25,000 to scale up their business model that would generate employment in the agriculture and handicraft sectors. Winning organizations will beshowcased at a DM sponsored event. A number of financial institutions, social entrepreneurs, investors, development organizations, and government officials will also participate in the event to bring attention to organizations implementing innovative solutions to unemployment in the country.

Overwhelming response to “Call for Proposal”

The call for proposals was launched in November and closed in January. At closing, 180 proposals from 171 organizations were submitted for funding. Preference was given to projects implemented in Upper Egypt and the majority of proposals were for projects in Minya. Applicants comprised the following types of organizations: 89 percent were Non-governmental Organizations (NGOs), 7 percent were private companies and 4 percent were foundations.

From its conception, the Egypt DM has been designed to surface and build the skills of organizations creating jobs in the country, primarily in the poorest areas with an emphasis on Upper Egypt. To generate interest in the competition and to ensure organizations operating in targeted areas applied, outreach events were held in Assyut, Qena, Aswan, and Minya. As a follow up, skill-building workshops in business planning were held for each of the 70 finalists to ensure high quality proposals were submitted.

What It Takes for Trade to Reduce Poverty in Africa

Otaviano Canuto's picture

Despite tremendous progress in poverty reduction over the last two decades, poverty still persists. Along with South Asia,  Africa is a region where large numbers of people continue to live in extreme poverty. It is also a region where there is clearly room for higher foreign trade levels (see Chart). Given that trade can generate growth – and thus poverty reduction – focus on trade-related reforms (e.g. lower tariffs, better logistics, and trade facilitation)  deserves to be a high priority of the region.

Women in the Workforce – a Growing Need in Emerging Europe and Central Asia

Sarosh Sattar's picture

Emerging Europe and Central Asia (ECA) is an interesting region because what you expect is not always what exists. Since this is written in honor of International Women's Day, discussing women’s labor market participation seems appropriate. The standard indicator used for this is the “female labor force participation” (LFP) rate, which is the proportion of all women between 15-64 years who either work or are looking for work. 

Since much of the region has a common socialist legacy, you would expect to see similar labor market behavior among women. However, the proportion of women who work ranges from a low of 42 percent in Bosnia and Herzegovina to 74 percent of adult women in Kazakhstan. And it wasn’t 20 years of social and economic transition that led to this divergence. Even in 1990, the range was about the same. The exception was Moldova which saw a 26 percentage point decline.

Bridging the Gender Gap: Empowering India’s Female Entrepreneurs

Mabruk Kabir's picture

A quiet revolution has been sweeping the Indian political landscape. Last year, the reservation (quota) for women in panchayats — rural local self-government — was increased to at least 50 percent, bringing women into the political fold in vast numbers.

However, economic empowerment may not have kept pace with political empowerment. When it comes to female labor force participation, gender disparities remain deeply entrenched. The 2012 World Economic Forum's Gender Gap Index ranked India 123rd out of 135 countries on economic participation and opportunity.

It’s Jobs, Stupid!

Otaviano Canuto's picture

The World Bank has been tracking the world's progress against poverty since the late eighties, but the release of 2008 data was the first time in which all regions of the developing world showed a decline in the number of people living below poverty lines!

Friday Roundup: Economically shrinking G7, Africa's youth, Chinese labor, Sandy's costs, and Industrial Policy

LTD Editors's picture

This week a new forecast and analysis from the OECD highlights how, by around 2025, China's and india's combined GDP will likely exceed that of all the current Group of 7 rich economies. Read it here.

Mo Ibrahim, entrepreneur and billionaire, talks in a video clip about how the promise and risks inherent Africa's demographic bulge require bringing youth to the table when discussing not just jobs, training and places in top schools, but they should also be in on governance discussions.

What skills are employers looking for in Vietnam’s workforce?

Christian Bodewig's picture

Cũng có ở Tiếng việt

Last month, we asked you for your views about whether Vietnam’s workforce is ready for the future, "from rice to robots". Developing a skilled workforce for an industrialized economy by 2020 is one of the stated top priorities of Vietnam, now that it has joined the ranks of middle-income countries. Not surprisingly, education reform was on the minds of members of the Central Committee of the Communist Party during a recent meeting.  However, education is also hotly debated by Vietnam’s citizens as seen and heard in an online discussion on human resource development, organized by the World Bank and VietNamNet, a local online newspaper, and by readers of our blog.


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