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on Labor Markets - Supply, Demand, and Wages |
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Issue of 2024‒06‒24
25 papers chosen by |
| By: | Bossler, Mario (Institute for Employment Research (IAB), Nuremberg); Liang, Ying (University of Mainz); Schank, Thorsten (University of Mainz) |
| Abstract: | In 2015, Germany introduced a national minimum wage. While the literature agrees on at most limited negative effects on the overall employment level, we go into detail and analyze the impact on the working hours dimension and on the subset of minijobs. Using data from the German Structure of Earnings Survey in 2010, 2014, and 2018, we find empirical evidence that the minimum wage significantly reduces inequality in hourly and monthly wages. While various theoretical mechanisms suggest a reduction in working hours, these remain unchanged on average. However, minijobbers experience a notable reduction in working hours which can be linked to the specific institutional framework. Regarding employment, the results show no effects for regular jobs, but there is a noteworthy decline in minijobs, driven by transitions to regular employment and non-employment. The transitions in non-employment imply a wage elasticity of employment of −0.1 for minijobs. Our findings highlight that the institutional setting leads to heterogeneous effects of the minimum wage. |
| Keywords: | minimum wage, working hours, monthly wages, hourly wages, minijobs |
| JEL: | J31 J38 J21 |
| Date: | 2024–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp16964&r= |
| By: | Humlum, Anders (University of Chicago Booth School of Business); Vestergaard, Emilie (University of Copenhagen) |
| Abstract: | We study the adoption of ChatGPT, the icon of Generative AI, using a large-scale survey experiment linked to comprehensive register data in Denmark. Surveying 100, 000 workers from 11 exposed occupations, we document ChatGPT is pervasive: half of workers have used it, with younger, less experienced, higher-achieving, and especially male workers leading the curve. Why have some workers adopted ChatGPT, and others not? Workers see a substantial productivity potential in ChatGPT but are often hindered by employer restrictions and required training. Informing workers about expert assessments of ChatGPT shifts workers' beliefs and intentions but has limited impacts on actual adoption. |
| Keywords: | technology adoption, labor productivity |
| JEL: | J24 O33 |
| Date: | 2024–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp16992&r= |
| By: | Alexander S. Kritikos; Mika Maliranta; Veera Nippala; Satu Nurmi |
| Abstract: | We examine how the gender of business-owners is related to the wages paid to female relative to male employees working in their firms. Using Finnish register data and employing firm fixed effects, we find that the gender pay gap is – starting from a gender pay gap of 11 to 12 percent - two to three percentage-points lower for hourly wages in female-owned firms than in maleowned firms. Results are robust to how the wage is measured, as well as to various further robustness checks. More importantly, we find substantial differences between industries. While, for instance, in the manufacturing sector, the gender of the owner plays no role for the gender pay gap, in several service sector industries, like ICT or business services, no or a negligible gender pay gap can be found, but only when firms are led by female business owners. Businesses in male ownership maintain a gender pay gap of around 10 percent also in the latter industries. With increasing firm size, the influence of the gender of the owner, however, fades. In large firms, it seems that others – firm managers – determine wages and no differences in the pay gap are observed between male- and female-owned firms. |
| Keywords: | Entrepreneurship, Gender Pay Gap, Discrimination, Linked employeremployee data |
| JEL: | J16 J24 J31 J71 L26 M13 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp2079&r= |
| By: | Hristos Doucouliagos; Katarina Zigova |
| Abstract: | We apply meta-regression analysis to assess the effect of the minimum wage on two types of human capital: 460 estimates of formal education enrolment and 428 estimates of on-the-job training. Raising the minimum wage reduces enrolment in all countries assessed. The minimum wage has a somewhat moderate positive effect on training in the US and a small positive training effect elsewhere. There is no publication bias in the formal education and modest bias in training literatures. Heterogeneity among reported estimates is primarily driven by alternative specifications and measures of the relevant variables and data differences. |
| Keywords: | minimum wages, on-the-job training, education enrolment, meta-regression analysis |
| JEL: | J08 J24 J51 M53 |
| Date: | 2024–05 |
| URL: | https://d.repec.org/n?u=RePEc:iso:educat:0219&r= |
| By: | Brummund, Peter (University of Alabama); Makowsky, Michael D. (Clemson University) |
| Abstract: | Participation in social groups ties members to local communities. Employers can capture these benefits as rents when geographically-specific club goods raise the cost of labor mobility. We measure ties to local clubs using the shares of households identifying with a minority religion, enrollment of children in Islamic schools, and membership in secular savings clubs. We identify larger wage markdowns where households have stronger ties to local club goods. Complementarity between labor market concentration and club goods offers an explanation of rising wage markdowns absent increasing concentration, while adding to the difficulty in separating monopsony rents from compensating wage differentials. |
| Keywords: | monopsony, imperfect competition, club goods, religion |
| JEL: | J42 J31 J24 |
| Date: | 2024–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp16999&r= |
| By: | Mehmet I. Canayaz; Isil Erel; Umit G. Gurun |
| Abstract: | We examine the repercussions of protectionist policies implemented in the United States since 2018 on the composition of workforce and career choices within the semiconductor industry. We find that the shift towards protectionism, aimed at reviving domestic manufacturing and employment, paradoxically resulted in a significant drop in hiring domestic talent. The effect is stronger for entry-level and junior positions, indicating a disproportionate impact on newcomers to the workforce. Additionally, we trace the trajectories of undergraduate and graduate cohorts possessing chip-related skills over time, and document significant shifts away from the chip industry. |
| JEL: | F16 G15 J21 J23 L1 O3 |
| Date: | 2024–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:32466&r= |
| By: | Peter Q. Blair; Bobby W. Chung |
| Abstract: | Licensed workers could be shielded from unemployment during recession since occupational licensing laws are asymmetric—making unlicensed workers an illegal substitute for licensed workers but not the reverse. We test our hypothesis using a difference-in-differences event study research design that exploits cross-state variation in licensing laws to compare the unemployment rate between licensed and unlicensed workers before and after the COVID-19 recession and the Great Recession. Controlling for worker ability, we find that licensing shields workers from a recession-induced increase in the unemployment rate of 0.82 p.p. during COVID-19 and 1.11 p.p. during the Great Recession. |
| JEL: | E02 E24 J08 J23 J24 J44 J64 K31 L31 M51 |
| Date: | 2024–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:32486&r= |
| By: | Egana-delSol, Pablo (Universidad Adolfo Ibañez); Micco, Alejandro (University of Chile) |
| Abstract: | The employment to output elasticity has risen from 0.65 during the 1960s and 1970s to 1.25 in the last two decades. We study the role of recent technological change in the evolution of this elasticity along the business cycle. Using the Covid-19-induced shock and an instrumental variable approach as sources of identification, we find that recent technologies augment the employment to output elasticity. We find that employment in sectors characterized with occupations with a high risk of automation are the most affected and that this effect is larger in sectors that have undergone a technology-capital deepening process in the last decades. |
| Keywords: | technological change, automation, employment to output elasticity, labor markets |
| JEL: | O33 E32 J23 |
| Date: | 2024–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp17003&r= |
| By: | Sarra Ben Yahmed; Francesco Berlingieri; Eduard Brüll |
| Abstract: | We show that digital capital and working from home were essential for the resilience of local labour markets in the context of the COVID-19 crisis in Germany. Employment responses differed widely across local labour markets, with differences in short-time work rates of up to 30 percentage points at the beginning of the pandemic. Using recent advancements in the difference-in-differences approach with a continuous treatment, we find that pre-crisis digital capital potential reduced short-time work rate by up to 3 percentage points. The effect was nonlinear, disproportionately disadvantaging regions at the lower end of the digital capital distribution for a longer period. One channel of impact is working from home, which was more often adopted in regions with higher digital capital. But digital capital smoothed the employment shock beyond the effect of remote work. |
| Keywords: | Covid-19, crisis, digitalisation, employment, information and communication technologies, local labour markets, resilience, short-time work, working from home |
| JEL: | J21 O30 R12 R23 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_11114&r= |
| By: | Iacopo Morchio; Christian Moser |
| Abstract: | Using linked employer-employee data from Brazil, we document a large gender pay gap due to women working at lower-paying employers with better nonpay attributes. To interpret these facts, we develop an equilibrium search model with endogenous firm pay, amenities, and hiring. We provide a constructive proof of identification of all model parameters. The estimated model suggests that amenities are important for both men and women, that compensating differentials explain half of the gender pay gap, and that there are significant output and welfare gains from eliminating gender differences. However, equal-treatment policies fail to achieve those gains. |
| JEL: | E24 J16 J31 J32 |
| Date: | 2024–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:32408&r= |
| By: | Daron Acemoglu |
| Abstract: | This paper evaluates claims about large macroeconomic implications of new advances in AI. It starts from a task-based model of AI’s effects, working through automation and task complementarities. So long as AI’s microeconomic effects are driven by cost savings/productivity improvements at the task level, its macroeconomic consequences will be given by a version of Hulten’s theorem: GDP and aggregate productivity gains can be estimated by what fraction of tasks are impacted and average task-level cost savings. Using existing estimates on exposure to AI and productivity improvements at the task level, these macroeconomic effects appear nontrivial but modest—no more than a 0.66% increase in total factor productivity (TFP) over 10 years. The paper then argues that even these estimates could be exaggerated, because early evidence is from easy-to-learn tasks, whereas some of the future effects will come from hard-to-learn tasks, where there are many context-dependent factors affecting decision-making and no objective outcome measures from which to learn successful performance. Consequently, predicted TFP gains over the next 10 years are even more modest and are predicted to be less than 0.53%. I also explore AI’s wage and inequality effects. I show theoretically that even when AI improves the productivity of low-skill workers in certain tasks (without creating new tasks for them), this may increase rather than reduce inequality. Empirically, I find that AI advances are unlikely to increase inequality as much as previous automation technologies because their impact is more equally distributed across demographic groups, but there is also no evidence that AI will reduce labor income inequality. Instead, AI is predicted to widen the gap between capital and labor income. Finally, some of the new tasks created by AI may have negative social value (such as design of algorithms for online manipulation), and I discuss how to incorporate the macroeconomic effects of new tasks that may have negative social value. |
| JEL: | E24 J24 O30 O33 |
| Date: | 2024–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:32487&r= |
| By: | Axel Ockenfels (University of Cologne & Max Planck Institute for Research on Collective Goods, Bonn); Dirk Sliwka (University of Cologne, IZA and cesIfo); Peter Werner (Maastricht University) |
| Abstract: | We compare evaluations of employee performance by individuals and groups of supervisors, analyzing a formal model and running a laboratory experiment. The model predicts that multi-rater evaluations are more precise than single-rater evaluations if groups rationally aggregate their signals about employee performance. Our controlled laboratory experiment confirms this prediction and finds evidence that this can indeed be attributed to accurate information processing in the group. Moreover, when employee compensation depends on evaluations, multi-rater evaluations tend to be associated with higher performance. |
| Keywords: | Performance appraisal, calibration panels, group decision-making, real effort, incentives |
| JEL: | J33 M52 |
| Date: | 2024–05 |
| URL: | https://d.repec.org/n?u=RePEc:ajk:ajkdps:307&r= |
| By: | Jason B. Cook; Chloe N. East |
| Abstract: | We provide the first evidence on the disenrollment impacts of SNAP's General Work Requirements, which apply to 28% of SNAP households, including many with young children. We leverage a regression discontinuity design based on the age of the youngest child in the household relative to the date of eligibility recertification---once the youngest child turns six, many heads of household become subject to General Work Requirements. We use novel administrative SNAP data, linked with state Unemployment Insurance earnings records, and find these requirements have important SNAP disenrollment effects, negative spillover effects to other members of the household, and no large impacts on labor supply. Additionally, the main mechanism through which these disenrollment effects occur is through referrals to the mandatory state Employment and Training program. |
| JEL: | H75 I38 J22 |
| Date: | 2024–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:32441&r= |
| By: | Hufe, Paul (University of Bristol) |
| Abstract: | Converging labor market opportunities of men and women have altered the economic incentives for how families invest monetary and time resources into the skill development of their children. In this paper, I study the causal impact of changes in the parental wage gap (PWG) - defined as the relative difference in potential wages of mothers and fathers - on children's socio-emotional skills. I leverage administrative and survey data from Germany to create exogenous between-sibling variation in the PWG through a shift-share design. I find that decreases in the PWG do not affect children's socio-emotional development as measured by their Big Five personality traits and externalizing/internalizing behaviors. This null effect can be rationalized by the offsetting effects of the PWG on monetary investments, i.e., more disposable household income that is increasingly controlled by mothers, and time investments, i.e., a substitution from in-home maternal care to informal childcare. |
| Keywords: | gender gaps, skill development, parental investments |
| JEL: | J13 J16 J22 J24 |
| Date: | 2024–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp16977&r= |
| By: | Cowgill, Bo (Columbia Business School); Perkowski, Patryk (Yeshiva University) |
| Abstract: | Firms increasingly delegate job screening to third-party recruiters, who must not only satisfy employers' demand for different types of candidates, but also manage yield by anticipating candidates' likelihood of accepting offers. We study how recruiters balance these objectives in a novel, two-sided field experiment. Our results suggest that candidates' behavior towards employers is very correlated, but that employers' hiring behavior is more idiosyncratic. Workers discriminate using the race and gender of the employer's leaders more than employers discriminate against the candidate's race and gender. Black and female candidates face particularly high uncertainty, as their callback rates vary widely across employers. Callback decisions place about two thirds weight on employer's expected behavior and one third on yield management. We conclude by discussing the accuracy of recruiter beliefs and how they impact labor market sorting. |
| Keywords: | hiring, recruiting, discrimination, field experiments |
| JEL: | M51 C93 J71 |
| Date: | 2024–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp17004&r= |
| By: | Okumura, Tsunao (Yokohama National University); Ueno, Yuko (Hitotsubashi University); Usui, Emiko (Hitotsubashi University) |
| Abstract: | Female physicians remain underrepresented in surgical specialties in Japan. The 2004 New Postgraduate Medical Education Program mandated a two-year rotating residency that allowed residents to choose their specialty after training in multiple fields, including surgery. Following this reform, there was a 2.7 percentage points increase in female physicians choosing general surgery and a 1.5 percentage points increase in urology being chosen, compared to male physicians, as well as a 3.4 percentage points decrease in internal medicine being chosen. This shift of female physicians toward male-dominated surgical specialties is primarily seen in breast surgery, catering to female patients, and in urology, known for its shorter workweeks. |
| Keywords: | specialty choice, policy reform, gender |
| JEL: | J16 J24 J44 |
| Date: | 2024–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp16990&r= |
| By: | Miriam Fritzsche |
| Abstract: | Across industrialized countries, regional disparities in labor market outcomes and income have increased in recent decades. This paper investigates how one of the largest localized labor demand shocks tied to the beginning of de-industrialization- the decline of the mining industry between 1960 and 2010 - affects labor market outcomes in the long run. The analysis relies on a new panel data set based on digitized census records from Belgium, France, the UK, and Germany that allows to trace labor market adjustments over 60 years for the male and female working-age population separately. For the causal estimation, I use an IV-shift share approach that exploits exogenous variation in the shifts induced by increased seaborne trade of energy substitutes and the share given by geological rock strata to predict mining activity. The male population disproportionately suffered under this (early) de-industrialization shock and the subsequent job loss. For the male population, the employment-population ratio has not yet recovered resulting in persistent local joblessness. In contrast, the female working-age population experienced a strong catch-up in employment and participation. I find that at the aggregate level, a substantial, albeit time-lagged population response paired with a strong increase in female participation rates fully compensate for the loss of male jobs over the decades. As a consequence, the male-female employment gap shrinks over time. |
| Keywords: | Structural change, local labor markets, regional disparities |
| Date: | 2024–05–14 |
| URL: | http://d.repec.org/n?u=RePEc:bdp:dpaper:0040&r= |
| By: | Mario Bossler; Lars Chittka; Thorsten Schank |
| Abstract: | We present the first empirical evidence on the 22 percent increase in the German minimum wage, implemented in 2022, raising it from Euro 9.82 to 10.45 in July and to Euro 12 in October. Leveraging the German Earnings Survey, a large and novel data source comprising around 8 million employee-level observations reported by employers each month, we apply a difference-in-difference-in-differences approach to analyze the policy's impact on hourly wages, monthly earnings, employment, and working hours. Our findings reveal significant positive effects on wages, affirming the policy's intended benefits for low-wage workers. Interestingly, we identify a negative effect on working hours, mainly driven by minijobbers. The hours effect results in an implied labor demand elasticity w.r.t. the employment volume of -0.17 which only partially offsets the monthly wage gains. We neither observe a negative effect on the individual's employment retention nor the regional employment levels. |
| Date: | 2024–05 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2405.12608&r= |
| By: | Stefano Filauro; Flaviana Palmisano; FVito Peragine |
| Abstract: | Individual circumstances like gender, family background, foreign origin, and health limitations significantly shape individual economic opportunities. This paper delves into inequality of opportunity by examining to what extent labor market outcomes in the European Union, such as employment access and earnings distribution, are influenced by these attributes. By using EU Statistics on Income and Living Conditions (2005, 2011, 2019), our country-specific analysis reveals that, on average, 40 per cent of earnings inequality stems from these circumstances, with variations among countries. A pan-European analysis, conducted for the first time, shows even higher opportunity inequality compared to national levels, magnified by the country-of-residence effect. Despite a 15-year downward trend, nearly 60 per cent of pan-European earnings inequality in 2019 was attributed to these predetermined circumstances, underscoring the need for targeted public policies to tackle an unethical form of inequality. |
| Keywords: | Inequality; Equality of opportunity; Labour market; Access to employment; Earnings; European Union; EU-SILC |
| JEL: | D31 D63 J31 O15 |
| Date: | 2024–05 |
| URL: | https://d.repec.org/n?u=RePEc:sap:wpaper:wp247&r= |
| By: | Sandor Juhasz; Zoltan Elekes; Virag Ilyes; Frank Neffke |
| Abstract: | Strong local clusters help firms compete on global markets. One explanation for this is that firms benefit from locating close to their suppliers and customers. However, the emergence of global supply chains shows that physical proximity is not necessarily a prerequisite to successfully manage customer-supplier relations anymore. This raises the question when firms need to colocate in value chains and when they can coordinate over longer distances. We hypothesize that one important aspect is the extent to which supply chain partners exchange not just goods but also know-how. To test this, we build on an expanding literature that studies the drivers of industrial coagglomeration to analyze when supply chain connections lead firms to colocation. We exploit detailed micro-data for the Hungarian economy between 2015 and 2017, linking firm registries, employer-employee matched data and firm-to-firm transaction data from value-added tax records. This allows us to observe colocation, labor flows and value chain connec- tions at the level of firms, as well as construct aggregated coagglomeration patterns, skill relatedness and input-output connections between pairs of industries. We show that supply chains are more likely to support coagglomeration when the industries in- volved are also skill related. That is, input-output and labor market channels reinforce each other, but supplier connections only matter for colocation when industries have similar labor requirements, suggesting that they employ similar types of know-how. We corroborate this finding by analyzing the interactions between firms, showing that supplier relations are more geographically constrained between companies that operate in skill related industries. |
| Keywords: | coagglomeration, labor flow network, skill relatedness, supply chain |
| JEL: | R12 J24 O14 D57 |
| Date: | 2024–05 |
| URL: | http://d.repec.org/n?u=RePEc:egu:wpaper:2416&r= |
| By: | Bo Cowgill; Jonathan M. V. Davis; B. Pablo Montagnes; Patryk Perkowski |
| Abstract: | A principal often needs to match agents to perform coordinated tasks, but agents can quit or slack off if they dislike their match. We study two prevalent approaches for matching within organizations: Centralized assignment by firm leaders and self-organization through market-like mechanisms. We provide a formal model of the strengths and weaknesses of both methods under different settings, incentives, and production technologies. The model highlights tradeoffs between match-specific productivity and job satisfaction. We then measure these tradeoffs with data from a large organization’s internal talent market. Firm-dictated matches are 33% more valuable than randomly assigned matches within job categories (using the firm’s preferred metric of quality). By contrast, preference-based matches (using deferred acceptance) are only 5% better than random but are ranked (on average) about 38 percentiles higher by the workforce. The self-organized match is positively assortative and helps workers grow new skills; the firm’s preferred match is negatively assortative and harvests existing expertise. |
| Keywords: | internal labor markets, assortative matching, assignment mechanisms, team formation, matching |
| JEL: | M50 D47 J40 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_11120&r= |
| By: | Zou, Baoling (Southwest University of Finance and Economics, Chengdu); Mishra, Ashok K. (Arizona State University) |
| Abstract: | Worldwide, most farms are small and family-operated. This study discusses the future of smallholder agriculture in China, where most farms are small, and farms' parcels are fragmented. The study puts forward a framework of vertical division of labor and specialized production in agriculture. We posit that hiring machinery services could be a pathway to connect smallholders with modern agriculture and achieve food security in China. Using household-level data from China, this study examines the impact of hiring machinery services on farm productivity, food security, and rural households' welfare. Findings show that mechanization services increased rural Chinese families' food security and agricultural productivity. Hiring machinery services improves smallholders' income by influencing the input efficiency of maize production. At the same time, increased mechanization implied greater participation in off-farm work. In other words, more family labor and time are allocated to off-farm work, which results in higher total income and increased consumption expenditures. Our findings highlight the importance of technology to improve smallholder agriculture and food security, not only in China but also in other South and Southeast Asian countries. |
| Keywords: | production efficiency, machinery services, household welfare, food security |
| JEL: | Q12 C36 J22 |
| Date: | 2024–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp17008&r= |
| By: | Justin R. Pierce; Peter K. Schott; Cristina Tello-Trillo |
| Abstract: | We examine US workers' employment and earnings before and after trade liberalization with China. Among workers initially employed in manufacturing, we find substantial and persistent declines in both outcomes, with indirect exposure via input-output linkages exacerbating the negative effects of direct exposure. For workers initially employed outside manufacturing, however, we find that the positive impact of greater upstream exposure via inputs more than offsets the adverse impacts of own- and downstream exposure, inducing relative earnings gains. We also find that spatial exposure is more influential than industry exposure. |
| JEL: | F0 F13 J30 |
| Date: | 2024–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:32438&r= |
| By: | Canavire Bacarreza, Gustavo J. (World Bank); Puerta-Cuartas, Alejandro (Universidad Carlos III de Madrid); Ramos, Andrey (Universidad Carlos III de Madrid) |
| Abstract: | This paper examines the impact of severe wildfire events on Bolivia's poverty and labor market outcomes. We use a panel from 2005 to 2020 utilizing NASA's MODIS Collection-6 MCD64A1 burned area product and household surveys. To attain survey representativeness at a lower geographical level, we aggregate neighboring municipalities using the max-p-region algorithm. Using the Interactive Fixed Effects Counterfactual Estimator, we estimate the causal effects of severe wildfire events on poverty, household per-capita income, and the agricultural sector. We find a significant short-term increase in poverty explained by a temporary decline in household per capita and, specifically, agricultural labor income. |
| Keywords: | poverty, counterfactual estimators, natural disasters |
| JEL: | I32 Q54 J43 |
| Date: | 2024–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp16988&r= |
| By: | Jens-Christian Høj; Viktoriia Klimchuk |
| Abstract: | Before the war, the Ukrainian Pay-As-You-Go pension system required large government transfers. Since then, large scale emigration and an increasing number of people eligible for pensions have further increased the need for government transfers and exacerbated the challenges of population ageing. At the same time, the system provides relatively low pension benefits, despite fairly high contribution rates and short time in retirement. This reflects to a large degree a relatively narrow contribution base due to a large informal economy and underreporting of labour income. Reform of the system must encourage participation, secure liveable pensions, and safeguard the system’s fiscal sustainability. |
| Keywords: | informal labour markets, old-age poverty, pension systems, Public finances |
| JEL: | E6 H55 I32 J46 |
| Date: | 2024–06–06 |
| URL: | https://d.repec.org/n?u=RePEc:oec:ecoaaa:1805-en&r= |