Suppressing resistance to low-skill migration

Just like any other trade activity, migration tends to generate gains to all parties involved, the migrants as well as the native population, if markets are well-functioning. But typically these gains tend to be rather small. However, when the labor market is mal-functioning, migration may exacerbate the imperfections in the market. Consequently, it could lead to losses to the host-country population, which can be quite sizable.An additional problem raised by migration is the toll it imposes on the welfare state. As a democracy, the host-country cannot exclude migrants from various entilement programs and public services. As a consequence, the modern welfare state could find it more and more costly to run its various programs when they attract low-income migrants.These considerations may help explain why there is strong resistance to migration. Consequently, to be able to benefit from migration, one may want to improve the functioning of the markets (with a compensation to wage earners that compete with unskilled migrants) and to downsize the scope of the state entitlement programs.The current version was prepared while the first author was visiting the Research Department and the second author was visiting the Fiscal Affairs Department of the International Monetary Fund.     

Spillover analysis across FinTech,ESG, and renewable energy indices before and during the Russia–Ukraine war: International evidence

This study is epicentral to analyze the impact of the Russia–Ukraine war on the financial markets, specifically focusing on the connectedness and spillover dynamics of FinTech, Environmental, Social, and Governance (ESG), renewable energy, gold, and Morgan Stanley Capital International (MSCI) indices in developed and emerging countries. Data are collected from Thomson Reuters, ranging from May 8, 2020, to May 11, 2022, and a time-varying parameter vector autoregression (TVP-VAR) and the dynamic conditional correlation (DCC) generalized autoregressive conditional heteroskedasticity (GARCH) t-Copula (DCC-GARCH t-Copula) are used to analyze the data. The results show that FinTech, ESG, and MSCI are net transmitters in developed countries, whereas gold and renewable energy are net receivers pre- and during war periods. ESG and MSCI are net transmitters in emerging countries, while FinTech, renewable energy, and gold become net receivers in both periods. The hedging ratio sheds light on the costs and weights of efficient pair investments that might change in the context of each region and under the combined scenario. The study has important implications for merchant bankers, policymakers, investors, hedgers, and risk managers.