World Bank Employment Policy Primer

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The World Bank Employment Policy Primer aims to provide a comprehensive, up-to-date resource on labor market policy issues. These short notes are concise summaries of best practice on various topics.

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  • Publication
    The Impact of Non-Wage Benefits on Job Quality and Labor Market Outcomes in the Developing World : What Do We Know?
    (World Bank, Washington, DC, 2009-12) Helppie, Brooke; Macis, Mario
    One indicator of job quality in the developing world is the extent to which workers are covered by nonwage mandated benefits. Mandated benefits are a class of labor market regulation that requires employers to provide their workers with some form of non-wage pay or benefits. These benefits are typically fully financed by the employer or the employer-worker pair, and administered at the firm level. This note summarizes the existing knowledge and research on the effects of providing higher mandated benefits on labor market outcomes. In particular, the authors focus on the evidence available for developing economies. The authors discuss the potential advantages and drawbacks of providing mandated benefits (as implied by economic theory), summarize some of the existing empirical literature on the impact of mandated benefits. This note sets out to introduce some of the theory and existing literature about mandated benefits, and to draw attention to the need for more research about the impact of this type of policy.
  • Publication
    Unemployment Insurance: Efficiency Effects and Lessons for Developing Countries
    (World Bank, Washington, DC, 2004-04) Vodopivec, Milan
    Unemployment insurance (UI) is the most common public income support program for the unemployed in developed countries.1 In these countries, it typically offers good protection: it covers the majority of employed persons, irrespective of occupation or industry, and provides adequate smoothening of consumption patterns. For example, studies on the U.S. find that the welfare of benefit recipient households is on average only 3-8 percent lower than the welfare of otherwise identical households, and that in the absence of unemployment insurance, average consumption expenditures would fall by about 20 percent. In the last decade, UI programs have been introduced in transition countries, and their use in developing countries is on the rise as well.
  • Publication
    Comparing Unemployment Insurance and Unemployment Assistance
    (World Bank, Washington, DC, 2004-02) Vodopevic, Milan
    Markets alone cannot provide adequate protection against the risk of unemployment. Private unemployment insurance (UI) fails because of informational problems: the so-called moral hazard (changes in behavior in the presence of insurance that are impossible or very costly to detect) and adverse selection problems (high-risk workers make insurance unattractive to average- and low-risk workers). Hence the mandate for social policy. But social policy has to deal with the same problems that render markets inefficient. Mandatory participation mitigates the problem of adverse selection, but the moral hazard problems remain. In addition, the existence of a social protection program may give rise to inefficiencies of its own. Particularly with the rise of unemployment in European Union in the last two decades, inefficiencies created by UI, the traditional and most widely used public program of income support for the unemployed in developed economies, have become more widely discussed, and solutions and alternatives sought.