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21. Inflation and Activity: Two Explorations and Their Monetary Policy Implications

Author:
Olivier Blanchard, Eugenio Cerutti, and Lawrence H. Summers
Publication Date:
11-2015
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
Blanchard, Cerutti, and Summers explore two issues triggered by the global financial crisis. First, in most advanced countries, output remains far below the prerecession trend, suggesting hysteresis. The authors look at 122 recessions over the past 50 years in 23 countries and find that a high proportion of them have been followed by lower output or even lower growth. Second, while inflation has decreased, it has decreased less than anticipated, suggesting a breakdown of the relation between inflation and activity. The authors estimate a Phillips curve relation over the past 50 years for 20 countries and find that the effect of unemployment on inflation, for given expected inflation, decreased until the early 1990s but has remained roughly stable since then. The paper concludes with implications for monetary policy.
Topic:
Economics, Labor Issues, Monetary Policy, Financial Crisis, and GDP
Political Geography:
Global Focus

22. The Tradability of Services: Geographic Concentration and Trade Costs

Author:
Antoine Gervais
Publication Date:
08-2015
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
To date, empirical studies have focused almost exclusively on the trade exposure of the manufacturing sector, implicitly assuming that services are not tradable. However, because service trade has grown over time and now accounts for about 20 percent of global international transactions (and 30 percent of US exports), the traditional assumption that goods are tradable and services are not is increasingly inadequate. Gervais and Jensen use a unique dataset on the distribution of producers and consumers across regions of the United States to estimate the share of economic activity exposed to international competition. Their estimation method is a natural extension of the gravity model of trade and identifies trade costs in the absence of trade data. The estimated trade costs are higher on average for service industries, but there is considerable variation across industries within sectors. Using the trade cost estimates, they classify industries into tradable and nontradable categories. They find that accounting for tradable service industries nearly doubles the international exposure of the US economy, tradable services value added is unevenly distributed across geographical regions, labor productivity and wages are higher on average for tradable industries, and potential welfare gains from trade liberalization in the service sector are sizable.
Topic:
Economics, International Trade and Finance, Labor Issues, and Global Markets
Political Geography:
Global Focus

23. Meeting Our Highest Aspirations for Capitalism -2014

Publication Date:
01-2015
Content Type:
Policy Brief
Institution:
Aspen Institute
Abstract:
In New York City on October 16-17, 2014, the Aspen Institute Business & Society Program hosted a Symposium focused on exemplary teaching at the business and society interface with a particular emphasis on sourcing and employment practices-leveraging increased consumer demand for "responsible" labor practices and supply chains, and employer demand for graduates with strong operational skills. This meeting brought together an impressive roster of corporate, academic and non-profit leaders, and identified ways for business schools to effectively prepare future leaders for the challenges of our complex economy, and to lead companies in ways that help build a vibrant economy for all.
Topic:
Economics, Education, International Trade and Finance, Politics, and Labor Issues
Political Geography:
Global Focus

24. From College to Jobs: Making Sense of Labor Market Returns to Higher Education

Publication Date:
04-2015
Content Type:
Working Paper
Institution:
Aspen Institute
Abstract:
This report summarizes key findings from recent research on links between higher education and the workforce. Featuring eight brief papers from leading education and workforce experts from around the country, the report offers practical advice for institutional leaders, policymakers, students and their advisers about how to use the increasingly available information on the economic value of higher education. Specifically, the authors’ papers and the opening summary explore what various audiences can learn from emerging evidence about: variations in labor market outcomes by program and institution; the value of degrees to jobs both in and out of fields studied; returns to the completion of certain course clusters that don’t add up to a degree; and distortions that may result from examining returns to individual degrees rather than “stacked” degrees.
Topic:
Economics, Education, Labor Issues, Global Markets, and Employment
Political Geography:
Global Focus

25. Bonded Labor: Tackling the System of Slavery in South Asia

Author:
Siddharth Kara
Publication Date:
09-2012
Content Type:
Book
Institution:
Columbia University Press
Abstract:
Siddharth Kara's Sex Trafficking has become a critical resource for its revelations into an unconscionable business, and its detailed analysis of the trade's immense economic benefits and human cost. This volume is Kara's second, explosive study of slavery, this time focusing on the deeply entrenched and wholly unjust system of bonded labor. Drawing on eleven years of research in India, Nepal, Bangladesh, and Pakistan, Kara delves into an ancient and ever-evolving mode of slavery that ensnares roughly six out of every ten slaves in the world and generates profits that exceeded $17.6 billion in 2011. In addition to providing a thorough economic, historical, and legal overview of bonded labor, Kara travels to the far reaches of South Asia, from cyclone-wracked southwestern Bangladesh to the Thar desert on the India-Pakistan border, to uncover the brutish realities of such industries as hand-woven-carpet making, tea and rice farming, construction, brick manufacture, and frozen-shrimp production. He describes the violent enslavement of millions of impoverished men, women, and children who toil in the production of numerous products at minimal cost to the global market. He also follows supply chains directly to Western consumers, vividly connecting regional bonded labor practices to the appetites of the world. Kara's pioneering analysis encompasses human trafficking, child labor, and global security, and he concludes with specific initiatives to eliminate the system of bonded labor from South Asia once and for all.
Topic:
Labor Issues, Sex Trafficking, and Slavery
Political Geography:
Pakistan, Bangladesh, South Asia, India, Nepal, and Global Focus
Publication Identifier:
9780231528016
Publication Identifier Type:
ISBN

26. Tax Smoothing in Frictional Labor Markets

Author:
David M. Arseneau and Sanjay K. Chugh
Publication Date:
01-2009
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
We re-examine the optimality of tax smoothing from the point of view of frictional labor markets. Our central result is that whether or not this cornerstone optimal fiscal policy pre- scription carries over to an environment with labor market frictions depends crucially on the cyclical nature of labor force participation. If the participation rate is exogenous at business- cycle frequencies — as is typically assumed in the literature — we show it is not optimal to smooth tax rates on labor income in the face of business-cycle shocks. However, if households do optimize at the participation margin, then tax-smoothing is optimal despite the presence of matching frictions. To understand these results, we develop a concept of general-equilibrium efficiency in search-based environments, which builds on existing (partial-equilibrium) search- efficiency conditions. Using this concept, we develop a notion of search-based labor-market wedges that allows us to trace the source of the sharply-contrasting fiscal policy prescriptions to the value of adjusting participation rates. Our results demonstrate that policy prescriptions can be very sensitive to the cyclical nature of labor-force participation in search-based environments.
Topic:
Markets, Labor Issues, and Tax Systems
Political Geography:
Global Focus

27. Labor Market Search in Emerging Economies

Author:
Emine Boz, Ceyhun Bora Durdu, and Nan Li
Publication Date:
12-2009
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
This paper shows that labor markets of emerging economies are characterized by large fluctuations in wages while employment fluctuations are subdued. We find that a real business cycle model of a small open economy that embeds a Mortensen-Pissarides type of search-matching frictions can account for these aforementioned regularities. Moreover, the joint interaction of countercyclical interest rates and search-matching frictions can go a long way in accounting for higher consumption variability relative to output and countercyclical current account observed in emerging markets. Extending this baseline model to incorporate procyclical variations in the technical efficiency at which matches are generated, the model can match the unemployment variability observed in the data.
Topic:
Economics, Emerging Markets, and Labor Issues
Political Geography:
Global Focus

28. Minimum Wages, Globalization, and Poverty in Honduras

Author:
T. H. Gindling and Katherine Terrell
Publication Date:
03-2008
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
To be competitive in the global economy, some argue that Latin American countries need to reduce or eliminate labor market regulations such as minimum wage legislation because they constrain job creation and hence increase poverty. On the other hand, minimum wage increases can have a direct positive impact on family income and may therefore help to reduce poverty. We take advantage of a complex minimum wage system in a poor country that has been exposed to the forces of globalization to test whether minimum wages are an effective poverty reduction tool in this environment. We find that minimum wage increases in Honduras reduce extreme poverty, with an elasticity of -0.18, and all poverty, with an elasticity of -0.10 (using the national poverty lines). These results are driven entirely by the effect on workers in large private sector firms, where minimum wage legislation is enforced. Increases in the minimum do not affect the incidence of poverty in sectors where minimum wages are not enforced (small firms) or do not apply (self-employed and public sector).
Topic:
Globalization, Political Economy, Poverty, and Labor Issues
Political Geography:
Global Focus

29. The Unemployment Impact of Immigration in OECD Countries

Author:
Sébastien Jean and Miguel Jimenez
Publication Date:
07-2007
Content Type:
Working Paper
Institution:
The Organisation for Economic Co-operation and Development
Abstract:
This paper assesses the consequences of immigration for natives' unemployment in OECD countries and investigates the role played by product and labour market policies in the economy's adjustment to immigration inflows. The estimations, combining a skill-level and an aggregate approach using data for males, cover eighteen OECD countries over the period 1984-2003. While no significant long-run impact is found, an increase in the share of immigrants in the labour force is estimated to raise temporarily natives' unemployment, over a period of approximately five to ten years. Anticompetitive product market regulations are found to increase both the magnitude and the persistence of this impact, while more stringent employment protection legislation magnifies its persistence, and a higher average replacement rate of unemployment benefits increases its magnitude.
Topic:
Migration, Labor Issues, Immigration, Developing World, and Unemployment
Political Geography:
Global Focus

30. Migration in OECD countries Labour Market Impact and Integration Issues

Author:
Sébastien Jean, Orsetta Causa, Miguel Jimenez, and Isabelle Wanner
Publication Date:
07-2007
Content Type:
Working Paper
Institution:
The Organisation for Economic Co-operation and Development
Abstract:
immigration for natives' labour market outcomes, as well as issues linked to immigrants' integration in the host country labour market. Changes in the share of immigrants in the labour force may have a distributive impact on natives' wages, and a temporary impact on unemployment. However, labour market integration of immigrants (as well as integration of second-generation immigrants - both in terms of educational attainments and of labour market outcomes) remains the main challenge facing host economies. In both cases, product and labour market policies have a significant role to play in easing the economy's adjustment to immigration.
Topic:
Migration, Labor Issues, Immigration, and Employment
Political Geography:
Global Focus