The Handbook in “Labor, Human Resources and Population Economics” provides an integrated picture of knowledge about the economic and social behaviors and interactions of human beings on markets, in households, in companies and in societies.A fast evolving project by the GLO with a core basis in labor economics, human resources, demography and econometrics, it will provide a large and complete summary and evaluation of the scientific state of the art. Chapters are developed under the guidance of an engaged team of editors led by the GLO President administered in 30 sections.
to find out how to contribute to this exciting venture with an own chapter.
The Section “Technological Changes and the Labor Market” is directed by Marco Vivarelli, who is also the GLO Cluster Lead of the “Technological Change” area.The Section is just completing its set of 20 published papers now available for use, review and debate.List of the articles and links to access them are below.
The Handbook of Labor, Human Resources and Population Economics Editor: Klaus F. Zimmermann
Section – Technological Changes and the Labor Market Marco Vivarelli, Section Editor Università Cattolica del Sacro Cuore Department of Economic Policy, Milan, Italy
Note: Find abstract links of the articles below the chapter titles.
Why do employees participate in innovations? Skills and organisational design issues and the ongoing technological transformation, in production Nathalie Greenan, Silvia Napolitano Conservatoire National des Arts et Métiers
Quantity and Quality of Work in the Platform Economy Francesco Bogliacino1, Cristiano Codagnone2,3, Valeria Cirillo4, Dario Guarascio5 1Universidad Nacional de Colombia, 2Università degli Studi di Milano, 3Universitat Oberta de Catalunya, 4INAPP, National Institute for the Analysis of Public Policies, 5Università degli Studi di Roma
You want to enjoy economics and learn crispy lessons about everyday challenges, and how to deal with them? Then try this new book by GLO Fellow Sudipta Sarangi:
By “using a range of everyday objects and common experiences like bringing about lasting societal change through Facebook to historically momentous episodes like the shutting down of telegram services in India offers crisp, easy-to-understand lessons in economics. The book studies the development of familiar cultural practices from India and around the world and links the regular to the esoteric and explains everything from Game Theory to the Cobra Effect without depending on graphs or equations-a modern-day miracle! Through disarmingly simple prose, the book demystifies economic theories, offers delightful insights, and provides nuance without jargon.”
The ultimate goal of any theorist is to explain phenomena around us.
Economic theory is all around us, and simple everyday actions can be explained using the lens of economics.
Takeaways of the book are: incentives matter, heterogeneity matters, complementarities matter, information matters, cognitive costs matter, and strategic behavior matters.
Even grandmas in India are obsessed with cricket!
The anecdotes used are true and about actual people and their lives.
Being closeted at home due to the pandemic has created curiosities that may not have happened otherwise.
GLO Fellow Sudipta Sarangi is a Professor and Department Head at Virginia Tech (Virginia Polytechnic Institute and State University). He has received the 2020 Kuznets Prize of the Journal of Population Economics.
GLO: Neither formulas nor figures: What drives a theorist to be so ‘practical’?
Sudipta Sarangi: This is an astute observation. While it is true that theorists are often considered to inhabit the realms of the esoteric, the ultimate goal of any theorist is to explain phenomena around us. For example, my very first paper was motivated by a real-life observation: Why does the late fee exceed the rental price (or opportunity cost) of an object? That combined with my love for teaching is what resulted in this plain-English book!
GLO:What is the core message you want to convey with your book?
Sudipta Sarangi: Sometimes when I talk about the book, I liken it to Rene Magritte’s painting: The Son of Man. Everything we see around us hides things, and we human being always want to see what is hidden by what we see. I feel that economic theory is all around us, and simple everyday actions can be explained using the lens of economics. So, as in Magritte’s painting, I want to draw attention to the apple covering the face and show people what lies behind the apple – get a closer look at those eyes peeping at us. I believe that this will not only create a curiosity about economics but also provide people better insights about their own behavior and those of the others.
GLO:What are the major insights the various sections of your book provide?
Sudipta Sarangi: Honestly speaking, I did not want to list insights in the book because I felt it would be too pedantic. I just wanted people to enjoy reading a book about economics. However, my wife and a philosopher friend insisted that I needed a set of takeaways. Now these are forces to reckon with! So, I finally gave in and suggested six takeaways: incentives matter, heterogeneity matters, complementarities matter, information matters, cognitive costs matter, and strategic behavior matters. Of course, you will have to read the book to find out how specifically they matter and what might be the caveats.
GLO:Your book can be placed in the Freakonomics tradition with an Indian touch: What makes it attractive for a typical European or American reader?
Sudipta Sarangi: Another insightful question! It is true that in some ways I wanted a book that an Indian reader would enjoy, and there are possibly a couple of chapters that will strongly appeal mostly to Indian readers – like the one on cricket for instance. Even grandmas in India are obsessed with cricket! I think the appeal is universal because the book tries to explain everyday phenomena. For instance – why does no one take that last slice of pizza at the office party? Why do we always offer the first piece of cake to the guests when evolution suggests that you just take it yourself? There is a story of shoe thieves operating in Sweden and Denmark stealing left and right shoes separately in the two different countries. This is used to drive home the importance of complementarities and explore Michael Kremer’s O-Ring theory.
GLO:What economists find insightful or funny is often not shared by non-economists. How do you break this resistance?
Sudipta Sarangi: This is so true – I chuckled to myself as I read this question. I think the most important element is the fact that many of the anecdotes are true and about actual people and their lives. So, the humor is not made up by me. Of course, it takes more than the crowd sourced stories and pop culture references – lots of rewriting, my wonderful editors and the many people from whom I have learnt to write and learnt about economics. The spectrum ranges from my first-grade teacher Mrs. Meera Pradhan to my PhD supervisors Hans Haller and Rob Gilles.
GLO:Is your success with the book related to a weakening of populism caused by the pandemic which demonstrates the importance of science?
Sudipta Sarangi: That is something I would like to believe – although I cannot say that I have a lot of hard evidence in its favor. I feel that being closeted at home due to the pandemic has created curiosities that may not have happened otherwise. I have also observed during several virtual book talks that young people looking for new things to explore are drawn to the book because of its intuitive explanation of economic models. They like the Indian examples, but also enjoy the anecdotes from other parts of the world. That gives me hope for science and the future.
Thank you, Professor Zimmermann, for the insightful questions and this virtual interview. I thoroughly enjoyed answering them. To end with a small quote from the book:
This is a book about the economics of these small things. Over the course of the book, I will delve into the economic concepts behind the events mentioned here and other such phenomena drawn from everyday life. The book invites you to explore these different economic ideas and concepts—and to have fun while doing it. And for those interested in exploring these topics further, there is a detailed reading list at the end.
************* With Sudipta Sarangi spoke Klaus F. Zimmermann, GLO President.
Throughout history, border walls and fences have been built for defense, to claim land, to signal power, and to control migration. The costs of fortifications are large while the benefits are questionable. The recent trend of building walls and fences signals a paradox: In spite of the anti-immigration rhetoric of policymakers, there is little evidence that walls are effective in reducing terrorism, migration, and smuggling. Economic research suggests large benefits to open border policies in the face of increasing global migration pressures. Less restrictive migration policies should be accompanied by institutional changes aimed at increasing growth, improving security and reducing income inequality in poorer countries.
A new book in the Springer series “Population Economics” offers the first comprehensive study on rural-urban migration in Vietnam and analyzes the challenges for policy making. It uses extensive qualitative and quantitative data to explore the impact of rural-urban migration on migrants and their families. The book provides useful experiences for other developing countries.
Dr. Amy Y.C. Liu is Honorary Senior Lecturer, Graduate Studies in International and Development Economics, Crawford School of Public Policy, Australian National University, Canberra. Her key research interests to date have been wage structure, gender inequality and labor outcomes, human capital investment, and poverty. Her work on Vietnam’s transition to a market economy has been published in peer-reviewed international economics journals and was widely recognized by media.
Prof. Xin Meng works at the Research School of Economics, College of Business and Economics, Australian National University. Her main research interests to date have been the themes of China’s labor market, poverty, income inequality, human capital development, the economic implications of rural-urban migration, and the influence of institutions and culture on human behavior and on gender discrimination. Prof. Meng has published papers in numerous leading peer-reviewed international journals.
Abstract: This edited volume is the first publication using a new data set, Rural-Urban Migration in China and Vietnam (VRUMS2013). The questionnaire was particularly designed to collect information on rural-urban migrants and their families in Vietnam and was also linked to the national representative Vietnam Household Living Standards Survey 2012. Using this data and other data sources, this edited volume provides a comprehensive overview of rural-urban migration in Vietnam. It addresses a wide range of important topics, including Vietnam’s household registration system (ho khau), migration trends, remittance behavior and social networking. In addition, it examines migrants’ earnings, their children’s schooling, housing issues and their families’ consumption behavior in the cities they migrated to.
GLO Research Director Danny Blanchflower has just published his challenging and much acclaimed new book: “Don’t trust low unemployment numbers as proof that the labor market is doing fine—it isn’t. Not Working is about those who can’t find full-time work at a decent wage—the underemployed—and how their plight is contributing to widespread despair, a worsening drug epidemic, and the unchecked rise of right-wing populism.”
GLO President Klaus F. Zimmermann: “The book to read this summer. Original, full of evidence based on micro data analysis. Provocative in its conclusions. Entertaining, even if you do not agree. Important to debate for our future.”
David G. Blanchflower is the Bruce V. Rauner Professor of Economics at Dartmouth College, Professor of Economics at the University of Stirling, and a Research Associate at the National Bureau of Economic Research. He is the coauthor of The Wage Curve. Twitter @D_Blanchflower
GLO: Many people think that the
post-crisis recession is over and employment levels are high again. What is
wrong with this observation?
David G. Blanchflower: Working age employment rates, which calculates employment divided by population – have recovered their pre-recession levels in many countries including the UK, Germany, Japan Canada and France. The main exception is the United States where the employment rate is still below starting levels. That is also true in Denmark, Greece, Norway and Spain. The problem with many of the jobs that have been created over the last decade is that they have been low paid and insecure.
GLO: What do you mean by underemployment,
how is it measured and why do you think it is so challenging?
David G. Blanchflower: Even though the unemployment rate in many countries has fallen a lot and is below 4% in the UK, the US and Germany, wage growth is still benign. That seems to be because of underemployment which has replaced unemployment as the main measure of labor market slack in advanced countries. Underemployment occurs when workers are employed for less hours than they would like at the going wage. The Governor of the Central bank of Australia Philip Lowe in a speech has recently emphasised the importance of underemployment there. It is challenging because underemployment remains above pre-recession levels and seems to be used by firms to keep wages down.
GLO: How to avoid the threatening epidemic of unhappiness and self-destruction?
David G. Blanchflower: Now more than a decade since the onset of recession in advanced countries in 2008 wage growth remains benign. In the UK for example real wages are still 5% below starting levels and have grown more slowly than in any recovery in more than 150 years. Insecurity and the lack of decent paying jobs seems to have a major impact and appease central to the rise of right-wing populist movements, including in the US, France, Italy and Brexit in the UK. Hopelessness, isolation and unhappiness have been on the rise around the world. In the US the rise in deaths of despair – from drug overdoses, heavy drinking and suicide – is of particular concern. Putting the pedal to the metal and running advanced at full-employment, – which still seems a long way off – seems an obvious fix. Stimulative fiscal and monetary policy can lower the unemployment rate a lot more without a big pick-up in wage growth or inflation: then the balance of power will swing back to workers for the first time in decades.
This is a highly insightful book examining the way in which generations old inequalities by caste, ethnicity and religion interact with modern labour markets to reshape the opportunity structures in contemporary India. Its primary strength lies in its careful examination of job search strategies and the processes through which employers choose to interview and hire some candidates while excluding others.
Rajendra P. Mamgainis Professor of Economics, Giri Institute of Development Studies, Lucknow, India. He is a former Managing Editor of the Indian Journal of Labour Economics and former Director, Indian Institute of Dalit Studies, New Delhi.
Table of Content Foreword by Sukhadeo Thorat Preface Introduction: Labour Market Employment and Unemployment Situation in Urban India City-Level Features of Employment and Unemployment Job Search Methods and Access to Jobs Job Mobility in Urban Labour Market Wage Earnings and Inequality Hiring Practices in Urban Labour Market Discrimination and Promoting Inclusive Employment Opportunities References Index
This book is a comprehensive study on the demand and supply dynamics of urban labour markets in India. It presents an in-depth analysis of job search methods, job postings, access to information, job mobility, access to quality employment and hiring practices by employers. The book covers employed as well as unemployed job seekers belonging to different genders and socio-religious groups. It examines the nature and magnitude of discrimination and related consequences on employment, income and social status of labour. It further explains how social networks and employee referrals are critical in job search and job mobility in urban India, thereby undermining the chances of those equally or more competent for a job. The book offers valuable policy suggestions towards inclusive labour market through informational symmetries, education and skill development, and promoting socially inclusive policies by private enterprises.
“What is the use of research in public debates and policy-making on immigration and integration? Why are there such large gaps between migration debates and migration realities, and how can they be reduced?”
“Bridging the Gaps: Linking Research to Public Debates and Policy Making on Migration and Integration provides a unique set of studies written by researchers and policy experts who were significantly involved in linking social science research to public policies.”
“Bridging the Gaps argues that we must go beyond the prevailing focus on the research-policy nexus by considering how the media, public opinion, and other dimensions of public debates can interact with research and policy-processes.”
The book positions itself within the discussion on high-skilled self-initiated expatriation (SIE): Taking cross-disciplinary approaches; connecting to theories about international migration and mobility; and moving away from the restrictive human resource management discipline, where the concept of SIE was developed.
Habti, Driss and Maria Elo (2019) Global Mobility of Highly Skilled People: Multidisciplinary Perspectives on Self-initiated Expatriation. Cham, Switzerland: Springer. Details and Table of Contents.
Driss Habti is postdoctoral researcher in sociology of migration at the Karelian Institute, University of Eastern Finland Maria Elo is doctor of economics and lecturer in international business and marketing at the University of Southern Denmark, Odense, Denmark.
This volume examines self-initiated expatriates (SIEs), the category of
highly skilled people whose movement from one country to another is by
choice. Although they are not forced
to relocate due to work, conflict or natural disaster, their migration
pattern is every bit as complex. The book challenges previous
theoretical approaches that take for granted a more simplistic view of
this population, and advances that mobility of SIEs
relates to the expatriates themselves, their conditions and the
different structures intervening in their career life course. With their
visible increase worldwide, this book positions itself as a nexus for
this on-going discussion, while linking self-initiated
expatriation to the theoretical landscape of international skilled
migration and mobility. Major interests that catch attention are
transnational practices, work-related experiences and personal life
course, including forms of inequalities in their migration
experiences. The book identifies forms and drivers of migratory
behaviour and provides an argument concerning the broader processes of
mobility and integration. As such, this book constitutes a departure
point for future research in terms of theoretical underpinnings
and empirical rigor on global highly skilled mobility of SIEs. The
collection of empirical case studies offers an insightful analysis for
policy makers, concerned stakeholders and organizations to better cope
with this form of migration.
3 of the 13 chapters:
Habti, D. and Elo, M. (2019) Rethinking Self-Initiated Expatriation in International Highly Skilled Migration. In Driss Habti and Maria Elo (eds.), Global Mobility of Highly Skilled People: Multidisciplinary Perspectives on Self-Initiated Expatriation (1–37). Cham, Switzerland: Springer.
Habti, D. (2019). Mapping drivers of Arab highly skilled self-initiated expatriation to Finland: Personal-professional life pendulum. In Driss Habti & Maria Elo (Eds.), Global mobility of highly skilled people-Multidisciplinary perspectives on self-initiated expatriation (pp. 107–145). Cham, Switzerland: Springer.
M. and Habti, D. (2019) Self-Initiated Expatriation Rebooted: A
Puzzling Reality – A Challenge to Migration Research and its Future
Direction. In Driss Habti & Maria Elo (Eds.),
Global mobility of highly skilled people-Multidisciplinary perspectives on self-initiated expatriation
(pp. 293–304). Cham, Switzerland: Springer.
On Friday, 5 April 2019, the Berlin Government Office (Landesvertretung) of the State of North Rhine – Westphalia hosted the launch of the German draft of the book ‘A Second chance for Europe: Economic, Political and Legal Perspectives of the European Union’ was presented by Jo Ritzen.
Jo Ritzen: “Eine zweite Chance für Europa: Wirtschaftliche, politische und rechtliche Perspektiven der Europäischen Union. Königshausen & Neumann, 2019.
The host, Stephan Holthoff-Pförtner, Minister of North Rhine – Westphalia in Berlin, introduced the event, and Christoph Schmidt, President of the RWI Leibniz Institute for Economic Research and Head of the German Council of Economic Experts, provided a keynote speech discussing the challenges for Europe and evaluated the solutions outlined in the book. The detailed agenda can be found here.
Author Jo Ritzen, who is a former Dutch Minister of Education, a former Vice-President of the World Bank and the Past-President of Maastricht University, and has been a Professor of Economics before his remarkable career in politics, is currently working as Honorary Professor of Maastricht University and Fellow of the Global Labor Organization (GLO). At the book launch, he was presenting the major contributions of the book, which is based on joint research with a number of GLO Fellows.
In the view of Ritzen, key challenges for Europe are (i) the social market economy, (ii) governance including corruption, (iii) internal and external labor mobility, (iv) the asylum issue, (v) the dept crisis and the Euro, and (vi) the knowledge society. It was common sense among the speakers that more Europe and not less is needed in the future to manage the current and forthcoming challenges.
Also present and contributing his views in a panel discussion after the book presentation were Alexander Kritikos, Research Director of the German Institute for Economic Research (DIW), Professor at the University of Potsdam and GLO Fellow, and GLO PresidentKlaus F. Zimmermann, currently at the Central European University (CEU) in Budapest as the George Soros Chair Professor. Zimmermann is also co-author of two chapters in the book.
Latest news: The next version of the book, Jo Ritzen announced at the meeting, will be in Spanish.
“What problems are today’s populists seeking to address? Are followers of populist leaders driven by economic insecurity at a time of rising economic inequality and subpar growth, or by a reaction against progressive values, or both?” The International Economy magazine.
In its Winter 2019 issue of “The International Economy”, the Washington DC based magazine of international economic policy, has featured a prominent symposium of views on “Why is Populism on the Rise and What Do the Populists Want?”. Klaus F. Zimmermann, the President of the Global Labor Organization (GLO), Bonn University Professor and UNU-MERIT/Maastricht affiliated economist, who is currently the George Soros Chair Professor at the School of Public Policy of the Central European University (CEU) in Budapest, had been asked to contribute to this debate. The link to the full text of the symposium is here. Please find the contribution of Zimmermann also below.
Related to the interactions between media, populism and migration is a new Oxford University book also free access online, to which GLO President Klaus F. Zimmermann has contributed a chapter. See:
Martin Ruhs, Kristof Tamas, & Joakim Palme (Eds.): Bridging the Gaps. Linking Research to Public Debates and Policy Making on Migration and Integration. Oxford University Press. Published online March 28, 2019.
Chapter 8: Klaus F. Zimmermann: Gaps and Challenges of Migration Policy Advice: The German Experience
Marco Leonardi, economic advisor to two prime ministers in the Italian government from 2014 to 2018, has just published a new book on his experience in office during the Italian labor market reforms and the threatened future perspectives of those changes:
The hijacked reforms: why there is no coming back from labor and pension reform.Le Riforme Dimezzate, EGEA 2018 (in Italian).
Italy has passed three important reforms in the past four years—of the labor market, of the pension system and the introduction of a universal measure against poverty. All these reforms are already being undone, and yet this book explains, from the perspective of someone who worked within the Prime Minister’s policy unit, why there should not be any coming back from the main changes in the labor market and in the pension system.
Economic Adviser to the Prime Minister of the Italian Government and Full
Professor of Economics at the University of Milan, Italy. He received his PhD
from the London School of Economics and spent visiting periods at MIT,
Georgetown and Berkeley. His research interests are in labor economics,
inequality and education.
“In this book I describe the birth of labor market reform from within the policy unit of the Prime Minister’s Office. In addition, I discuss two other major reforms undertaken in the past four years: the pension reform and the introduction of a universal measure against poverty. I approach these topics from both the political (how and why certain policy decisions were taken) and the technical perspective. I refer to the many (at times difficult) relations between the government and other administrations, as well as the unions, and the lengthy political and administrative process required to enact a law, from the first parliamentary draft up to the implementation of the software to request the new subsidy online (in the case of the new subsidy for the poor). No law produces real effects until the moment it is “online,” and several steps are required to reach that point. Very often the laws are ineffective because their implementation is flawed, and a policy unit’s job is to drive the laws through their implementation process.
The most important reform has been the labor market reform (called the “Jobs
Act”). This reform is recognized internationally because it was adopted amid the
international debate on “flexsecurity” and the increasing protection of the
open-ended contract (or single contract).
During the 1990s there was considerable continuity in the employment
protection legislation of OECD countries, with one major exception: the
deregulation of fixed-term contracts and other non-standard labor relationships.
Particularly in Southern Europe, changes in labor market policy consisted
mainly of measures aimed at introducing “flexibility at the margin,” that is,
making the utilization of non-permanent contracts more loosely regulated while
leaving the discipline of permanent employment unchanged. Flexibility at the
margin, however, amplified the two-tier nature of labor markets, raising
concerns over the risk of labor market “dualism” or “segmentation.” Triggered
by these concerns, public opinion and policy-makers have repeatedly stressed
the importance of searching for “an appropriate balance between flexibility and
security” (the so-called “flexsecurity,” as pointed to by the European
Commission in multiple documents).
Act marks a stark change with respect to the approach to flexibility at the
margin by reducing firing costs for permanent employment and by making them
both (a) predictable ex ante and (b) increasing
according to the worker’s tenure within the firm. By doing so, the Jobs Act
aims at reducing dualism in the labor market, fostering human capital
accumulation, increasing job mobility to cope with structural adjustment, and
favoring workers’ protection “in the market.”
The most controversial aspect of the reform has
certainly been the abolition of the possibility of a worker’s reinstatement (“reintegro”) after illegitimate dismissal
for economic motives. This provision is limited to contracts signed after the
reform (March 7, 2015) and entails a drastic limitation to the possibility of
reinstatement, even in case of disciplinary dismissal. This substantial
uniformity of firing costs for both disciplinary and economic cases is
necessary to curb the incentive to surreptitiously justify dismissals so that
they allow for reinstatement, an outcome that would have certainly increased
the number of cases litigated in court. For consistency, the ability to
reinstate workers has also been excluded for collective dismissals, as they
have in essence an economic motivation. The abolition of the possibility of
reinstatement has certainly given birth to a clear-cut reform, a fact that has
been welcomed by international investors. Besides the new rules on firing
costs, generous employment subsidies were introduced to incentivize the use of
Another qualifying aspect of the reform scheme is the
introduction of a fast track for the settlement of dismissals (“conciliazione rapida”). The aim is to
promote consensual resolution of disputed terminations (as well as other
possible disputes). Contrary to other proposals for a “single contract” with
increasing firing costs, which would have introduced non-appealable
compensation, the reform scheme embraces the fast-track settlement model
introduced by the German and French employment protection legislations. The
latter, though, are different from the solution adopted in the Italian Jobs Act
as they don’t bind the court to award compensation according to a predetermined
schedule (which in the Jobs Act amounts to two months for each year of contract
tenure, up to a maximum of 24 months).
Unfortunately, this feature of the reform was declared illegitimate after
three years, in spring 2018, by the Italian Constitutional Court, and therefore
today the reforms are “dimezzate” (or
“hijacked”: the title of the book refers to the reversal of many reforms under the
new government, of which this case is
among the most serious).
The success of the reform is measured by the reduction
of court litigation in cases of dismissal (which was reduced by 80%, but
unfortunately began to rise again after the decision of the Constitutional
Court), and by the shortening of the amount of time young workers spend in
temporary contracts (that is, the average length of the initial part of one’s
career regulated by fixed-term contracts) and the resulting share of permanent
hiring among total hires. The expected substitution of fixed-term contracts
unfortunately has not happened: in 2014, roughly 70% of hiring was through
fixed-term contracts, and only 17% open-ended; in 2015 and 2016, the share of
open-ended contracts increased considerably, but in 2018, when the generous
employment subsidies ended, the share of new hiring in open-ended contracts
went back to the 2014 levels.
We made a mistake in allowing the coexistence of a
very liberal regime for fixed-term contracts and of the new open-ended contract
with increasing protection. Employers are reluctant to hire on open-ended
contracts, and if left with the easy outlet of fixed-term contracts, they will
not change their preferences. Furthermore, after having established a national
system of active labor market policies to favor the reallocation of workers
(after 20 years of debate, Italy finally has a national agency and a common
measure to manage active labor market policies across 20 regions), we were too slow
in the implementation process; as a result, public opinion has become aware of the
more liberal regime on firings but not the new policy of support through active
labor market policies.
While much of the reform process is now in reversal, when these very
incisive labor market reforms were introduced they faced no opposition and
Italy enjoyed four continuous years of employment growth (which has now been interrupted
under the new government).
Further details of the labor market reforms and my suggestions regarding future action can be found in the interview below. Additional information on some of the other reforms, including pensions, wage bargaining and measures against poverty, can be found in the book, only available currently in Italian.”
GLO: What were the essential elements of the Italian labor market reforms?
Marco Leonardi: The main policy tools of the
Jobs Act (and the main reversals under the new government since June 2018) can
be summarized as follows:
First, “Contratto a tutele crescenti,” i.e., the open-ended contract for new hires (from March 7, 2015), which eliminates the possibility of a worker’s reinstatement after illegitimate dismissal for economic motives (the so-called “article 18”) and embeds increasing monetary compensation in the case of separation. In this respect the Jobs Act marks a stark change with respect to the approach of flexibility at the margin (i.e., the tendency to liberalize the use of fixed-term contracts and leave open-ended contracts untouched by reforms) by reducing firing costs for permanent employment and by making them both predictable ex ante and increasing according to the worker’s tenure within the firm (two months for every month of tenure, starting from a minimum of four months and up to a maximum of 24 months). The Jobs Act is an example of “flexsecurity” in practice: it reduces dualism in the labor market and favors workers’ protection “in the market.”
Recently (in June 2018) the Constitutional Court declared illegitimate the rigid link between tenure and months of compensation in case of illegitimate firing, thus restoring the full discretion of judges in determining the amount of compensation (this will make firing costs uncertain again and the hiring permanent workers less convenient).
Recently (in June 2018) the Constitutional Court declared illegitimate the rigid link between tenure and months of compensation in case of illegitimate firing, thus restoring the full discretion of judges in determining the amount of compensation (this will make firing costs uncertain again and the hiring permanent workers less convenient).
Second, restrictions on self-employment arrangements (“co.co.co.,” “co.co.pro.,” etc.) used in the past to hire dependent workers while saving on both firing costs and social security contributions. In the three years during which the reforms were applied (2015–2018) we witnessed an increase in dependent employment and a decrease in the number of self-employed workers (from a record share of 25% of total employment): most of them took up a fixed-term contract but some of them transitioned to an open-ended contract, exploiting the very generous tax break for open-ended contracts activated in 2015 and 2016. Under the new government this trend has been reversed by a combination of three factors: the limits set by the new government on fixed-term contracts; the sentence of the Constitutional Court which has rendered dependent permanent employment contracts less convenient; and new tax breaks exclusively for the self-employed, which will soon cause the composition of employment to revert to a large share of self-employed.
Third, the reform of unemployment benefits, which have been extended both in terms of eligibility criteria and maximum coverage length, and the concurrent reduction of the short-time work compensation scheme that subsidizes employers that reduce hours of work during a temporary period of falling demand. The unemployment benefit reform aims to make benefits more generous and long-lasting and to include those with discontinuous or uneven employment histories. The reform of 2015 extended the benefits period to exactly half the number of weeks of contribution, up to 24 months. Employees can activate their individual right to a benefit if they have contributed for at least 13 weeks over the previous four years; this criterion has significantly relaxed the contributions requirement and has increased the number of potential beneficiaries to more than 95% of the employed population. The current government has not touched the benefits reform, but it has gone back to a generous regime of subsidies for firms that reduce hours of work. A generous short-time work scheme with loose rules on contributions risks keeping “zombie” firms alive for too long and keeping workers attached to them with little incentive to search for a new job.
Finally, fourth: Reform of active labor market policies, with the establishment of a national agency to coordinate the work of the regions (which have the competence over active labor market policies) and of a “re-training and placement voucher” (i.e., a voucher for placement services provided by both public and private operators), which introduces a quasi-market approach in active labor market policies. Unfortunately, the reform of active labor market policies never actually took off. The popular referendum, which should have moved the competence from the regions to the central state, failed, and the regions are jealous of their autonomy, with the result that the performance of the services is very patchy across Italy.
GLO: What are your recommendations for effective and successful labor reform policies?
Marco Leonardi: Use your political capital fast on your priorities, compensate unpopular reforms with popular ones and spend money to make reforms effective.
First, when you win an election, you may want to use your political capital immediately on your priorities before it is depleted. I think that the absence of strikes during the reform of the labor market was due to the “surprise” effect. Unions were prudent and waited to see what a young new leader of the center-left would bring about. If you aim at important issues (such as removing article 18) you may hope the reforms will endure, but you should expect that the next government will at least want to change the names of things in order to get credit for them.
Second, compensate for unpopular reforms with popular ones. We compensated for firing cost reforms with more unemployment benefits and active labor market policies. Unfortunately, we did not do enough on active labor market policies and we got the timing wrong: active labor market policies should have come prior to firing cost reform, because first you offer the carrot and then the stick and because active labor market policies require a long implementation period and the interaction of various actors: public employment services, the regional governments and private employment agencies.
Third, spend money to make reforms effective. We accompanied the abolition of article 18 with two dedicated measures in the 2015 budget law: (a) a three-year tax break for social security contributions, and (b) a corporate tax (IRAP) cut on labor costs applicable only to permanent contracts. This meant creating a cost wedge between permanent and temporary contracts. Conventional wisdom has it that one of the best ways to make the former more appealing is to make it cheaper than the latter. A generous tax break made a difference by incentivizing the use of permanent contracts and encouraged the perception that the reform was working.
GLO: What is your advice for the current phase of anti-reform sentiments?
Marco Leonardi: There could be two reasons why people seem to be adverse to reforms in many countries. The first might be because the reforms did not work or because they did not work for all in the same way. To make reforms work we need to focus on implementation: you may do less, but what you do must affect people’s lives in a simple way. Politicians often forget that somebody must take care of all the details of the implementation. Let’s take the example of a new measure against poverty for which the beneficiaries must fill in a new request module. Somebody must follow all the administrative processes that bring the law into effect, from the first parliamentary draft up to the implementation of the software to request the new subsidy online. No law produces real effects until the moment it is “online,” and there are several steps that must be taken to achieve this, including the involvement of the many administrations that have to do with the measure at various steps. Very often the laws are ineffective because their implementation is flawed, and a policy unit’s job is to watch over the laws until their implementation is complete.
The second issue regards the distribution of benefits. Many reforms are perceived as targeted at a few people rather than at everyone. In our time, when information is available to everybody through many of the same channels (TV and social media), it is important to stress the redistributive characteristics of all policy measures. In our case, the reform of the labor market occurred concurrently with a significant increase in the number of employed people (probably in part due to the reform itself), and yet people perceived the precariousness of the new jobs that had been created rather than their number. We should have highlighted more the redistributive feature of the reform (more people having a chance to find a job) rather than merely the increase in the number of those employed.
GLO: Thank you very much. (Questions by Klaus F. Zimmermann)
The book: The Crossroads of Globalization. A Latin American View. December 2018, 232 pages: World Scientific. More Info.
The author: Alfredo Toro Hardy. GLO Fellow, Venezuelan Scholar and Diplomat. More Info.
The Interviewer: Klaus F. Zimmermann/GLO President. Hardy and Zimmermann have been both Rockefeller Foundation Bellagio Center Resident Scholars in Fall 2017. Zimmermann has written the Preface in the book: Text.
GLO: Globalization seems to be under political pressure around the globe. How does it affect Latin America?
Alfredo Toro Hardy: Two powerful forces are measuring their strength by acting upon globalization. One of them pushes globalization forward, while the other hinders its advance and promotes its demise. At this point in time, it is not clear which of them will end up prevailing.
China’s economic umbrella and Asia’s middle class, whose expansion is estimated to represent 80 percent of the world’s middle class increase up to 2030, remain as the fundamental driving forces of globalization. On the other hand, though, we find populism and the displacement that disruptive technologies bring with them. While populism creates boundaries and discourages free trade, the Fourth Industrial Revolution advances towards a decoupling between developed and developing economies. Under these two very different but converging impulses, globalization is bound to loose ground.
hinders Latin America’s strategic vision. If the future entailed a re-launching
of globalization, it would seem obvious that the region should follow along its
lines, positioning itself in the best possible terms so as to increase its potential
benefits. However, if globalization is entering into a declining phase, Latin
America would need to look for options.
Latin America faces, therefore, not only a dramatic uncertainty as a result of forces beyond its control, but also the need to anticipate, to the best of its abilities, unforeseen events to which it will have to act or react upon.
GLO: How can Latin America adapt best in the future?
Alfredo Toro Hardy: As said, Latin America finds itself at the crossroads of the pro and the anti globalization forces. Were the rules of the game to change now, the region would certainly suffer. Uncertainty, however, is an even greater challenge because positioning itself and planning ahead amid conflicting signs, becomes extremely difficult.
emerged as a result of political intention and technological feasibility. Now,
it finds itself seriously challenged for the very same reasons. In both cases,
political intention and technological feasibility are clearly identified with developed
What kind of route map can Latin America follow amid this confusing
situation? To begin with, it
is necessary to analyze the forces that push for and against globalization,
trying to measure their respective strength, convergence capacity, and
potential impact. This requires, at the same time, looking into the flaws,
weaknesses and contradictions of such forces. With these elements in hand, it
might be easier to envisage where the trends are leading to and, by extension,
where Latin America might end up standing.
However, there seems to be no alternative to playing in both directions, with the aim of minimizing costs and maximizing opportunities. Within this highly fluid situation, pragmatism, resilience, creativeness, imagination, and the joining together of Latin American forces, will have to guide the region’s actions in the foreseeable future.
GLO: What are the challenges for globalization to become profitable for Latin America?
Alfredo Toro Hardy: The curious equation formed by protectionism, populism, political rage, algorithms, deep learning, robots, 3D printing, nanotechnology, indoor and vertical farming, an emerging post animal food industry, and renewable energy, among other elements, may end up suctioning the oxygen of globalization. It is not only that trade barriers emerge, but that it will make no sense to look for cheaper manufactures, products or services afar, when it would become possible to generate them locally at competitive prices.
A decoupling world economy, like the one that may emerge under such equation, presents no benefit for Latin America. Finding a path under such scenario would become extremely stressful and challenging. However, globalization has not been a rose garden for the region. Much to the contrary, it has imposed upon it the need to reconvert into labor-intensive manufacturing or to go back in time to commodities producing. Both of those options have being far from satisfactory.
A globalization that becomes profitable for Latin America would entail the possibility of overcoming such limitations, while opening a path towards a much more international service oriented economy and a more value added manufacturing. Unfortunately, at this point in time options are narrowing not widening.
In his new book just published in December 2018, Alfredo Toro Hardy, Venezuelan Scholar and Diplomat as well as a Fellow of the Global Labor Organization (GLO), explains his views about the perspectives of Latin America at the crossroads of globalization. Currently, globalization seems to be in decline all over the globe. However, if the future would see a revival, it seems plausible that Latin America should continue its current pace of following it. However, if globalization would continue to decline, the region would need to find other options. The book evaluates the risks and outlines the options. MORE DETAILS.
The Preface to the book has been provided by Klaus F. Zimmermann, who is the President of the GLO. He writes in the book:
“As so often in the history of mankind, the fate of globalization is currently at stake. It looks that, again, the world is at a crossroad between development or contraction. The economic and political polarizations within or between countries, the rise of populism and in the number of instable democracies, the tensions resulting from migration, inequality, robotization and the demands of emerging economies like China, India and (perhaps) Brazil require attention. Protectionism, EU-skepticism, nationalism, racism, and rejections of economic multilateralism and multicultural approaches are more and more important again. Only few critical observers of the world are not concerned about the current strength and the unclear directions of the driving forces behind which are only slowly understood.
Globalization is much more than the
persistent global integration of the flow of goods, capital and labor. It also
merges cultures and enforces permanent and immediate exchange of knowledge and
sentiments. Latin America was once forced into globalization and moved in
unprepared, stumbling. It survived by adapting. It is an export-based economy. Moving
out is likely to be very costly in economic terms. Is this unavoidable or are
Globalization, as is widely
perceived, mainly benefits liberal democracies. But is this really true? The
Chinese pro-globalization strategy certainly questions this position. And if
globalization collapses in parts of the world, does it make sense to follow
like lemmings. Or is it not better to go on as much as possible, making use of
the potentials of globalization? In other words, if the United Kingdom wants
Brexit, why should the remaining European Union give up its ambitions?
Globalization will not end, since
economic advantages and constraints will enforce its rise, as it materialized
over the entire history of mankind. The rise of homo sapiens over thousands of years has taken place due to a
superior brain, excellent language abilities and a tremendous talent to collaborate. But, of course, mistakes of
humans as of political and social organizations can cause a break of further
globalization for some time. In many ways, the current world is not much more open
than it was before World War I. In any case: Those nations and continents
ignoring historical lessons will eventually fall behind.
Alfredo Toro Hardy offers us some
advanced training. The author of this book deserves significant attention:
After a long and successful career as top diplomat, ambassador and global
scholar, he is exploiting his deep knowledge and experience acquired over a
worklife to tackle some of the most pressing issues of our time.
I have had the privilege to learn him and his lovely wife during a joint tenure as a Rockefeller Foundation Bellagio Center Resident Scholar in 2017. During this period, we have had many inspiring and fruitful exchanges about the future of our worlds and the challenges of life. I have always been impressed by his deep insights in complex issues and his balanced views on controversial or even explosive topics.
In his unique way, Alfredo Toro
Hardy, develops the perspectives of his continent in this world at the
crossroads as the Voice of Latin America.
Chapter by chapter, he sharpens our views for the challenges to come and the strengths,
Latin America is able to mobilize. What is the right path for the continent? As
the author states (p. 388): “Fast moving nations, indeed, appeared to be
the better prepared to take advantage from a rapidly moving global
market-place.” It is ‘flexibility, stupid’, making the difference.
Investing in the technological advances in the fields of knowledge transfer,
communications and transportations still make sense. And the continent needs to
embrace, not to fight the upcoming digital economy.
Hence, Alfredo Toro Hardy suggests
that (p. 393) “pragmatism, resilience, creativeness, imagination, and the
joining together of Latin American forces, will have to guide the region’s
actions in the foreseeable future.” This implies to develop the
integration of the Latin American markets even further through free trade
agreements while keeping open to the global economy, in particular to the
European Union. Certainly, institutions like the Inter-American Development
Bank and the Economic Commission for Latin America can be instruments to foster
Klaus F. Zimmermann , President of the Global Labor Organization, Professor Emeritus, Bonn University, UNU-MERIT & Maastricht University, Rockefeller Foundation Policy Fellow 2017″
Two Fellows of the Global Labor Organization (GLO) have just published a new study on “Wealth and Homeownership: Women, Men and Families” with the prominent publisher Palgrave Macmillan. In this timely book, Mariacristina Rossi and Eva Sierminska analyze the complex relationship between gender, wealth and homeownership. By providing a conceptual framework to insert homeownership and housing decisions within an economic rationale, the authors explore how gender and family types have shaped wealth accumulation and homeownership.
GLO Fellow Mariacristina Rossi is Associate Professor of Economics at the University of Turin, Italy. Her research interests include intertemporal saving and consumption choices, household finance, development and gender economics.
GLO Fellow Mariacristina Rossi
GLO Fellow Eva M. Sierminska is Senior Researcher at the Luxembourg Institute of Socio-Economic Research, Luxembourg. She is a labor economist and has extensive research experience in the area of labor markets, inequality, household finance and population economics.
Editor-in-Chief: Klaus F. Zimmermann Editors: Alessandro Cigno, Erdal Tekin, Junsen Zhang Managing Editor: Michaella Vanore
Covers pressing topics of our time, such as migration, population aging, employment,health, and economic growth
The series is useful as handbooks for policymakers as weil as for students and teachers of graduate and postgraduate courses
Treats both theoretical and empirical aspects
Written by the leading scholars in the field, employing the latest research methodologies
Research on population economics deals with some of the most pertinent issues of our time and, as such, is of interest to academics and policymakers alike. Like the Journal of Population Economics, the book series “Population Economics” addresses a wide range of theoretical and empirical topics related to all areas of the economics of population, household, and human resources. Books in the series comprise work that closely examines special topics related to population economics, incorporating the most recent developments in the field and the latest research methodologies. Micro-level investigations include topics related to individual, household or family behavior, such as migration, aging, household formation, marriage, divorce, fertility choices, labor supply, health, and risky behavior. Macro-level inquiries examine topics such as economic growth with exogenous or endogenous population evolution, population policy, savings and pensions, social security, housing, and healthcare. These and other topics related to the relationship between population dynamics and public choice, economic approaches to human biology, and the impact of population on income and wealth distributions have important individual, social, and institutional consequences, and their scientific examination informs both economic theory and public policy.
Keywords: >Population Economics > Household and Family Economics > Labour Economics >Human Resources >Migration Economics
Recently published books:
A. Yakita:Population Aging, Fertility and Social Security
C. Diebolt, F. Perrin: Understanding Demographie Transitions. An Overview of French Historical Statistics
A. Artal-Tur, G. Peri, F. Requena-Silvente (Eds.):The Socio-Economic Impact of Migration Flows Effects on Trade, Remittances, Output, and the Labour Market
Discussion with MPAndrew Leigh on Globalism and his new book “Choosing Openness. Why global engagement is best for Australia” Penguin Books, Lowy Institute for International Policy 2017 (183 pages).
On December 8, 2017, GLO President Klaus F. Zimmermann met Andrew Leigh in his office in Canberra to discuss the merits of openness for Australia and the World, and the mission of the Global Labor Organization (GLO).
GLO Fellow Andrew Leigh is the Shadow Assistant Treasurer and Federal Member for Fenner. Prior to entering the Australian Parliament in 2010, he was a Professor of Economics at the Australian National University (ANU) in Canberra. Andrew Leigh holds a PhD from Harvard University and is a Fellow of the Australian Academy of Social Sciences.
As Leigh and Zimmermann agree, global engagement has become a major political fault line around the world, where some argue that trade, investment and migration are threats rather than opportunities. The challenges to an open world are generated by global uncertainty, rising inequality and populism. In his book, Andrew Leigh argues that Australia’s past prosperity has been the result of engaging with the world, a view that complements the evaluation of global economic progress by the GLO President, and is in line with the GLO mission. Not less, but more openness is required in the future for capital, goods, and people to stabilize and foster prosperity.
The two men after the discussion in front of the office of Andrew Leigh (left).
Handbook of the Economics of Population Aging, Volumes 1A and 1B
Edited by GLO – FellowsJohn Piggott and Alan Woodland. Both are at the Australian School of Business, University of New South Wales, Australia.
Dissolves the barriers between policymakers and scholars by presenting comprehensive portraits of social and theoretical issues
Synthesizes valuable data on the topic from a variety of journals dating back to the late 1970s in a convenient, comprehensive resource
Presents diverse perspectives on subjects that can be closely associated with national and regional concerns
Offers comprehensive, critical reviews and expositions of the essential aspects of the economics of population aging
Handbook of the Economics of Population Aging synthesizes the economic literature on aging and the subjects associated with it, including social insurance and healthcare costs, both of which are of interest to policymakers and academics. These volumes, the first of a new subseries in the Handbooks in Economics, describe and analyze information from general economics journals, from various field journals in economics, especially, but not exclusively, those covering labor markets and human resource issues, from interdisciplinary social science and life science journals, and from papers by economists published in journals associated with gerontology, history, sociology, political science, and demography, among others.
Table of Contents
The Global Demography of Ageing: Facts, Explanations, Future: David E. Bloom and Dara Lee Luca
Macroeconomics, Aging and Growth: Ronald Lee
Migration and Demographic Shift: Anzelika Zaiceva and Klaus F. Zimmermann
Global Demographic Trends: Consumption, Saving and International Capital Flows: Orazio Attanasio, Andrea Bonfatti, Sagiri Kitao and Guglielmo Weber
Insurance Markets for the Elderly: Hanming Fang
Intergenerational Risk Sharing: Roel Beetsma and Ward Romp
The Political Economy of Population Ageing: Georges Casamatta and Loïc Batté
Retirement Incentives and Labor Supply: Richard Blundell, Eric French and Gemma Tetlow
Investing and Portfolio Allocation for Retirement: Barbara Kaschützke and Raimond Maurer
Conflict and Cooperation within the Family, and between the State and the Family, in the Provision of Old-Age Security: Alessandro Cigno
Complex Decision Making: The Roles of Cognitive Limitations, Cognitive Decline and Ageing: Michael Keane and Susan Thorp
Taxation, Pensions and Demographic Change: Alan Woodland
Social Security and Public Insurance: Axel Börsch-Supan, Klaus Härtl and Nuno Leite
Workplace-Linked Pensions for an Aging Demographic: Olivia S. Mitchell and John Piggott
Poverty and Aging: Joseph Marchand and Timothy Smeeding
Health and Long-Term Care: Edward C. Norton
The HRS around the World Surveys: Loretti Isabella Dobrescu and James P. Smith
NEW THIS WEEK: Venezuelan Diplomat and Scholar Alfredo Toro Hardy, Fellow of the Global Labor Organization (GLO), explains Latin America in his new book (Understanding Latin America. A Decoding Guide, World Scientific, 2017).
From afar, Latin America looks like a blurry tableau: devoid of defining lines, particularities and nuances. Little is understood about the idiosyncrasies of Latin-Americans, their cultural identity and social values. Differences between Brazilians and Spanish Americans, or amid the diverse Spanish American countries, are not sufficiently understood. Even less is known about the amplitude of the Iberian heritage of such countries, or about the miscegenation and acculturation processes that took place among their different constitutive races. There is no clarity regarding the Western nature of Latin America or about its cultural affinities with Latin Europe. Nor is there sufficient understanding of the links between the Latin population of the United States and the inhabitants of Latin America.
This book’s aims to fill the gap by focusing on Latin America’s history, culture, identity and
idiosyncrasies. It serves as a guide to understand regional attitudes, meanings and behavioral differences of the region. It also analyses the present economic situation of the region, while trying to predict the future of the region. Written in a simple and accessible manner, this book will be of interest to readers keen on exploring the region for potential opportunities in trade, investment or any other kind of business and cultural endeavor.
Understanding Latin America: More information & How to order the book
GLO Fellow Alfredo Toro Hardy is a Venezuelan diplomat and scholar. Graduated in Law from the Central University of Venezuela with several master and postgraduate degrees from ENA, University of Paris II, Central University, the University of Pennsylvania and Harvard University. Career diplomat who has served, among other posts, as Director of the Diplomatic Academy of the Venezuelan Ministry of Foreign Affairs, and Ambassador to Brazil, Chile, the United States, the United Kingdom, Ireland, Spain, and Singapore. Director of the Center for North American Studies and Coordinator of the Institute for Higher Latin American Studies of the Simón Bolívar University (1989-1992). Elected “Simon Bolívar Chair Professor for Latin American Studies” by the Council of Faculties of the University of Cambridge for the academic year 2006-2007. Member of the Advising Committee of the Diplomatic Academy of London (2003-2008). Fulbright Scholar and Visiting Professor at Princeton University (1986-1987). Author or coauthor of 30 books and more than 30 academic papers on international affairs.