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561. Where Will Work Come from in the Era of the Cloud and Big Data?

Author:
John Zysman and Martin Kenney
Publication Date:
01-2015
Content Type:
Working Paper
Abstract:
Will the digital revolution, and its current manifestation in Cloud computing and platform-based work, inexorably lead to the elimination of jobs and work due to automation. Are new opportunities for work opening? Should we be thinking in terms of conventional work or is value creation the key? Certainly, nearly all firms are experiencing intense competition leading to commoditization based principally upon price. In the first section of this paper, we explore the pathways opened as cloud computing, transforms the way both goods and services are innovated, produced, and distributed. Production now has two aspects; classically understood manufacturing and ICT-enabled services, activities and virtual goods, both of which can be transformed to escape a commodity trap. As firms in advanced countries seek to sustain advantage in global markets, their efforts alter not only the terms of competition, but the character of work. The second section speculates upon the ways in which the cloud, as a platform, is transforming the nature of work, jobs, and employment. The emergence of cloud-based platforms such as, Airbnb, the Apple app store, Github, Google, LinkedIn, and Uber is redefining the forms and nature of value creation. Paradoxically, given that Google monetizes peoples’ searches, Facebook and LinkedIn monetize posts, Github monetizes open source software creation, and App stores monetize software creations, it is also possible to argue that more value than ever is being created, even while traditional notions of employment are being challenged. This suggests that as a consequence of the implementation of cloud-based strategies; an entirely new category of work organization, which we term, the “Platform Economy” is emerging.
Topic:
Science and Technology, Communications, Labor Issues, and Global Markets
Political Geography:
Global Focus

562. 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 (PIIE)
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

563. 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 (PIIE)
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

564. Recent Declines in Labor's Share in US Income: A Preliminary Neoclassical Account

Author:
Robert Z. Lawrence
Publication Date:
06-2015
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
Over the past decade, the US economy has been plagued by sluggish wage growth and rising income inequality. The debate over inequality in the 1980s and 1990s focused on the growing disparity between the earnings of skilled and unskilled workers and the earnings of the super-rich. Growing inequality between capital and labor income has now been added to these concerns. Remarkably, the growth in real GDP per worker over the decade of the 2000s, which averaged 1.7 percent annually, was actually more rapid than in the 1970s, 1980s, or 1990s, yet in the 2000s workers saw almost no increase in their take-home pay. Consistent with this gap between labor productivity and wage growth was a pronounced decline in the share of US national income earned by workers. As labor's share has declined, the share of capital has risen and has been especially concentrated in corporate profits. As profits are far less equally distributed than wages, this increase has contributed to rising income inequality. There are several plausible reasons for this development—globalization, automation, weak bargaining power of labor, political capture, higher markups—but the natural starting point for explaining factor income shares is the neoclassical theory of the functional distribution of income enumerated by John Hicks and Joan Robinson in the 1930s. In this framework there are two possible explanations for labor's recent declining share. The first is that capital and labor are gross substitutes, and the second is that capital and labor are gross complements. Several papers have explained the recent decline in labor's share in income by claiming that capital has been substituted for labor. Lawrence puts forward the alternative "gross complements" explanation for the declining US labor share. He shows that despite a rise in measured capital-labor ratios, labor-augmenting technical change in the United States has been sufficiently rapid that effective capital-labor ratios have actually fallen in the sectors and industries that account for the largest portion of the declining labor share in income since 1980. In combination with estimates that corroborate the consensus in the literature that the elasticity of substitution is less than 1, these declines in the effective capital-labor ratio can account for much of the recent fall in labor's share in US income at both the aggregate and industry level. Paradoxically, these results also suggest that increased capital formation, ideally achieved through a progressive consumption tax, would raise labor's share in income.
Topic:
Economics, Globalization, Markets, and Labor Issues
Political Geography:
United States

565. The Future of Worldwide Income Distribution

Author:
Tomas Hellebrandt and Paolo Mauro
Publication Date:
04-2015
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
Over the next two decades the structure of world population and income will undergo profound changes. Global income inequality is projected to decline further in 2035, largely owing to rapid economic growth in the emerging-market economies. The potential pool of consumers worldwide will expand significantly, with the largest net gains in the developing and emerging-market economies. The number of people earning between US$1,144 and US$3,252 per year in 2013 prices in purchasing power parity terms will increase by around 500 million, with the largest gains in Sub-Saharan Africa and India; those earning between US$3,252 and US$8,874 per year in 2013 prices will increase by almost 1 billion, with the largest gains in India and Sub-Saharan Africa; and those earning more than US$8,874 per year will increase by 1.2 billion, with the largest gains in China and the advanced economies.
Topic:
Economics, Emerging Markets, Globalization, and Labor Issues
Political Geography:
Africa and Asia

566. Morocco's Experience of Migration as a Sending, Transit and Receiving Country

Author:
Mehdi Lahlou
Publication Date:
09-2015
Content Type:
Working Paper
Institution:
Istituto Affari Internazionali
Abstract:
If Morocco appears to be Africa's gateway to Europe, it is a gateway that until today has been used primarily by Moroccans – more than 3 million Moroccans currently live in EU countries such as France, Spain and Italy. The number of other nationalities entering Europe through Morocco has seldom exceeded 20,000 annually and was no more than 7,300 in 2014. Thus, while Morocco is a country of migrant departure, it is only a minor host/transit country for migrants in search of better living conditions outside of their region of origin. Such a configuration has been the basis of recent Moroccan migration policy.
Topic:
Globalization, Migration, Political Economy, Bilateral Relations, and Labor Issues
Political Geography:
Europe and North Africa
Publication Identifier:
978-88-98650-54-5
Publication Identifier Type:
ISBN

567. Aggregating Elasticities: Intensive and Extensive Margins of Female Labour Supply

Author:
Orazio P. Attanasio, Peter Levell, Hamish Low, and Virginia Sanchez-Marcos
Publication Date:
06-2015
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
There is a renewed interest in the size of labour supply elasticities and the discrepancy between micro and macro estimates. Recent contributions have stressed the distinction between changes in labour supply at the extensive and the intensive margin. In this paper, we stress the importance of individual heterogeneity and aggregation problems. There is a renewed interest in the size of labour supply elasticities and the discrepancy between micro and macro estimates. Recent contributions have stressed the distinction between changes in labour supply at the extensive and the intensive margin. In this paper, we stress the importance of individual heterogeneity and aggregation problems. At the intensive margins, simple specifications that seem to fit the data give rise to non linear expressions that do not aggregate in a simple fashion. At the extensive margin, aggregate changes in participation are likely to depend on the cross sectional distribution of state variables when a shock hits and, therefore, are likely to be history dependent. We tackle these aggregation issues directly by specifying a life cycle model to explain female labour supply in the US and estimate its various components. We estimate the parameters of different component of the model. Our results indicate that (i) at the intensive margin, Marshallian and Hicksian elasticities are very heterogeneous and, on average, relatively large; (ii) Frisch elasticities are, as implied by the theory, even larger; (iii) aggregate labour supply elasticities seem to vary over the business cycle, being larger during recessions.
Topic:
Gender Issues, Labor Issues, Feminism, and Labor Market
Political Geography:
Global Focus

568. Labour in Europe’s crisis

Author:
Mario Pianta
Publication Date:
04-2015
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
A structural transformation is investing labour in Europe, accelerated by the crisis started in 2008. Job destruction is dominating employment trends in most EU countries and deep changes are taking place in labour relations, labour market institutions and wage regimes. The focus of this paper is on three issues. First,an overview is offered of the change taking place across EU countries at the level of industries in manufacturing and services. Second, the changes taking place in the structure of employment by professional groups are investigated, showing the factors that account for the evolution of skills. Third, the need for policies is argued, that are not limited to labour market conditions, but address production structures, especially in the countries hardest hit by the crisis.
Topic:
Labor Issues, European Union, Crisis Management, and Labor Market
Political Geography:
Europe

569. Do men and women have different policy preferences, and if so, why?

Author:
Jessica Gottileb, Guy Grossman, and Amanda Lea Robinson
Publication Date:
02-2015
Content Type:
Working Paper
Institution:
Afrobarometer
Abstract:
Gender quotas to increase women’s representation are often motivated by the assumption that men and women have different policy preferences. In Africa – where gender quotas have been particularly widespread – we find that gender differences in preferences are quite small on average, but vary significantly across both policy domains and countries. We propose a theoretical framework for differentiating policy domains where preference divergence indicates increased gender parity from those where it signifies growing inequality. We then demonstrate that favourable gender gaps increase with female labour-force participation, while unfavourable gaps are more likely where women are most vulnerable. We show that these gender gaps in preferences are related to gender gaps in both political participation and representation.
Topic:
Gender Issues, Labor Issues, Representation, and Participation
Political Geography:
Africa

570. Risk Choices and Compensation Design

Author:
Mark Carey and Bo Sun
Publication Date:
01-2015
Content Type:
Commentary and Analysis
Institution:
Board of Governors of the Federal Reserve System
Abstract:
We analyze the impact of bad-tail risks on managerial pay functions, especially the decision to pay managers in stock or in options. In contrast to conventional wisdom, we find that options are often a superior vehicle for limiting managerial incentives to take bad-tail risks while providing incentives to exert effort. Arrangements similar to collar options are able to incent the desired project choice in wider range of circumstances than call options or stock. However, information requirements appear high. We briefly explore alternatives with features similar to maluses and clawbacks, which are a bit like weakening the limited liability of managers.
Topic:
Labor Issues, Risk, Business Management, Stock Markets, and Wage Growth
Political Geography:
Global Focus