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Coping with crises : why and how to protect employment and earnings


  • Paci, Pierella
  • Revenga, Ana
  • Rijkers, Bob


Events of the past two years are a reminder that crises are a recurring phenomenon with deep and often protracted impacts on labor markets. This paper examines the challenges inherent in crafting policy responses, with particular attention to developing countries. It focuses on the potential tradeoffs between offsetting adverse short-term impacts and preserving incentives for economic recovery and future growth, and between protecting the most vulnerable and compensating those most immediately impacted. It also highlights how policymakers’ room for maneuver is constrained in crisis times by deteriorating fiscal space, limited institutional capacity, and mounting political pressures. Based on empirical evidence from previous crises, the paper asserts that taking a myopic and reactive approach may be costly and counterproductive. Instead, it advocates a more comprehensive approach, designed to build institutions - such as automatic stabilizers and safety nets - that can deliver a coordinated and coherent policy package. This approach will make crises catalysts for institutional changes and long-run growth.

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  • Paci, Pierella & Revenga, Ana & Rijkers, Bob, 2009. "Coping with crises : why and how to protect employment and earnings," Policy Research Working Paper Series 5094, The World Bank.
  • Handle: RePEc:wbk:wbrwps:5094

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    Cited by:

    1. Gamberoni, Elisa & Von Uexkull, Erik & Weber, Sebastian, 2010. "The Roles of Openness and Labor Market Institutions for Employment Dynamics during Economic Crises," World Bank - Economic Premise, The World Bank, issue 29, pages 1-5, August.
    2. repec:ilo:ilowps:468419 is not listed on IDEAS
    3. Guimbert, Stephane & Oostendorp, Remco, 2012. "Weathering the storm : responses by Cambodian firms to the global financial crisis," Policy Research Working Paper Series 6220, The World Bank.
    4. repec:ilo:ilowps:461897 is not listed on IDEAS
    5. Ambar Narayan & Carolina Sánchez-Páramo, 2012. "Knowing, When You Do Not Know : Simulating the Poverty and Distributional Impacts of an Economic Crisis," World Bank Publications, The World Bank, number 2229.

    More about this item


    Labor Markets; Labor Policies; Safety Nets and Transfers; Banks&Banking Reform; Population Policies;

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