This report is issued under the responsibility of the Secretary-General of the OECD. This report was prepared by the Secretariat at the request of the G20 German Presidency for the joint G20 Presidency – OECD conference on Key Issues for Digital Transformation in the G20, in Berlin, Germany, on 12 January 2017. The opinions expressed and arguments employed herein do not necessarily reflect the official views of OECD Member countries or of the G20. This report and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.

This report of the Organisation for Economic Co‐operation and Development has been prepared at the request of G20 Leaders (Hangzhou Summit Communique, 4‐5 September 2016). An initial prototype was prepared for the Third G20 Sherpa Meeting in Xiamen, China, 23‐25 June 2016. This report is based on material from the OECD's Science, Technology and Industry Scoreboard 2015 (with data updates where available) and the forthcoming Science, Technology and Innovation Outlook 2016. The latter publication benefits from policy information gathered via the joint European Commission/ OECD International Survey on Science, Technology and Innovation Policy (STIP).

As Inequality has markedly risen over the past few decades, so has economic volatility. Abundant research demonstrates that both individuals and households have faced much greater instability in income since the 1970s 1 – a trend dubbed by Jacob Hacker as the “Great Risk Shift.” 2 Income insecurity can lead to problems and crises like bad credit and losing one’s home, which then further exacerbate a family’s economic vulnerability. As the market restructures, relying on more independent contract work than ever before, we expect these vulnerabilities to be exacerbated even further. The moniker “1099 economy” refers to the trend in the American labor market in which companies are contracting independent workers for short-term arrangements rather than hiring full-time workers. Jobs aren't just being replaced with lower paying jobs, but instead are being replaced with what are essentially non-jobs – contracts that come with no tenure, security or safety net As our economy endures seismic changes, policymakers are beginning to explore compelling ideas to help Americans adjust to the 1099 economy. After President Obama elevated the idea in his last State of the Union address, wage insurance has attracted the attention of policy wonks, who believe it could help displaced workers transition quickly back into the job market. But is wage insurance a useful policy idea for a job market that is increasingly reliant on 1099 employment? This paper argues that while wage insurance may not be suitable as a long-term support system for 1099 workers, it could be extraordinarily helpful as transitional assistance to workers who have lost their full-time jobs and are moving into 1099 work. Ultimately, a full safety net for 1099 workers will require the development of a number of new protections and programs, such as universal portable benefits. We recommend further research and exploration of wage insurance as part of a potential suite of policy options for helping the 1099 worker develop and maintain economic security in the new economy.

For American workers, having a high school or general equivalency diploma (GED)—which once represented a means of entrance to the middle class—is no longer adequate for finding steady employment. In fact, three quarters of low wage workers have these qualifications but lack the relevant occupational skills and connections to employers needed to launch a career. At the same time, in some regions of the country there are persistent skills gaps clustered in particular industries, such as manufacturing and healthcare. Many of these jobs are expected to grow3 and require specific technical skills that can be gained only through focused training that is closely linked to the needs of local businesses. Over the past two decades, an innovative approach to workforce development known as sectoral employment has emerged, resulting in the creation of industry-specific training programs that prepare unemployed and under-skilled workers for skilled positions and connect them with employers seeking to fill such vacancies. Based on earlier outcomes studies pointing to the promise of this strategy, Public/Private Ventures (P/PV) set out to conduct a random assignment evaluation to assess whether sector-focused programs could in fact increase the earnings of low-income, disadvantaged workers and job seekers.

The production and shipment of goods in the United States is a large, important, and growing part of the economy. Despite the continued growth and long-term health of manufacturing, significant misconceptions remain about the sector’s demand for labor and how it has changed in recent decades. In this brief, we identify and explain a major source of misunderstanding in manufacturing. In the first section, we focus on what effects productivity change, domestic demand, and foreign trade have on U.S. manufacturing employment. We then discuss policy dimensions of these findings. We begin with a brief overview of manufacturing in the United States.

Taxing Wages provides unique information on the taxes paid on wages in OECD countries. It covers personal income taxes and social security contributions paid by employees; social security contributions and payroll taxes paid by employers and cash benefits paid by in-work families. The purpose is to illustrate how these taxes and benefits are calculated in each member country and to examine how they impact on household incomes. The results also enable quantitative cross-country comparisons of labour cost levels and the overall tax and benefit position of single persons and families on different levels of earnings.

The 2016 election revealed a dramatic gap between two Americas—one based in large, diverse, thriving metropolitan regions; the other found in more homogeneous small towns and rural areas struggling under the weight of economic stagnation and social decline. This gap between two American geographies came as a shock to many observers. While it is true that some members of the media and policy analysts had grown disconnected from a significant portion of the country, something else had happened, too: the nation’s economic trends had changed. For much of the 20th century, reality conformed to economists’ predictions that market forces would gradually diminish job, wage, investment, and business formation disparities between more and less developed regions. As recently as 1980, the wage gap between regions was shrinking while growth in rural areas and small towns led the country from recession to recovery in the 1990s. Recent decades, however, have witnessed a massive shift in the relationship between the nation’s biggest, most prosperous metropolitan and non-metropolitan areas. Globalization has weakened the supply chains that once connected these regions. The rise of the information economy has boosted the returns to urban skills and diminished the importance of the resources and manual labor that non-metropolitan areas provided during the heyday of the manufacturing economy.1 And for that matter, high-tech manufacturers that still depend on supply chains to produce physical goods—and might once have sourced from the American “heartland”—have instead moved production and assembly functions overseas.

First authorized by the Workforce Investment Act (WIA) in 1998 and reauthorized in 2014 by the Workforce Innovation and Opportunity Act (WIOA), the Adult and Dislocated Worker programs are two of the nation’s largest publicly funded employment and training programs. To rigorously assess the impact of these programs on job seekers’ employment and earnings, the Employment and Training Administration of the U.S. Department of Labor contracted with Mathematica Policy Research and our partners at Social Policy Research Associates, MDRC, and the Corporation for a Skilled Workforce to conduct a national evaluation. This report includes interim impact findings from this evaluation of 28 randomly selected local workforce investment areas from across the country.

This report summarizes the two-year findings of a rigorous random assignment evaluation of the WorkAdvance model, a sectoral training and advancement initiative. Launched in 2011, WorkAdvance goes beyond the previous generation of employment programs by introducing demand-driven skills training and a focus on jobs that have career pathways. The model is heavily influenced by the positive findings from the Sectoral Employment Impact Study (SEIS) completed in 2010. A major component of the WorkAdvance model, in common with the programs studied in the SEIS, is formal training offering industry-recognized certifications, reflecting the hypothesis that skills acquisition is necessary for advancement. The model also requires providers to be far more employer facing than traditional training programs, taking into account multiple employers’ changing skill requirements, employee assessment practices, and personnel needs. This report presents the implementation, cost, participation, and two-year economic impacts of WorkAdvance. The economic results are based on unemployment insurance earnings records and a second-year follow-up survey. The WorkAdvance program operations and evaluation are funded through the federal Social Innovation Fund (SIF), a public-private partnership administered by the Corporation for National and Community Service. This SIF project is led by the Mayor’s Fund to Advance New York City and the NYC Center for Economic Opportunity in collaboration with MDRC.