Tackling Brazil's labor market challenges with evidence: JOI Brazil's research agenda

Brazil's labor market faces multiple challenges, including gender and racial disparities, an aging population where many lack access to savings or a pension, and adaptation to new labor regulations and digital transformation. The Covid-19 crisis exacerbated challenges as unemployment rates in the country hit a historical high and affected millions of workers, particularly women and youth. Given the need for evidence-based solutions to address this wide array of challenges, in 2021 J-PAL launched the Jobs and Opportunity Initiative (JOI) Brazil. 
JOI Brazil funds impact evaluations of programs related to job training and matching, job creation, the future of jobs, and social issues in labor markets. The initiative aims to support vulnerable workers and entrepreneurs by promoting quality employment and informing policy discussions on economic opportunities, with a focus on cross-cutting issues such as gender, race, youth, green jobs, regional inequalities, and job quality.

What are some of JOI Brazil's main research topics?

JOI Brazil assesses the current evidence base and seeks to fill knowledge gaps around how to improve employment outcomes for people in Brazil. Here, we provide a brief summary of the existing literature on several key labor market topics and suggest future directions for evidence generation. Download the initiative's research agenda to see a complete overview.

Labor supply and matching

Many experts view a mismatch between skills and market demands as a common contributor to youth unemployment. Current training programs are sometimes costly and have had mixed results, but randomized evaluations can help us analyze specific program components in order to make training interventions effective. Job seekers also face other barriers, including expensive and ineffective job searches that can be mitigated by job assistance programs. However, these programs tend to be less efficient when other labor market issues prevail. Valuable topics for future research include how online platforms and technology can help reduce hiring costs, how policies can prevent hiring discrimination, and determining promising characteristics of job training programs.
 

Job creation

Entrepreneurship is critical for job creation in low- and middle-income countries, but microentrepreneurs often lack effective management practices. A potential solution could be targeted psychological training programs to foster personal initiative and equip self-employed individuals with the tools they need. Still, it would be valuable to explore how to implement and combine these programs with other forms of training. Another topic of interest is gazelles—high-growth potential enterprises that are rare in low- and middle-income countries. They are less likely to need training on basic business skills or on cultivating an entrepreneurial mindset, but instead need more specialized assistance through business accelerators and incubators with a proper selection process to achieve success, especially when led by underrepresented groups. Other areas for research in the entrepreneurship space include how firms utilize consulting and training services, the unique challenges women and youth entrepreneurs encounter, strategies targeted at high-potential entrepreneurs, and the role of different mechanisms to address credit constraints faced by Small and Medium Enterprises (SMEs).

Future of jobs

There are many concerns that automation, globalization, and non-traditional employment arrangements may worsen inequalities by disproportionately harming less-skilled workers. Despite a growing body of research on the future of jobs, few studies focus on low- and middle-income countries. Examples of potential solutions include training marginalized youth for internet-based jobs and using online platforms for job searches. Further research on the gig economy, technology-based employment, and equipping people for the changing labor market demands would be valuable. Specific research topics concern the role of technology in improving job opportunities, providing support and benefits to workers without traditional social protections, the impact of non-standard work arrangements and gigs on productivity and inclusivity, and the various ways in which technology can facilitate firm growth, create jobs, improve job matching, influence productivity, simplify the job search process, and enhance job quality.

Social issues in the labor market

Labor markets are also influenced by social issues such as informality, crime, mental health, and social protection. Cash transfers, workfare programs, and formalization benefits have all been shown to impact labor market outcomes. Still, unanswered questions remain, such as which firms benefit most from formalization, which mechanisms drive crime reduction in youth employment programs, and the longer-term effects of mental health treatment on labor market outcomes. Further research is needed on how to reduce costs associated with formalizing enterprises, the mechanisms behind the effects of mental health treatment programs on labor outcomes, and the effects of workplace prevention strategies targeting psychosocial risk factors, among others.

If you are interested in learning more about JOI Brazil’s work and how evidence-based solutions can help address labor market challenges, we invite you to read about our activities and publications. You can also share our grantees' research findings, available here, with policymakers, researchers, and practitioners who are interested in promoting job creation and improving labor market outcomes for vulnerable populations. Together, we can support evidence-based policies that help reduce inequality and promote inclusive growth in Brazil.