University:
Boston University
Course:
QST AC 431 | Sustainability Reporting
Academic year:

2019
Views:

179

Pages:

27
Author:

StellarSymphony

Job Stabllity in Developing and Developed Countries: Evidence from Colombla and the United States Job Stabllity in Developing and Developed Countries: Evidence from Colombla and the United States Abstract: This paper presents the first systematic comparison of job staЬility for developing and developed countries, and Ьegins to analyze why long-lasting jobs are less prevalent in developing countries. It compares Ьoth crosssection distributions of cuпent job tenure and estimates of job retention probaЬilities ( derived Ьу following synthetic cohorts over time) between ColomЬia and the United States, and within ColomЬia Ьefore and after а major liberalization of job security legislation. Jobs for males in private sector wage employment are significantly shorter in ColomЬia than in the United States. The most striking differences in job retention probaЬilities are for workers in their first year of tenure. Small increases in these low-tenure job retention rates after the liberalization of ColomЬian job security legislation are consistent with arguments that the original legislation encouraged "rotation" of low-tenure workers, but the effects are quite small, suggesting that differences in legislation do not explain the entire cross-country retention rate difference. Cross-country job length differences diminish, but remain significant, after controlling simply for cross-country differences in the rnix of production activities. Thus even when attempting to meet similar production objectives, ColomЬian employers seem to employ fewer long-term workers. The evidence is consistent with the hypothesis that employers face greater costs of implementing long-term employment contracts or the work organization practices that such contracts facilitate. The paper discusses possiЫe reasons for such cost differences. Regardless of their source, higher costs of long-term employment contracting in developing countries may help explain why those countries exhiЬit higher rates of self employment and employment in very small estaЫishments, as well as lower levels and growth rates of labor productivity and GDP per capita. More important, а rethinking of theoretical models of cross-country growth differences (such as those following Lucas, 1988) may Ье required. Theoretical models of cross-country differences in productivity and growth have tended to abstract from employment contracting difficulties, assuming that labor with а given level of formal schooling is а homogeneous commodity that may Ье bought and sold in well-functioning spot markets free of information proЫems. They direct policymakers to Ье concerned about formal schooling levels, incentives toward R&D and technology transfer, and to the macro level institutions defining the scope for diversion Ьу producers or government officials. The evidence presented above motivates interest in а new generation of models focussing on the micro level institutions through which workers are brought into the production process. Obstacles to the development of long-term employment contracting might inhiЬit growth, both because long-term contracts may provide workers with incentives to share information that leads to productivity advance (as in Levine and Parkin, 1993, р.253-3), and because productivity may tend to advance more rapidly in the larger, modern estaЫishments that make intensive use of long-term employment contracts. Thus, where the macroeconomic environment is less staЫe, where the cost of providing workers with а given set of skills through on-the-job training is higher, or where the costs of long-term employment contracting are higher for other reasons, employers might rationally пiake fewer investments in the development of productivity-enhancing long-term employment relationships, with potentially important ramifications for both the level and growth rate of labor productivity. 25

Job Stability in Developing and Developed Countries - Evidence from Colombia and the United States

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