Labor Market Policy Research for Developing Countries: Recent Examples from the Literature – What do We Know and What should We Know?

This paper is focused on research in developing countries into labour market institutions, behaviour and policies. Theoretical and empirical implications of employment protection legislation on labour outcomes are analysed.

Issues that exist around the shifting from job to worker protection are discussed. Particular focus is given to the different alternatives to severance pay, including unemployment insurance and unemployment insurance savings accounts and their application to developing countries. The paper also includes an analysis of the effect of active labour market programs, particularly of training, on labour market outcomes. Finally the causes and consequences of informality in the labour market are explored. Efforts to model the informal sector are highlighted. Evidence gaps are presented, suggesting directions for future research.

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