G²LM|LIC

This paper analyses labour market segmentation within and between the formal and informal manufacturing sector in an emerging economy, Zimbabwe, and studies the potential role of labour market policies and rent-sharing in driving these outcomes. The estimates exploit the panel dimension of a matched employer-employee dataset of Zimbabwean manufacturing firms collected between 2015 and 2016 that allows for the inclusion of firm and individual characteristics in identifying sources of segmentation. Evidence of low worker mobility between the formal and informal sector, and between contract and permanent jobs in the formal sector, suggesting the presence of segmented labour markets. Mincerian wage regressions corroborate this finding revealing high wage differentials between formal and informal workers that is more pronounced for lower wage workers, as well as wage gaps between permanent and contract workers within the formal sector. The complementarity between union membership and permanent employment status is found to be a key source of wage segmentation within the formal sector, with rent-sharing the channel driving this outcome. These findings underscore the multi-tiered nature of labour market segmentation in Zimbabwe and illustrate how the intersection of labour market regulations governing unionisation and permanent employment contracts raises the bargaining power of workers.

Can making jobs easier to find and keep raise female employment in societies where gender norms discourage women from working? We report the results of an experiment in Egypt — a country where social norms limiting female employment are widely held, but many women nevertheless look for work and identify lack of childcare as the key barrier to employment — designed to help women with young children obtain employment. The study cross-randomized job matching (making jobs easier to find) and child care subsidies (making jobs easier to keep). Take-up of the child care subsidies was low, and while nearly half of the women who were offered the opportunity signed up for the job-matching services, only some applied to jobs and very few obtained jobs through the services. Neither intervention led to appreciable changes in women’s employment or the use of child care. We present evidence that a mismatch between desired non-pecuniary job attributes and the attributes of available jobs limited the impacts of the interventions. While this may be partly due to gender norms, we also document a mismatch between desired and existing job attributes for couples who do not report restrictive norms. Overall, our results demonstrate the limits of female employment interventions that do not address — by either tackling norms or strengthening job amenities — the mismatch between desired and available non-pecuniary job attributes.

The Covid-19 pandemic and the lockdown policies that followed led to a sharp economic downturn. Many countries used cash transfers to curb the negative effects on vulnerable households but little is known about the effects of such transfers in a time of crisis, when markets are closed and movements are restricted. In this paper, we study the impacts of cash transfers to households in Uganda. Leveraging differences in the timing of the intervention, we show that the temporary cash transfers improved business outcomes during the pandemic and had persistent, positive effects on household income, savings and food security.