Do NBFCs propagate real shocks?

Notwithstanding a smaller share of total loans vis-à-vis commercial banks, we investigate a possible role of Non-banking financial companies (NBFCs) in propagating a real shock to the rest of the economy. Our two-sector model captures emerging economy characteristics such as NBFC borrowings from commercial banks, heterogeneities in financial constraints, and labour market friction faced by firms. Our theoretical and simulation results, using Indian parameters, indicate that an idiosyncratic shock (i.e., higher realization of the failed firms) and a sectoral productivity shock (in the sector financed by NBFCs) increase the interest rate charged by the banks, and the unemployment rate while reducing the real wages and per capita capital formation. However, the reverse happens given a structural shock, assumed as an increase in the average number of failed firms. Early detection of such shocks and quick policy intervention are required to provide a cushion for capital formation and job creation.     

China's Great Ascendancy and structural risks: consequences of asymmetric market liberalisation

China's great ascendancy from a poor agrarian economy to an economic superpower is unprecedented. But in the process, structural imbalances, resource inefficiency, and income inequality worsened rapidly. It is argued that the coexistence of China's extraordinary growth and serious structural risks are two sides of the same coin: asymmetric liberalisation of product and factor markets. Distortions in markets for labour, capital, land, energy, and the environment lower production costs, increase corporate profits, raise investment returns, improve the international competitiveness of Chinese goods, and therefore lift China's growth. But they also depress consumption. China needs to accelerate factor market liberalisation in order to complete the transition to a market economy and to lock the economy onto a more sustainable path.     

Key Factors of Recent Chinese Provincial Economic Growth

The aim of this paper is to analyse the factors that affected Chinese provincial economic growth after the reforms of the early 1980s, through a panel analysis (period 1986–2001). The production function approach focuses on human capital, ‘space-serving’ infrastructure, sectoral allocation of labour and institutional changes. Indices relevant for the analysis are elaborated and provincial capital stocks are estimated. The empirical results indicate the positive role of capital stock, human capital and physical infrastructure and underline that sectoral allocation of labour and institutional changes affected the level of aggregate output. A redistribution policy in favour of the inland provinces needs to be implemented so that human capital and infrastructure can be enhanced, bottlenecks can be overcome and investment can be attracted.     

The impact of sectoral shifts in investment on unemployment in U.S. labor markets

Capital stock data for the U.S. economy are used to develop a measure of sectoral shifts in productive resources. Within the context of the creative destruction process, this measure provides a direct indicator of sectoral shifts in resource demands independent of aggregate fluctuations. Years with greater reallocations of capital have higher unemployment, a result consistent with the traditional sectoral shifts hypothesis. However, fluctuations in unemployment appear to be more strongly influenced by aggregate rather than sectoral shocks. Significant variation exists across demographic groups in the responsiveness of unemployment to aggregate fluctuations and sectoral shifts. The adverse impact of sectoral shifts is greater for males and members of the nonwhite labor force.     

Quantifying shifts in primary factor demand in the South African economy

This article uses a dynamic computable general equilibrium model to explain the persistence in the high levels of unemployment in the South African economy in spite of modest to relatively strong output growth. We make use of a historical simulation for the period 2006–13 and find that the capital–labour ratio increased despite a relative increase in the rental price of capital. Classical economic theory suggests that changes in industry preferences toward capital and labour lead to adjusted capital–labour ratios. We quantify the changes in industry factor preferences during this period and highlight their impact in explaining observed labour market outcomes. Other changes in the economy over this period are also quantified.     

Sectoral Wage Rigidities and Labour and Product Market Institutions in the Euro Area

We estimate wage Phillips curve relationships between sectoral wage growth, unemployment and productivity in a country-industry panel of euro area countries. We find that institutional rigidities – such as labour and product market institutions and regulations – limit the adjustment of euro area wages to unemployment, in both upturns and downturns, particularly in manufacturing and, to a lesser extent, in the construction and service sectors. In addition, there are further limitations in the response of wages to changes in unemployment during economic downturns which suggests that euro area wages are also characterised by significant downward wage rigidities, especially in the manufacturing sector. These results are robust to specifications that account for factors that may affect structural unemployment (such as duration-dependent unemployment effects), as well as changes in the skill composition of employment that may affect the evolution of aggregate wages. The results also hold for panels including or excluding the public sector (where wages may be determined differently to the private sector also due to the effects of fiscal consolidation on public sector wages during the crisis). From a policy perspective, reforms in product and labour markets which reduce wage rigidities can facilitate employment growth and enhance the rebalancing process in the euro area.     

我国农业经济发展水平及其影响因素实证研究

农业经济发展与农业生产自然制约条件、农业人力资本投入、农业生产资本投入、农业生产技术、农业经济的市场作用、农业生产条件制约因素等密切相关.本文选取反映农业经济增长的13个指标,对其1980-2012年的时间序列运用主成分回归分析与其误差修正模型,研究我国农业经济发展全要素生产率及影响我国农业长期经济发展与短期经济发展的因素.结果表明,影响我国农业长期与短期经济发展的主要因素按影响力大小依次为农业生产条件、市场作用、自然制约条件、农业生产资本、农业生产技术、人力资源.     

Labour market performance in developing countries: A survey

Malfunctioning of labour markets is often given as a principal explanation of the widespread poverty in developing countries. Open urban unemployment and disguised unemployment in agriculture are generally considered symptoms of the poor performance of the decentralized system of allocation of labour time and skills in these countries.This survey leads us to a much less pessimistic view of labour market performance per se, though obviously imperfections do exist. On the one hand, the shifts of the labour force in response to shifts in demand have been noteworthy and suggest, at an aggregate level, rather impressive performance. On the other, a closer look at open unemployment, disguised unemployment, and other possible types of labour market malfunctions suggests that they may be less serious misallocations than they appear, and that only in part can such misallocations be attributed to poor labour market functioning.Though the labour market is the immediate locus of the problem of low and stagnant incomes of workers at the bottom of the distribution, the evidence suggests no causality in this association. There is no reason to presume that poverty is a manifestation of labour market failure.     

人民币资本项目下证券投资发展研究——基于QFII现状分析

十八届三中全会提出要健全多层次资本市场体系以及推动资本市场双向开放提高跨境资本和金融交易可兑换程度。然而目前我国对资本市场开放实施的是过渡性的制度安排。从事境内资本项目下证券投资的境外资本参与者主要是合格境外机构投资者(QFII)。自2002正式引入QFII制度以来,我国的QFII制度已经走过了14个年头,伴随着我国经济的良好发展、证券市场的不断完善,以及QFII的投资规模和投资额度不断扩大,本文通过对QFII建立背景的回顾,14年来证券投资现状的分析,针对QFII证券投资中存在的主要问题展开讨论,并提出相应的完善我国人民币资本项目下证券投资制度的对策建议。     

Unemployment in LDCs: Worker heterogeneity, screening, and quantity constraints

Unemployment in many less developed countries is characterized by a significant urban-rural wage differential coexisting with high urban unemployment. This may be consistent with optimization when there is imperfect information about a worker's ability, and abilities are heterogeneous. Firms know only the average quality of workers in the labour pool. High urban wages induce immigration of workers from rural areas, improving the average quality of the urban labour pool which has been depleted of high ability workers by previous screening. Hence, both sides of the market way find high non-market-clearing wages optimal. Quantity constraints from imperfect capital markets may strengthen this effect.     

Towards an analysis of tax effects on labour market and allocation: A micro/macro approach

Summary Tax effects on labour market and allocation are analysed with a sectoral model which is based on the microeconomic theory of the behaviour of economic agents. The model contains a highly disaggregated household sector, an enterprise sector, equilibrium unemployment on the labour market and a detailed modelling of institutional aspects of the tax and social security system. The model is calibrated for 1985. Simulation results show that temporary increases of world trade and higher value-added tax rates do not affect the equilibrium unemployment rate in the long run. A higher replacement rate of unemployment benefits increases unemployment and a tax reform containing lower marginal and average tax rates reduces unemployment.The authors thank F.J.H. Don, C.J.J. Eijgenraam, F.H. Huizinga and R.M. van Opstal for assistance on the household model, the cumulated production structure approach, the wage model and the model of firm behaviour respectively, and other colleagues of the Central Planning Bureau for useful comments.See Shoven and Whalley (1984) and Borges (1986) for reviews, and Keller (1980) for an application to The Netherlands.See, for instance, Abel (1980), Summers (1981), Bruno and Sachs (1985), Van de Klundert and Peters (1986).Ginsburgh and Mercenier (1988) review AGE modelling and the disequilibrium approach.     

A Flexicurity Labour Market in the Great Recession: The Case of Denmark

Flexicurity labour markets are characterised by flexible hiring/firing rules, a generous social safety net, and active labour market policies. How can such labour markets cope with the consequences of the Great Recession? This paper takes a closer look at this question considering the case of Denmark. It is found that employment adjustment is not particularly large in international comparison, but a larger burden of adjustment is along the extensive (number of employees) rather than the intensive (hours) margin. The level of job creation is high, and remains so despite the crisis, although job creation is pro-cyclical and job-separation counter-cyclical. As a consequence most unemployment spells remain short. Comparative evidence does not suggest that flexicurity markets are more prone to persistence. Crucial for this is the design of the social safety net and in particular the active labour market policy. However, it is a challenge to maintain the efficiency of the activation system in a period with high unemployment.     

LABOUR PRODUCTIVITY GROWTH IN THE LONG RUN: JAPAN, 1600–1909

This article examines long-term labour productivity change in Japan from the early seventeenth century to the nineteenth century. We constructed sectoral labour force estimates based on the methodology presented in a previous study, who provided a sectoral GDP series covering the Tokugawa period. Our results show the industrial structure in the Tokugawa period remained relatively stable in comparison with the economy after the Meiji Restoration. Nevertheless, the estimates of sectoral labour productivity suggest expansion of the market economy in Tokugawa Japan influenced the development of industrialisation after the Meiji Restoration.     

Regulation,Institutions and Aggregate Investment: New Evidence from OECD Countries

This paper investigate the relationship linking investment (capital stock) and structural policies. Using a panel of 32 OECD countries from 1985 to 2013, we show that more stringent product and labour market regulations are associated with less investment (lower capital stock). The paper also sheds light on the existence of non-linear effects of employment protection legislation (EPL) on the capital stock. Several alternative testing methods show that the negative influence of EPL is considerably stronger at higher levels. Finally, and importantly, the paper uncovers important policy interactions between product and labour market policies. Higher levels of product market regulations (covering state control, barriers to entrepreneurship and barriers to trade and investment) tend to amplify the negative relationships between EPL and the capital stock and ETCR and the capital stock. Equally important is the finding that the rule of law and the quality of (legal) institutions alters the overall impact of regulations on capital deepening: better institutions reduce the negative effect of more stringent product and labour market regulations on the capital stock, possibly through the reduction of uncertainty as regards the protection of property rights. This result also implies that the benefit from product and labour market reforms may be smaller in countries with weaker institutions.     

The Machine–Building Industry and Austria's Great Depression after 1873

Adopting a sectoral perspective, this article is concerned with the pattern of economic growth in the late nineteenth-century Habsburg empire. The timing and extent of changes in machinery output and investment support the notion of a great depression in Austria after the 1873 stock market crash and match with the direction of capital flows. The post-1873 outflow of capital from Austria to Hungary, which was eventually reversed in the early 1890s, hampered industrial investment in the western part of the empire, and stimulated expansion in the eastern part. The evidence casts doubt on the revisionist view which postulates steady and uninterrupted growth of the Austrian economy between 1870 and 1913.     

Labour hoarding in a disequilibrium model of the Dutch labour market

Summary This paper presents a method to integrate labour hoarding into a disequilibrium model of the labour market. Disequilibrium indicators for the labour market that include labour hoarding are constructed. These indicators, being important determinants of policy multipliers with respect to employment, are found to be less volatile than the corresponding disequilibrium indicators for the goods market which are available from business surveys. The lower volatility reflects the role of labour hoarding as a buffer between actual and efficient employment levels. Our results indicate that labour hoarding in Dutch enterprises ranges from a minimum of 0.5 per cent of employment in early 1985 to a maximum of 7.0 per cent in 1975. Furthermore, the paper pays special attention to the modelling of mismatch unemployment and to the simulation results of an empirical disequilibrium macromodel of the Dutch economy.The authors thank M.M.G. Fase and two anonymous referees for their useful comments.     

The Balassa-Samuelson model with job separations

We incorporate sectoral job separation rates in a small open economy model to examine the Balassa-Samuelson (B-S) effect. Unequal separation rates give rise to compensating wage differentials. We simulate the model for Japan and replicate a feature of its economy that the nontradeables sector has higher wages and a higher separation rate compared to the tradeables sector. With productivity growth in the tradeables sector, labour moves from the tradeables sector to the nontradeables sector if tradeables and nontradeables are complements in consumption. The B-S effect is dampened. With a higher separation rate in the nontradeables sector, higher wages in the nontradeables sector amplifies this labour movement. Nevertheless, unemployment always falls due to a positive income effect. In contrast, the effect of productivity growth in the nontradeables sector is to lower the real exchange rate and raise unemployment.     

Local Responses to Long-term Unemployment: Delivering Access to Employment in Edinburgh

This paper examines locally developed policy responses to long-term unemployment in the city of Edinburgh: a labour market characterised by relatively low-unemployment and generally high levels of demand. Drawing upon in-depth interviews with 115 long-term unemployed people residing in the city, the paper first analyses the complex combination of barriers to work faced by members of this client group. Two recent labour market initiatives, developed by the local authority in partnership with other public and third sector agencies and (in one case) major employers, are then discussed. It is suggested that this locally focused, partnership-based approach may provide a useful model for local policy responses to long-term unemployment, particularly in buoyant labour markets.     

FORMAL–INFORMAL ECONOMY LINKAGES AND UNEMPLOYMENT IN SOUTH AFRICA

South Africa's high unemployment and small informal economy has been attributed to barriers to entry in informal labour markets. We develop a general equilibrium model based on a typology of informal activities that captures formal/informal linkages in product and labour markets. Simulations reveal that trade liberalisation increases formal employment, hurts informal producers, and favours informal traders and may explain the dominance of traders instead of producers. Wage subsidies also raise employment but further heighten competition for informal producers. Cash transfers favour informal employment, albeit with a fiscal burden. Results confirm the role of formal/informal linkages and product markets in explaining policy outcomes.     

The Short-Run Relationship Between Sectoral Shifts and U.S. Labor Market Fluctuations

Monthly data for the aggregate U.S. economy are used to assess competing hypotheses concerning the relationship between sectoral employment shifts and fluctuations in the unemployment rate. It is shown that sectoral shifts are caused by major work stoppages, aggregate fluctuations unrelated to permanent sectoral shifts, a reallocation-timing effect, and allocative shocks at the sectoral level. Larger employment shifts are associated with higher unemployment during slow growth periods and lower unemployment during above-average growth periods. Models are presented which demonstrate that both aggregate and allocative shocks are causes of cyclical increases in unemployment.