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11. Low Inflation Bends the Phillips Curve

Author:
Joseph E. Gagnon and Christopher G. Collins
Publication Date:
04-2019
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
The Phillips curve, which traces out a negative relationship between inflation and unemployment, has undergone tremendous changes over more than 100 years. Some researchers argue that the slope of the curve in the United States fell substantially around 20 years ago so that unemployment now has little or no effect on inflation. This paper shows that another hypothesis is equally consistent with the data: The Phillips curve may be nonlinear when inflation is low, with the economy having operated in the flat region of the curve for most of the past 20 years. The next few years may be decisive in the debate between these hypotheses, as unemployment has returned to a range in which a nonlinear curve ought to display significant steepness. A flat Phillips curve implies little change in inflation going forward, but a nonlinear curve implies moderate increases in inflation over the next few years.
Topic:
Economics, Inflation, and Unemployment
Political Geography:
North America and United States of America

12. The Impact of Labour Market Institutions and Capital Accumulation on Unemployment: Evidence for the OECD, 1985-2013

Author:
Philipp Heimberger
Publication Date:
04-2019
Content Type:
Working Paper
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
This paper provides econometric evidence on the impact of labour market regulations on (‘structural’) unemployment rates. Based on a data set for 23 OECD countries over the time period 1985‑2013, the panel regression results suggest that standard institutional labour market indicators – such as employment protection legislation, trade union density, tax wedge, minimum wages – largely underperform in explaining (medium-term) unemployment, while cyclical macroeconomic factors – in particular capital accumulation, but also the long-term real interest rate – are essential determinants. These results underscore that the existing macroeconometric evidence in favour of the view that labour market rigidities are at the heart of increased ‘structural’ unemployment in advanced economies is modest at best. Some labour market variables do have an impact on unemployment, but it is in general smaller than the impact of relevant macroeconomic variables. To understand the development of unemployment in OECD countries, researchers and policy-makers therefore should consider aggregate demand dynamics and focus on capital accumulation.
Topic:
Migration, Labor Issues, Institutions, Macroeconomics, Unemployment, Labor Market, and Capital Accumulation
Political Geography:
Europe and United States of America

13. Trade Disputes With China Shoot US In The Foot

Author:
Li Chunding
Publication Date:
04-2018
Content Type:
Policy Brief
Abstract:
US-China trade friction has intensified, and one excuse that the Trump administration has used for trade protectionism against China is that China has been stealing US jobs, especially in the manufacturing sector. But bilateral trade has nothing to do with unemployment in the US. China itself or trade with China is merely scapegoats. The US is being a fault finder without realizing that the real reasons are internal, and the trade conflict will jeopardize manufacturing jobs on both sides.
Topic:
Bilateral Relations, Trade Wars, Trade, and Unemployment
Political Geography:
China, Asia, North America, and United States of America

14. Generation "U".: The Plight oof 75 Million Unemployed Youth

Author:
Arun S. Nair
Publication Date:
09-2012
Content Type:
Working Paper
Abstract:
Consider this—globally, 75 million youth between 15 and 24 years of age are unemployed, according to a May 2012 report of the International Labor Organization (ILO). If all these youth were residents of a single nation, that would make it the 18th most populous in the world. The 75 million youth (an increase of around 4 million since 2007) comprise about 40 percent of the estimated 207 million unemployed people across the world. Many of those who have managed to secure some employment are not any better off. As many as 228 million youth who have 'jobs' live on less than $2 a day, a reflection of their poverty and under-employment. The ILO forecasts a bleak future too. The international body on labor projects that the global youth unemployment rate—seen at 12.7 percent this year (or higher at 13.6 percent if one includes those who have given up or put off their job search due to the poor prospects)—will remain at such high levels in the near future, that is at least till 2016. Such is the seriousness of the problem that some experts have already started describing today's youth as Generation 'U' (for Unemployed) or Generation 'NEET' (an acronym for Not in Education, Employment or Training), a far cry from the more popularly used term—'Generation Z' or 'iGeneration' (symbolizing their skills in being technologically advanced and connected).
Topic:
Debt, Youth, Unemployment, and Job Creation
Political Geography:
North America and United States of America

15. Heterogeneous Workers, Optimal Job Seeking, and Aggregate Labor Market Dynamics

Author:
Brandan Epstein
Publication Date:
08-2012
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
In the United States, the aggregate vacancy-unemployment (V/U) ratio is strongly procyclical, and a large fraction of its adjustment associated with changes in productivity is sluggish. The latter is entirely unexplained by the benchmark homogeneous-agent model of equilibrium unemployment theory. I show that endogenous search and worker-side horizontal heterogeneity in production capacity can be important in accounting for this propagation puzzle. Driven by differences in unemployed and on-the-job seekers' search incentives, the probability that any given firm with a job opening matches with a worker endowed with a comparative advantage in that job exhibits a stage of procyclical slow-moving adjustment. Consequently, so do the expected gains from posting vacancies and, hence, the V/U ratio. The model has channels through which the majority of both the V/U ratio's sluggish-adjustment properties and its elasticity with respect to output per worker can be accounted for.
Topic:
Labor Issues, Employment, Business, Unemployment, and Labor Market
Political Geography:
North America and United States of America