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162. Have Macroeconomic Rules of the Game Changed? Some Clues from the Phillips Curve
- Author:
- Samuel Howorth, Domenico Lombardi, and Pierre Siklos
- Publication Date:
- 02-2016
- Content Type:
- Policy Brief
- Institution:
- Centre for International Governance Innovation
- Abstract:
- Students of macroeconomics will have heard about the central role played by the so-called Phillips curve in both theoretical and empirical analyses for almost 70 years. In 1958, A. W. Phillips reported an inverse relationship between changes in wages and the unemployment rate (Phillips 1958). The progeny of his thinking led to a revolution both in policy making and in the development of theoretical links between the real and nominal macroeconomic variables. Names such as Samuelson, Solow, Phelps, Friedman, Lucas and Sargent became associated with refinements and enhancements of the core finding reported by Phillips. Indeed, all of these economists went on to become Nobel laureates in economics, although not exclusively because of their contributions to the analysis of what has since been called the Phillips curve. Indeed, the concept is so influential that it spawned several different versions of the trade-off used to guide policy makers as a menu for the choices they face when deciding whether the gains from lower inflation are offset by the economic costs of higher unemployment. Initially, expectations of individuals or firms were ignored. This briefly gave policy makers the impression that they could simply select an inflation-unemployment combination and implement the necessary policy mix to achieve the desired outcome. Once a role for expectations was incorporated, debate centred on how forward-looking individuals are. The more forward-looking, the less likely it was that policy makers would be able to “exploit” the trade-off because, unless wages rose in purchasing-power terms, the gains from lower unemployment would, at best, be temporary once workers realized that the higher inflation, at unchanged wages, actually drives real wages down. Indeed, the pendulum swung all the way to the conclusion — reached by the 1970s and early 1980s — that the Phillips curve was illusory and there was no trade-off policy makers could exploit.
- Topic:
- Economics, Human Welfare, International Political Economy, Labor Issues, and Global Markets
- Political Geography:
- Global Focus
163. How ASEAN’s Transformation Can Play Out Well for Europe
- Author:
- Damian Wnukowski
- Publication Date:
- 02-2016
- Content Type:
- Policy Brief
- Institution:
- The Polish Institute of International Affairs
- Abstract:
- The transformation of ASEAN into an economic community is a significant step in the organisation’s integration process. The project, formally launched at the beginning of 2016, aims at creation of a single market of more than 620 million people, loosens the flow of goods, services and investment, which should underpin regional economic growth and catch the attention of foreign businesses. However, obstacles to economic cooperation remain, such as limitations on the movement of labour or capital, which shows that the integration process is not yet complete. The EU, which can benefit from a well-functioning market in this region, should share its own experience to support the ASEAN integration process.
- Topic:
- Economics, International Trade and Finance, Markets, Politics, and Labor Issues
- Political Geography:
- Europe
164. From Catching Up to Forging Ahead in Advanced Manufacturing—Reflections on China’s Future of Jobshina's Evolving Role in Latin America: Can it Be a Win-Win?
- Author:
- Dieter Ernst
- Publication Date:
- 03-2016
- Content Type:
- Working Paper
- Institution:
- East-West Center
- Abstract:
- This paper explores what we know about possible employment effects of the 10-year plan, issued by the State Council on May 19, 2015, entitled Made in China 2025. MIC2025 was designed to address China’s emerging labor shortage challenge. To achieve this goal, the plan seeks to boost labor productivity through an increased use of robots and through network-based upgrading of the entire industrial value chain and related services. How might the projected increase in labor productivity affect the creation and quality of jobs in China? Will China’s push into advanced manufacturing now move the country’s manufacturing employment closer to the pattern of “employment de-industrialization” observed in the US and other industrialized countries? How China will cope with the advanced manufacturing challenge for employment will have major implications not only for the US and other industrialized countries, but also for emerging economies and, most importantly for the majority of developing countries that are still struggling as latecomers to labor-intensive industrial manufacturing. The paper lays out objectives of the MIC 2025 plan and highlights a failure of Chinese policy makers to take into account employment effects and other labor market issues when they design their grand visions of industrial policy. The paper finds that until 2014, manufacturing has acted as an employment absorber in China. However new data on unemployment, labor force participation and income inequality signal that China may now be moving towards an “employment de-industrialization” pattern, unless enough knowledge-intensive service jobs will be created in China’s growing information economy. The paper concludes with implications for policy and further research.
- Topic:
- Economics, International Political Economy, Markets, and Labor Issues
- Political Geography:
- China
165. Potential Beneficiaries of the Obama Administration’s Executive Action Programs Deeply Embedded in US Society
- Author:
- Donald Kerwin and Robert Warren
- Publication Date:
- 03-2016
- Content Type:
- Journal Article
- Journal:
- Journal on Migration and Human Security
- Institution:
- Center for Migration Studies of New York
- Abstract:
- The Obama administration has developed two broad programs to defer immigration enforcement actions against undocumented persons living in the United States: (1) Deferred Action for Parents of Americans and Lawful Permanent Residents (DAPA); and (2) Deferred Action for Childhood Arrivals (DACA). The DACA program, which began in August 2012, was expanded on November 20, 2014. DAPA and the DACA expansion (hereinafter referred to as “DACA-plus”) are currently under review by the US Supreme Court and subject to an active injunction. This paper offers a statistical portrait of the intended direct beneficiaries of DAPA, DACA, and DACA-plus. It finds that potential DAPA, DACA, and DACA-plus recipients are deeply embedded in US society, with high employment rates, extensive US family ties, long tenure, and substantial rates of English-language proficiency. The paper also notes various groups that would benefit indirectly from the full implementation of DAPA and DACA or, conversely, would suffer from the removal of potential beneficiaries of these programs. For example, all those who would rely on the retirement programs of the US government will benefit from the high employment rates and relative youth of the DACA population, while many US citizens who rely on the income of a DAPA-eligible parent would fall into poverty or extreme poverty should that parent be removed from the United States.
- Topic:
- Human Welfare, Poverty, Labor Issues, and Governance
- Political Geography:
- United States of America
166. An Analysis of Firm Characteristics as Earnings Determinants: The Urban Bolivia Case
- Author:
- Beatriz Muriel Hernández
- Publication Date:
- 12-2016
- Content Type:
- Working Paper
- Institution:
- Institute for Advanced Development Studies (INESAD)
- Abstract:
- This article analyzes the importance of firm characteristics to explain earnings in urban Bolivia. Initially I propose a new simple theoretical model of segmented labor market where, in equilibrium, individual and firm variables jointly determine earnings at the worker level. The key for achieving this equilibrium is that workers have both specific preferences and heterogonous skills provided by years of schooling, which are in turn associated to certain firms. Given the household surveys information, I estimate two alternative earnings functions from this model, one for unsalaried workers, for which there is detailed firm data and one for salaried workers, in which sector, size and formality are used as firm proxies. I find not only that firm characteristics are fundamental determinants of earnings but that regressions that include only individual characteristics present highly overestimated coefficients.
- Topic:
- Development, Economics, Labor Issues, Urban, Microeconomics, and Private Sector
- Political Geography:
- Latin America and Bolivia
167. One Million Opportunities: The Impact of Mobile Internet on the Economy of Southeast Asia
- Author:
- Oxford Economics
- Publication Date:
- 06-2016
- Content Type:
- Working Paper
- Institution:
- Oxford Economics
- Abstract:
- This study investigated the economic and social impact of mobile internet technology across the economies of South East Asia. In-house econometric research established the relationship between mobile internet penetration and key enablers of supply side growth including productivity and labour force participation. These results were applied to a group of economies in South East Asia to quantify the economic benefits of observed and forecast future increases in mobile internet penetration. Overall, increased mobile internet penetration is forecast to create an extra $58.1 billion in GDP and one million new job opportunities by 2020.
- Topic:
- Economics, Science and Technology, Labor Issues, and Internet
- Political Geography:
- Asia and Southeast Asia
168. The Recruitment of Migrant Workers By London Science and technology Firms
- Author:
- Andrew P. Goodwin
- Publication Date:
- 08-2016
- Content Type:
- Working Paper
- Institution:
- Oxford Economics
- Abstract:
- Access to talent is central to London’s competitiveness. It is important that all companies can recruit the skills and experience they need to innovate and grow. Tier 2 of the UK’s visa system is the main economic route for skilled immigration from outside the European Economic Area (EEA), where the position cannot be filled by a UK/EEA national or is on the Shortage Occupation List. This report assesses the extent to which start-ups and SMEs, particularly those in the science and technology sectors, have difficulties in recruiting from outside the EEA through Tier 2. It finds that while some firms are undoubtedly facing challenges, the problem is not especially widespread across the science and technology sector as a whole. However, at least some employers are encountering difficulties with Tier 2 and a faster, better-supported, and simpler process would make a real difference to employers.
- Topic:
- Migration, Science and Technology, Labor Issues, and Immigrants
- Political Geography:
- United Kingdom, Europe, London, and England
169. The impact of pension system reform on projected old-age income: the case of Poland
- Author:
- Elena Jarocinska and Anna Ruzik-Sierdzińska
- Publication Date:
- 05-2016
- Content Type:
- Special Report
- Institution:
- Center for Social and Economic Research - CASE
- Abstract:
- This paper analyses the distributional effects of the Polish old-age pension reform introduced in 1999. Following a benchmark Mincer earnings equation, and using a newly developed microsimulation model we project future pension benefits for males born in years 1969–1979. We find that inequality of predicted first pension benefits measured by the Gini coefficient increases from 0.119 to 0.165 for cohorts of men retiring between 2036 and 2046. The observed increased inequality of pension benefits is due to the decreasing share of initial capital that is based on a more generous DB formula in the total accumulated pension capital. At the same time, inequality in replacements rates decreases due to a stronger link between contributions paid through the entire working life and pension benefits.
- Topic:
- Demographics, Economics, Labor Issues, Inequality, Social Policy, Public Policy, Innovation, and Aging
- Political Geography:
- Europe, Poland, and European Union
170. The Collaborative Economy in Poland and Europe: A Tool for Boosting Female Employment?
- Author:
- Karolina Beaumont
- Publication Date:
- 07-2016
- Content Type:
- Working Paper
- Institution:
- Center for Social and Economic Research - CASE
- Abstract:
- The collaborative economy is a relatively new economic approach based on peer-to-peer transactions. It includes the shared creation, production and consumption of goods and services accessible for all through online platforms and smartphone applications. It is a burgeoning business model that is experiencing increased interest in all European countries. Statistics show that Poland already has an above-average number of women who are interested in self-employment. Furthermore, formal female employment in Poland is quite low by European standards. This situation implies great potential for the development of the participation of women in the collaborative economy. The paper “The Collaborative Economy in Poland and Europe: A Tool for Boosting Female Employment?” by Karolina Beaumont discusses the challenges of the collaborative economy as a system stimulating female social and economic empowerment and assesses the opportunities offered by the collaborative economy in increasing the female labour participation rate amongst Polish women.
- Topic:
- Gender Issues, Labor Issues, Women, Employment, Inequality, Economy, Social Policy, and Labor Policies
- Political Geography:
- Europe and Poland