Labor and Social Protection
This is the fifth in our series of posts by students on the job market this year.
Do people perform better when working with friends or do their friends distract them from doing their job well? Does the effect depend on their personality traits? I investigate these questions in the context of a seafood-processing plant in Vietnam in which several workers perform the identical task – cleaning and filleting fish -- at 4-person tables in a processing room. I collaborated with the management to design and implement a field experiment in which employees were randomly assigned to positions within the room each day. I use random variation in a worker’s proximity to friends to estimate the effect of working with friends on job performance. Before the experiment, I administered a baseline survey to collect information on employees’ friendship ties and personality characteristics. I find that employees are less productive when working with friends but only when friends are close enough to socialize with each other. I also find that personality traits matter and explain a significant portion of individual differences in socializing behaviors at work. Conversely, socializing with friends explains a large portion of why workers with certain personality traits – notably, conscientiousness – are more productive workers.
Did you know that investments in early childhood are crucial for achieving the brain’s full developmental potential and resilience?
Jim Heckman, Nobel Laureate in economics, and his collaborators have shown that strong foundational skills built in early childhood are crucial for socio-economic success. These foundational skills lead to a self-reinforcing motivation to learn so that “skills beget skills”. This leads to better-paying jobs, healthier lifestyle choices, greater social participation, and more productive societies. Growing research also reveals that these benefits are linked to the important role that early foundations of cognitive and socio-emotional abilities play on healthy brain development across the human lifespan.
Brain complexity –the diversity and complexity of neural pathways and networks— is moulded during childhood and has a lasting impact on the development of cognitive and socio-emotional human abilities.
Although immigration and its effect on labor markets in receiving countries is a frequent focus of research and public concern, there is less known about the impact of emigration on sending countries. Yet, as Benjamin Elsner explains in his recent study for IZA World of Labor, emigration actually has positive and large effects on wages in sending countries.
Greater competition is crucial for creating better jobs, although there may be short term tradeoffs.
Job creation on a massive scale is crucial for sustainably ending extreme poverty and building shared prosperity in every economy. And robust and competitive markets are crucial for creating jobs. Yet the question of whether competition boosts or destroys jobs is one that policymakers often shy away from.
It was thus valuable to have that question as a central point of discussion for competition authorities and policymakers from almost 100 countries – from both developed and developing economies – who recently gathered in Paris for the 14th OECD Global Forum on Competition (GFC).
According to World Bank Group estimates the global economy must create 600 million new jobs by the year 2027 – with 90 percent of those jobs being created in the private sector – just to hold employment rates constant, given current demographic trends.
Yet the need goes further than simply the creation of jobs: to promote shared prosperity, one of the urgent priorities – for economies large and small – is the creation of better jobs. This is where competition policy can play a critical role.
Competition helps drive labor toward more productive employment: first, by improving firm-level productivity, and second, by driving the allocation of labor to more productive firms within an industry.
Moreover: Making markets more open to foreign competition drives labor to sectors with higher productivity – or, at least, with higher productivity growth. Making jobs more productive, in turn, generally increases the wages they command.
That’s in addition to cross-country evidence on the impact of competition policy on the growth of Total Factor Productivity and GDP, and the fact that growth tends not to occur without creating jobs. Thus there’s compelling evidence that – far from being a job killer, as skeptics might fear – competition (over the long term) has the potential to create both more jobs and better jobs.
The key question then becomes whether such long-term benefits must be achieved at the expense of short-term negative shocks to employment – especially in sectors of the economy that may experience sudden increases in the level of competition.
Progress toward better jobs is driven partly by the disappearance of low-productivity jobs, as well as the creation of more productive jobs in the short run. Competition encourages that dynamic through firm entry and exit, along with a reduction in “labor hoarding” in firms that have previously enjoyed strong market power.
Consider this: By the time you had breakfast this morning, the world’s urban population grew by some 15,000 people. This number will increase to 180,000 people by the end of the day and to 1.3 million by the end of the week. On a planet with such a vast amount of space, this pace of urbanization is like crowding all of humanity into a country the size of France.
Cities are where most of the world’s population lives, where more and more of population growth will occur, and where most poverty will soon be located.
But why do so many people choose cities? Poor people constantly pour into Rio de Janeiro and Nairobi and Mumbai in search of something better. The poorest people who come to cities from other places aren’t irrational or mistaken. They flock to urban areas because cities offer advantages they couldn’t find elsewhere. The poverty rate among recent arrivals to big cities is higher than the poverty rate of long-term residents, which suggests that, over time, city dwellers’ fortunes can improve considerably.
It is 8 AM. The winter sun begins to appear over the gray-green mass of trees above the village of Tritriva in Madagascar’s central highlands. The courtyard of a stone church is already filled with women, many holding still-sleeping children in their arms. They have assembled for the first time in two months to receive a cash payment from the Malagasy state.
The women are poor and all live on less than $2 per day. The money they receive from the government amounts to about a third of their cash income for the two months in between each payment: it will go a long way in helping them support their families for the rest of the winter.
Initiated by the Madagascar government, with support from the World Bank, the payments are part of a new program implemented by the Fonds d'Intervention pour le Développement (FID) to combat poverty in rural Madagascar and provide sustainable pathways to human development.
Cities are the future. They are where people live and work. They are where growth happens and where innovation takes place. But they are also poles of poverty and, much too often, centers of unemployment.
How can we unleash the potential of cities? How do we make them more competitive? These are urgent questions. Questions, as it turns out, with complex answers – that could potentially have huge returns for job creation and poverty reduction.
Cities vary enormously when it comes to their economic performance. While 72 percent of cities grow faster than their countries, these benefits do not happen uniformly across all cities. The top 10 percent of cities increase GDP almost three times more than the remaining 90 percent. They create jobs four to five times faster. Their residents enjoy higher incomes and productivity, and they are magnets for external investment.
We’re not just talking about the “household names”among global cities: Competitive cities are often secondary cities, many of them exhibiting success amidst adversity – some landlocked and in lagging regions within their countries. For instance, Saltillo (Mexico), Meknes (Morocco), Coimbatore (India), Gaziantep (Turkey), Bucaramanga (Colombia), and Onitsha (Nigeria) are a few examples of cities that have been competitive in the last decade.
So how do cities become competitive? We define competitive cities as those that successfully help firms and industries create jobs, raise productivity and increase the incomes of citizens. A team at the World Bank Group spent the last 18 months investigating, creating and updating our knowledge base for the benefit of WBG’s clients. In our forthcoming report, “Competitive Cities for Jobs and Growth,”* we find that the recipe includes several basic ingredients.
In the long term, cities moving up the income ladder will transform their economies, changing from “market towns” to “production centers” to “financial and creative centers,” increasing efficiencies and productivity at each stage. But economic data clearly shows there are large gains to be had even without full-scale economic transformation: Cities can move from $2,500 to $20,000 in per capita income while still remaining a “production center.” In such cases, cities become more competitive at what they already do, finding niche products and markets in tradable goods and services. Competitive cities are those that manage to attract new firms and investors, while still nurturing established businesses and longtime residents.
What sort of policies do competitive cities use? We find that leading cities focus their energies on leveraging both economy-wide and sector-specific policies. In practice, we see how successful cities create a favorable business climate and target individual sectors for pro-active economic development initiatives. They use a combination of policies focused on cross-cutting issues such as land, capital markets and infrastructure, while not losing focus on the needs of different industries and firms. The crucial factor is consultation, collaboration and partnerships with the private sector. In fact, success also involves building coalitions for growth with neighbors and other tiers of government.
- urban competitiveness
- sustainable cities
- Trade and Competitiveness
- Private sector competitiveness
- competitive cities
- Competitive Sectors
- Competitive Industries
- Financial Sector
- Labor and Social Protection
- Public Sector and Governance
- Social Development
- Urban Development
- Private Sector Development
Can we end extreme poverty in a world with extreme inequality? That question inspired a spirited debate in English and Spanish on Oct. 7, just ahead of the World Bank Group-IMF Annual Meetings in Lima, Peru, addressing corruption, taxation, discrimination against women, and the need to even the playing field for the younger generation.
Latin America’s experience with inequality was front and center at the live-streamed event, Inequality, Opportunity, and Prosperity, featuring World Bank Group President Jim Yong Kim, Ibero-American Secretary General Rebeca Grynspan, Oxfam International Chair Juan Alberto Fuentes Knight, and moderated by CNN Español news anchor Patricia Janiot.
The economic slowdown in Latin America and the Caribbean is putting pressure on workers and wages and forcing some people out of the labor force, according to a new report released during a live-streamed event of the same name, “Jobs, Wages, and the Latin American Slowdown,” in the lead-up to the World Bank Group-IMF Annual Meetings in Peru.
“A lot of women joined the labor force in the good times. Now, in the slowdown, people are exiting the labor force — men and youth with little education. This is good news if they’re going to university, but bad if they’re going to live with their parents and be idle,” said Augusto de la Torre, the World Bank’s chief economist for Latin America and the Caribbean.
Moreover, the “exit of youth from the labor force will affect poor families more than wealthier ones – inequality could become greater,” said de la Torre.