Demographic Change and Policy Responses: Implications for the Global Economy

The fertility declines associated with the final phase of the global demographic transition have led to slower population growth and accelerated ageing in developed countries and in several advanced developing countries. A global demographic and economic model is used to assess the implications of these changes for population sizes, age‐gender distributions, labour force growth and their implications for economic performance. A baseline projection that incorporates declining fertility is compared with a hypothetical constant population growth scenario. The results show that slower population growth and ageing reduces average saving rates in industrial regions, yet global investment demand is also slowed and saving rates rise in developing regions, so there is no net tightening of financial markets. Increased aged labour force participation, considered one solution to the resulting rise in aged dependency in advanced regions, is found to redistribute investment in favour of the industrialised regions and hence to accelerate their per capita income growth, while conferring on the other regions compensatory terms of trade improvements. The alternative of replacement migration is found to require inconceivably large population movements. It also impairs real per capita growth in destination regions but by least in Western Europe, where the terms of trade are improved by the immigration.     

Labour Migration and Economic Growth in East and South‐East Asia

East and South‐East Asia will face major demographic changes over the next few decades with many countries’ labour forces starting to decline, while others experience higher labour force growth as populations and/or participation rates increase. A well‐managed labour migration strategy presents itself as a mechanism for ameliorating the impending labour shortages in some East Asia–Pacific countries, while providing an opportunity for other countries with excess labour to provide migrant workers who will contribute to the development of the home country through greater remittance flows. This paper examines such migration policy options using a global dynamic economic simulation approach and finds that allowing migrants to respond to the major demographic changes occurring in Asia over the next 50 years would be beneficial to most economies in the region in terms of real incomes and real GDP over the 2007–50 period. Such a policy could deeply affect the net migration position of a country. Countries that were net recipients under current migration policies might become net senders under the more liberal policy regime.     

The Challenges of Inflation in Europe and the US

Inflationary pressures and uncertainties related to the severity and duration of the coronavirus pandemic have been growing steadily in the last year. Different approaches to supporting labour force participation in Europe and the United States have led to different inflationary outcomes. In addition, the Russian war against Ukraine, which began on 24 February, has provided a definitive answer to questions about whether rising inflation is just temporary. The sharp increase in already volatile food and energy prices is presenting monetary policymakers with new challenges. The authors in this Forum consider how to respond to rising inflation, discuss why inflation is so hard to predict and examine whether long-term inflation expectations have de-anchored.

     

WORKFORCE AGEING AND THE SUBSTITUTION OF LABOUR: THE ROLE OF SUPPLY AND DEMAND OF LABOUR IN AUSTRIA

We study the sensitivity of projected economic productivity (output per worker) with respect to alternative projections of labour supply and alternative assumptions on the substitutability of workers at different ages. We show that in a pure labour economy assuming imperfect substitution of workers at different ages implies an increase in relative productivity during the next two decades. For a decreasing or hump‐shaped age‐specific productivity profile a negative tradeoff between an increasing labour force at older ages and aggregate productivity results. A decline in productivity can be attenuated by adjusting labour force participation rates to levels currently observed in Nordic countries.     

Ageing in Europe

For many people all over Europe, there is an understanding and an expectation that in old age they will be taken care of by the state. High social security contributions throughout the three or four decades of a working life are rationalised by the prospect of a straightforward transition out of the labour force when the time comes. While this was a reasonable expectation in decades past, a number of factors have combined to cause people all across the continent to feel very anxious about what awaits them once it is time to exit the labour force into retirement. The well-documented demographic transition of many rich European countries is a big factor, as greying populations start to weigh on the sparser younger generations, leading to increasing dependency ratios that would cause any social security system to buckle. The Great Recession has not helped matters, and the austerity measures still crippling many vulnerable European nations will not make anyone in these countries feel optimistic about their post-working lives. The following papers look at different threads of the new reality of ageing in Europe, from pension reform and prolonging the working life to more qualitative aspects such as an analysis of the quality of life of the elderly across Europe. They serve to inform and advise on an important issue that will affect everyone in Europe at some point in their lives.     

Welche Wachstumspotenziale lassen sich über das Arbeitsangebot erschließen?

Demographic change will lead to a shrinking and ageing population in Germany, resulting in a decrease in the labour force. The fundamental trend can be counteracted through net immigration and behavioural effects such as increasing labour market participation of females in the short and medium run, but is unlikely to be reversed in the long run. This paper shows that the average age of the labour force follows a linear trend since the late 1990s. Moreover, there has been a convergence of average age between male and female workers. In a long run perspective the age distribution has become less heterogeneous, as measured by the coefficient of variation. At the same time, the average length of schooling and training has increased significantly over the last 40 years, but at a slower pace in recent years. We discuss the consequences of these changes for economic growth.     

The Gender Employment Gap: Costs and Policy Responses

This paper will firstly investigate the economic and the social costs associated with the observed gender employment gap. It will then discuss key aspects of the needed policy responses to foster and promote labour market participation among women.     

The Diffusion of Voluntary Environmental Programs: The Case of ISO 14001 in Korea, 1996–2011

Small family businesses have generally been shown to exhibit significant concern for social responsibility, especially at the community level. Despite the reported heterogeneity of family firms in their preferences for and participation in social responsibility, the drivers of such differences are not agreed upon in the literature. We draw from enlightened self-interest and social capital theories by exploring their complementary and competing implications for the effect of duration and community satisfaction on participation in community-oriented social responsibility (CSR). Additionally, drawing on the association between gender and self-construal and evidence that gender shapes helping and giving behaviors, we assess the moderating role of the gender of the firm manager in these relationships. We test our hypotheses on a sample of 279 family businesses and find support that gender moderates the relationship between community duration and satisfaction and measures of CSR.     

Deutlicher Anstieg der Nettozuwanderung nach Deutschland

Since 2010 net immigration to Germany has risen significantly. Net immigration to Germany in 2012 is estimated to total nearly 400 000 people. Influxes of such a magnitude have significant macroeconomic implications. While in the long run they increase the domestic labour force and hence potential output, they moderate wages and prices in the short run. This article investigates the determinants of immigration to Germany and its outlook for the coming years. It shows that differences in employment opportunities in Germany and in the rest of Europe largely explain migration flows. Owing to Germany’s attractive labour market and the expected slow recovery in neighbouring Europe, cumulative immigration to Germany is likely to exceed two million by 2017.     

Soziale Marktwirtschaft – das Fundament für Wachstum und Gerechtigkeit

Among all G20 countries, Germany has the lowest level of inequality in terms of disposable income. Germany’s tax and transfer system – which has a strong and effective redistributive impact compared with other countries – plays a key role in this connection. Over the past ten years, positive growth and employment trends have significantly improved opportunities for economic participation and have put a stop to previous trends towards greater income inequality. In order to safeguard efficient growth and redistributive policies in the future, it is essential for Germany to maintain sufficient incentives for investment, innovation and employment. Political reform strategies to ensure equality of opportunity should aim to achieve a more broad-based accumulation of private wealth and to strengthen labour force participation. The promotion of lifelong education and training, and the economic and social application of the knowledge created in this process, will play a decisive role in achieving these objectives.     

Career barriers: Do we need more research?

Research on career barriers has stressed the commonalities among women, and the ways in which women can develop the personal and professional skills they need to demonstrate their commitment to the organization. However, this individualistic focus is not appropriate for dealing with the problem of combining career and family responsibilities. Our research focus must now turn to the commonalities among organizations, and the ways in which different organizational structures and cultures are more or less responsive to women. A study of Canadian National Sport Organizations illustrates some of the issues in this approach.Dr. Dallas Cullen is a member of the Department of Organizational Analysis in the Faculty of Business at the University of Alberta, with a teaching specialization in gender issues in organizations. Some of her previous research focussed on the impact of affirmative action on women's labour force participation in Canada and the U.S.     

Can labour market institutions mitigate the China syndrome? Evidence from regional labour markets in Europe

This paper investigates how labour market regulations alter the adverse impact of rising import competition from China in European local labour markets between 1997 and 2006. The paper constructs measures of regional exposure to Chinese imports based on previous literature and on regional labour market frictions exploiting involuntary labour reallocations. Taking into account the endogeneity of import competition and its interaction with labour market regulations, the paper finds that regions more exposed to the rise of China have suffered from a reduction in manufacturing employment shares. This shock grows larger with regional labour market frictions; hence, it exacerbates the impact of trade shock on employment. Moreover, the paper finds that employment in public services, and not in construction or private services sector, absorbed the negative shock to the manufacturing sector. The unemployment rate, the labour force participation rate and wages in all sectors are unresponsive to import competition from China.     

Industriepolitik 2.0

Europe is a long-run success model in a mid-life crisis. In the wake of the financial crisis, European growth has been low, unemployment is high and income disparity has increased - developments that have resulted in less support for the European project, manifested in populism and Brexit. The best answer to the current problems is a new strategy based on new drivers of growth and “Beyond GDP” goals, as proposed in the WWWforEurope project. A new industrial policy would be an important part of the new European strategy. It has to be systemic, working in alignment with competition, energy and innovation policy, and it must support social and ecological goals instead of calling for cheap labour or energy as a precondition for success. High ecological standards will lead to a competitive advantage for Europe in technologies that will become all-important if the Paris 2015 goal of decarbonisation is implemented. A European technology lead in low-carbon technologies, energy efficiency and renewables constitutes a core part of a new industrial policy that can help Europe end its mid-life crisis. It should be implemented in a European-wide dialogue with industry and citizens.     

Does Regulation in Credit,Labour and Business Matter for Bank Performance in the EU-10 Economies?

Cost efficiency scores for banks in ten new EU member countries of Central and Eastern Europe are estimated using a parametric approach (data envelopment analysis) for the period prior to and immediately following their accession (2000–2010). These are then used in both fixed effects and dynamic panels to estimate the impact of regulation on bank specific efficiency in the transition economies of the EU. Using the Fraser Index of Economic Freedom (Gwartney, Hall, and Lawson 2012) we find that, among all the indices of economic freedom, the composite regulation index that includes regulation in credit, labour and business has more importance for the banking sector as results suggest a positive and statistically significant impact on bank efficiency. By decomposing the regulation index into its three components (credit, business and labour regulation) we find that strict labour regulation is associated with lower bank cost efficiency while certain aspects of credit regulation such as foreign ownership and competition as well as private ownership are significantly associated with improved efficiency. The dynamic panel vector autoregression (VAR) results using impulse response functions and variance decomposition further support the validity of these results. These findings are valuable for both academics and policy makers in their attempts to understand the drivers of bank efficiency.     

Gender specific effects of exports on work decisions in Indonesia

This paper proposes a new household panel data approach to study the gender specific effects of exports on labor force participation and household work.We construct a novel measure, the Export Exposure index, by combining information about exports and the respondent's location. The index enables us to address a key identification issue, which is to estimate the effect of exports that is unconfounded by unobserved household characteristics and macroeconomic shocks. We construct a simple model to show that if women have a comparative disadvantage in market work relative to men, and if an increase in exports increases the gender wage gap, Labor force participation of the women would be negatively related to exports. We find that in Indonesia, exports encourage women to substitute their time away from paid labor participation towards unpaid house or family work, but have no statistically significant effect on men, as predicted by our model.     

Mad women: gendered divisions in the Swedish advertising industry, 1930–2012

This article constitutes a first attempt to systematically map the presence of women in the greatly changing Swedish advertising industry since 1930. The overarching aim of the study is to analyse how the gendered divisions of labour and business changed in relation to both business structure and the overall labour market in Sweden. While we conclude that women constituted around 40–50% of the workforce over time, we see an increase in the shares of women in higher positions and in women who were self-employed and managers. This upturn, however, stabilised during the 1990s. We argue that the changes in gendered divisions of labour and business coincided with a fast-changing business structure. First, the old cartel broke down in the mid-1960s. Then, the number of firms increased quickly during the 1970s and 1980s, and the market share for the largest firms declined. This, in turn, meant new business opportunities for women at the same time as their overall labour market participation increased. The article stresses the importance of both acknowledging women’s presence in the industry development as well as the structures constituting gender divisions.     

Only So Many Hours in a Day: Time Constraints,Labour Pools and Demand for Consumer Services

Some sociological sources of increasing demand for consumer services are discussed in this article. Contrary to J. Gershuny's theory of ‘self-service: jobs in these industries are still growing, despite productivity improvements, due to increasing house-hold demand generated by constraints placed on time by both paid and unpaid production and insufficient pools of household labour upon which to draw. Social trends with these effects include increasing female labour force participation and longevity, declining household size, later age at marriage, political struggles over state provision, and factors internal to the state itself.     

Understanding Participation

The word 'participation' is taken to refer to a situation in which employees have some sort of share in the businesses which employ them. On this basis a classificatory scheme is produced which distinguishes between different forms of participation as well as the sources and motives behind those different forms. Participation as a whole is then distinguished from bargaining between management and labour. In bargaining, separate and opposing interests are accepted. In participation, there is an attempt to produce an over-arching common interest. More importantly, bargaining operates outside those organizational arrangements definitive of a business which grant a strictly subordinate role to labour with respect to management structures and property entitlements. In contrast, participation is a modification of those arrangements up to, but not beyond, a position of equality for labour. It is this which gives participation its essentially reformist character and exposes it to attack from both those seeking a more than participatory share to labour and those for whom even a participating share is excessive.     

Structural Reforms and Labour‐market Outcomes: International Panel‐data Evidence

This paper explores the impact of structural reforms on a comprehensive set of macro‐level labour‐market outcomes, including the unemployment rate, the average wage index, and overall and female employment levels and labour force participation rates. Together, these outcome variables capture the overall health of the labour market and the aggregate welfare of workers. Yet, to our knowledge, there seems to be no other comprehensive empirical investigation in the existing literature of the impact of structural reforms at the cross‐country macro‐level on labour‐market outcomes other than the unemployment rate. After documenting the average trends across countries in the labour‐market outcomes up to 10 years on either side of each country's structural reform year, we run fixed‐effects ordinary least squares and instrumental variables regressions to account for the likely endogeneity of structural reforms to labour‐market outcomes. Overall, the results suggest that structural reforms lead to positive outcomes for labour. Redistributive effects in favour of workers, along the lines of the Stolper‐Samuelson effect, may be at work.     

Industrial innovation and foreign trade in the 80’s

The 1980’s will be decisive for Europe. But Europe, to use Valéry’s phrase, seems to be entering the future backwards. Not a few Europeans are beginning to worry about their political, economic and cultural future. Poor in raw materials and energy, burdened with a considerable downward trend in the economy and rising unemployment, confronted with a shift in the international division of labour, politically fragmented and only to a limited extent capable of action, Europe seems to many to be heading for “the decline and fall” which was forecast more than 50 years ago. But anxiety can be a creative force, provided we have the courage to analyse its causes and to transform it into tangible proposals for action.¹