History of IZA

Dedicated to the future of labor

Since its founding in 1998, IZA has become a leading center in national and international labor market research and policy advice. The current profile of the institute is rooted in a history characterized by diverse research initiatives and a unique global network.

Pioneering work in science, service and policy advice

IZA was initiated by the Deutsche Post Foundation and its President, Klaus Zumwinkel, who also serves as President of IZA. Established for the purpose to foster research, science and education, the Deutsche Post Foundation has been providing IZA with substantial funding for more than 20 years now, thereby ensuring its financial and intellectual independence. As required by law, the Deutsche Post Foundation itself acts independently from its founder, Deutsche Post DHL.

During the crisis of the German labor market at the end of the 1990s, the vision of IZA’s founders was to establish a new, independent research institute that would be able to concentrate entirely on labor market research and evidence-based policy advice. Free from the constraints of commissioned research and other dependencies, IZA was charged with developing sustainable concepts for the future of work. This initiative of the Deutsche Post Foundation is still unparalleled in the German research landscape. It has not only created ideal working conditions for IZA as a non-profit research institution, but it has also pushed German labor market research in general towards greater independence and international competitiveness.

Local and global

IZA has always aimed at reconciling scientific excellence with impartial policy advice. Under the leadership of its founding director, Klaus F. Zimmermann, the institute rose within a few years to the top of international labor economics and found its role as a place of professional communication between science, politics and society. IZA maintains its headquarters in Bonn, the former German capital, which has seen many political and often visionary debates in the past – a tradition that has also inspired IZA.

The international team at our headquarters, and our fellows and affiliates worldwide, are the key assets of IZA. Our success would not have been possible without the global network activities coordinated from Bonn. The combination of a local research center and global network has enabled IZA to swiftly bring together expert groups to work on specific projects dealing with current challenges of labor market policy. Hardly any other research institute has this sort of infrastructure, which has proven its worth over the past 20 years.

The constant exchange within the network ensures that IZA always remains up-to-date and incorporates the latest empirical findings and research methods into its work. This is what drives our impact and credibility.

Milestones

In numerous independent research reports for German, European and international institutions, as well as in various scientific publications, IZA has always critically but constructively assessed labor market policies and developments. IZA has been advising, among others, the European Commission, the European Parliament, national ministries, foundations and global institutions such as the World Bank or the OECD.

These are some examples of notable achievements in IZA’s history of research and policy advice:

- supporting the German government’s Independent Commission on Immigration with analyses of the short- and long-term demand for immigration to fill labor shortages;

- accompanying the Hartz reforms in Germany with comprehensive evaluation studies;

- constructing the IZA/IAB Administrative Evaluation Dataset (AED) and the IZA/IAB Linked Evaluation Dataset 1993-2010 (LED), which link administrative data with survey data, thus enabling new approaches to evaluate the effectiveness of active labor market policies;

- developing the IZA Policy Simulation Model (IZAΨMOD), a behavioral microsimulation model regularly used to assess the labor market and distributional impact of social policy reform proposals;

- evaluating pilot projects for the use of anonymous job applications at the federal and state level in order to assess the potential of this approach to combat discrimination in the hiring process and to promote diversity;

- analyzing demographic change to estimate future shortages of skilled labor in the German and European labor markets;

- coordinating the GLM|LIC initiative on behalf of the UK Department of International Development (DFID), which supports a large number of research projects aimed at improving living conditions in low-income countries;

- reaching framework agreements with the European Parliament and federal ministries to provide decision-makers with timely expertise on specific labor market topics;

- directing the conception and implementation of a large-scale project for the German government to evaluate federal policies to promote the social and labor market integration of refugees.

All these activities share IZA’s main objectives to facilitate communication between science and practice, to make labor market research more visible, and to encourage labor economists to provide evidence-based policy advice.

Promoting research – through cooperation and competition

We are proud that our approach has proven successful and has led other institutions to adopt our understanding of labor market research as a constructively critical partner in policymaking. IZA has partnered with many of these institutions over the years, but also engages in fair and mutually respectful scientific competition that serves to advance our discipline.

We believe that our work has contributed to improving the process of policy design and evaluation, which today relies much more strongly on scientific expertise than in the past.

Rooted in our tradition as an impartial source of research and policy advice, IZA will further sharpen its thematic focus on the future of work, while continuing to exercise its role as a global cluster of excellence in labor market research.