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Mr. Sakai Ando, Mr. Ravi Balakrishnan, Bertrand Gruss, Mr. Jean-Jacques Hallaert, La-Bhus Fah Jirasavetakul, Koralai Kirabaeva, Nir Klein, Ana Lariau, Lucy Qian Liu, Mr. Davide Malacrino, Mr. Haonan Qu, and Alexandra Solovyeva
In 2020, the COVID-19 pandemic caused by far the largest shock to European economies since World War II. Yet, astonishingly, the EU unemployment rate had already declined to its pre-crisis level by 2021Q3, and in some countries the labor force participation rate is at a record high. This paper documents that the widespread use of job retention schemes has played an essential role in mitigating the pandemic’s impact on labor markets and thereby facilitating the restart of European economies after the initial lockdowns.
International Monetary Fund. Strategy, Policy, &, Review Department, and International Monetary Fund. African Dept.

secondary (predominantly female) earners that can potentially generate large efficiency gains and improve aggregate labor market outcomes; and (v) using tax credits or benefits for low-wage earners to reduce the net tax liability thereby increasing the net income gain from accepting a job. These policies can be particularly effective in advanced economies and some developing countries. With growing recognition that gender equality promotes economic stability and growth, the IMF has scaled up its work in this area and is committed to continue these efforts . Work by

International Monetary Fund. Research Dept.

international dimensions of labor market outcomes. According to their study, appreciation of the dollar, while negatively affecting aggregate labor market outcomes, may improve employment conditions in some sectors, particularly those with a high import share. Amiti and Pissarides (2004) consider the nexus between trade liberalization and interregional labor and firm allocation and demonstrate that trade liberalization, through reduced trade costs, may lead to increased industrial agglomeration, more interregional trade, and more efficient labor matching. Trade

Mr. Sakai Ando, Mr. Ravi Balakrishnan, Bertrand Gruss, Mr. Jean-Jacques Hallaert, La-Bhus Fah Jirasavetakul, Koralai Kirabaeva, Nir Klein, Ana Lariau, Lucy Qian Liu, Mr. Davide Malacrino, Mr. Haonan Qu, and Alexandra Solovyeva

Contributions to Aggregate Labor Market Outcomes A. Sectoral Analysis of Okun’s Law and Its Drivers B. Is the COVID-19 Crisis Different? 6. The Role of JRS during the Pandemic 7. Labor Market Recovery Prospects A. Near-Term Unemployment Prospects: What Does a Macro Okun’s Law Approach Suggest? B. Using a Sectoral Approach to Illustrate Potential Reallocation Needs over a Longer Horizon 8. Designing Labor Market Policies amid High Uncertainty A. Adjusting Job Retention Schemes B. Facilitating Reallocation C. Minimizing Workforce Scars and

Zaijin Zhan

-country variations in aggregate labor market outcomes at the macro level. An early classical example is Blanchard and Wolfers (2000) , which argues that labor market institutions and their interactions with shocks explain most of the heterogeneity in the unemployment rate cross European countries. For this line of literature, Bassanini and Duval (2006) provides a comprehensive survey of the impact of policies and institutions. Empirical results have been largely mixed in this area. Among the key variables identified by the literature, higher unemployment benefits and labor

International Monetary Fund. European Dept.

the relevant index falling slightly below the OECD average – although still exceeding some other transition economies and some countries of comparable income levels (chart). On the other hand, regulations concerning temporary contracts were tightened, and remain somewhat more restrictive than the OECD average. More importantly, the regulatory regime regarding collective dismissals was not changed by the reform, and remains relatively restrictive. EPL Index - Individual Dismissals, 2013 Source: OECD 15. Post-reform aggregate labor market outcomes improved

International Monetary Fund. Strategy, Policy, &, Review Department, and International Monetary Fund. African Dept.
The economic and social imperative for women’s economic empowerment is clear. Greater gender equality boosts economic growth and leads to better development outcomes. It contributes to reducing income inequality and boosting economic diversification and, in turn, supports economic resilience. Gender equality is one of the 17 global UN Sustainable Development Goals, which provide a roadmap for ending poverty, protecting the planet, and ensuring that all people enjoy peace and prosperity. The G7 has emphasized the need for closing the gender gap. The Taormina Leaders’ Summit in 2017 renewed the emphasis on promoting women’s empowerment, which the leaders see as a crucial contribution to promoting sustainable development. In this regard, leaders committed to mainstreaming gender equality into all their policies. This is carried forward by Canada’s G7 Presidency. With growing recognition that gender equality promotes economic stability and growth, the IMF has scaled up its work in this area and is committed to continue these efforts. Work by the IMF will focus on (i) deepening its understanding of the economic benefits of women’s empowerment, both in the labor market and through more equal opportunities for boys and girls, also against the background of persistent megatrends, including in an environment of rapid technological change; (ii) integrating the analysis into Fund policy dialogue with member countries; (iii) providing customized assistance, workshops, and peer-learning courses in areas such as gender budgeting; and (iv) expanding collaboration with other international institutions on the subject to benefit from complementary areas of expertise.
International Monetary Fund. Strategy, Policy, &, Review Department, and International Monetary Fund. African Dept.

(predominantly female) secondary earners by replacing family taxation with individual taxation can potentially generate large efficiency gains and improve aggregate labor market outcomes. Many advanced economies, in particular, European countries, have the potential to reduce the secondary earner tax wedge significantly ( Elborgh-Woytek and others, 2013 ). Using tax credits or benefits for low-wage earners . These “in-work” tax credits reduce the net tax liability thereby increasing the net income gain from accepting a job. Typically, they are phased out as income rises

Mr. Umidjon Abdullaev and Mr. Marcello M. Estevão

substantial and their use in a specific country context requires a careful assessment of their potential benefits and costs. Moreover, the effectiveness of ALMPs can be substantially undermined in an environment with weak labor demand and slow growth. There is plenty of evidence on the effectiveness of ALMPs. For instance, relatively long time series data available for many OECD countries allows estimating the effect of ALMPs on aggregate labor market outcomes. In particular, Estevão (2007) show that ALMPs have been effective in raising employment rates in the business