Applying behavioural insights to labour markets

A job is more than a source of income. It gives you a sense of identity, social inclusion, and contributes to positive health and wellbeing. 

Employment is one of the most important policy areas that governments manage. Governments have historically relied on two approaches to improve employment rates: (i) incentives, such as relocation vouchers for job seekers or wage subsidies for employers; and (ii) penalties for non-compliance, such as the removal of unemployment benefits.

As employment is one of BIT’s longest standing areas of work, we have seen how behavioural insights can improve these existing approaches, and offer alternative solutions that place people and their decision-making at the heart of the system.

One of the key lessons from our work is that to design effective employment policies, governments must improve their understanding of how job seekers and employers make decisions, and how they interact in the labour market, including through job service providers.