Gender Role Attitudes and the Labour-market Outcomes of Women across OECD Countries

This paper uses data from the World Value Surveys (1990, 1995,1999)to investigate the impact of gender role attitudes and workvalues on women's labour-market outcomes across 25 OECD countries.Anti-egalitarian views are found to display the strongest negativeassociation with female employment rates and the gender paygap. These views are, however, softening among recent cohorts.On the other hand, perceptions of women's role as homemakers,which are likely formed in youth and linked to religious ideology,are more persistent over time. They could be implicated in therecent slowdown of the gender convergence in pay. Finally, theunavoidable clash between family values and egalitarian views,that takes the form of an inner conflict for many women—theso-called ‘mother's guilt’—is another obstaclein the path towards greater gender equality in the labour market. Footnotes ¹ E-mail address: nifortin{at}interchange.ubc.ca     

Is Fiscal Policy Poised for a Comeback?

For several decades, discretionary fiscal policy has been indisrepute. Most economists viewed it as unnecessary, becausemonetary policy was up to the job of stabilizing the economy.Economists also viewed fiscal policy as too clumsy to deal withthe relatively short recessions that became the post-war norm.But the experience of Japan and the near-Japan experience ofthe United States in 2001–3 have renewed some of the oldcase for fiscal policy. Low-interest environments in which monetarypolicy becomes ineffective turn out to be a real danger, nota myth. Economic slumps that last for a number of years, offeringample time to implement fiscal expansion, also turn out to bepossible. As a result, the case for fiscal policy made by thefirst generation of Keynesians has experienced a real revival. Footnotes ¹ E-mail address: pkrugman{at}princeton.edu     

Management Practices, Work--L ife Balance, and Productivity: A Review of Some Recent Evidence

Increasing product-market competition is believed to be a drivingforce behind higher productivity. However, even those criticsof globalization who accept this argument claim that there isa hard trade-off because tougher competition comes at the priceof reducing work—life balance (WLB). Optimists, by contrast,argue that competition can spur better WLB practices and thereforehigher productivity, so there is a ‘win—win’situation. To address this issue we use an innovative surveytool to collect the first international data on management practicesand WLB practices, surveying 732 medium-sized manufacturingfirms in the USA, France, Germany, and the UK. We find thatthe USA has the best management practices but the worst work—lifebalance. When we look within countries, however, we reject thepessimistic ‘trade-off’ model. First, WLB outcomesare significantly associated with better management, so thatwell-run firms are both more productive and offer better conditionsfor their employees. Second, tougher competition increases averagemanagement quality but does not negatively affect employees'working environment. As with many other studies, better WLBpractices are associated with significantly higher productivity.This relationship disappears, however, after controlling forthe overall quality of management. Footnotes ¹ E-mail addresses: nbloom{at}stanford.edu; j.vanreenen{at}lse.ac.uk     

Monetary and Fiscal Theories of the Price Level: The Irreconcilable Differences

The fiscal theory of the price level (FTPL) has attracted muchattention but disagreement remains concerning its defining characteristics.Some writers have emphasized implications regarding interest-ratepegging and determinacy of rational expectations solutions,whereas others have stressed its capacity to generate equilibriain which price-level trajectories mimic those of bonds and differdrastically from those of money supplies. We argue that theFTPL attained prominence precisely because it appeared to providea theory whose implications differ greatly from conventionalmonetary analysis; accordingly we review monetarist writingsto identify the primary distinctions. In addition, we reviewrecent findings concerning learnability—and thereforeplausibility—of competing rational expectations equilibria.These indicate that when FTPL and monetarist equilibria differ,the latter are more plausible in the vast majority of cases.Under Ricardian assumptions, necessary for clear distinctions,theoretical analysis indicates that fiscal and monetary coordinationis not necessary for macroeconomic stability. Footnotes ¹ E-mail addresses: bmccallum{at}cmu.edu; edward.nelson{at}stls.frb.org     

Regulation by Prices, Quantities, or Both: A Review of Instrument Choice

Choosing appropriate policy instruments is an important partof successful regulation. Once objectives are agreed and suitabletargets adopted, policy-makers can employ command-and-controlregulation and/or economic instruments, and choose between fixinga price or a quantity. This paper examines the relative advantagesof price, quantity, and hybrid instruments according to: theirefficiency under uncertainty; the trade-off between crediblecommitment and flexibility; implementation; international considerations;and political economy. Various illustrations of the theory areprovided, with two detailed applications to climate change andtransport policy, specifically congestion and ‘safetypricing’. Footnotes ¹ E-mail address: cameron.hepburn{at}economics.ox.ac.uk     

Regulatory Policy: OECD Experience and Evidence

In the past 20 years a key topic of public-sector reform inOECD countries has been the emergence of regulatory policy.During this period, the nature of regulation has undergone profoundand rapid change. This paper reviews the development of regulatorypolicy in OECD countries over the last quarter-century. It identifiesa range of tools and institutions that have been used by OECDcountries to develop high-quality regulation. The analysis attemptsto show that while there is considerable commonality on broadobjectives of regulatory policy, considerably diversity remainsin the implementation of regulatory policy across OECD countries. Footnotes ¹ E-mail address: nikolai.malyshev{at}oecd.org     

Improving Productivity--Opening the Black Box

Hourly productivity levels in the UK still remain behind thosein some competitor countries. The government devotes much policyattention to enhancing productivity and continues to emphasiseits five drivers—investment, innovation, skills, enterprise,and competition. This article argues that it is investment broadlydefined that is the key to sustained productivity improvement.The emphasis should be on improving productivity simultaneouslywith improving the quality of production. Only thus will thegains be widely shared. In achieving these aims there are twoprerequisites for policy-makers. The first is to ensure bettercoordination of policy than appears to be currently achievedby the present departmental structures in Whitehall. The secondis to recognize fully the long and complex chain of causationthat can be triggered by pulling on one policy lever. Such complexitycan only be fully understood by more research on what actuallygoes on inside the black box of the organization. Footnotes ¹ E-mail addresses: ken.mayhew{at}ox.ac.uk; a.neely{at}cranfield.ac.uk     

The Swedish Experience with Pension Reform

Sweden is one of few countries in Europe to have introduceda comprehensive pension reform. In 1998, Sweden passed legislationthat transformed its public pension system to a notional defined-contribution(NDC) plan— that is, a defined-contribution plan financedon a pay-as-you-go basis. In addition, a second tier of fundedindividual accounts was introduced. The reform had broad politicalsupport with more than 80 per cent of the votes in parliament.This paper discusses the trends in retirement in Sweden andassesses the experience with pension reform. The objective wasto design a fiscally sustainable system tied to economic growthwith a clear link between contributions and benefits. We discussthe challenges in meeting this goal, the extent to which theSwedish reform has succeeded, and how the system affects beneficiaries.The paper evaluates the experience of the individual fundedaccounts to date and concludes with an outlook for the future. Footnotes ¹ E-mail address: annika.sunden{at}sofi.su.se     

Rethinking Fiscal Policy

The use of fiscal policy as a stabilization device has all butvanished, more or less explicitly in Europe and de facto inthe United States. The practical consequences have not beenentirely satisfactory, in either place. So it is important andtimely that the Oxford Review is devoting a special issue tothe macroeconomics of fiscal policy. In this paper I want todiscuss two underlying questions about the eclipse of fiscalpolicy. Why did this happen and was it a good idea? And if itwas not a good idea, then what follows? Footnotes ¹ E-mail address: jamu{at}mit.edu     

The Structural Pension Reform in Chile: Effects, Comparisons with Other Latin American Reforms, and Lessons

Chile pioneered a structural reform in Latin America that privatizedits public pension system and influenced similar reforms inanother nine countries. Twenty-five years later, this articleevaluates the macroeconomic, microeconomic, and social effectsof this reform in Chile and the other countries in the region,and extracts lessons from those experiences. Fiscal costs ofthe reform have been high and prolonged, exceeded capital accumulation,and had a negative impact on national savings, but Chile's reformhas contributed to the development of capital markets; employer'scontributions were eliminated or reduced in half of the countriesand the worker's share in the total contribution averages 65per cent; competition is afflicted by a small number of administratorsand a high level of concentration; administrative costs arehigh and stagnant; capital returns are fair but declining; portfoliodiversification has been achieved only in Chile and Peru; labour-forcecoverage has declined in all ten countries, and gender and incomeinequalities have expanded. Footnotes ¹ E-mail addresses: aarenas{at}dipres.gob.cl; cmesa{at}usa.net     

Will Social Welfare Expenditures Survive Tax Competition?

Increasing economic openness creates demands for social welfareprogrammes designed to cushion the impact of economic changes,but may also encourage governments to reduce tax rates to attractmobile economic resources. Competitive tax reductions couldthen prevent governments from being able to finance significantwelfare spending. Alternatively, economic globalization mightimprove the ability of governments to afford social welfareprogrammes—and several considerations point in this direction.First, taxes on internationally mobile activity represent onlysmall fractions of total revenue collections; personal incometaxes, value-added taxes, and social insurance contributionsfinance most social welfare spending. Second, internationalcompetition need not reduce taxes, and indeed, over the past25 years, corporate tax collections have remained high as fractionsof GDP and total taxes. Third, the vitality of a country's economylargely determines its level of social spending. To the extentthat incomes rise as a result, greater economic openness shouldstrengthen provision of social welfare. Footnotes ¹ E-mail address: jrhines{at}umich.edu     

The Generosity of Social Insurance, 1971-2002

International comparisons of national social policy rely overwhelminglyon programme spending ratios. However, there are widespreadproblems with this type of data as an indicator of trends insocieties' commitments to social protection. This paper suggestsan alternative approach to understanding social commitmentsand introduces a new international data set of social insuranceprogrammes that is comprised of important characteristics ofthree types of public insurance: unemployment, sick pay, andpublic pensions. The data are available annually from the 1970sfor 18 OECD countries. Looking more closely at trends in twoprogramme characteristics, income replacement rates and programmecoverage, we develop an indicator of expected benefits. Accordingto this indicator, there is considerably more evidence of welfarestate retrenchment in recent years than most analyses of publicspending have suggested. Footnotes ¹ E-mail address: lyle.scruggs{at}uconn.edu     

The Rationale for Occupational Pensions

Employers and employees have no incentive to include pensionsas part of employment contracts unless the pension completesa missing market, or ameliorates an imperfection in existingcapital or labour markets. We examine the influence on the choiceand design of occupational pensions of capital- and labour-marketimperfections. In capital markets, we focus on basis risks,taxation, employer default risks, transactions costs, portfoliorestrictions, and liquidity constraints. Aspects of labour marketsaffecting occupational pensions may be the presence of firm-specifichuman capital, asymmetric information between firms and potentialhires, the presence of moral hazard, and internal labour marketsin firms which cause employers to attempt to control the retirementbehaviour of workers. The implications of this analysis of occupationalpensions for public policy towards pensions are briefly examined. Footnotes ¹ E-mail address: dg.mccarthy{at}imperial.ac.uk     

The Macroeconomic Role of Fiscal Policy

This article examines the new consensus that fiscal policy shouldhave no macroeconomic role in ‘flexible inflation targeting’regimes. There is little basis for this presumption. Fiscalpolicy remains important in setting the policy mix and in managingshocks and imbalances. The credibility of an inflation-targetingregime should be enhanced rather than reduced if fiscal policyplays its proper role. It is true, nevertheless, that the costsof focusing fiscal policy narrowly on public-sector concernsmay not be very great, most of the time. However, when interestrates cannot be used, the role of fiscal policy must be different.With interest rates at their lower bound of zero, there is noplausible alternative. For asymmetric shocks and adjustmentsin EMU, fiscal policy needs, ideally, to substitute for theinterest-rate policy reaction function of the consensus, butthe difficulties are very great. We suggest a policy focus onreal exchange rates as a way of resolving some of the dilemmas.There is a serious danger that orthodox views about fiscal policy,drawn from the consensus, will be inappropriately applied, especiallyin Europe. Footnotes ¹ E-mail addresses: christopher.allsopp{at}new.ox.ac.uk; david.vines{at}economics.oxford.ac.uk     

Sons, Daughters, and Parental Behaviour

The prevalence of son preference and its implications for familybehaviour in developing countries have received a great dealof scholarly attention, but child-gender bias is believed tobe empirically unimportant in wealthy, non-traditional societies.Studies by sociologists and psychologists during the past 30years, however, have documented consistent discrepancies betweenthe behaviour of parents of sons and parents of daughters—boystend to increase marital stability and marital satisfactionrelative to girls, and fathers spend more time with, and aremore involved with, sons than daughters. In recent years, economistshave begun to contribute to the child-gender literature, re-examiningthe effects of sons and daughters on family structure and parentalinvolvement with larger samples and greater concern for possiblesources of selection bias. Other economic outcomes, such asmarket work and earnings, have also been studied, and some investigatorshave exploited the randomness of child gender as a source ofexogenous variation in parental behaviour. In general, recentresults suggest that child gender does affect family stabilityand the time allocation of parents, but it is not clear whetherthese responses reflect parental preferences for boys ratherthan girls or differences in the constraints parents face. Footnotes ¹ E-mail address: lundberg{at}u.washington.edu     

Outsourcing and Offshoring: Implications for Productivity of Business Services

This paper reviews the implications of outsourcing and offshoringfor the productivity of business services in the UK. Officialstatistics indicate that business-service productivity has grownby over 20 per cent in the last 7 years at the same time asemployment grew by 20 per cent. The paper considers possiblefactors that account for the simultaneous growth of employmentand productivity. First, we discuss outsourcing and offshoring,and their role in enhancing productivity through greater specialization,standardization, and consolidation of business processes, anda shift to higher value-added services. Outsourcing of businessservices is interpreted as part of corporate restructuring,namely as the unbundling of corporate functions as well as verticaldisintegration. Second, as some services become more like products,both low-skilled and high-skilled jobs are subjected to productivitygrowth through standardization and digitization. It is argued,however, that the future of business-service productivity ison a knife-edge, depending on the mix of two sources of productivityenhancement—namely greater standardization and capturingvalue from customized solutions. Footnotes ¹ E-mail addresses: mari.sako{at}sbs.ox.ac.uk     

Regulatory Reform, Capture, and the Regulatory Burden

This paper provides a critique of broad aggregate proposalsto reduce the regulatory burden. It argues that the public debateabout regulatory reform and red tape is loose and general, withlittle regard for the complex ways in which regulation imposescosts and benefits on the economy. Although there are theoreticalreasons to expect regulation to be in excess supply, there islittle empirical analysis to link aggregate regulation withproductivity and economic growth. Regulation is itself a publicgood, and many aspects of economic efficiency require regulationto address market failures. The main efficiency issues are betteraddressed through a disaggregated approach, focusing on when,where, and how to regulate, rather than on crude aggregate estimatesof the total burden. The design of regulation needs to takeaccount of regulatory capture, and it is argued that market-basedinstruments and independent regulatory bodies tend to reducethe scope for capture. The incentives and employment rules governingregulatory institutions are also discussed. In ignoring thesedisaggregated regulatory design problems, crude aggregate targetsfor the reduction of regulation, and rules such as ‘onein, one out’ may be counter-productive. Footnotes ¹ E-mail address: dieter{at}dhelm.co.uk     

Fiscal Stabilization Policy and Fiscal Institutions

In this paper we analyse counter-cyclical fiscal policy withinthe context of a microfounded analysis of business-cycle stabilization.We show that tax and spending instruments can have a usefulcounter-cyclical role, even after allowing for the distortionarynature of the instruments and the need for debt sustainability.A critical barrier to the use of fiscal instruments may be politicaleconomy concerns, and we survey recent suggestions involvingalternative fiscal policy institutions. Footnotes ¹ E-mail addresses: c.b.leith{at}socsci.gla.ac.uk; s.wren-lewis{at}exeter.ac.uk     

Redesigning Regulation of Pensions and Other Financial Products

We observe that financial regulation is ever-growing, with thelatest area to experience increased supervisory attention beingpensions. Yet this has not made the financial world or consumerssafer, and for pensions in particular there are unexpected andundesired consequences. We explore the current policy approachto supervision, which is ‘bottom up’, i.e. assessmentand regulation of individual institutions, with the aim ofmakingthe financial system safe by making each institution safe. Weshow that this is both damaging (because it stifles innovation)and does not work (because risk will always be squeezed fromthe regulated institutions to the less regulated and less seen).Instead, we advocate a ‘top-down’ approach, whichfocuses on making the system safe first. We conclude that onceyou have made systems safe, detailed supervision of individualinstitutions is less necessary, thus reducing the burden ofsupervision. We believe that this approach will lead to a moresuitable and diverse treatment of different risks that willincrease both systemic and consumer safety. ‘If you haveten thousand regulations you destroy all respect for the law’,Winston Churchill (1931). ‘The ultimate result of shieldingmen from the effects of folly is to fill the world with fools’,Herbert Spencer (1891). Footnotes ¹ E-mail addresses: n.barr{at}lse.ac.uk; john_nugee{at}ssga.com     

From Skills Revolution to Productivity Miracle--Not as easy as it Sounds?

This article surveys the potential impact of skill on productivity.It opens with a review of the utility of productivity as a measureof systemic economic performance, and then goes on to explorethe oft-assumed close and strong relationship between skillsand productivity. The importance of other factors and typesof investment is stressed. These complementary elements maybe at least as important as skill in boosting performance, andtheir absence may negate the impact of public investment ineducation and training. The ability of economic developmentpolicy, particularly as it relates to the Regional DevelopmentAgencies, to address skills and economic development is assessed,and questions are raised about what type and level of skillmight have the largest impact on economic performance. In conclusion,we discuss the demands that new policy approaches are makingupon the machinery and personnel of government. Footnotes ¹ E-mail addresses: keepej{at}cardiff.ac.uk; ken.mayhew{at}pmb.ox.ac.uk;paynej3{at}cardiff.ac.uk