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Fewer Jobs or Smaller Paychecks? Labor Market Impacts of the Recent Crisis in Middle-Income Countries

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Author Info

  • Khanna, Gaurav
  • Newhouse, David

    () (World Bank)

  • Paci, Pierella

    () (World Bank)

Abstract

This note presents early evidence on the labor market impacts of the recent economic crisis in 41 middle-income countries.A broader geographic coverage is prevented by the lack of high-frequency labor market data in other middle-income countries and in the low-income countries. Whereas the economic downturn has threatened recent progress in enhancing employment opportunities, the impact has fallen disproportionately on the quality of employment rather than on the number of jobs. Slower growth in earnings accounts for nearly three quarters of the total adjustment for the average country. The bulk of the earnings adjustment was driven by a reduction in working hours, as well as a shift away from the better-paid industrial sector. Evidence of the adjustment’s nature and magnitude suggests a policy package that combines (1) income maintenance programs—that is, cash transfers to low-paid poor workers; (2) interventions that facilitate flexible-hours arrangements; and (3) innovative policies that provide workers access to income maintenance mechanisms to compensate for temporary reductions in standard working hours—for example, by granting partial compensation from the unemployment benefit system or by providing paid training opportunities.

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Bibliographic Info

Article provided by The World Bank in its journal Economic Premise.

Volume (Year): (2010)
Issue (Month): 11 (April)
Pages: 1-4

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Handle: RePEc:wbk:prmecp:ep11

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Related research

Keywords: jobs; wages; labor market; financial crisis; middle-income countries; employment; growth; earnings; unemployment; cash transfers;

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Cited by:
  1. Bidani, Benu & Fatou Diagne, Mame & Zaidi, Salman, 2012. "Subjective perceptions of the impact of the global economic crisis in Europe and Central Asia : the household perspective," Policy Research Working Paper Series 5995, The World Bank.
  2. Cho, Yoon Y. & Newhouse, David, 2011. "How Did the Great Recession Affect Different Types of Workers? Evidence from 17 Middle-Income Countries," IZA Discussion Papers 5681, Institute for the Study of Labor (IZA).
  3. Kucera, David & Roncolato, Leanne & von Uexkull, Erik, 2010. "Trade contraction in the global crisis : employment and inequality effects in India and South Africa," ILO Working Papers 459401, International Labour Organization.

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