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751. 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

752. 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

753. Paying the Price for the Economic Crisis

Author:
Bethan Emmett
Publication Date:
03-2009
Content Type:
Working Paper
Institution:
Oxfam Publishing
Abstract:
New research by Oxfam International uncovers a hidden aspect of the global economic crisis – its impact on women workers in developing countries. Preliminary findings from Oxfam's research with women in global supply chains shows that the crisis is having a devastating impact on their livelihoods, their rights, and their families. Women are often first to be laid off, with employers leaving pay outstanding and evading legal obligations to give notice and pay compensation, and governments turning a blind eye, with devastating knock-on effects. Last year, women's wages were putting food on the table and children through school in millions of families. Now, the lives of women who were already suffering from poor labour conditions have become even more precarious.
Topic:
Economics, Gender Issues, Globalization, Political Economy, and Labor Issues

754. What Happened at the G20? Initial Analysis of the London Summit

Publication Date:
04-2009
Content Type:
Policy Brief
Institution:
Oxfam Publishing
Abstract:
G20 leaders met for the second time in London on 2 April, as the global economic crisis began to crash across the borders of poor countries with ever-greater severity. Oxfam's research shows rising human impacts in the shape of job losses, falling remittances to the families of migrant workers and a particularly severe impact on women workers in global supply chains. Based on the latest forecasts, published on the eve of the summit, Oxfam estimates that the crisis could push 100 million people into poverty in 2009 alone.
Topic:
Economics, Gender Issues, Globalization, International Organization, Poverty, and Labor Issues
Political Geography:
London

755. Close to Home: UK poverty and the economic downturn

Publication Date:
04-2009
Content Type:
Policy Brief
Institution:
Oxfam Publishing
Abstract:
The major social policy challenge of the current economic recession is how to prevent a precipitous rise in poverty in the UK. In addition to limiting the numbers of people plunged into poverty because of the recession, government must also mitigate the impact on people already living below the poverty line. But, this paper will argue, response s to the recession present an opportunity to make a step-change, ensuring that actions taken also help build a fairer, more sustainable society in which poverty is ended in the long-term.
Topic:
Economics, Globalization, Poverty, and Labor Issues
Political Geography:
Europe

756. Crossing Borders, Changing Landscapes: Land-Use Dynamics in the Golden Triangle

Author:
Jefferson Fox
Publication Date:
12-2009
Content Type:
Policy Brief
Institution:
East-West Center
Abstract:
Over the last half-century, public policy has affected land-use practices across the borders linking China, Thailand, and Laos. Political and economic reforms have facilitated labor mobility and a shift in agricultural practices away from staple grains and toward a diverse array of cash crops, rubber being one of the foremost. China has promoted the conversion of forests to rubber agroforestry in southern Yunnan--profitable for farmers, but a concern in terms of biodiversity and long-term viability. In Thailand, the response is at the other end of the spectrum as the government's concerns about land-use practices and watershed management have led to policies that dramatically constrain land-use practices and limit tenure rights. In Laos the future is not yet clear. Government policies provide weak support for both private land ownership and protected areas. In a global environment where national policy has such a dramatic effect on land use and land cover, the factors behind land-use change merit close examination.
Topic:
Agriculture, Economics, Migration, and Labor Issues
Political Geography:
China, Asia, Thailand, and Southeast Asia

757. The Externalisation of the EU's Labour Immigration Policy: Towards mobility or insecurity partnerships?

Author:
Sergio Carrera and Raül Hernández i Sagrera
Publication Date:
10-2009
Content Type:
Working Paper
Institution:
Centre for European Policy Studies (CEPS)
Abstract:
This paper looks at the dynamics affecting the external dimensions of the EU's labour immigration policy. It assesses the role and functions of mobility partnerships as a mechanism for governing circular migration schemes that allow the temporary movement of individuals for employment purposes between EU member states and non-EU countries. The paper argues that given the actual origins, rationale, conditional nature and kinds of circular migration policies advocated by these partnerships, they should be considered 'security' partnerships for the participating EU member states and to a limited extent for the non-EU countries. At the same time, they could be regarded as 'insecurity' partnerships for the coherency and legitimacy of the EU's labour immigration policy, as well as the liberty and security of the third-country workers.
Topic:
Migration, Labor Issues, and Immigration
Political Geography:
Europe

758. Institutionalizing Inequality: The Political Origins of Labor Codes in Latin America

Author:
Matthew E. Carnes, SJ.
Publication Date:
12-2009
Content Type:
Working Paper
Institution:
Kellogg Institute for International Studies
Abstract:
When do labor laws protect workers from workplace risks, and when do they serve to institute or insulate the privilege of particular political and economic actors? This paper argues that Latin American labor laws are highly politicized, and have been since their early origins. In the early decades of the twentieth century, the first labor codes were formulated to favor skilled, unionized labor in key economic sectors controlled by business and governmental elites. Non-skilled labor outside of these sectors was largely locked out of the benefits of legislation. Recent efforts at market-oriented reforms, rather than creating a common (albeit weakened) norm for all workers, have only strengthened the privileges given to formal-sector, unionized workers, and widened the gap between these sectors and the unskilled workers in the informal sector. In this paper, I develop a theory of the political dynamics of labor code origins, emphasizing the explanatory role of skilled labor profiles, geographic isolation, and union organization, as well as the concentration of capital and nascent state power in the hands of a limited group of elites. I then illustrate the principal claims of the theory through a historical examination of three cases of labor law formulation: Argentina, Chile, and Peru.
Topic:
Human Rights and Labor Issues
Political Geography:
Argentina, Latin America, Chile, and Peru

759. To Formalize or Not to Formalize? Comparisons of Microenterprise Data from Southern and East Africa

Author:
Vijaya Ramachandran, Manju Kedia Shah, Alan Gelb, and Taye Mengistae
Publication Date:
07-2009
Content Type:
Working Paper
Institution:
Center for Global Development (CGD)
Abstract:
Why do firms choose to locate in the informal sector? Researchers often argue that the high cost of regulation prevents informal firms from becoming formal and productive. Our results point to a more nuanced story.
Topic:
Development, Economics, Markets, and Labor Issues
Political Geography:
Africa

760. The Effect of Wage-Payment Reform on Workers' Labor Supply and Welfare

Author:
Esther Redmount, Arthur Snow, and Ronald S. Warren Jr.
Publication Date:
08-2009
Content Type:
Working Paper
Institution:
Department of Economics and Business, Colorado College
Abstract:
We analyze the effects of a largely ignored 1885 legislative reform in Massachusetts requiring that firms provide workers the option of receiving weekly wage payments. Using an inter-temporal model of deferred compensation, we derive conditions on elasticities of labor supply that determine the effects of the reform on workers' effective wage and utility. We then examine empirically the effects of the reform, using weekly data on mill workers in Lowell. Given the implications of our theoretical analysis, the empirical findings of positive wage and reform elasticities imply that the switch to weekly payment increased workers' effective wage and well-being.
Topic:
Economics, Markets, and Labor Issues
Political Geography:
United States