The Path to full Employment

Persistent unemployment arises because free market ideology has overridden collective responsibilities. To restore full employment the government must provide permanent employment for all the unemployed in environmentally sustainable and useful jobs.     

Improving the estimation of total factor productivity growth: capital operating time in a latent variable approach

Measuring labor and capital services accurately is essential to obtaining reliable estimates of production functions and total factor productivity (TFP) growth. Using data on the operating time of capital, a series that exists for the French business sector, greatly improves the measurement of effective capital services in production. The ensuing estimation results are consistent with Cobb–Douglas technology under constant returns to scale, with the factor elasticities not statistically different from their income shares. In the same framework, TFP growth is estimated as a latent variable and found to be less volatile than accounting residuals, negatively correlated with employment, and free of cyclicality. It is statistically best estimated as a first-order autoregressive process, with an autoregressive coefficient of 0.95. Total factor productivity growth was estimated to have declined steadily between the mid-1970s and mid-1990s, but the rate of decline has diminished since then.     

A nonbehavioral theory of saving

The article presents a demand-driven model, where the saving rate of households at the bottom of the income distribution becomes the endogenous variable that adjusts for full employment to be maintained over time. An increase in income inequality and the current account deficit and a consolidation of the government budget lead to a decrease in the saving rate of the household sector. Such a process is unsustainable because it leads to an increase in the debt-to-income ratio of the households and its maintenance depends on some kind of asset bubble. This framework allows us to better understand the factors that led to the Great Recession in the United States and the dilemma of the present and the future regarding a repeat of this unsustainable process or secular stagnation.     

The London Business School econometric model of the UK

This paper describes the London Business School econometric model — the first fully computerized model of the UK — which has been used for regular public forecasting since 1966. The model, estimated on quarterly data, is organized around the income expenditure accounts with a fully integrated flow of funds sector which ensures consistency between portfolio decisions and income, savings and investment decisions. Aggregate demand is built up from its individual components so that demand influences are important for the short- and medium-term behaviour of the model. But there are important supply-side effects which work through the real exchange rate and real wages. Monetary conditions have a powerfull effect on the model through the exchange rate, personal sector wealth and interest rates. Wages and employment are determined in a labour market in which employment decisions depend on the level of demand and real wages while real wages depend on the level of unemployment, real benefits and direct and indirect taxes as well as underlying trends in productivity. Asset prices move in any period to clear both the spot and the future market in assets so that current asset prices in the equity, gilt-edged and foreign exchange markets reflect all current information about the expected state of the economy. In contrast, goods prices adjust sluggishly. The combination of continuously clearing asset markets and sluggish wages and prices gives the model many of the theoretical characteristics associated with the open-economy models of Dornbusch and Buiter and Miller.     

Analysis of county employment and income growth in Appalachia: a spatial simultaneous-equations approach

County median household income and employment growth rates tend to be characterized by spatial interaction. A spatial simultaneous-equations growth equilibrium model was estimated using GS2SLS and GS3SLS. The results indicate strong feedback simultaneity between employment and median household income growth rates. They also show spatial autoregressive lag simultaneity and spatial cross-regressive lag simultaneity with respect to employment and median household income growth rates, as well as spatial correlation in the error terms. Estimates of structural parameters show strong agglomerative effects and significant conditional convergence with respect to employment growth and median household income growth in Appalachia in the 1990 s.     

Expanding New York State's Earned Income Tax Credit Programme: the effect on work,income and poverty

Given its favourable employment incentives and ability to target the working poor, the Earned Income Tax Credit (EITC) has become the primary antipoverty programme at both the federal and state levels. However, when evaluating the effect of EITC programmes on income and poverty, governments generally calculate the effect using simple accounting, where the value of the state or federal EITC benefit is added to a person's income. These calculations omit the behavioural incentives created by the existence of these programmes, the corresponding effect on labour supply and hours worked, and therefore the actual effect on income and poverty. This article simulates the full effect of an expansion of the New York State EITC benefit on employment, hours worked, income, poverty and programme expenditures. These results are then compared to those omitting labour supply effects. Relative to estimates excluding labour supply effects, the preferred behavioural results show that an expansion of the New York State EITC increases employment by an additional 14?244 persons, labour earnings by an additional $95.8 million, family income by an additional $84.5 million, decreases poverty by an additional 56?576 persons and increases costs to the State by $29.7 million.     

Converting Forests to Farms: The Economic Benefits of Clearing Forests in Agricultural Settlements in the Amazon

Agricultural expansion into tropical forests is believed to bring local economic benefits at the expense of global environmental costs. The resulting tension is reflected in Brazilian government policy. The national agrarian reform program has settled farm families in the Amazon region since the 1970s, with the expectation that they will clear forests in order to farm the land. On the other hand, recent Brazilian policy initiatives seek to reduce deforestation to mitigate climate change. We contribute to the policy debate that surrounds these dual goals for the Amazon by estimating the marginal effects of new agricultural land on the full income and assets of farm settlers over a 13-year period from 1996 to 2009. Using micro panel data from agrarian settlements where forest was being rapidly cleared, and controlling for factors that would otherwise confound the relationship, we estimate the effect of converting forest to agriculture on total household income to estimate the opportunity cost of conserving forest. Our measure of income reflects any re-allocation of resources by utility maximizing households and any productivity effects due to loss of forest ecosystem services. The estimated effect of new agricultural land on income is positive, but small relative to the income per hectare of previously cleared land. However, we show that income increases investment in physical assets, which raises households’ income generating capacity and future accumulation of assets. Thus, while there is only a small immediate income gain from clearing more forest, the long-term effects on wealth are still substantial. This demonstrates that given the right conditions, conversion of forest to agricultural land can be an impetus for asset accumulation by smallholders. It also highlights the importance of considering the indirect and long-term welfare benefits of new agricultural land when assessing the opportunity costs of forest conservation.     

消费传导视角下资产 价格对物价水平的影响

本文在生命周期-持久收入（LC PIH）模型基础上分析了资产价格波动对居民消费及物价水平的影响，发现资产价格波动可以通过预算约束效应、实际收入效应、预期收入效应与替代效应四个渠道影响资产持有者的消费行为，进而影响物价水平。在此基础上，本文运用ARDL UECM模型实证分析了资产价格对物价水平的影响，实证结果发现股票、房地产价格在长期内与物价存在相关关系，房地产价格是影响物价水平的重要因素，但股票价格对物价的影响不显著且不稳定。     

Environmentally Sustainable Transport: Definition and Long-Term Economic Impacts for Austria

The transition to an environmentally sustainable transport system involves a combination of technological and demand-side transport policies. Regulatory, educational and economic instruments can be used to enhance the development of cleaner transport technologies as well as the shift from road-based towards more environmentally benign modes of transport. This article provides estimates of overall economic impacts in the long term and describes the required change in the transport system. The article proceeds in three steps. First, this article reviews concepts of sustainability and applies them to transportation. Second, a small open economy computable general equilibrium model for Austria is developed to evaluate the long-term macroeconomic and sectoral impacts of a sustainable freight transport policy. Third, simulation results are discussed and conclusions drawn concerning the crucial features of a sustainable freight transport policy.Although the required transition within the transport system is substantial, the economic costs in terms of GDP are comparably low and employment is likely to increase slightly.     

必要增长率与财政政策的理论与实证研究

本文利用我国1992～2003年的年度统计数据,检验了开放经济条件下必要增长率与财政政策关系模型,验证了财政支出水平变化、财政支出结构变化、财政投资结构变化、所得税税率变化及销售税税率的变化对我国国民经济必要增长率的影响,提出了尽量减少必要增长率与民间投资增长率缺口、提高财政支出水平、改善财政支出与投资结构、提高所得税税率与销售税税率、改善所得税结构的政策建议.     

On the Double Dividend under Imperfect Competition

We investigate whether, and under which conditions, a revenue-neutral environmental tax reform may yield an employment double dividend, i.e., an improvement of environmental quality and an increase in aggregate employment. Using a model with two market imperfections – a rigid real wage and imperfect competition in one industry – we show that an employment dividend is plausibly obtained. However, for countries where labor taxes are high and households spend a large share of their income in favor of environmentally harmful consumption goods a double dividend can nevertheless not be obtained, for under these conditions environmental quality deteriorates.     

A Vision for Australia: Indicators from Singapore

This article suggests that Australia could benefit from observing more closely Singapore's current development strategy. The production of labour intensive manufactures primarily by foreign firms and for export formed the core of Singapore's successful economic advance in the 1960s and 1970s. While a factor endowment strength—comparatively cheap labour—lay behind this achievement, the Singapore government actively supplemented this strength by creating a business environment highly favourable to the needs of foreign investors.
With full employment and rising wage levels since then, Singapore lost its comparative advantage in the production of low wage manufactures to other East Asian countries. Recently, its development has been based more on created than inherited advantages. The Singapore government argues that the resources crucial to sustained per capita income advance in middle and higher income countries are not natural resources but rather information, technology, investible funds, research and development (R&D) spending and professional people. Singapore aims to develop its business environment to attract such resources to Singapore.
The government's vision for Singapore is a nation where the share of professional and highly skilled manpower in the workforce rises over time. This employment goal informs the government's approach to all policy matters: infrastructure development, education, urban development, microeconomic reform, taxation, fiscal, monetary and exchange rate policy, support for manufacturing and service activities, and attitudes to foreign investors.
By comparison with Australia, Singapore has a very level playing field. The government sees no conflict between intervening to attempt to create competitive advantage while vigorously pursuing microeconomic reforms to make the playing field in Singapore still more level.     

Optimal Liquidity Provision Through a Demand Deposit Scheme: The Jacklin Critique Revisited

We derive conditions such that optimal liquidity provisions through a demand deposit scheme can be sustainably implemented in a subgame perfect Nash equilibrium under the assumption that renegade investors have free access to ex post asset markets. As our qualitative main finding we demonstrate that such sustainability is more likely for ‘poor’ than for ‘rich’ scheme participants in terms of future income. By establishing sustainability for low future income populations, our formal analysis therefore offers an important qualification of Jacklin's (1987) influential claim that an optimal demand deposit scheme is not sustainable whenever there exists the possibility of an ex post asset market.     

资源环境与旅游业的核心竞争力

旅游业以服务为主、重在服务的倾向和观念,是造成旅游发展过程中环境保护和培育未受到足够重视的一个深层理论原因。从旅游者的旅游动机和目的而言,旅游资源环境才是真正的吸引因素,从旅游产品的构成来看,旅游资源环境乃是根本的核心要素。环境对旅游发展具有正向决定性作用,是一种确定的关系;旅游发展对环境的作用则有正负两种可能性,是一种不确定的关系。因此,旅游资源环境的保护和培育才是旅游业存在和可持续发展的核心竞争力。在理论上,应倡导旅游重在环境的观念。     

Are Full Employment and Social Cohesion Possible Under Financialization?

Unemployment and unequal income distribution were singled out by J.M. Keynes, in the General Theory, as major faults of capitalist economies. This paper argues that there is a negative relationship between financialization and unemployment. In particular, we develop a simple Post Keyneian/Kaleckian model and explore distribution as well as institutional channels through which financialization might have negatively affected the employment performance of capitalist economies, undermining the social cohesion and egalitarian development. Furthermore, we argue that in the face of financialization full employment is likely to be attainable under the institutionalization of an Employer of Last Resort (hereafter ELR) policy strategy.     

Ecosystem services: Foundations for a new rural–urban compact

The traditional rural–urban compact, now almost ten thousand years old, whereby the countryside sent products and people to the city in exchange for the city's products, services and governance is not working anymore. The rural population is increasingly marginalized and natural environments are increasingly destroyed. A new rural–urban compact needs to arise where cities acknowledge and pay for environmental sustainability. In this new rural–urban compact there would be more employment opportunities and more income coming to the rural areas, and the cities would benefit from a sustainable supply of rural products and ecosystem services provided by restored rural environments. This paper describes why this is important and provides several ideas on how to implement programs.     

The Case for Gender-Sensitive Superannuation Plan Design

A key feature of superannuation plan design is the assumption that members have long and continuous periods of employment over which contributions are made. This heroic design feature has led to debate on the adequacy of superannuation plans for those with interrupted employment, particularly the adverse impacts this has on the retirement income prospects of women. This paper employs non-parametric stochastic simulation to investigate two possible solutions to gender inequality in superannuation, higher contribution rates and more aggressive asset allocation. Our results suggest that while both these strategies in isolation are effective in reducing the current gender disparity in superannuation outcomes, they demand significant changes to current arrangements when employed individually to address the problem. A combined approach is found to be more powerful in ensuring a more equitable superannuation outcome for women, as it nullifies the relative disadvantage of interrupted employment with only modest changes to contribution rates and asset allocation.     

Are Full Employment and Social Cohesion Possible Under Financialization?

Unemployment and unequal income distribution were singled out by J.M. Keynes, in the General Theory, as major faults of capitalist economies. This paper argues that there is a negative relationship between financialization and unemployment. In particular, we develop a simple Post Keyneian/Kaleckian model and explore distribution as well as institutional channels through which financialization might have negatively affected the employment performance of capitalist economies, undermining the social cohesion and egalitarian development. Furthermore, we argue that in the face of financialization full employment is likely to be attainable under the institutionalization of an Employer of Last Resort (hereafter ELR) policy strategy.     

Social identity and perceived income adequacy

Economists are increasingly interested in subjective well‐being, but the economic literature on perceptions of income adequacy, which is one of the factors that shape subjective well‐being, is little. Our paper fills this lacuna. We utilize nationally representative data on perceptions of amounts considered as remunerative earnings from self‐employment in India and examine how these are earnings shaped by social identity, namely, caste. We also investigate if institutional change such as the introduction of an employment guarantee scheme alters these perceptions. Finally, we examine the relationship between caste identity and actual earnings. We find that caste identity does shape both perceptions of income adequacy and actual earnings: lower‐ranked groups perceive lower amounts as being remunerative and also earn lower amounts. Further, the employment guarantee scheme alters self‐perceptions differentially for different caste groups, but in more nuanced ways than our ex‐ante beliefs.