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OECD Employment Outlook 2015

image of OECD Employment Outlook 2015

The 2015 edition of the OECD Employment Outlook provides an in-depth review of recent labour market trends and short-term prospects in OECD countries. Chapter 1 looks at recent labour market developments focusing on minimum wages, while Chapter 2 draws on the OECD’s International Survey of Adult Skills and considers skills and wage inequality. Chapter 3 looks how policies to get job seekers back into work can help make labour markets more inclusive, while Chapter 4 examines job quality in terms of earnings mobility, labour market risk and long-term inequality. Finally, Chapter 5 discusses how job quality in emerging economies can be enhanced.

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The quality of working lives: Earnings mobility, labour market risk and long-term inequality

This chapter analyses how earnings mobility – defined as moving up or down the earnings ladder and in and out of work – affects labour market risk and long-term inequality. To this end, it employs a simulation methodology to analyse workers’ careers using short panel data for 24 OECD countries. On average, three quarters of inequality in a given year is shown to be permanent in nature, while the remainder evens out over the life cycle as a result of mobility. Mobility does not appear to be higher in countries with more inequality. Chronic unemployment, weak cognitive skills, atypical work arrangements and poor productivity in firms are major determinants of low long-term earnings. Unemployment insurance plays a major role in securing worker careers by mitigating income risks due to unemployment. Minimum wages reduce the risk of extreme low pay, but their impact is muted in the long-term due to the equalising effect of mobility and potential adverse employment effects.

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