IZA Newsroom

IZA – Institute of Labor Economics

Mark Fallak

Happy power couples?

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A happy relationship is what most people strive for in private life. At the same time, we try hard to succeed in our jobs. If we are lucky, we find happiness in both departments, at least for some time. What is well known is that for this to happen, working life and private life need to strike a balance, so that none of them comes at a constant cost for the other. Much less attention has been paid to interference between working life and private life that might in fact be advantageous, that is if partners are also work-linked.

In fact, many of us are work-linked in some form, as our partners work in the same industry, have the same occupation or even the same employer. Some prominent examples may come to mind, such as Özlem Türeci and Ugur Sahin, the copreneurial couple who invented the first Covid-19 vaccine, or lawyers Ruth and Marty Ginsburg whose careers mutually benefited from sharing the same occupation.

But are these links actually beneficial and, if yes, in what area of life do they pay off? Is a work link too much of an interference between private life and work life when no line can be drawn between the two areas? Juliane Hennecke and Clemens Hetschko answer these questions in a new IZA discussion paper.

The two researchers from Auckland University of Technology and University of Leeds analyze the well-being of work-linked couples in Germany. Based on nationally representative data, the analysis focuses on industry-linked and occupation-linked couples, as compared to couples where both partners work in different fields. To identify advantages and disadvantages in different areas, the authors examine people’s satisfaction with their incomes, jobs, family lives and leisure, besides general life satisfaction.

Higher satisfaction, but not for the self-employed

The study confirms what the authors call the ‘power couple hypothesis’. Various data analyses identify a positive effect of being work-linked on overall life satisfaction, which seems to be especially driven by much higher income satisfaction in work-linked couples. Job satisfaction also benefits from the link, unlike satisfaction with leisure and family life.

The positive effects of being work-linked are most pronounced in high-skilled workers. These results imply that work-linked partners may help each other climb the career ladder, presumably by providing mutual support, sharing networks and information. Strikingly, being work-linked to the partner does not benefit self-employed workers. This might be an example of a work link being too close.

According to the authors, their findings may also hold implications for recruitment policies. When hiring specialized talents who need to relocate, firms often provide job search support for partners. Given the well-being effects of being work-linked, there may be a case for seeking job opportunities in the same industry, as happier workers are also more productive workers.

Men try to avoid being beaten by a woman

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Gender differences in paid performance under competition have been found in many laboratory-based experiments, and it has been suggested that these may arise because men and women respond differently to psychological pressure in competitive environments. A recent IZA discussion paper by Alison Booth and Patrick Nolen explores these gender differences further in a laboratory experiment with 444 subjects.

The experiment comprised four distinct competitive situations: (i) the standard tournament game where the subject competes with three other individuals and the winner takes all; (ii) an anonymized competition in which an individual competes against an imposed production target and is paid only if s/he exceeds it; (iii) a ‘personified’ competition where an individual competes against a target based on the previous performance of one anonymized person of unknown gender; and (iv) a ‘gendered’ competition where an individual competes against a target based on the previous performance of one anonymized person whose gender is known.

Women do not respond to changing competitive pressure

The analysis shows that only men respond to pressure differently in each situation, whereas women responded the same to pressure no matter the situation. Moreover, the personified target caused men to increase performance more than under an anonymized target and, when the gender of the person associated with the target was revealed, men worked even harder to outperform a woman but strove only to equal the target set by a male.

In other words, while women shy away from competition, once in a competitive environment their performance is not worsened, while men will respond positively. Therefore, the authors conclude that policies to raise the share of females in competitive environments could increase overall output and productivity.

Even those who are fair can discriminate

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Recruitment tests and assessment centers are commonplace in both the private and public sectors to find the most qualified applicants for a specific job. But while anonymously graded tests are generally deemed to be procedurally fair, they still carry the risk of disadvantaging certain applicant groups if test instruments are used that have no relevance for actual job performance.

A recent IZA discussion paper by Dominique Meurs and Patrick A. Puhani finds such “systemic discrimination” in the recruitment process for the French civil service. The study compares the entry exams for senior regional administrators with evaluations and tests administered after a one-year trainee program. The trainee program is much more practical than the recruitment exams and also includes an internship component.

Women outperform men on the job

It turns out that women do better in the trainee program than men, even when comparing women and men with the same results in the entry exam. This suggests the recruitment exams tend to overlook job-relevant positive qualities of female applicants, thus favoring men – even though the exams are graded anonymously and women may even be slightly favored in the non-anonymous job interview.

Further analysis shows that an essay exam on common culture, a minimally job-related exercise, leads to the disadvantage for women. While the discrimination is not very pronounced, it is still statistically significant. Although it has been suspected that elites try distinguish and protect themselves via a “hidden curriculum” of hard-to-acquire codes not taught in the general school system, the authors suggest the discrimination they found was probably unintended.

Nonetheless, they argue that their results should raise awareness for “systemic discrimination,” which can and should be avoided by choosing recruitment criteria that clearly signal productivity on the job. They also point out that some situations that look like gender or ethnic discrimination may at least in part be cases of cultural discrimination.

Does technological progress promote gender equality?

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As societies transition to more advanced stages of technological and economic development, an important question arises about how these processes affect gender equality in these societies. A new IZA paper by Alina Sorgner provides a comprehensive literature review on the relationship between gender equality and industrialization in the context of developing countries.

The study highlights historical developments, such as pre-industrial preconditions of contemporary levels of gender equality. It also provides empirical evidence for the current situation and discusses new trends, such as Industry 4.0 and premature deindustrialization, which may affect gender equality in developing countries.

Gender inequalities are region-specific and persist over time

Gender inequalities, for instance, in labour market participation or participation in politics, seem to have their roots in local pre-industrial conditions. The transitioning of pre-industrial societies to a more advanced stage of technological development, such as the Neolithic Revolution and the use of more advanced technologies in agriculture, for example the plough, have likely contributed to the emergence and strengthening of gender-specific roles. One of the most striking results is that these roles tended to persist over time, even when societies transitioned to a more advanced stage of development.

This finding has important policy implications. First, the determinants of gender equality are at least partly defined at a rather narrow level of regions defined within countries rather than at a broad level of nations. The existing initiatives to promote gender equality often disregard regional variations in the determinants of gender equality. However, regional differences in gender equality within a country are likely to be substantial, which is due to sectoral structure of regional economies, region-specific social norms and values regarding appropriate gender roles in a society, and local historical contingencies, among others. This implies that initiatives to promote gender equality should entail a location-based approach. The “glocalization” of efforts to promote gender equality seems to be a promising way to achieve this goal: While the promotion of gender equality is a global objective, it can best be achieved by considering local factors that might affect gender equality.

Second, given the strong persistence of regional gender-specific roles over time, policymakers need to make a long-term commitment to fighting gender inequality. It is fairly unlikely that short-term measures, particularly if they do not account for local conditions, will be successful in promoting gender equality.

The pace of industrialization matters for gender equality

Results presented in this paper suggest that developing countries that industrialize at a high pace are generally less gender equal compared to developing countries with a lower speed of industrialization. Importantly, this result varies significantly across regions and across countries within regions. This variation could be explained, for instance, by differences in the sectoral structure of developing countries’ economies, which determine the availability of opportunities for female labor.

Women in some developing countries, for example, had high labor market participation rates in certain manufacturing industries, such as textile and apparel, whereas a high share of mining and quarrying industries in the economy was associated with low female labor force participation rates. This pronounced variation of female labor force participation across sectors might also explain the strong variation in the levels of gender equality across regions within countries. Therefore, the issue of gender equality needs to be addressed with a special attention in developing countries that industrialize at a high pace.

News trends of Industry 4.0 and premature deindustrialization

A recent trend of the de-feminization of the manufacturing sector in selected developing countries seems to be driven at least partially by the technological upgrading within labor-intensive sectors. This trend is particularly important in the context of the Industry 4.0. One example is the textile industry, which experienced a strong decline in the share of female workers, even though this share is still high. This industry is characterized by strong transformations due to the introduction of so called Fourth Industrial Revolution (4IR) technologies.

At the same time, new 4IR technologies are likely to have labor-displacing effects on workers with specific types of skills. It appears that women in developing countries are less likely than men to possess skills that shield them from the labor-displacing effects of new digital technologies, such as analytical, non-routine manual, interpersonal, advanced ICT and socio-emotional skills.

This result is robust across sectors, but gender differences are more pronounced in manufacturing than in services. Moreover, developments in Industry 4.0 will result in a higher demand for workers with advanced ICT skills. However, gender differences in the level of ICT skills and access to digital technologies are particularly large in developing countries. Thus, education programs specifically designed for women are needed to reduce this digital gender divide. Moreover, further action should be taken to improve opportunities for women to take over managerial posts and other decision-making positions.

Last but not least, premature deindustrialization is a relatively new trend in developing countries that signifies a decreasing share of manufacturing employment among late industrializers at a lower level of economic development compared to early industrializers. This trend is likely to amplify the defeminization of manufacturing labor. The transition to post-industrial societies may also result in new types of social inequalities, for instance, related to the hollowing-out of the middle class. The author stresses that these developments must be closely monitored in developing countries to identify the emergence of potentially new gender inequalities in a timely manner.

Working from home continues to increase

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To reduce the risk of infection at work, Germany’s Federal Labor Ministry issued a new regulation in late January 2021, mandating employers to offer work from home to all employees whose tasks are suitable for remote work. A representative survey conducted by IZA in mid-February assesses the incidence of, and experience with, working from home, as well as changes in working conditions due to the new regulation, employees’ perceived risk of infection at the workplace, and general stress perceptions.

Almost half of employees work at least partly from home

According to the survey, 49% of employees worked from home at least some of the time, while 34% worked mainly or exclusively from home in February. Compared to January, 22% of employees worked more hours from home.

One-fourth of respondents stated that the new workplace health and safety regulation had an impact on workplace arrangements at their firm, with more coworkers switching to remote work or increasing their hours working from home. Those who did not notice any changes attributed this mainly to already existing remote work options before the regulation came into effect, or to the fact that their jobs cannot be done from home.

Only one in five employees cites a lack of suitable technical equipment as a reason for not working (more) from home. While some plan to ask their employer to increase their share of work done from home, the overwhelming majority of employees are satisfied with the options currently offered by their firm.

High satisfaction with measures taken by employers

In addition to the increase in work from home, the new regulation also seems to have led to improved infection control measures in the workplace. One-third of employees noted that their firm tightened social distancing at work when compared to December 2020. One-fourth indicated their firm had started providing medical protective masks, while 12% (22% in small firms) did not receive them from their employer.

Most employees are satisfied with the way their employer handles infection control. Only 17% are very concerned they could become infected at work. With regard to the provision of technical equipment, 85% stated they received computers, laptop or tablets, and 44% were given smartphones. Notably, female employees were less likely to receive technical equipment for remote work than their male coworkers.

Many employees feel a heavy workload

Gender differences also appear with respect to the perception of workload, exhaustion, and stress. 42% of employees currently feel a high or very high level of stress, which is more prevalent among women (48%) than among men (36%).

The rising stress level also seems to have a negative impact on life satisfaction. On a scale from 0 (completely dissatisfied) to 10 (completely satisfied), the surveyed employees reported an average value of 6.7. At the outset of the pandemic in April 2020, a representative survey of the entire German population had recorded an average of 7.4 points.

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The IZA study was conducted on behalf of the Federal Labor Ministry and is available in German language only.

Targeted COVID-19 relief programs improve compliance with confinement measures

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Until a vaccine becomes available for the entire population, social distancing is doomed to remain a matter of life or death. Compliance with social distancing measures requires civic-mindedness, law enforcement, and the capacity to satisfy basic needs from home. In particular, stay-at-home orders can be unbearably unfair to people who can neither work from home nor afford food delivery.

Enlightenment thinkers like Locke and Rousseau taught that inadequate or unfair policies weaken the social contract between citizens and the state, encouraging agents to withdraw their cooperation. In a pandemic crisis, the belief that the policy response is unsustainable or unfair may discourage compliance with emergency rules, resulting in the worsening of the epidemiological situation.

In a new IZA Discussion Paper, Claudio Deiana, Andrea Geraci, Gianluca Mazzarella and Fabio Sabatini study how to improve social distancing in the wake of the pandemic recession. The authors assess the impact of a food relief program on compliance with social distancing mandates in Italy, the early European epicenter of the pandemic.

Food stamps for the economically disadvantaged

At the end of March 2020, the Italian government launched emergency measures aimed at providing food stamps to economically disadvantaged groups. The authors combine information on the allocation of the program’s resources across Italian municipalities with data tracking citizens’ movements through mobile devices and vehicles’ navigation systems, anonymized and aggregated at the municipality level. As social distancing requires staying at home and renouncing unnecessary activities, the empirical analysis employs human mobility as a proxy for compliance.

To assess the causal impact of the aid program, Deiana and colleagues exploit nonlinearity in the allocation of funds. A quota of resources was distributed to municipalities depending on the deviation of their per capita income from the national level in 2017, more than two years before the pandemic. This design generated a random treatment assignment in a neighborhood of a threshold point. A -1000€ per capita deviation from the cut-off determines an increase in municipality transfers of 0.58€ per capita (i.e., 0.58€ multiplied by the population size), to be distributed to the limited group of beneficiaries. The remaining resources were allocated proportionally to municipalities’ population.

Mobility decreased with the amount of transfers received

The authors find robust evidence that, after the introduction of the program, mobility decreased with the transfers received by each municipality. The effect is statistically significant and economically sizable. In the week of the policy announcement, the transfers cause a drop in mobility of 3 percentage points from the baseline level observed before the pandemic crisis (between January 13 and February 16, 2020). Two weeks later, the impact is still negative, statistically significant, and sizable. Given an average drop of 60 percentage points in the neighborhood of the threshold point in the same week, the increase in transfers determined by a -1000€ per capita deviation from the threshold point causes a decrease in mobility by 5%. The decline in mobility persisted for approximately two more weeks.

The size of the effect suggests that more than one mechanism may have been at work in channeling the impact of the emergency measures. The program probably reduced mobility needs and the marginal utility of contravening stay-at-home orders for the targeted group. However, behavioral spillovers may also have occurred, affecting a larger population than the limited pool of the program’s beneficiaries. Improving the fairness of the COVID-19 policy response may have strengthened lower-income agents’ motives for staying at home by reinforcing the social contract between citizens and the institutions.

Targeted relief measures vs. general fiscal stimuli

The authors’ results put forward actionable insights for policymakers. Relief programs must be designed also in light of their potential impact on social distancing. For example, a recent study finds that support to the hospitality sector led to a multiplication of new infection clusters in the UK, probably due to lesser social distancing. Instead, alleviating the essential needs of economically disadvantaged groups can significantly encourage compliance with social distancing measures.

Compensation measures targeting economically disadvantaged groups can be more effective than indiscriminate fiscal stimuli to mitigate pandemic economic disruption and encourage compliance simultaneously.

IZA Crisis Monitor assesses national policy responses to the COVID-19 pandemic

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While the unprecedented COVID-19 pandemic severely affects societies, economies and labor markets, the impact differs across countries, socio-economic groups and sectors within in countries. For the IZA Crisis Response Monitoring, IZA invited selected labor economists as country experts to jointly monitor the labor market and social policy responses that have been deployed to help mitigate the imminent crisis effects.

Policy inventories released by the OECD and other institutions show significant cross-country differences in policy responses. The IZA initiative aims at providing an independent assessment of actual crisis-related policy responses, based on a qualitative survey among the country experts. Consisting of a set of eight questions, the second wave of the survey covers a sample of 13 European and G7 countries heavily affected by COVID-19.

Second report available online

The second crisis management report is now available on IZA’s “COVID-19 and the Labor Market” website. The crisis monitoring page contains all country reports in an interactive format that makes for easy comparison (see screenshot), as well as PDF downloads including a summary of the most striking similarities and differences between countries.

While labor markets continue to be heavily affected by the pandemic, countries have started to extend and adjust stabilization measures that were introduced at the outset of the crisis. In an overview, IZA researchers Werner Eichhorst, Paul Marx and Ulf Rinne address three essential elements of the crisis response that require particular attention: the further development of short-time work schemes, ad hoc income protection for the self-employed, and the specific difficulties labor markets are currently facing.

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Read also interviews with our country experts from Sweden, Austria, The Netherlands, and Canada.

Suddenly a stay-at-home dad?

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In most developed countries, men on average contribute less to domestic unpaid work than women. Although this so-called “gender care gap” can explain phenomena like the motherhood penalty and gender inequality in the labor market in general, there still is no clear evidence on its origins and drivers. This is why policy makers all around the world are still puzzled about how fathers’ involvement in domestic production can be increased in order to enable women, especially mothers, to enter or remain in the labor market.

A number of European countries introduced father quotas to their parental leave schemes to encourage fathers to consider domestic work as an outside option. However, earlier research shows that there is only a rather small overall long-term effect on paternal engagement beyond the short-term paternity leave take-up. A major disadvantage of the research on paternal leave-taking is that it affects a very small and select group of men and might thus not be representative of most fathers.

Therefore, researchers and policy makers are especially interested in the broad effects of short-term shifts of domestic responsibilities in households affected by the COVID-19 pandemic, for example by working-from-home requirements as well as increases in unemployment. Because more women are employed in critical occupations, this might disproportionately affect men. However, investigating the long-term effects of these shocks is a dream of the future.

A recent IZA discussion paper by Juliane Hennecke and Astrid Pape provides novel evidence on the short- and long-run effects of a sudden shock on paternal domestic availability, through a job loss, on the allocation of domestic work within couples. Using German survey data, the authors find that paternal child care and housework significantly increase on weekdays in the short run but no similar shifts can be identified on weekends.

Effects are positive and persistent for fathers who remain unemployed and are especially pronounced if the female partner works. Nevertheless, in the long run, re-employment reverses the effects, and re-employed fathers spend significantly less time on child care and housework than before the job loss due to new professional challenges. In addition, the authors also find significant changes for female partners as well as for the cumulative household time investments and the outsourcing of tasks.

The authors conclude that paternal availability can induce changes within families to a more equal division of tasks and a reduction in outsourcing, but a strong reversal of these arrangements in the case of re-employment. There is no indication of long-term changes in comparative advantages, gender role attitudes, and emotional bonds in the affected families.

This provides important policy implications as it indicates that overcoming existing external barriers to increased paternal involvement, such as societal gender norms, workplace practices and expectations, may be preferable to short-term impulses, such as parental leave quotas, which are likely to have few long-term consequences even if their take-up were to increase.

Measuring individual-level poverty in developing countries

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In developing countries, households are typically large and can include several generations and many children. In large families, individuals are allocated a smaller share of the household budget, but they tend to benefit from scale economies in terms of joint consumption. Quantifying this trade-off is necessary to compare individuals’ well-being across households and may be critical for the correct measurement of poverty and inequality.

In a recent IZA paper, Rossella Calvi, Jacob Penglase, Denni Tommasi, and Alexander Wolf shed new light on this trade-off. First, they develop a new approach to identify the intra-household allocation of resources and scale economies in a collective household model. They then apply their approach to construct estimates of individual consumption for Bangladesh and Mexico.

Country differences

In Bangladesh, they find a modest amount of consumption sharing, suggesting that ignoring economies of scale is not likely to lead to a large degree of error in individual consumption estimates. By contrast, they estimate significant economies of scale in Mexico. The model estimates also indicate that women in Mexican families are allocated a larger fraction of household resources relative to women in Bangladesh. In both countries, children command the smallest share of household resources, but their disadvantage is more pronounced in Bangladesh.

The authors compute country-specific poverty rates that are adjusted for scale economies and intra-household inequality. They find that standard equivalence scales widely overstate scale economies (and hence understate poverty). They also show that ignoring scale economies may lead to an overestimation of poverty rates. Still, the extent to which this is the case depends on the degree of joint consumption in different contexts and how far from the poverty line households are.

Brexit referendum vote caused an increase in hate crime

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The campaign ahead of the Brexit referendum brought immigration to the forefront of the public debate. The referendum result, much like Trump’s election in 2016, was a surprise. It defied both the betting markets and the polls. The true extent of society’s private anti-immigration sentiment was now public.

There was a documented rise in hate crime after the Brexit referendum result. The reported spike in racist or religious abuse incidents in England and Wales within the first month since the referendum has been attributed to the vote itself. While these changes coincided with the referendum, they could have been correlated with the vote itself, rather than triggered by it. Specifically, it is possible that other economic and political factors resulted in both the Brexit vote and the changes in hate crime incidents. The vote may have also led to increased reporting of hate crimes by victims and witnesses or better recording by the police. Both trends could have been further amplified by (social) media reporting.

Hate crime as a breakdown of social norms

A recent IZA Discussion Paper by Joel Carr, Joanna Clifton-Sprigg, Jonathan James, Sunčica Vujić examines the impact of the Brexit referendum result on an observable and measured breakdown in social norms – that of committing racial and religious hate crime.

Given that the event was national, identifying control groups is not obvious in this case. In order to isolate the causal effect, the paper uses racial and religious hate crime as the treatment group and other crime categories as the control group. The idea is that the Brexit vote was unlikely to impact other crimes such as burglary, shoplifting or drug use but had a direct impact on racial and religious hate crime.

The paper finds a 15-25% rise in recorded hate crime as a result of the Brexit referendum vote. This effect is concentrated in the first quarter after the referendum (July to September 2016). Specifically, the impact is largest and most significant in the first month after the referendum (July 2016). Thereafter, the paper does not find a bigger increase in hate crimes relative to other crimes. This suggests that social norms can change quickly, but this change might not be long lasting.

Hate crime larger in areas that voted to leave the EU

The estimates reveal a larger relative increase in hate crimes in areas that voted to leave the EU compared to areas that voted to remain. This suggests that when the private anti-immigration sentiment was made public by the referendum, areas where more people agreed with this sentiment now had the norm updated. As a result, they were more likely to express the anti-immigrant views by committing hate crime.

The paper also provides suggestive evidence that media (traditional and social) played a role in increasing hate crime, although these effects are rather small. The paper further finds evidence that there was an increase in the probability of reporting hate crimes, having been a victim after the referendum. There were also changes to the outcomes of recorded crimes that could reflect police effort or changing police behavior.

However, the magnitude of these effects and the types of crimes affected by these changes indicate that only a small part of the observed racial and religious hate crimes increase post-referendum can be explained by a change in either victim or police reporting behaviors. Similarly, the paper shows evidence against the argument that changes in the perception of the victims resulted in these large increases in racial and religious hate crimes.