Assessing Labor Markets in the DevelopingWorldDavid Newhouse, Labor EconomistSocial Protection and Labor, World BankLabor ...
Labor Market AssessmentI. Indicators (10)II. Data Sources (7)III. Recent Trends (3)IV. Implications for labor marketassess...
I. Ten Labor Market Indicatorso Primary activity (3)– Employment ratio, Unemployment rate, Labor force participationo Type...
Activity Indicators•But these activity indicators don’t measure job qualityIndicator Definition Strength WeaknessEmploymen...
Interpreting changes in employment andunemployment depends on country context5505560657075100 250 500 1000 2500 5000 10000...
Job quality indicators are more informative0102030405060Pre crisis Post crisisEmploymentWage Self Family0102030405060pre c...
Job Quality IndicatorsIndicator Definition Strength WeaknessEmployment Statusand sectorShare ofemployment indifferent stat...
Better jobs, not more jobs, drive development8020406080100300 500 1000 2500 5000 10000 25000 50000Per Capita GDPNon-ag unp...
II. Seven Sources of Data on Labor Marketso Where does information exist on labor marketoutcomes in developing countries?–...
ILO data is scarceYears of available data, 2000-2008
Though ILO data availability is slowly improving0204060801001201988-1990 2006-2008Countries reporting labor forceparticipa...
• KILM and Short-term indicators– Derived from national labor force surveys, householdsurveys, or censuses• Issues of timi...
ILO estimates• Seemingly precise, even in data-poorenvironmentsWhere do these estimates come from?Country Y Sex AgeEmploym...
A short rant about the ILO estimates• ILO methodology: Apply regional employment elasticities tocountries’ historical labo...
Private sources of labor market dataAggregate Information on LM indicators1. IMF International Financial Statistics– Acces...
Private sources of labor market dataHousehold Survey Data3. International Income Distribution Database (I2D2)– Large stand...
Private sources of labor market dataHousehold Survey Data (cont.)4. Gallup World Poll– Surveys of 1000 persons conducted a...
III. Recent Trends1. What do labor market outcomes look like around thedeveloping world?– Use Gallup World Poll• We obtain...
GWP coverage is highHigh-income countriesUMICLMICLow-incomeNo data
…and significantly better than ILO nationalestimates for developing countiesData from 2009-2011 All countries Low and Midd...
Perceived job conditions bounced back rapidly- Especially in LMICs3639364531283829271634343435233739384230Low-Income Count...
362133576343214063664522426065382535576845244363694824456172321729565537133162593814345954Low-Income Countries (13)Lower M...
But ECA is still struggling- So is MNA, following the Arab spring- Everywhere else, 2011 was better than 20083635314543244...
…while East and South Asia forge ahead- Maybe job conditions in MNA weren’t as bad in 2011 as people think?342029654747404...
Does creating good jobs make governments morepopular?- Not immediately. Despite creating good jobs, MIC leaders much lessp...
Decline in popularity driven by MNA and SouthAsia- In MNA, consistent with perceived worsening of job prospects- Governmen...
ConclusionsRecent trends give reason for optimism•Crisis could have been worse•Slow recovery continuing in Eastern Europe ...
A jobs lens is crucial for learning how to betterreduce poverty and share prosperity1. Jobs are politically important2. Jo...
Large long-run agenda on labor assessmento Get a better picture of recent developmentso Improve on ILO estimates if possib...
Continue to evaluating labor regulations andALMPsEffects on aggregate jobs are usually modest, but…o Debates on regulation...
Better Data can Helpo Regular labor force surveys• Important input into political debates about macroeconomic andother pol...
Better Data can HelpoWell-designed long-term household panel surveysare particularly valuable• Potential to understand how...
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Labor Markets Core Course 2013: Assessing Labor Markets in the Developing World

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Labor Markets Core Course 2013: Assessing Labor Markets in the Developing World

  1. 1. Assessing Labor Markets in the DevelopingWorldDavid Newhouse, Labor EconomistSocial Protection and Labor, World BankLabor Market Core CourseMay 6, 2013
  2. 2. Labor Market AssessmentI. Indicators (10)II. Data Sources (7)III. Recent Trends (3)IV. Implications for labor marketassessment
  3. 3. I. Ten Labor Market Indicatorso Primary activity (3)– Employment ratio, Unemployment rate, Labor force participationo Type of job (3)– Status:• Government worker, Private wage worker, self employed, family and unpaidworkers– Sector• Agriculture, industry, service, etc.–Average productivity of sectoro Compensation and hours (3)–Earnings, benefits, hours of worko Subjective work satisfaction (1)– Reflects respondent frame of reference / expectations
  4. 4. Activity Indicators•But these activity indicators don’t measure job qualityIndicator Definition Strength WeaknessEmployment ratio #employed/#working age pop.Overall level ofeconomic activity,simple & clearWhether good orbad depends oncountry contextLabor forceparticipation rate# labor force/#working age pop.Measures size ofwork force andwillingness to workFuzzy definition,whether good or baddepends on contextUnemployment rate #unemployed/#oflabor forceA measure of lostpotentialFuzzy definition,whether good or baddepends on context
  5. 5. Interpreting changes in employment andunemployment depends on country context5505560657075100 250 500 1000 2500 5000 10000 20000GDP in 2000 05101520253035Unemploymentrate100 250 500 1000 2500 5000 10000 20000GDP in 2000
  6. 6. Job quality indicators are more informative0102030405060Pre crisis Post crisisEmploymentWage Self Family0102030405060pre crisis post crisisEmploymentemployment6Hypothetical example
  7. 7. Job Quality IndicatorsIndicator Definition Strength WeaknessEmployment Statusand sectorShare ofemployment indifferent statusor sectorEasy to measure andrelated to earningsand productivityCoarse measureSectoralProductivityValue addedper worker ineach sectorWell-defined and oftenmeasurableCoarse andchallenging toconstructEarnings Reportedprofits or salaryper monthWhat workers careabout most. Goodproxy for productivity.Continuous measure.Very difficult tomeasure accurately,especially for self-employed.Self-reported jobSatisfactionReportedWorkersatisfactionwith jobEasy to measure,including for unpaidfamily workersSubjective --definition variesgreatly acrosspeople
  8. 8. Better jobs, not more jobs, drive development8020406080100300 500 1000 2500 5000 10000 25000 50000Per Capita GDPNon-ag unpaid Non-ag own accountNon-ag employer Non-ag wage and salariedAll agricultural workers
  9. 9. II. Seven Sources of Data on Labor Marketso Where does information exist on labor marketoutcomes in developing countries?– Three publicly available sources:1. National estimates (from ILO)2. ILO Estimates (imputed by ILO)– These are the two sources for World Bank’s WDI3. IMF World Economic Outlook– Unemployment only, about 60 developing countries– Four privately held sources:1. Aggregate national indicators– IMF International Financial Statistics– CEIC/Haver2. Disaggregated data– World Bank International Income Distribution Database (I2D2)– Gallup World Poll
  10. 10. ILO data is scarceYears of available data, 2000-2008
  11. 11. Though ILO data availability is slowly improving0204060801001201988-1990 2006-2008Countries reporting labor forceparticipation at in least one year
  12. 12. • KILM and Short-term indicators– Derived from national labor force surveys, householdsurveys, or censuses• Issues of timing…– KILM has a 2 year lag– Short term indicators start in 2004• … and limited coverage– Short-term indicators: 35 developing countries (2004-2011)– KILM• Roughly 20 developing countries (1990-2009)• 2010 information available for 13 developing countriesILO National Estimates
  13. 13. ILO estimates• Seemingly precise, even in data-poorenvironmentsWhere do these estimates come from?Country Y Sex AgeEmployment(000)Population(000)Employment-to-populationratioCongo, DemocraticRepublic of 2009 F 15-24 3176.3 6651.8 47.8Korea, DemocraticPeoples Republic 2009 F 15-24 661.2 1897.7 34.8Zimbabwe 2009 F 15-24 688.6 1595.9 43.1
  14. 14. A short rant about the ILO estimates• ILO methodology: Apply regional employment elasticities tocountries’ historical labor market data– Regress employment on GDP and country dummy variables, separatelyby age and gender group• Issues:– Estimates based only on GDP– Assumes same employment elasticity for each country and across time– No indication of precision of estimates• And no validation against actual data• Warning:– ILO estimates are not always documented as estimates• Participation statistics from WB World Development Indicators!Bottom line: Be aware of the difference between ILO estimates andnational estimates
  15. 15. Private sources of labor market dataAggregate Information on LM indicators1. IMF International Financial Statistics– Accessible to World Bank and IMF staff– Contains aggregate information on employment and labor forceparticipation on about 37 developing countries2. CEIC/Haver– Companies that collect and sell information published by nationalstatistical offices– Contains employment, unemployment, and participation for about35 developing countries
  16. 16. Private sources of labor market dataHousehold Survey Data3. International Income Distribution Database (I2D2)– Large standardized database managed by DEC• Grew out of successive WDRs, starting with Equity (2007)– Latest version contains 533 standardized households surveyscovering 126 countries– Indicators: Activity, sector, status, unemployment duration(when available)• Earnings and consumption not yet reliable• Employment indicators sometimes inconsistent over time– Future plans• Clean up inconsistencies• Merge with data on household consumption used for povcalnet• Enable online analysis from public– Data available to all Bank employees for any Bank work
  17. 17. Private sources of labor market dataHousehold Survey Data (cont.)4. Gallup World Poll– Surveys of 1000 persons conducted annually in over140 countries– Some labor market questions are non-standard andhard to interpret• Does your job always bring out your most creativeideas or not?• At work, do your opinions seem to count or not?– Microdata very expensive
  18. 18. III. Recent Trends1. What do labor market outcomes look like around thedeveloping world?– Use Gallup World Poll• We obtained aggregates by country– Group countries by income group and region– Population weighted
  19. 19. GWP coverage is highHigh-income countriesUMICLMICLow-incomeNo data
  20. 20. …and significantly better than ILO nationalestimates for developing countiesData from 2009-2011 All countries Low and Middle-IncomeNumber ofcountriesPercent ofPopulationNumber ofcountriesPercent ofPopulationGallup World PollAll four Indicators 90 86% 64 70%ILO Short Term IndicatorsEmployment 62 36% 27 19%Unemployment 83 37% 36 20%Share in Employment inAgriculture46 29% 15 13%Share of Employment inWage or Salaried jobs53 34% 17 17%
  21. 21. Perceived job conditions bounced back rapidly- Especially in LMICs3639364531283829271634343435233739384230Low-Income Countries (15)Lower Middle-Income Countries (31)Upper Middle Income Countries (20)High-Income Countries (19)Total (85)10 20 30 40 502008 2009 2010 2011Good time to get a jobSource: Gallup World Poll
  22. 22. 362133576343214063664522426065382535576845244363694824456172321729565537133162593814345954Low-Income Countries (13)Lower Middle-Income Countries (31)Upper Middle Income Countries (20)High-Income Countries (26)Total (90)20 30 40 50 60 70 20 40 60 80 10 20 30 40 50 60Total Male Female2009 2010 2011Share of employment in full-time wage workStrong LMIC performance most apparent inincreasing wage employment for men
  23. 23. But ECA is still struggling- So is MNA, following the Arab spring- Everywhere else, 2011 was better than 200836353145432447293425123526353429332246293738383827501840Sub Saharan Africa (13)East Asia and Pacific (7)Europe and Central Asia (13)Latin America and Caribbean (18)Middle East and N Africa (9)South Asia (6)Total (66)10 20 30 40 502008 2009 2010 2011Good time to get a job
  24. 24. …while East and South Asia forge ahead- Maybe job conditions in MNA weren’t as bad in 2011 as people think?342029654747404122346653514642203567514955362131644946404427376656514646253768554955301627664348433417286549514735163265465651Sub Saharan Africa (11)East Asia and Pacific (5)Europe and Central Asia (14)Latin America and Caribbean (18)Middle East and N Africa (10)South Asia (6)Total (64)20 30 40 50 60 70 20 30 40 50 60 70 0 20 40 60 80Total Male Female2009 2010 2011Share of employment in full-time wage work
  25. 25. Does creating good jobs make governments morepopular?- Not immediately. Despite creating good jobs, MIC leaders much lesspopular in 20115562586039576258544861636264435261515843Low-Income Countries (14)Lower Middle-Income Countries (25)Upper Middle Income Countries (16)High-Income Countries (18)Total (73)40 45 50 55 60 652008 2009 2010 2011Approve of national leadership
  26. 26. Decline in popularity driven by MNA and SouthAsia- In MNA, consistent with perceived worsening of job prospects- Government dissatisfaction rising in India, Pakistan, and Bangladeshfor unrelated reasons?58526863535059574280554758586249736756576352587660523749Sub Saharan Africa (13)East Asia and Pacific (6)Europe and Central Asia (9)Latin America and Caribbean (18)Middle East and N Africa (3)South Asia (6)Total (55)30 40 50 60 70 802008 2009 2010 2011Approve of national leadership
  27. 27. ConclusionsRecent trends give reason for optimism•Crisis could have been worse•Slow recovery continuing in Eastern Europe and Central Asia•Rapid recovery – or mild crisis effects -- in most other regionsMajor challenges remain• Most workers remain in low-productivity jobs• Need to create more good jobs• By helping workers make transitions into higher-productivity jobs• By supporting entrepreneurship efforts when possible• Key roles for state include:–maintaining rule of law–providing infrastructure and other public goods (likeinformation)–promoting human capital (skills, health)
  28. 28. A jobs lens is crucial for learning how to betterreduce poverty and share prosperity1. Jobs are politically important2. Jobs are more closely related to poverty and sharedprosperity than growth3. Unlike poverty and growth, jobs are measured atthe individual level4. Relatively little is known about how governmentcan create conditions conducive to the growth ofgood jobs.
  29. 29. Large long-run agenda on labor assessmento Get a better picture of recent developmentso Improve on ILO estimates if possibleoInvestigate potential constraints to better employmentoutcomes:oHuman capitaloEarly Childhood Development, Health, Non-cognitive skillsoPopulation growthoFiscal and monetary policy?oInfrastructure improvements?oMigrationoBoth internal and externaloSearch behavioroTrainingoBoth on the job and through public programs
  30. 30. Continue to evaluating labor regulations andALMPsEffects on aggregate jobs are usually modest, but…o Debates on regulations can be heatedoNot sure how mucho ALMPs are a political fact of life in many UMICsEvaluations can help learn about which types oftraining programs / regulations mattero How to better enforce existing regulations
  31. 31. Better Data can Helpo Regular labor force surveys• Important input into political debates about macroeconomic andother policy• Labor force surveys cheaper than poverty surveys• Urban surveys are particularly inexpensive• Offer unexploited potential to look at how policies and ALMPs areassociated with outcomeso Best if standardized across years and countries• WB should continue investments in I2D2 and regionalstandardization efforts.
  32. 32. Better Data can HelpoWell-designed long-term household panel surveysare particularly valuable• Potential to understand how interactions with publicpolicies and institutions affect future outcomes•Can be used to track long-term effects of interventions foryouth.• Common in OECD countriesoUS: Survey of Income and Program Participation, National LongitudinalStudy of Youth, Panel Survey of Income Dynamics• Examples in developing countries are rareo Indonesian and Mexican Family Life Surveys, China Health and NutritionLongitudinal Survey, National survey of Income Dynamics in South Africa,others?

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