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Who Ultimately Bears the Burden of Greater Non-Wage Labour costs?
Get PDFWe investigate the effect of a rise in non-wage labour costs (NWLC) on real anufacturing labour costs in OECD countries, taking into account the degree of coordination in the wage bargaining
process. We find that, in countries in which wage bargaining is not highly coordinated, 55% of an increase in NWLC appears to be shifted to workers in the long run, whereas in countries operating under a highly coordinated bargaining regime, full shifting occurs. Overall, our results suggest that
high NWLC can be associated with a high equilibrium unemployment rate, but only in those OECD countries that do not have highly coordinated wage bargaining
Enhancing Interns’ Aspirations towards the Labour Market through Skill-Acquisition: The Second Chance Schools Experience
Get PDFSecond Change School programmes are active in a number of European countries. These schools offer vulnerable young adults an alternative opportunity to enhance their employability skills by alternating education with work experience. People enrolling in these programmes disengaged from schools at an early age. They already experienced or are at-risk to enter into unemployment. This paper examines the impact of the Second Chance Schools on their participants’ aspirations towards the labour market through skill-acquisition. We are able to identify the perception of Second Chance Schools’ interns regarding entry to the professional life. A third of them, for example, consider their attitude or their surroundings as a barrier preventing them from getting a job. However, our results emphasise the role of the interns’ coach in improving their aspirations towards the labour market. We also show that when compared to male interns, female interns have a stronger (positive) perception of the school as a place where they can gain skills
A Panel Data Investigation of Real Exchange Rate Misalignment and Growth
Get PDFThe paper investigates the role of real exchange rate misalignment on long-run growth for a set of ninety countries using time series data from 1980 to 2004. We first estimate a panel data model (using fixed and random effects) for the real exchange rate, with different model specifications, in order to produce estimates of the equilibrium real exchange rate and this is
then used to construct measures of real exchange rate misalignment. We also provide an alternative set of estimates of real exchange rate misalignment using panel cointegration methods. The variables used in our real exchange rate models are: real per capita GDP; net foreign assets; terms of trade and government consumption. The results for the two-step System GMM panel growth models indicate that the coefficients for real exchange rate misalignment are positive for different model specification and samples, which means that a more depreciated (appreciated) real exchange rate helps (harms) long-run growth. The
estimated coefficients are higher for developing and emerging countries
Interprovincial disparities in China since the reforms: Convergence or divergence?
Get PDFThis paper investigates the extent of disparities amongst the provinces of China since the economic reform in 1978 up to the most recent year for which data is available. After a brief review of theoretical and in particular recent empirical literature on regional inequality in China it investigates whether or not the dynamic economic growth in China has been coupled with increasing disparities amongst the Chinese provinces. The paper utilises a few models of convergence along the lines of those hypothesised by neoclassical economists. It employs per
capita income and per capita consumption to identify the possible absolute and conditional convergence since the economic reforms. The coverage and impact of the disparities in terms of the relative size of population affected are then taken into account in the analysis of inequality in
income and consumption
The Importance of Graduates for the Scottish Economy: A “Micro-to-Macro” Approach
Get PDFThere have been numerous attempts to assess the overall impact of Higher Education
Institutions on regional economies in the UK and elsewhere. There are two disparate
approaches focussing on: demand-side effects of HEIs, exerted through universities’
expenditures within the local economy; HEIs’ contribution to the “knowledge economy”.
However, neither approach seeks to measure the impact on regional economies that HEIs
exert through the enhanced productivity of their graduates.
We address this lacuna and explore the system-wide impact of the graduates on the
regional economy. An extensive and sophisticated literature suggests that graduates enjoy a significant wage premium, often interpreted as reflecting their greater productivity relative to non-graduates. If this is so there is a clear and direct supply-side impact of HEI
activities on regional economies through the employment of their graduates. However,
there is some dispute over the extent to which the graduate wage premium reflects innate abilities rather than the impact of higher education per se.
We use an HEI-disaggregated computable general equilibrium model of Scotland to
estimate the impact of the growing proportion of graduates in the Scottish labour force that is implied by the current participation rate and demographic change, taking the graduate wage premium in Scotland as an indicator of productivity enhancement. We conduct a range of sensitivity analyses to assess the robustness of our results.
While the detailed results do, of course, vary with alternative assumptions about future graduate retention rates and the size of the graduate wage premium, for example, they do suggest that the long-term supply-side impacts of HEIs provide a significant boost to regional GDP. Furthermore, the results suggest that the supply-side impacts of HEIs are likely to be more important than the expenditure impacts that are the focus of most “impact” studies
Contracting Institutions and Development
Get PDFThe quality of contracting institutions has been thought to be of second-order
importance next to the impact that good property rights institutions can have
on long-run growth. Using a large range of proxies for each type of institution,
we find a robust negative link between the quality of contracting institutions and
long-run growth when we condition on property rights and a number of additional
macroeconomic variables. Although the result remains something of a puzzle, we present
evidence which suggests that only when property rights institutions are good do
contracting institutions appear also to be good for development. Good
contracting institutions can reduce long-run growth when property rights are not
secured, presumably because the gains from the (costly) contracting institutions
cannot be realised. This suggests that contracting institutions can benefit growth,
and that the sequence of institutional change can matter
Accounting for the dead in the longitudinal analysis of income-related health inequalities
Get PDFThis paper develops an accounting framework to consider the effect of deaths on the longitudinal analysis of income-related health inequalities. Ignoring deaths or using inverse probability weights (IPWs) to re-weight the sample for mortality-related attrition can produce misleading
results, since to do so would be to disregard the most extreme of all health outcomes.
Incorporating deaths into the longitudinal analysis of income-related health inequalities provides a more complete picture in terms of the evaluation of health changes in respect to socioeconomic
status. We illustrate our work by investigating health mobility in Quality Adjusted Life Years (QALYs) as measured by the SF6D from 1999 till 2004 using the British Household Panel Survey (BHPS). We show that for Scottish males explicitly accounting for the dead, rather than
using IPWs to account for mortality-related attrition, changes the direction of the relationship between relative health changes and initial income position, while for other population groups it increases the strength of this relationship by up to 14 times. When deaths are explicitly incorporated into the analysis it is found that over this five year period for both Scotland and
England & Wales the relative health changes were significantly regressive such that the poor experienced a larger share of the health losses relative to their initial share of health and a large amount of this was related to mortality
Delay and Haircuts in Sovereign Debt: Recovery and Sustainability
Get PDFOne of the striking aspects of recent sovereign debt restructurings is,
conditional on default, delay length is positively correlated with the size of
haircut. In this paper, we develop an incomplete information model of debt
restructuring where the prospect of uncertain economic recovery and the
signalling about sustainability concerns together generate multi-period delay.
The results from our analysis show that there is a correlation between delay
length and size of haircut. Such results are supported by evidence. We show
that Pareto ranking of equilibria, conditional on default, can be altered once
we take into account the ex ante incentive of sovereign debtor. We use our results to evaluate proposals advocated to ensure orderly resolution of sovereign debt crises
Does China overinvest? Evidence from a panel of Chinese firms
Get PDFThis paper addresses the hotly-debated question: do Chinese firms overinvest? A firm-level dataset of 100,000 firms over the period of 2000-07 is employed for this purpose. We initially calculate
measures of investment efficiency, which is typically negatively associated with overinvestment.
Despite wide disparities across various ownership groups, industries and regions, we find that corporate investment in China has become increasingly efficient over time. However, based on direct
measures of overinvestment that we subsequently calculate, we find evidence of overinvestment for all types of firms, even in the most efficient and most profitable private sector. We find that the free
cash flow hypothesis provides a good explanation for China‟s overinvestment, especially for the private sector, while in the state sector, overinvestment is attributable to the poor screening and
monitoring of enterprises by banks
Median Independent Inequality Orderings
Get PDFTo date, inequality orderings for ordered response data are only suitable for comparing distributions that share a common median state. In this paper we propose a methodology for comparing distributions irrespective of their medians. We set out to do so by introducing a general pre-ordering
and equivalence relation defined over distributions with different median
responses, leading us naturally to derive a partial ordering over equivalence
classes. We then discuss the implications of our results for the axiomatic
derivation of inequality indices for ordered response data