What do innovative countries have in common?
06, JuneDuring LAB4+ it became clear that these are societies with young, qualified human capital that have transformed into knowledge economies, sell primary matter with added value, ...
Chile
By Ricardo Rojas Parr. In 2010, the economists Peter Diamond, Dale Mortensen and Christopher Pissarides were given ...
By Ricardo Rojas Parr.
In 2010, the economists Peter Diamond, Dale Mortensen and Christopher Pissarides were given Nobel Prize of Economy, because of their analysis of the markets with search frictions. Their contribution to the labour environment is important since they managed to explain with great accuracy how that market works and why there is unemployment in a country even when there are vacancies to cover.
One of the reasons they give, to understand this phenomenon, is connected with the difficulty that companies have to contact unemployed people quickly. The justification is based on the fact that there are problems which affect the communication between both parts and makes it difficult for unemployed people to contact the companies which have vacancies.
The second reason is related to the fact that some people prefer to reject a labour opportunity and go on unemployed till they find a better job which fulfills their level of expectations as regards salary, personal achievement, etc.
Diamond, Mortensen and Pissarides explain, besides that the State´s intervention in that market, though economic policies which try to low costs in the job search can affect the unemployment levels in the countries. The creation of job notice boards and the provision of subsidies for unemployed workers are two of those measures. For them, the first is a fundamental tool because it facilitates a more efficient matching between unemployed people and companies. As regards the second, they consider that the high unemployment subsidies or giving them for a long time, generate bad effects on the agents because they discourage the acceptance of labour opportunities and they extend the search periods (long term unemployment)
When it comes to Colombia, several governmental strategies have been designed and implementd to decrease the present faults in the labour market. On one hand, the new public service of employment has aimed to improve the articulation between national labour demand and offer, though the reduction of searching time and the costs associated in this process. This agency, which also offers assessment and training to unemployed people so that they strengthen their profile according to the companies´demands, tries to increase significantly the match among the parts.
On the other hand, we can suppose that, for the definition of the unemployed worker subsidy which started in October 2013, the government took into consideration the reflections of the three Nobel prizes and that is why the amount of money given is not high enough to make them reject labour offers (a salary and a half of the minimum national salary) and the period is relatively short (6 months). This situation would lead to a better labour market and would improve the lifestyle of the people who take part in it.
Ricardo Rojas Parr is Economist and University Professor.
Column originally published by Portafolio- Colombia