Coping with Crises : Why and How to Protect Employment and Earnings
Events of the past two years are a reminder that crises are a recurring phenomenon with deep and often protracted impacts on labor markets. This paper examines the challenges inherent in crafting policy responses, with particular attention to devel...
| Main Authors: | , , |
|---|---|
| Format: | Policy Research Working Paper |
| Language: | English |
| Published: |
2012
|
| Subjects: | |
| Online Access: | http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20091026093000 http://hdl.handle.net/10986/4286 |
| Summary: | Events of the past two years are a
reminder that crises are a recurring phenomenon with deep
and often protracted impacts on labor markets. This paper
examines the challenges inherent in crafting policy
responses, with particular attention to developing
countries. It focuses on the potential tradeoffs between
offsetting adverse short-term impacts and preserving
incentives for economic recovery and future growth, and
between protecting the most vulnerable and compensating
those most immediately impacted. It also highlights how
policymakers room for maneuver is constrained in crisis
times by deteriorating fiscal space, limited institutional
capacity, and mounting political pressures. Based on
empirical evidence from previous crises, the paper asserts
that taking a myopic and reactive approach may be costly and
counterproductive. Instead, it advocates a more
comprehensive approach, designed to build institutions -
such as automatic stabilizers and safety nets - that can
deliver a coordinated and coherent policy package. This
approach will make crises catalysts for institutional
changes and long-run growth. |
|---|