Assessing Labor Markets in the Developing World · Implications for labor market assessment . ......
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Assessing Labor Markets in the Developing World David Newhouse, Labor Economist Social Protection and Labor, World Bank Labor Market Core Course May 6, 2013
Transcript of Assessing Labor Markets in the Developing World · Implications for labor market assessment . ......
Assessing Labor Markets in the Developing World
David Newhouse, Labor Economist
Social Protection and Labor, World Bank Labor Market Core Course
May 6, 2013
Labor Market Assessment
I. Indicators (10) II. Data Sources (7)
III. Recent Trends (3) IV. Implications for labor market
assessment
I. Ten Labor Market Indicators
o Primary activity (3) – Employment ratio, Unemployment rate, Labor force participation
o Type of job (3) – Status:
• Government worker, Private wage worker, self employed, family and unpaid workers
– Sector • Agriculture, industry, service, etc.
–Average productivity of sector
o Compensation and hours (3) –Earnings, benefits, hours of work
o Subjective work satisfaction (1) – Reflects respondent frame of reference / expectations
Activity Indicators
•But these activity indicators don’t measure job quality
Indicator Definition Strength Weakness
Employment ratio #employed/# working age pop.
Overall level of economic activity, simple & clear
Whether good or bad depends on country context
Labor force participation rate
# labor force/# working age pop.
Measures size of work force and willingness to work
Fuzzy definition, whether good or bad depends on context
Unemployment rate #unemployed/#of labor force
A measure of lost potential
Fuzzy definition, whether good or bad depends on context
Interpreting changes in employment and
unemployment depends on country context
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50
55
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Em
plo
ym
ent to
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pu
latio
n r
atio
100 250 500 1000 2500 5000 10000 20000GDP in 2000
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10
15
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25
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Un
em
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ym
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t ra
te
100 250 500 1000 2500 5000 10000 20000GDP in 2000
Job quality indicators are more informative
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10
20
30
40
50
60
Pre crisis Post crisis
Employment
Wage Self Family
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30
40
50
60
pre crisis post crisis
Employment
employment
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Hypothetical example
Job Quality Indicators
Indicator Definition Strength Weakness
Employment Status and sector
Share of employment in different status or sector
Easy to measure and related to earnings and productivity
Coarse measure
Sectoral Productivity
Value added per worker in each sector
Well-defined and often measurable
Coarse and challenging to construct
Earnings Reported profits or salary per month
What workers care about most. Good proxy for productivity. Continuous measure.
Very difficult to measure accurately, especially for self-employed.
Self-reported job Satisfaction
Reported Worker satisfaction with job
Easy to measure, including for unpaid family workers
Subjective -- definition varies greatly across people
Better jobs, not more jobs, drive development
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Pe
rcen
t of w
orke
rs
300 500 1000 2500 5000 10000 25000 50000Per Capita GDP
Non-ag unpaid Non-ag own account
Non-ag employer Non-ag wage and salaried
All agricultural workers
II. Seven Sources of Data on Labor Markets
o Where does information exist on labor market outcomes 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 WDI 3. IMF World Economic Outlook
– Unemployment only, about 60 developing countries
– Four privately held sources:
1. Aggregate national indicators – IMF International Financial Statistics – CEIC/Haver
2. Disaggregated data – World Bank International Income Distribution Database (I2D2) – Gallup World Poll
ILO data is scarce
Years of available data, 2000-2008
Though ILO data availability is slowly improving
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20
40
60
80
100
120
1988-1990 2006-2008
Countries reporting labor force participation at in least one year
• KILM and Short-term indicators – Derived from national labor force surveys, household
surveys, 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 countries
ILO National Estimates
ILO estimates
• Seemingly precise, even in data-poor environments
Where do these estimates come from?
Country Y Sex Age Employment
('000) Population
('000)
Employment-to-population
ratio Congo, Democratic
Republic of 2009 F 15-24 3176.3 6651.8 47.8 Korea, Democratic People's Republic 2009 F 15-24 661.2 1897.7 34.8
Zimbabwe 2009 F 15-24 688.6 1595.9 43.1
A short rant about the ILO estimates
• ILO methodology: Apply regional employment elasticities to countries’ historical labor market data – Regress employment on GDP and country dummy variables, separately
by 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 and national estimates
Private sources of labor market data
Aggregate Information on LM indicators
1. IMF International Financial Statistics
– Accessible to World Bank and IMF staff
– Contains aggregate information on employment and labor force participation on about 37 developing countries
2. CEIC/Haver – Companies that collect and sell information published by national
statistical offices
– Contains employment, unemployment, and participation for about 35 developing countries
Private sources of labor market data
Household Survey Data 3. 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 surveys covering 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
Private sources of labor market data
Household Survey Data (cont.)
4. Gallup World Poll – Surveys of 1000 persons conducted annually in over
140 countries
– Some labor market questions are non-standard and hard to interpret
• Does your job always bring out your most creative ideas or not?
• At work, do your opinions seem to count or not?
– Microdata very expensive
III. Recent Trends
1. What do labor market outcomes look like around the developing world? – Use Gallup World Poll
• We obtained aggregates by country
– Group countries by income group and region
– Population weighted
GWP coverage is high
High-income countries
UMICLMICLow-incomeNo data
…and significantly better than ILO national estimates for developing counties
Data from 2009-2011 All countries Low and Middle-Income
Number of
countries
Percent of
Population
Number of
countries
Percent of
Population
Gallup World Poll
All four Indicators 90 86% 64 70%
ILO Short Term Indicators
Employment 62 36% 27 19%
Unemployment 83 37% 36 20%
Share in Employment in
Agriculture
46 29% 15 13%
Share of Employment in
Wage or Salaried jobs
53 34% 17 17%
Perceived job conditions bounced back rapidly
- Especially in LMICs
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39
36
45
31
28
38
29
27
16
34
34
34
35
23
37
39
38
42
30
Low-Income Countries (15)
Lower Middle-Income Countries (31)
Upper Middle Income Countries (20)
High-Income Countries (19)
Total (85)
10 20 30 40 50
2008 2009 2010 2011
Good time to get a job
Source: Gallup World Poll
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21
33
57
63
43
21
40
63
66
45
22
42
60
65
38
25
35
57
68
45
24
43
63
69
48
24
45
61
72
32
17
29
56
55
37
13
31
62
59
38
14
34
59
54
Low-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 60
Total Male Female
2009 2010 2011
Share of employment in full-time wage work
Strong LMIC performance most apparent in increasing wage employment for men
But ECA is still struggling
- So is MNA, following the Arab spring
- Everywhere else, 2011 was better than 2008
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35
31
45
43
24
47
29
34
25
12
35
26
35
34
29
33
22
46
29
37
38
38
38
27
50
18
40
Sub 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 50
2008 2009 2010 2011
Good time to get a job
…while East and South Asia forge ahead
- Maybe job conditions in MNA weren’t as bad in 2011 as people think?
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20
29
65
47
47
40
41
22
34
66
53
51
46
42
20
35
67
51
49
55
36
21
31
64
49
46
40
44
27
37
66
56
51
46
46
25
37
68
55
49
55
30
16
27
66
43
48
43
34
17
28
65
49
51
47
35
16
32
65
46
56
51
Sub 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 80
Total Male Female
2009 2010 2011
Share of employment in full-time wage work
Does creating good jobs make governments more popular?
- Not immediately. Despite creating good jobs, MIC leaders much less popular in 2011
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62
58
60
39
57
62
58
54
48
61
63
62
64
43
52
61
51
58
43
Low-Income Countries (14)
Lower Middle-Income Countries (25)
Upper Middle Income Countries (16)
High-Income Countries (18)
Total (73)
40 45 50 55 60 65
2008 2009 2010 2011
Approve of national leadership
Decline in popularity driven by MNA and South Asia
- In MNA, consistent with perceived worsening of job prospects - Government dissatisfaction rising in India, Pakistan, and Bangladesh for unrelated reasons?
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52
68
63
53
50
59
57
42
80
55
47
58
58
62
49
73
67
56
57
63
52
58
76
60
52
37
49
Sub 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 80
2008 2009 2010 2011
Approve of national leadership
Conclusions
Recent 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 regions
Major 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 (like information) –promoting human capital (skills, health)
A jobs lens is crucial for learning how to better reduce poverty and share prosperity
1. Jobs are politically important 2. Jobs are more closely related to poverty and shared
prosperity than growth 3. Unlike poverty and growth, jobs are measured at
the individual level 4. Relatively little is known about how government
can create conditions conducive to the growth of good jobs.
Large long-run agenda on labor assessment
o Get a better picture of recent developments o Improve on ILO estimates if possible
oInvestigate potential constraints to better employment outcomes:
oHuman capital oEarly Childhood Development, Health, Non-cognitive skills
oPopulation growth oFiscal and monetary policy? oInfrastructure improvements? oMigration
oBoth internal and external oSearch behavior oTraining
oBoth on the job and through public programs
Continue to evaluating labor regulations and ALMPs
Effects on aggregate jobs are usually modest, but… o Debates on regulations can be heated
oNot sure how much o ALMPs are a political fact of life in many UMICs
Evaluations can help learn about which types of training programs / regulations matter
o How to better enforce existing regulations
Better Data can Help
o Regular labor force surveys • Important input into political debates about macroeconomic and other policy • Labor force surveys cheaper than poverty surveys • Urban surveys are particularly inexpensive • Offer unexploited potential to look at how policies and ALMPs are associated with outcomes
o Best if standardized across years and countries • WB should continue investments in I2D2 and regional
standardization efforts.
Better Data can Help
oWell-designed long-term household panel surveys are particularly valuable
• Potential to understand how interactions with public policies and institutions affect future outcomes
•Can be used to track long-term effects of interventions for youth.
• Common in OECD countries oUS: Survey of Income and Program Participation, National Longitudinal Study of Youth, Panel Survey of Income Dynamics
• Examples in developing countries are rare o Indonesian and Mexican Family Life Surveys, China Health and Nutrition Longitudinal Survey, National survey of Income Dynamics in South Africa, others?
