Labor market transitions—between jobs, from school or inactivity to work, and in and out of unemployment—affect income flows and household welfare, labor productivity, and social cohesion. This paper discusses the types of market and government failures that can affect these transitions. We use rotating panels for Brazil and Mexico in the 2000’s to describe labor market transitions along the life-cycle and identify the types of constraints faced by different population groups. The analysis shows that there is large heterogeneity in the mobility patterns across employment states between and within countries. The paper then reviews the types of policies and implementation arrangements that can be considered to facilitate welfare increasing labor market transitions for different country contexts and sub-populations. These include social insurance programs, as well as programs that address skills gaps, deal with limited information in the labor market, provide access to credit, and stimulate labor demand. Looking forward, we flag implementation challenges and lessons learned for policy makers.
Almeida, R.K.; Robalino, D.A.; Weber, M. Facilitating Labor Market Transitions and Managing Risks. The World Bank, Washington DC, USA (2012) 49 pp.