Third Dimension of Labor Markets

The book contains selected papers that diagnose labour market developments in Brazil, present relevant international experience, and discuss policy implications of possible labour market reforms. The functioning of Brazil's labour market has intrigued analysts and policymakers for decades. It has been characterised both as flexible and efficient and -- at the other extreme -- as segmented and inequitable, and almost everything in between. This book aims to address this debate on how the Brazilian labour market functions. It does so not by focusing on labour market functioning itself but on its outcomes. After all, what is central are labour market outcomes, such as adequate employment growth so that job-seekers can find gainful employment, acceptable worker productivity levels that are fairly compensated, and reasonable income security for workers and their households. This book addresses these labour market issues using existing research and original work on the issues of interest in Brazil and the relevant international experience. The chapters have been structured in a way such that the Brazilian case is always contrasted with lessons of the international experience. The idea is to make it clear that labour market institutions are the main link connecting labour market outcomes with macroeconomic performance. In that sense, the analysis presented here is pioneer in Brazil, as it portrays in a clear and structured way the three sides of the labour market: labour demand, labour supply and the institutional framework. The novelty is exactly in the fact that the editors consider labour market institutions, including regulations and interventions, as the main source of concern in the search for a well functioning labour market. Throughout the book, it will become clear that the goals of poverty reduction, greater productivity, lower unemployment, and less inequality will continue to be a distant dream unless governments face up to the challenge of aligning incentives (institutions) with outcomes (labour market performance).