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December 2011:

David Lam appointed as new IZA Program Director -- GLM | LIC program publishes first call for proposals

David Lam
David Lam (University of Michigan) has been appointed as Program Director for the new research program on Growth and Labor Markets in Low Income Countries (GLM | LIC), a collaboration between the United Kingdom Department for International Development (DFID) and IZA. The objective of this program is to improve knowledge on labor market issues in low-income countries through the funding of scientific research and capacity building activities. A major goal is to provide evidence that will improve labor market policies. The program will allocate over 10 million euros to fund peer-reviewed research projects based in institutions around the globe. The first call for proposals was sent out in early December (see the program website for details).

As IZA Program Director, David Lam will provide the intellectual leadership of the program. This includes the identification of research gaps and specification of research areas for the calls for proposals. He will also lead the monitoring and evaluation of funded research projects, and the synthesizing of results of the program. "This program is an ambitious investment in improving our understanding of how labor markets work in the world’s poorest countries. The program will engage top economists in the world to study labor market imperfections, obstacles to productive employment, and gender gaps in employment opportunities. The results will lead to better policies that will improve the prospects for economic growth and poverty alleviation in these countries," said Lam.

[read full story]

Zimmermann supports German initiative to attract skilled workers from Southern Europe

IZA Director Klaus F. Zimmermann supports the initiative by Germany's Economics Minister Philipp Rösler to recruit high-skilled workers from southern European countries that are facing high rates of unemployment. "Both Europe and Germany could benefit from this plan," Zimmermann told the German business daily Handelsblatt. Since the introduction of the euro took away the instrument of exchange rate flexibility, it was clear that labor mobility would be needed as a channel of adjustment for regional disparities. "The eurozone states not only failed to meet the deficit targets, they also failed to stimulate mobility between the national labor markets," said Zimmermann. He had already argued previously that Germany neglected a great opportunity by closing its borders to labor migration from eastern European countries during the first years after EU enlargement.

Zimmermann added: "Mobility is traditionally low in Europe. It should not take government intervention to get jobless skilled workers from southern Europe to come to Germany at least temporarily. The common market and existing ethnic networks should do the trick. But the reluctance even among high-skilled workers to move within the EU shows that much remains to be done in terms of European integration."

Read the article in Handelsblatt Online (in German).


World Bank and IZA sign collaboration contract

K. F. Zimmermann | A. Banerji
On December 2, 2011, Arup Banerji, Director for Social Protection and Labor within the World Bank's Human Development Network, signed a collaboration contract with IZA Director Klaus F. Zimmermann on the premises of the World Bank in Washington, DC. The memorandum of understanding documents how both institutions have been collaborating intensively over the last years in a series of activities and have decided to continue and extend this collaboration into a number of new areas.

Important knowledge gaps and weak capacity have limited the identification and implementation of effective labor market policy reforms in developing and transition countries. Against this background, the World Bank and IZA had launched a joint research area on Employment and Development in 2006. At the heart of this partnership is the development of operationally-oriented research and policy advice on labor market issues. The World Bank and IZA share a common mission in promoting rigorous research and evidence-based policy analysis to support countries with the design and implementation of labor policies to create and provide access to jobs.

Therefore, the core of the collaboration in the near future will be the joint development of the World Bank Jobs Knowledge Platform and the IZA World of Labor project. At the same time, IZA and the World Bank will continue its many successful joint conferences and workshops and its research activities dealing with the pressing issues of developing, emerging and transition countries. The next joint IZA/World Bank "Employment and Development" conference is scheduled to take place in Delhi, India, in November 2012. IZA research teams also support the forthcoming World Development Report on Jobs.

New survey data to analyze the Chinese labor market now available at IZA

The first wave of the Longitudinal Survey on Rural Urban Migration in China (RUMiC) is now available at IZA. RUMiC consists of three large scale surveys: the Urban Household Survey, the Rural Household Survey and the Migrant Household Survey.

RUMiC provides unique data to the scientific community to explore topical issues in the Chinese labor market. The rural, urban and migrant samples contain peculiar information at both the individual and household level which allow the study of a wide range of research topics: migration and return migration, employment, entrepreneurship, social networks, health and subjective well-being, and children's education.

Details about the survey and information on data application can be found on the IZA International Data Service Center (IDSC) homepage: idsc.iza.org

November 2011:

Alan Krueger confirmed as Chairman of the Council of Economic Advisers

Alan B. Krueger
After his unanimous confirmation by the U.S. Senate, IZA Research Fellow Alan B. Krueger (Princeton University) now chairs President Barack Obama's Council of Economic Advisers. He had served as chief economist of the Treasury Department for two years before returning to Princeton last November.

IZA Director Klaus F. Zimmermann has been in close touch with Krueger over the past years through IZA's partner institution DIW DC in Washington. "Alan is a brilliant and insightful economist who is dedicated to a better understanding of the labor market. Given the vast economic challenges ahead of the United States, he is certainly an excellent choice for this influential post," said Zimmermann.

Alan Krueger received the IZA Prize in Labor Economics together with David Card in 2006. Their joint volume "Wages, School Quality, and Employment Demand" is currently in press as part of the IZA Prize Book Series.

Successful IZA/OECD Employment Seminar in Paris on "Job Creation in Hard Times"

On November 3-4, the third IZA Employment Seminar on "Job Creation in Hard Times: Learning for the Past and New Policy Directions" was held in cooperation with the Employment Directorate of the OECD in Paris. Following up on earlier meetings in 2008 and 2009, this year’s seminar brought together more than 80 high-ranking academics and policymakers to discuss the impact of the global economic crisis on labor markets in Europe and the US.

Organized by Werner Eichhorst (IZA), Stefano Scarpetta (OECD and IZA) and Klaus F. Zimmermann (IZA), the event focused in particular on the diversity of national labor market responses which can be attributed to different types of labor market flexibility and on the unequal distribution of unemployment to the detriment of young people and workers on fixed-term contracts in many European countries.

From a policy perspective, the seminar addressed two main themes: (1) the need to reform employment protection in order to close the gap in regulation between permanent and temporary contracts, and (2) the recalibration of unemployment benefits in terms of conditions for benefit receipt and benefit generosity. To counter any risks of emerging long-term unemployment, the participants stressed the need for well-targeted and consistently implemented activation and training programs.

[view program]

International study finds no "welfare migration" within EU

According to a comprehensive study of 19 European countries over a period from 1993 to 2008, national differences in unemployment benefits have no impact on migration flows within the European Union. Contrary to widespread prejudice, benefit generosity overall does not influence the individual decision to migrate. For non-EU immigrants only a small, statistically insignificant effect was found. "It is a popular myth that scores of immigrants come to take advantage of the welfare state," said IZA Director Klaus F. Zimmermann. "While such cases exist, they are rather due to ill-designed immigration policies than to generous public benefits."

Read the complete study: IZA DP No. 6075

Research in Labor Economics: New volume and advisory board

The most recent volume of Research in Labor Economics (RLE) contains ten original innovative chapters on worker well-being. The articles cover such topics as time allocated to work and human capital acquisition, aspects of risk in the earnings process, migration, and the impact of public policies and institutions on employment and earnings.

The RLE series, which is co-edited by IZA, now benefits from a newly established Editorial Advisory Board including Orley C. Ashenfelter, Francine D. Blau, Richard Blundell, David Card, Ronald G. Ehrenberg, Richard B. Freeman, Daniel S. Hamermesh, James J. Heckman, Alan B. Krueger, Edward P. Lazear, Christopher A. Pissarides, and Klaus F. Zimmermann.

As another milestone in the success story of RLE, the series has now been included in the newly launched Thomson Reuters Book Citation Index, which will enable a wider dissemination of each article and a better analysis of citations.

For more information, please see the latest RLE newsletter.

Comparative study on labor relations in Germany and Brazil

Pictured from left to right: Luiz Carlos Robortella (Mackenzie
Presbyterian University), Werner Eichhorst (IZA), José
Pastore (University of Sao Paulo), Sérgio Nobre (Head of
Metalworkers' Union), Senator Armando Monteiro
In November 2011, IZA Deputy Director of Labor Policy Werner Eichhorst, together with José Pastore, professor of Industrial Relations at the University of Sao Paulo, presented a joint study (co-authored with IZA Research Associate Paul Marx) at seminars organized by the Chamber of Commerce of the State of Sao Paulo (Fecomércio) and the National Confederation of Brazilian Industry (CNI) in Brasilia as well as before the Labor Committee of the Lower House of Brazilian Parliament.

The study, supported by Bradesco, a major bank in Brazil, compares labor market institutions and dynamics in Germany and Brazil with particular emphasis on the role of dismissal protection, flexible contracts, unemployment benefit systems and collective bargaining. Brazilian discussants, among them leading members of the business community, trade union leaders and representatives of both chambers of the Brazilian Congress, were particularly interested in learning more about the beneficial role of internal flexibility regarding working time and wages at the plant level which helped stabilize employment during the 2008-09 crisis in the German manufacturing sector.

The English version of the study is downloadable as IZA Discussion Paper No. 6137.
The paper is also available in Portuguese.

October 2011:

Nowcasting the business cycle: IZA presents the Toll Index

In a recent paper forthcoming in the Journal of Forecasting, Nikos Askitas, Head of IZA's International Data Service Center (IDSC), and IZA Director Klaus F. Zimmermann have introduced the Toll Index as an early indicator for the German business cycle. It is based on German highway MAUT system data, where traffic data on the road transportation of goods are recorded. Owing to the system's innovative technology, the data have some very attractive properties such as a short publication lags and insignificant revisions. The Toll Index has been discussed in the Financial Times and in Tim Harford's blog. It is also featured in an upcoming edition of Marketplace Europe on CNN International.

Regular updates of the toll index data are available from the IDSC homepage and will be published on a monthly basis in Wirtschaftswoche, Germany’s leading business weekly.

Read more:
- IZA DP No. 5522: "Nowcasting Business Cycles Using Toll Data"
- IZA PP No. 31: "The Toll Index: Innovation-based Economic Telemetry"
- Article in Wirtschaftswoche (Oct. 10, 2011): "New Economics: Maut als Maßstab"

IZA Director Klaus F. Zimmermann advises Chinese government

IZA Director Klaus F. Zimmermann has been selected as a Member of the Advisory Committee of the China Institute of Income Distribution Studies at Beijing Normal University. The Committee assembles distinguished national and international experts in the field of income distribution and poverty studies. Professor Zhao Renwei, Honorary Fellow of Chinese Academy of Social Sciences is Chairman of the Committee. The Institute concentrates on studying labor market issues in China and provides policy recommendations to the Chinese government.

Study: Start-up subsides for the unemployed are a successful policy instrument

A new study by IZA and IAB finds that Germany's start-up subsidies for the unemployed result in high survival rates and low deadweight losses. Contrary to common perception, the money seems well spent: After 19 months (four months after the maximum program duration), the start-up survival rate is 75-84 percent. With an additional 7-12 percent of participants back in regular employment, this results in an overall labor market integration rate of up to 94 percent.

The average net monthly income generated from the start-up is around 2,500 euros for men (well above comparable employees) and 1,670 euros (slightly less than an average employee, but still sufficient to live without additional transfers). Also, deadweight losses are much lower than often assumed. While 47 percent of the previously unemployed – looking back on a successful start-up – claim they would have gone into self-employment anyway, about 70 percent state they would not have made it through the first six months without the subsidy. Accordingly, the study estimates the rate of potentially successful entrepreneurs without government support at about 19 percent. "Policymakers seem to overestimate the deadweight effect and underestimate the positive impact on entrepreneurial success," said IZA Program Director Marco Caliendo (University of Potsdam).

Read more (in German):
- IZA press release (Oct. 18, 2011)
- Complete study (IZA DP No. 6035)


IZA Director Zimmermann: German labor market ill-prepared for demographic challenge

According to IZA Director Klaus F. Zimmermann, the federal government's "Demography Report" shows that the German labor market is ill-prepared to meet the demographic challenges of the next decades. He proposed five policy priorities:

1. More incentives to retain older workers
2. Better coordination of labor market and education policies
3. Expansion and improvement of childcare capacities
4. Demand-oriented immigration policy based on points system
5. Better re-integration of the long-term unemployed

Read more (in German):
- IZA press release (Oct. 26, 2011)
- Demography Report of the Federal Government

2011 G20 Summit in Cannes: IZA researchers propose global debt brake

In time for the G20 summit in Cannes on November 3-4, IZA experts put forward a proposal for a global consolidation strategy of public finances. In the IZA Policy Paper entitled "A challenge for the G20: Globally stipulated debt brakes and transnational independent fiscal supervisory councils," Mathias Dolls, Andreas Peichl and Klaus F. Zimmermann recommend that political leaders of the G20 countries implement a global debt brake to push the process of consolidation of public finances and make it binding. The debt brakes should be fixed in national constitutions and enforced by transnational independent fiscal supervisory councils. The researchers point out that the debt brake is an important instrument for a long-lasting solution of the sovereign debt crisis.

A number of international media in the G20 countries have published op-eds on the topic by IZA Director Klaus F. Zimmermann [view coverage].

See also:
- IZA Press Release (Oct. 31, 2011)
- IZA Policy Paper No. 33 (full text of the study)

September 2011:

IZA and DFID launch GLM | LIC Programme

Over the next five years IZA will manage research funding in the amount of 10.6 million pounds for the UK Department for International Development (DFID) for research projects on growth and labor markets aimed at improving the living conditions of people in countries with particularly low income levels. IZA and DFID will support up to 30 different research projects to analyze, for instance, which strategies are especially helpful for economic growth and job creation under the specific conditions found in the countries under study.

To date there have been hardly any empirically data or studies on the poorest regions of the world upon which policy recommendations can be based. Hence, the efficacy of policies to promote employment and stable economic structures in these countries has so far been very limited.

GLM | LIC Homepage | Press Release

IZA Fellow Adriana Kugler serves as Chief Economist at the U.S. Department of Labor

A. Kugler
IZA Fellow Adriana Kugler has become Chief Economist to U.S. Labor Secretary Hilda L. Solis. She is currently on leave from her position as Full Professor of Public Policy at Georgetown University. Dr. Kugler has been an IZA Research Fellow for more than 10 years and has published 15 papers in the IZA DP Series. She is also affiliated with NBER, CEPR and CReAM, and serves on the Editorial Boards of the Industrial and Labor Relations Review, the British Journal of Industrial Relations, Labour Economics, and Economia.

Adriana Kugler has published widely in leading economics journals about the impact of public policies on employment and earnings. She has also written on the topic of immigration and its impacts on both receiving and sending countries. She earned a B.A. in economics and political science with First Class Honors from McGill University and her Ph.D. in economics from the University of California at Berkeley.

IZA advises European Commission on migration policies towards EaP countries

With IZA Director Klaus F. Zimmermann as the consortium leader, IZA joins forces with CASE Warsaw, Central European University and London School of Economics to advise the European Commission on the costs and benefits of, and the available policy options for, labor mobility between the EU and the Eastern Partnership (EaP) countries (Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine). The study aims to provide both the EU Commission and the EaP countries with an expert analysis of the current patterns of labor migration, their relationships with labor market characteristics as well as the potential for increased flows between the EaP countries and the EU. The study will aim to propose a series of specific and detailed recommendations that could improve (i) the labor migration management of the EU and of its Member States when seeking human capital complementarities with EaP Partner Countries, (ii) the overall EU economic strategy towards EaP countries, as well as (iii) the labor and labor migration policies of EaP countries. The project (Costs and Benefits of Labour Mobility between the EU and the Eastern Partnership Partner Countries - EuropeAid/130215/C/SER/Multi) started in September 2011 and is to be completed by February 2013.


Policy forum in Beijing discusses challenges for the Chinese labor market

On September 17, 2011, a policy forum was organized at the China Institute for Employment Research (CIER) in Beijing to discuss challenges for the Chinese labor market. The event was organized as part of the 3rd CIER/IZA Workshop.

The panel of speakers consisted of five distinguished experts on the Chinese labor market: Deqiao Hu (National Development and Reform Commission), Shi Li (Beijing Normal University and IZA), Danhua Liu (Ministry of Human Resources and Social Security), Xiangquan Zeng (Renmin University of China and IZA) and Klaus F. Zimmermann (IZA and University of Bonn).

The event produced a stimulating debate about crucial issues in China, from the structural unbalance between labor supply and demand, to rural-to-urban migration, and the need for intensifying labor market reforms and promoting wage increases. Several themes, such as labor flexibility, shortages of high-skilled workers, and the impact of the financial crisis were discussed comparing the cases of China and Germany, and emphasizing similarities and differences between the two countries.


IZA Director Klaus F. Zimmermann supports proposal for a European finance ministry

The proposal by former ECB chief economist Jürgen Stark (view FAZ article) to establish an independent institution to monitor the Euro countries' fiscal policies as a step towards a European finance ministry are in line with the recommendations made by IZA Director Klaus F. Zimmermann in mid-August (view his FTD op-ed).

[read more in German]


IZA Program Director Armin Falk wins Prize of the Berlin-Brandenburg Academy of Sciences and Humanities

A. Falk
Armin Falk, IZA Program Director for "Behavioral and Personnel Economics" and former Director of Research (2003-2007), will be awarded the Prize of the Berlin-Brandenburg Academy of Sciences and Humanities, funded by the Commerzbank Foundation. Worth 30,000 euros, the Prize is awarded biennially for outstanding achievement in research on the foundations of economics and law.

New study: Immigrant integration in the EU still insufficient

In a new study requested by the European Parliament's Committee on Employment and Social Affairs, an international research team led by Werner Eichhorst (IZA Deputy Director of Labor Policy) analyzed the situation of immigrants in the EU member states. The report focuses on the process of integration and its impact on the labor market. Among other aspects, the experts investigate both restrictive immigration policies and practical barriers to integration. They describe best practices taken at the national and company level, which have been successful in promoting the integration of immigrants, preventing discrimination and improving their social inclusion.

The authors' policy recommendations include: raising the awareness of discrimination issues, effective enforcement and implementation of anti-discrimination laws, promoting introduction programs for immigrants, providing language services for immigrant children, enhancing the labor market participation of immigrants, and improving the recognition of foreign qualifications.

The full text is downloadable from the European Parliament web pages and also available as IZA Research Report No. 40:
The Integration of Migrants and its Effects on the Labour Market

August 2011:

2011 IZA Prize awarded to George Borjas and Barry Chiswick in Oslo

G. Borjas | K. Zimmermann | B. Chiswick
During a festive gala in Oslo, Norway, IZA Director Klaus F. Zimmermann awarded this year's IZA Prize in Labor Economics to the U.S. economists George J. Borjas (Harvard University) and Barry R. Chiswick (George Washington University).

The prestigious award recognizes their fundamental contributions to the economic analysis of migration and integration. Borjas and Chiswick have pioneered the economic analysis of global migration and its impact on labor markets and social security systems. They have been the leading figures in the intense debate about earnings assimilation and the nature of migrant selectivity. Their research has made migration an important subdiscipline of economics with high policy relevance.

Read more:
Program of the Award Ceremony | IZA Prize Homepage

IZA Director Klaus F. Zimmermann: "We are at the brink of a new crisis"

According to IZA Director Zimmermann, the U.S. and Europe must implement major structural policy changes to avoid sending their financial markets into turmoil again.
Read his Handelsblatt online op-ed (August 8, 2011 - in German).


New IZA Book on Ethnic Diversity in European Labor Markets

Edited by Martin Kahanec and Klaus F. Zimmermann, a new book on Ethnic Diversity in European Labor Markets analyzes the labor market situation of ethnic minorities in the European Union and outlines a policy agenda for diversity and minority integration. Facing the demographic challenge, EU countries have strong economic incentives for labor immigration and the better labor market inclusion of ethnic minorities. Still, high unemployment rates and extensive welfare state provisions raise public fears of immigration, which leads to discrimination and xenophobia. The result is a vicious cycle for the labor market prospects of ethnic minorities.

Against this worrying setting, leading IZA experts have published a new book in an effort to offer an unprecedented platform for a debate between science and policymakers. Based on hard data and rigorous research, yet in a broadly accessible way, the book describes the labor market situation of ethnic minorities in EU countries, identifies the key policy challenges, and scrutinizes integration initiatives in practice. In an unprecedented effort, interdisciplinary experts deliver a series of country studies. The book expands on an IZA project funded by the European Commission (2006-2008).

Download book flyer (PDF) | More info at Edward Elgar Publishing

July 2011:

IZA research report: Availability of after-school care would encourage up to 460,000 mothers to work

A recent IZA study prepared for the German Federal Ministry of Family Affairs analyzes the employment effects and costs of after-school care.
According to the study, up to 460,000 German mothers would choose to take up employment if such programs were available.
[read more in German]


IZA Director supports German plans to recruit high-skilled labor in Europe

In view of skilled labor shortages in Germany, the Federal Employment Agency (BA) plans to recruit qualified workers in those European Union member countries that face excess supply due to the economic crisis. This initiative is highly controversial.

IZA Director Klaus F. Zimmermann supports this new strategy, arguing that it is in line with the idea of the common market and would help to provide the flexible labor market that Europe needs. The German "Handelsblatt" reported about Zimmermann's views. [read more in German]


IZA Fellow Vincenzo Caponi wins Arrow Prize for Junior Economists

V. Caponi
IZA Research Fellow Vincenzo Caponi (Ryerson University) is the winner of this year's Kenneth J. Arrow Prize for Junior Economists for his article "The Impact of Aggregate and Sectoral Fluctuations on Training Decisions" co-authored with Burc Kayahan (Acadia University) and Miana Plesca (University of Guelph). The article first appeared as IZA Discussion Paper No. 4042 and was published in The B.E. Journal of Macroeconomics.

Caponi's work was voted by economics experts from around the world as the best paper published in Berkeley Electronic Press economics journals in 2010 by a junior scholar. Named for renowned economist and Nobel laureate Kenneth J. Arrow, the Arrow Prizes are awarded annually to recognize outstanding contributions to the field.

[more information]

IZA Director Zimmermann: Germany must become more attractive for high-skilled migrants

In May 2011, Germany opened its borders to labor migrants from the EU accession countries in Eastern Europe. IZA Director Klaus F. Zimmermann had warned in various interviews and commentaries [view press coverage] that this step was taken too late to attract high-skilled migrants. Three months after freedom of movement was granted, the figures published by the Federal Employment Agency support this view. Only 24,000 additional workers have been registered, many of them legalized immigrants who were already in the country. "As expected, few people from Eastern Europe have chosen to come to Germany. This is mainly because Germany failed to sent the right signals all along that immigrants are welcome and much needed in the German labor market," said Zimmermann.

[read more in German]


IZA Director awards Kuznets Prize to Makoto Hirazawa and Akira Yakita

The Japanese economists Makoto Hirazawa (Nagoya University) and Akira Yakita (Nagoya City University) received the 5th Kuznets Prize for their paper "Fertility, child care outside the home, and pay-as-you-go social security", which was selected as the best published article in the Journal of Population Economics during the period 2007-2009. The Prize was awarded by the journal's Editor-in-Chief, IZA Director Klaus F. Zimmermann, during the ESPE 2011 conference in Hangzhou, China.

[more about the Kuznets Prize]

June 2011:

IZA/World Bank Conference in Mexico: Making the Case for Social Protection in Developing Countries

Keynote speech by Mexico's President Felipe Calderón
How to provide insurance and security to people working in the informal sector was the key theme of the 6th IZA/World Bank conference on "Employment and Development" held in Mexico City on May 30-31, 2011. Having more insurance and social protection is critical because it can increase the population's acceptance of labor market reforms, such as the introduction of more flexible labor contracts. However, as was stressed by Mexico's President Felipe Calderón in his keynote address [view video], for all the economic virtues and benefits, political economy considerations can hinder any reform process. He laid out the difficulties he has encountered in his country's parliament in seeking to reform the labor laws.

According to IZA Director Klaus F. Zimmermann, global poverty can be ameliorated through the creation of jobs - but in the absence of formal-sector jobs, governments must step in to provide basic social insurance. To this end, the IZA/World Bank conference series brings together policymakers, researchers and representatives of international institutions to foster a better understanding of the informal sector and the effectiveness of labor market reforms in emerging and developing economies - and in determining how policies that have been successfully employed by developed countries such as Germany can be adapted to the unique circumstances of developing economies.

In the context of the IZA/World Bank Conference, IZA Director Zimmermann published an op-ed in Mexico's leading newspaper El Universal [download]. The text on "Germany's lesson for the U.S. on labour mobility" also appeared in Canada's The Globe and Mail [download] and the Polish newspaper Gazeta Wyborcza [view online] at the occasion of U.S. President Obama's visit to Poland.

More information:
- IZA Press Release (June 9, 2011)
- Program of the Conference (May 30-31, 2011)
- Program of the Policy Forum (June 1, 2011)

FTD op-ed by Andrew Oswald about the economics of happiness in Europe

A. Oswald
In a recent op-ed for the Financial Times Deutschland, IZA Visiting Research Fellow Andrew J. Oswald argues that the new research literature on the economics of happiness is becoming influential and that this is important and valuable for Europe. It is moving us away from economists' traditional focus with GDP (which was invented as a concept in the 1930s). Our problems in Europe, he argues, are no longer issues like lack of food and few automobiles, but closer to the reverse - obesity and traffic congestion and pollution. So new measures of success are needed. One day the headline on the front page of FTDeutschland, he argues, will be not "economic growth was up 1.2% last month" but rather "the country's composite psychological well-being index rose 0.8% last month". Counting Euros as a way of approximating human progress will be viewed as misguided and the new ideas on the measurement of well-being will seem obvious. People will look back and puzzle to themselves why it was not done that way in the early part of the 21st century.

Read more: Original text in English | FTD op-ed in German

Research reveals that 10% of middle-aged Europeans are on antidepressants

A new study by IZA Program Director David G. Blanchflower and IZA Visiting Fellow Andrew J. Oswald shows that 10% of middle-aged Europeans took antidepressants in 2010. The researchers looked in detail at the lives of a randomly selected sample of nearly 30,000 Europeans in 27 countries.
Oswald described the results as concerning: "Antidepressants are a relatively new kind of commodity. We are only starting to get proper data on who takes them. But as we live in the richest and safest era in the history of humans, perhaps we are going to have to ask ourselves why one in ten of Europe's middle-aged citizens need a pill to cope with life. That is an awful lot of people relying on chemical happiness."

In detail, the authors find:
- One in thirteen of adult European citizens (10% of middle-aged Europeans) took an antidepressant in the previous twelve months.
- The rates of antidepressant use are markedly greatest in Portugal, but also noticeably higher than the European norm in Lithuania, France and the UK.
- The probability of taking an antidepressant is greatest among those middle-aged, female, unemployed, with low levels of education, and divorced or separated.
- A strong hill-shaped age pattern is found, both for males and females and in Western and Eastern Europe, that peaks in people's late 40s. The study adjusts for whether individuals have young children, so children are not the cause of the midlife low in well-being.
- This pattern is consistent with, and independently helps corroborate, the recent finding across the world that happiness and mental health follow an approximate U-shape through life. The scientific explanation for that midlife low is still unknown.

Read the complete study: "Antidepressants and Age" (IZA Discussion Paper No. 5785)

May 2011:

New IZA Research Associates: Patrick Arni, Costanza Biavaschi and Janneke Pieters

P. Arni | C. Biavaschi | J. Pieters
We are delighted to announce that Patrick Arni, Costanza Biavaschi and Janneke Pieters will join IZA as Research Associates in September 2011. "We are looking forward to have these promising young researchers join our research team in Bonn," said Marco Caliendo, IZA Director of Research. Patrick Arni is currently completing his Ph.D. in the Department of Econometrics and Political Economy at the University of Lausanne, HEC. His research focus is on microeconometric program evaluation, with further fields of interest in health, pension and education economics. He has been part of the IZA network as a Research Affiliate since November 2010. Costanza Biavaschi is about to receive her Ph.D. from the Department of Economics at Rutgers University. Her research interests are in labor economics, applied microeconomics/microeconometrics, and public economics. Her current work focuses on migration issues, such as return migration, self-selection of migrants, and immigrant academic achievement. Janneke Pieters is a Ph.D. student at the University of Groningen. Part of her current research is on trade and wage inequality in developing countries. Her particular focus is on India, where she analyzes such issues as informality and female labor market participation.

New volume of Research in Labor Economics edited by IZA: Who Loses in the Downturn?

Economic events such as the recent global economic crisis can have substantial effects on the distribution of resources at the individual and household levels. Identification of appropriate and timely policy responses that support vulnerable groups is hampered by how little is known about the likely patterns of losses early on during the downturn. A new volume of the Research in Labor Economics series edited by Herwig Immervoll, Andreas Peichl, and Konstantinos Tatsiramos contains fresh knowledge on the effects of the economic downturn on employment and income distribution. It contains nine original research papers from both Europe and the US, including illustrations of forward-looking simulation methods that can be used before detailed data on actual household experiences become available. These papers offer new insights into issues such as how wages, employment and incomes are affected by the crisis, which demographic groups are most vulnerable in the recession, how well the welfare system protects the newly unemployed and how consumption and income poverty change over the business cycle.

[more information at the Emerald Bookstore page]

IZA Program Director Armin Falk wins Yrjö Jahnsson Award

A. Falk
Armin Falk (University of Bonn) will be honored with this year's Yrjö Jahnsson Award in Economics for his contributions to the analysis of social preferences, in particular preferences for reciprocal fairness, and their impact on principal-agent relations, collective action and the functioning of labor markets.

This biennial prize, established by the Finnish Yrjö Jahnsson Foundation in 1993, is awarded to a European economist under 45 years of age who has made significant contributions to theoretical and applied research with particular relevance for the study of economics in Europe. The European Economic Association (EEA) participates in the selection of the winner and will present the award during the annual congress in Oslo, August 25.

After Gilles Saint-Paul in 2007 and John Van Reenen in 2009, this is the third time in a row that a member of the IZA network is awarded this prestigious prize. Armin Falk is IZA Program Director for Behavioral and Personnel Economics. He served as IZA Director of Research from October 2003 until June 2007.

Jo Ritzen presents recent book: "A Chance for European Universities"

Jo Ritzen, IZA Senior Advisor Policy, presented the German version of his recent book "A Chance for European Universities" to the public at the occasion of a panel discussion on the topic hosted by the University of Siegen on May 5, 2011. According to Ritzen, "Europe's universities are very well represented among the world's top 200 universities, but almost absent in the top 50. They are economically, culturally and socially underexploited. There is an urgent need to alter the context for European universities to strengthen the European competitive position through economic innovation, increased social cohesion and a more vibrant cultural dynamism. The unbalanced demographics in the world with a virtually constant supply of graduates in the developed West and a potentially fast increase in the number of graduates in developing countries pose both new threats and new opportunities for European universities. Europe can cash in on these opportunities by reinventing its higher education, taking into account the lessons learned from effective education for an international labor market, from the valorization of knowledge but also from the matching and selection of students."
Ritzen outlines three keys to the success of European universities: (1) Denationalization of the Bologna process with an emphasis on European-wide accreditation and quality control, (2) moving the organization of universities from the bureaucratic to the innovative, and (3) rebalancing the financing system so that the public budget cuts of the past decades can be met by private sources.

[read more about the book]

Andrew Oswald and Amanda Goodall joined IZA research team in May

A. Oswald | A. Goodall
IZA welcomes Andrew J. Oswald and Amanda H. Goodall, who started their new positions at IZA in May 2011. "We are thrilled to have researchers of this caliber on our team here in Bonn," said IZA Director Klaus F. Zimmermann.

Andrew Oswald has a two-year appointment as a full-time Visiting Research Fellow. He was previously Professor of Economics at Warwick University and is considered a leading scholar in labor economics and in the economics of happiness and health. His current research lies at the borders between economics, psychology, and epidemiology. Having received a number of awards for contributions to economics and social science, he is one of the few economists to have been invited to join the editorial board of Science.

Amanda Goodall started her work at IZA as a Senior Research Associate. She was previously a Visiting Fellow at Cass Business School in London). Her academic work, which includes the book Socrates in the Boardroom published recently by Princeton University Press, focuses on leadership and performance in knowledge-intensive organizations.

Economists call on G8 leaders to support Tunisia

In view of the G8 summit in Deauville (France) on May 26-27, a group of renowned international economists have called on the G8 members to provide substantial economic support for Tunisia in order not to jeopardize the democratic transition in the entire region. The list of signatories includes Elyès Jouini, (Université Paris-Dauphine), Richard Portes (London Business School and CEPR), Nouriel Roubini (New York University), Nobel laureate Joseph Stiglitz (Columbia University) and IZA Director Klaus F. Zimmermann.

Failure of the Tunisian democratic transition due to a deteriorating economy "would be a victory for all dictatorships in the region. At the international level, this would lead to an export of extremism and a continued flow of refugees out of the region." The economists propose an action plan including immediate food and energy subsidies as well as long-term investment in infrastructure and the financial system [read full text of the call] .

The call was published in major newspapers around the world, including New York Times/International Herald Tribune (USA), Le Monde (France), Neue Zürcher Zeitung (Switzerland), Der Standard (Austria), La Repubblica (Italy), and Financial Times Deutschland (Germany).

Researchers from the IZA network have published several studies on Tunisia in the past, for example:

DP 5611: Labor Market Dynamics in Tunisia: The Issue of Youth Unemployment (PDF)
DP 1084: Trade Liberalization and Labor-Demand Elasticities: Empirical Evidence from Tunisia (PDF)
DP 688: The Impacts of Trade Liberalization on Employment and Wages in Tunisian Industries (PDF)
DP 687: Labour-Use Efficiency in Tunisian Manufacturing Industries (PDF)


Steffen Altmann receives Schumpeter Fellowship

S. Altmann
The Volkswagen Foundation has awarded IZA Senior Research Associate Steffen Altmann with the prestigious Schumpeter Fellowship for his research project "Understanding Default Effects: Psychological Foundations, Economic Consequences and Implications for Public Policy". During the five-year funding period, Altmann seeks to contribute to a better understanding of why human behavior is affected by pre-specified choice options and other forms of non-binding rules.

With an interdisciplinary research approach, Altmann will analyze the causes of these so-called default effects, their economic importance as well as the resulting policy implications for the labor market, healthcare and other fields.

The Volkswagen Foundation initiated the Schumpeter Fellowship program in 2006 to support excellent junior researchers who investigate creative and interdisciplinary research questions in the social and legal sciences.

Marco Caliendo becomes Professor in Potsdam and IZA Program Director for Evaluation

M. Caliendo
As of October 1, 2011, IZA Research Director Marco Caliendo will become Professor of Empirical Economics at the University of Potsdam. IZA Director Klaus F. Zimmermann congratulated him on this career move: "One of IZA's key objectives is to support and promote promising young researchers. We thank Marco Caliendo for his excellent job as IZA Director of Research and look forward to our continued cooperation in the future."

Caliendo joined IZA in Bonn as a Senior Research Associate in 2007 before becoming Director of Research in 2009. His academic work focuses mainly on unemployment, entrepreneurship, and the influence of personality traits on economic decisions. He will continue to cooperate closely with IZA as Program Director for Evaluation (together with Gerard van den Berg, University of Mannheim). In addition to leading several IZA projects on evaluation and entrepreneurship, he will also be responsible for the scientific coordination of the IZA Evaluation Data Set.

Nikos Askitas represents permanent board of the German data infrastructure

N. Askitas
Nikos Askitas, Head of the IDSC of IZA, was elected to serve for three years as one of two speakers who represent the permanent board of the German data infrastructure (Ständiger Ausschuss Forschungsdaten-Infrastruktur) in the German Data Forum (RatSWD). The board comprises all research data centers (FDZ) and data service centers (DSZ) accredited in Germany. Its central task is to continuously enhance the data infrastructure for academic research. IZA has always been at the forefront of the initiative to improve data access in Germany, and its successful International Data Service Center (IDSC) serves as an example for many other institutions.

Heckman wins ERC Advanced Grant

J. Heckman
IZA Research Fellow James J. Heckman, Nobel Prize winning economist from the University of Chicago, has been awarded a prestigious Advanced Grant from the European Research Council (ERC). At the University College Dublin, Heckman will carry out his pioneering, highly interdisciplinary ERC project on "understanding health across the lifecourse", combining health, social and economic research. Studying the origins and the evolution of health inequalities over the entire life of human beings and across generations will bring the team to for instance focus on experiences and conditions during early childhood (e.g. family environment, early health, cognitive ability) and their long-term effects on health. The research will also explore policy implications for health prevention and remediation.

April 2011:

EU conference in Budapest: Werner Eichhorst gives keynote speech on youth unemployment

W. Eichhorst
On April 4, IZA Deputy Director of Labor Policy Werner Eichhorst gave the keynote speech at a conference on youth employment in EU Member States organized by the current Hungarian EU Presidency in Budapest. In his speech, Eichhorst pointed out that youth were most heavily affected by rising unemployment during the recent economic crisis, in particular in countries with high shares of temporary employment among young people. To facilitate sustainable employment of young labor market entrants and avoid long-term inactivity and poverty, Eichhorst stressed the need to strengthen basic skill formation at school also for the most vulnerable groups, to improve dual vocational training schemes with a strong role of firms, and to combine social benefits with effective active labor market polices.

March 2011:

IZA Director: "Hartz IV" compromise bears significant financial risks

According to IZA Director Klaus F. Zimmermann, the recent "Hartz IV" compromise bears significant financial risks for the Federal Employment Agency (BA), which may soon face a multi-billion euro deficit. "By no means should this be financed through a further increase in unemployment insurance contributions," Zimmermann told the German business daily Handelsblatt. Non-wage labor costs should rather be reduced if unemployment rates continue to decline.

Zimmermann pointed out that unemployment insurance contributions were already raised to three percent earlier this year despite an expansion in economic activity. "We must do everything to keep this rate stable at a low level. If labor becomes too expensive, this will hurt the prospects of regular jobs particularly for those who are currently in atypical employment," said the IZA Director.

Read the complete Handelsblatt article (in German).


New study by IZA and DIW Berlin: Self-employed are more open, extravert and risk-loving

A joint DIW/IZA study systematically investigates whether different kinds of personality characteristics influence entrepreneurial development. On the basis of a large, representative household panel survey, the authors examine the extent to which the Big Five traits and other personality characteristics more specifically related to entrepreneurial tasks influence entry into self-employment and survival of self-employed persons in Germany. The empirical analysis reveals that among the specific characteristics "risk attitudes" and "locus of control" have particularly strong effects on entry and survival. With respect to the Big Five approach, "openness to experience" and "extraversion" and to a lower extent "agreeableness" and "neuroticism" help explain entrepreneurial development. The explanatory power of the Big Five is comparable to one of the most prominent determinants of entrepreneurship – education – and approximately three times larger than parental self-employment.

Read the complete study:
IZA DP No. 5566 ("Personality Characteristics and the Decision to Become and Stay Self-Employed")

New study by IZA and Bertelsmann Foundation: Young adults are problem group in German labor market

Young adults between the age of 25 and 29 face an unemployment rate of more than 18 percent, according to a recent joint Bertelsmann Foundation/IZA study. This makes them one of the most troubled demographic groups in the German labor market.

The study takes issue with the popular notion that youth unemployment in Germany is relatively low by international standards. Comparing 27 OECD countries, the authors found that the optimistic figures for Germany are largely owed to long compulsory schooling and subsidized transition programs between school and vocational training.

Until the mid 2000s, demand for vocational training strongly exceeded supply. In 2006, still almost 50,000 applicants failed to find an apprenticeship. Although this situation has improved recently, as of 2009 up to 381,000 youths entered qualification programs that are meant to prepare them for actual apprenticeships but in reality amount to little more than waiting periods. To improve matters, the study calls for a fundamental reform of the school-to-work transition system.

"It is remarkable that labor market and educational participation among young Germans drops as they get older. Too many hard-to-train youths are caught in subsidized training programs that yield no real qualification. This leads to high long-term unemployment among young adults," says IZA expert Werner Eichhorst, who co-authored the study with Eric Thode of the Bertelsmann Foundation.

The study is available in German language as IZA Research Report No. 34 (Download PDF, 3.5 MB).

Werner Eichhorst/Eric Thode: Erwerbstätigkeit im Lebenszyklus (Benchmarking Deutschland: Steigende Beschäftigung bei Jugendlichen und Älteren)

February 2011:

IDSC of IZA becomes exclusive outlet for WageIndicator data

The International Data Service Center (IDSC) of IZA has entered a cooperation with the Wage Indicator Foundation (WIF) and the Amsterdam Institute for Labour Studies of the University of Amsterdam (AIAS), which will make the IDSC the exclusive outlet of the WageIndicator data to the scientific community.

"This type of cooperation and the resulting service to the scientific community lies at the heart of our mandate," said Nikos Askitas, Head of the IDSC. "We constantly analyze and poll IZA's large worldwide network in order to open new paths, realize new cooperations and offer new services to our researchers across the globe." The WageIndicator data was presented at IZA during a Red Cube Seminar by Kea Tijdens (AIAS) on the initiative of IZA Deputy Program Director Martin Kahanec. "Our resident research group acting as a proxy for the entire network was excited about the data and found extensive common ground for this cooperation," Askitas said.

The data will be available to the entire research community. IZA network members get free access. Contact idsc@iza.org for more information.

Polachek and Tatsiramos receive Leading Book Series Editor Award

 Polachek | Tatsiramos
IZA Research Fellow Solomon Polachek and Senior Research Associate Konstantinos Tatsiramos have been acclaimed as Leading Book Series Editors in the Emerald Literati Network 2011 Awards for Excellence in recognition of the outstanding work they have put into Research in Labor Economics.

The series was started in 1977 by Ronald G. Ehrenberg and has been published by Emerald since 2008. Polachek has been editor since 1995. Since 2006, the series has benefited from the contribution of IZA, first co-edited by Olivier Bargain and since 2007 by Tatsiramos. It was extended to two volumes per year with one volume remaining in the tradition of the series with empirical and theoretical papers in labor economics and a second volume being more policy-oriented, in the spirit of IZA's focus on policy aspects of labor economics.

"Sol and Kostas are particularly deserving of the award. They certainly went the extra mile to make IZA's involvement in the series a great success," said IZA Director Klaus F. Zimmermann.

[More information about Research in Labor Economics]

Zimmermann and Caliendo join EALE Executive Committee – IZA hosts 2012 conference

IZA Director Klaus F. Zimmermann and Research Director Marco Caliendo have been appointed as co-opted members of the Executive Committee of the European Association of Labour Economists (EALE) for a period of three years, starting September 2011. They will play a key role in the organization of the EALE 2012 annual conference, which will be hosted by IZA in Bonn. "We are convinced that IZA is able to offer all the local organizational support to make the conference a great success," said EALE Secretary Thomas Dohmen (ROA, Maastricht University).

[About EALE]

IZA analyzes earnings of German politicians

A recent IZA study finds that office remuneration of German Members of Parliament (MPs) is comparable to the earnings of business executives. However, a considerable income premium for MPs results from outside earnings. An average German MP in 2006 made 106,000 euros before tax. This includes basic office remuneration (84,108 euros p.a.), extra payments for government offices, pension and interim payments, as well as earnings from secondary employment. The outside earnings are a lower bound because the German parliament does not provide precise figures.

In order to test the widely held view that politicians would earn more in the private sector, the IZA researchers used GSOEP data to calculate the earnings gap between politicians and the electorate. They stress the importance of choosing an adequate control group. "Of course, politicians make more money than the average wage earner", says IZA researcher Andreas Peichl. "What we are interested in is the earnings gap between politicians and private-sector individuals with comparable job responsibilities."

The study finds that MPs earned around 60% more than the average full-time employee and 40% more than a business executive (15% for top-level executives). They make about 10% more money than the top 5% in the gross earnings distribution. However, excluding all outside earnings reduces the earnings premium by about 15 to 20 percentage points. The authors do not argue against above-average earnings for politicians. "If we want the best qualified individuals to run for public office, we must provide adequate monetary incentives," says Peichl. However, disproportionately high earnings are problematic when they result from activities that are not directly related to policymaking. The study therefore calls for a reform of the German regulation of politicians' outside earnings.

Read more:
- IZA press statement (in German)
- Full text of the study (IZA DP No. 5520)

The "Economist" reports on IZA study about trends in economic research

In a recent story about the growing clout of the European economics profession, the Economist cites an IZA Discussion Paper by Ana Rute Cardoso, Paulo Guimaraes and Klaus F. Zimmermann. According to the IZA study, economists with a primary affiliation to North American institutions (mostly in the United States) accounted for 66% of published economic research in 1991; Europeans produced just 24%. By 2006, 40% of all articles were by European-affiliated economists, while the North American share had fallen to 45%. This finding is attributed in part to the Bologna process, which European leaders initiated in 1999 to promote uniform academic standards and to encourage English-language teaching and publication.

Read more:
- Economist arcticle ("The economics profession: New world order")
- IZA DP No. 4785 ("Trends in Economic Research: An International Perspective")

Zimmermann at Bundestag hearing: Expert opinion on skilled labor shortage

On February 21, 2011, IZA Director Klaus F. Zimmermann was invited by the German Bundestag, on the initiative of the Green Party, to deliver an expert opinion on skilled labor shortage. In a written statement, Zimmermann calls on German policymakers to establish a points system to encourage and regulate the immigration of high-skilled workers.

[Complete statement in German]


Jo Ritzen joins IZA as a senior advisor for policy issues

Jo Ritzen
In February 2011, Jo Ritzen joined IZA on a part-time basis as Senior Advisor Policy. He previously served as President of Maastricht University, Vice President of the World Bank's Human Development Network, and Minister of Education, Culture, and Science of The Netherlands. During his term as one of the longest serving Ministers of Education in the world, Mr. Ritzen enacted a series of major reforms throughout the Dutch education system. Prior to taking up his government position in 1989, he held academic appointments at Nijmegen University, Erasmus University Rotterdam, the University of California-Berkeley, and the University of Wisconsin-Madison. He has also made significant contributions to agencies such as UNESCO and OECD, especially in the field of education and social cohesion. He will now support IZA's policy networking activities on the EU level while also pursuing his own research. "We are happy and proud to have Jo Ritzen at IZA. I am convinced that he will provide invaluable input on education and policy issues," said IZA Director Klaus F. Zimmermann.

January 2011:

IZA Prize awarded to Francine Blau at ASSA Meeting in Denver

J. Svejnar | F. Blau | K. F. Zimmermann
On January 8, 2011, the IZA Prize in Labor Economics was awarded to Francine Blau (Cornell University) during the Annual Meeting of the Allied Social Science Associations (ASSA) in Denver, Colorado. The event also featured a keynote speech by Nobel laureate Dale Mortensen (winner of the 2005 IZA Prize) and a panel discussion including past IZA laureates Orley Ashenfelter, David Card and Alan Krueger. IZA Director Klaus F. Zimmermann and Prize Committee member Jan Svejnar presented the 2010 Prize to Francine Blau. Also during the event, the winner of the 2010 IZA Young Labor Economist Award, Raj Chetty (Harvard University), was introduced by the current and past IZA Research Directors Marco Caliendo and Daniel Hamermesh.

Read more:
- Program of the awards event
- About the IZA Prize

Barry and Carmel Chiswick move to George Washington University

B. Chiswick | C. Chiswick
In January 2011, IZA Research Fellows Barry R. Chiswick and Carmel U. Chiswick joined the George Washington University's Columbian College of Arts and Sciences (CCAS). Barry was appointed the new chair of the Department of Economics. He previously served at the University of Illinois at Chicago as a distinguished professor and founding director of the UIC Center for Economic Education. He has been the IZA Program Director for migration studies since 2004. Barry Chiswick is among the world's leading experts on immigration and minorities. His policy recommendations regarding the reform of immigration law have strongly influenced the public debate and legislation. Carmel Chiswick's recent work focuses on the economics of religion, especially as it applies to American Judaism. "IZA has traditionally been well represented in Washington, DC. We welcome this opportunity to further enhance our networking activities in the U.S. capital," said IZA Director Klaus F. Zimmermann.

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