Vintage Effects In Human Capital: Europe Versus The United States

The standard assumption in growth accounting is that an hour worked by a worker of given type delivers a constant quantity of labor services over time. This assumption may be violated due to vintage effects, which were shown to be important in the United States since the early 1980s, leading to an underestimation of the growth of labor input (Bowlus anA1d Robinson, 2012). We apply their method for identifying vintage effects to a comparison between the United States and six European countries. We find that vintage effects led to increases of labor services per hour worked by high-skilled workers in the United States and United Kingdom and decreases in Continental European countries between 1995 and 2005. Rather than a productivity growth advantage of the US and UK, the primary difference with Continental European countries was human capital vintage effects instead.     

FACTORS IN CANADA-UNITED STATES REAL INCOME DIFFERENCES

This paper is a part of a larger study of economic growth in Canada, following the methods developed by Edward Denison in his book The Sources of Economic Growth in the United States and the publication Why Growth Rates Differ. The new material in this paper relates to Canada and the Canadian/U.S. comparison, while the material on Northwest Europe is drawn from the Brookings study. The present paper sets out the results to date on the differences in real output per employed person between Canada and the United States for one year, 1960. At this stage in our research the results indicate that the level of real output per employed person in Canada was about 20 per cent lower than in the United States in that year. On the basis of historical output data, it would appear that this margin of difference in Canadian/U.S. product levels has persisted throughout the present century. The central part of this paper examines the significance of differences in factor inputs in Canada and the United States and their contribution to the difference in income. The level of inputs per employed person in Canada accounts for only about 2 percentage points of the income difference between Canada and the United States. These results indicate that the overwhelming part of the difference in output per employed person between the two countries reflects the differences in output in relation to total factor inputs, rather than the magnitude of other factor inputs used in combination with labour. This result is consistent with earlier studies by Denison and others which have indicated the crucial importance of output in relation to total factor inputs, both in output growth over time and intercountry comparisons of output level. The body of the paper can give only brief attention to the numerous conceptual and statistical questions that arise in such a wide-ranging study, and the authors do not pretend to have tackled, let alone resolved, all of the wide range of problems related to this study. Nor do they claim any high degree of precision for the results, especially in the light of the statistical limitations of the basic data.     

Trade,aid and migrations: some basic policy issues

The link between trade policy and international migration is explored using data from the United States and Europe. "We conclude that restrictive trade policies in industrialised countries have most likely added to migration pressures. We then turn to the broader question of the effects of income growth in the sending countries on the propensity to migrate. We argue that, in relatively poor countries, an increase in income will be associated with higher migration flows. For middle income countries, however, income growth will lead to lower migrations. In the medium run, therefore, the relationship between development levels, as measured by GDP per capita, and the propensity to migrate follows an inverse-U pattern. Econometric analysis of aggregate migration flows from Southern Europe provides considerable support for such conjecture."     

The Macroeconomic Consequences of Financing Health Insurance

Employer-financed health insurance systems like those used in the United States distort firms’ labor demand and adversely affect the economy. Since such costs vary with employment rather than hours worked, firms have an incentive to increase output by increasing worker hours rather than employment. Given that the returns to employment exceed the returns to hours worked, this results in lower levels of employment and output. In this paper, we construct a heterogeneous agent general equilibrium model where individuals differ with respect to their productivity and employment opportunities. Calibrating the model to the U.S. economy, we generate steady state results for several alternative models for financing health insurance: one in which health insurance is financed primarily through employer contributions that vary with employment, a second where insurance is funded through a non-distortionary, lump-sum tax, and a third where insurance is funded by a payroll tax. We measure the effects of each of the alternatives on output, employment, hours worked, and wages.     

European technology policy

European countries do less research than Japan and the United States. But their lower level of research effort has more to do with the smaller markets facing European inventors than with lower research productivity. Europe has substantial research potential, in that increasing research effort in most European countries generates bigger income benefits there than increasing research effort in the United States and Japan by equivalent amounts. Research subsidies, enhanced patent protection, support for public research, higher educational achievement and increased integration are alternative routes towards exploiting this potential. These policies increase productivity not only in Europe, but also elsewhere. One problem with implementing such policies at the national level is the potential for free riding. A second possible problem with policies to promote research concerns their distributional consequences. While all countries within the European Union would benefit from increased research output, the countries that are already best at doing research, which tend to be the richer members, do best. The benefits of policies that facilitate the adoption of innovations are more evenly spread among richer and poorer countries.     

Does advertising increase labour supply? Time series evidence from the UK

Wages in industrialized countries have risen considerably during the last 50 years, whereas hours worked, for manual workers at least, have decreased only marginally. In Europe, one policy response has been to attempt to protect workers from pressure to work long hours by placing legal restrictions on the amount of hours that may be worked each week. This paper examines the possibility that, in fact, observed hours may be the result of a desire of workers to work longer due to a shift in their preferences from leisure to increased consumption, caused by the huge increase in mass media advertising. A cointegrating VAR framework is used to test this hypothesis on UK time series data for both males and females from 1952 to 1997. Advertising is shown to be positively associated with hours worked for both male and female series. Causality tests indicate unidirectional causality, for males and females, from advertising to hours worked. These results suggest that the European policy response is more likely to restrict employee rather than employer discretion over hours.     

Mind the Gap! International Comparisons of Productivity in Services and Goods Production

Abstract. In this paper, we make a comparison of industry output, inputs and productivity growth and levels between seven advanced economies (Australia, Canada, France, Germany, the Netherlands, United Kingdom and United States). Our industry-level growth accounts make use of input data on labour quantity (hours) and composition (schooling levels), and distinguish between six different types of capital assets (including three information and communication technology (ICT) assets). The comparisons of levels rely on industry-specific purchasing power parities (PPPs) for output and inputs, within a consistent input–output framework for the year 1997. Our results show that differences in productivity growth and levels can be mainly traced to market services, not to goods-producing industries. Part of the strong productivity growth in market services in Anglo-Saxon countries, such as in Australia and Canada, may be related to relatively low productivity levels compared with the United States. In contrast, services productivity levels in continental European countries were on par with the United States in 1997, but growth in Europe was much weaker since then. In terms of factor input use, the United States is very different from all other countries, mostly because of the more intensive use of ICT capital in the United States.     

Efficiency aspects of increasing inheritance taxes while decreasing income taxes

This article tries to shed some light on the economic efficiency aspects of a tax reform that would increase inheritance taxes while decreasing income taxes. An analysis of labour market decisions following the activation of such a reform is presented. An international comparison of inheritance tax collection shows that almost all industrial countries impose an inheritance tax. However, government revenue from inheritance and gift taxes in Europe is lower than 1% of GDP and is very low in the United States as well. Applying the proposed reform could increase work hours and delay retirement decisions.     

Reconciling Kuznets and Habbakuk in a unified growth theory

Economic historians have debated the relative labor productivity of the United States agricultural and nonagricultural sectors during the nineteenth century. David (Discussion papers in economic and social history, University of Oxford, 1996) offers a reconciliation of the opposing views by suggesting that while productivity per hour worked in agriculture was comparable to productivity in other sectors, the number of hours worked per year was relatively low, creating a large gap in annual output per worker across sectors. We model and extend a version of Davis’s reconciliation within a unified growth theory that makes connections between the decline in traditional agriculture and several other features of United States development. The dynamic general equilibrium model is consistent with the structural transformation having minor direct and indirect effects on aggregate labor productivity per hour, but substantial effects on aggregate labor productivity per worker. The model also provides a close match to the trends in schooling, fertility, rates of return to physical capital, and labor productivity growth in the nineteenth century.      

Models of labour services and estimates of total factor productivity

This article examines the manner in which labour services are modelled in the aggregate production function, concentrating on the relationship between numbers employed and average hours worked. It argues that numbers employed and hours worked are not perfect substitutes and that conventional estimates of total factor productivity which, by using total hours worked as the measure of labour services, assume they are perfect substitutes, will be biased when there are marked changes in average hours worked. The relevance of the theoretical argument is illustrated using data for the United States and the United Kingdom.     

HEALTHY MINDS IN HEALTHY BODIES: AN INTERNATIONAL COMPARISON OF EDUCATION-RELATED INEQUALITY IN PHYSICAL HEALTH AMONG OLDER ADULTS

We study education-related inequality in the physical health of older adults across 11 European countries and the United States. Combining the data from Health and Retirement Study 2002, the English Longitudinal Study of Ageing 2002 and the Survey of Health, Ageing and Retirement in Europe 2004, our results suggest that education is strongly correlated with health both across and within countries. Education-related inequality in health is larger in Mediterranean and Anglo-Saxon countries than in western European countries. We find no evidence of a trade-off between health levels and equity in health. Education-related inequality in health is hardly driven by income or wealth effects (except in the United States), and differences in health behaviours (smoking) by education level contribute little to health differences across education groups.     

Taxes and labor supply: Portugal, Europe, and the United States

I relate hours worked with taxes on consumption and labor for Portugal, France, Spain, United Kingdom and United States. From 1986 to 2001, hours per worker in Portugal decreased from 35.1 to 32.6. With the parameters for Portugal, the model predicts hours worked in 2001 with an error of only 12 min from the actual hours. Across countries, most predictions differ from the data by 1 h or less. The model is not sensible to special assumptions on the parameters. I calculate the long run effects of taxes on consumption, hours, capital and welfare for Portugal. I extend the model to discuss implications for Social Security. I discuss the steady state and the transition from a pay-as-you-go to a fully funded system.

THE SOVIET PATH TO ECONOMIC GROWTH: A COMPARATIVE ANALYSIS

Considerable attention has been devoted in the past to the methodological issues involved in the measurement and explanation of economic growth. Following the method pioneered by Denison and applied by him to the United States and Western Europe, comparative studies have been made of various other countries; that for Japan is of special interest. The present paper extends the analysis to the Soviet Union. In order to preserve comparability, the analysis follows the Denison methodology exactly, and compares the results with those for the United States, Northwest Europe, and Japan.     

Public Saving and Policy Coordination in Aging Economies

In the coming decades, the share of people of working age will fall significantly in most developed countries. According to optimal taxation theory, public debts should be reduced before the baby‐boom generation retires. I find that if debts are instead maintained at current levels, welfare may be reduced substantially in countries with a large public sector and/or a large demographic change. Since population aging will be less dramatic in the United States than in Europe and Japan, capital will move from Europe and Japan to the United States. These capital movements will facilitate the US demographic transition but aggravate the transition in most European countries.     

THE ROLE OF TECHNOLOGY AND NONTECHNOLOGY SHOCKS IN BUSINESS CYCLES*

This article proposes a method to identify technology and nontechnology shocks that permanently affect labor productivity and applies this method to data for the G7 countries. In most cases, whereas technology improvements have negative or weak effects on hours worked, positive permanent nontechnology shocks are expansionary. Permanent nontechnology shocks play an important role in business cycles, particularly in the United States and Japan, and account for 71% of a large reduction in Japan's detrended output from 1991 to 2002. Credit conditions are likely to be an important driver of variations in permanent nontechnology shocks.     

标准化对中国出口贸易的影响效应——基于局部均衡的分析

由于技术差距的存在,中国出口贸易产品的技术标准普遍低于美、日、欧等发达国家,因此,标准化对中国出口贸易的影响显著。从局部均衡的角度分析短期和长期的不同影响效应发现：在短期内,标准化对中国的出口贸易效应主要是负面的,表现为贸易限制效应、贸易转移效应和贸易条件效应;而在长期情况下,如果企业能够积极改进,不断创新,那么标准化对中国的贸易会产生积极的促进效应,贸易量会增加,同时贸易条件也会得到改善。     

THE DYNAMICS OF LABOUR'S INCOME SHARES AND THE WAGE CURVE–PHILLIPS CURVE CONTROVERSY

Based on a re-parameterised Blanchflower–Oswald model this paper uses long macro-data from the OECD countries to discriminate between the Philips curve and the wage curve and examines whether there are any differences in wage dynamics between Europe and the United States. The evidence gives support for the Phillips curve and shows that wage dynamics are no different between the United States and Europe.     

Relative underperformance Alla Turca

From 1960 to 2003, Turkey has underperformed relative to several Western economies, in terms of hours worked and output per hour. Our sectoral analysis illustrates two points. First, Turkey's large drop in hours is due to the fact that the substantial decline in agricultural hours has not been accompanied by a corresponding increase in nonagricultural market hours. Second, the sectoral composition of output is important for understanding Turkey's relatively weak rise in output per hour. We develop a simple model of structural transformation and home production to provide an account of Turkey's performance relative to the U.S. and Southern Europe. We find that the evolution of exogenous differences in sectoral productivity and taxes, between Turkey and the U.S., as well as Southern Europe, can account quantitatively for most of Turkey's relative underperformance to these regions.     

TPP语境下版权保护期限的经济分析

在TPP影响日益扩大的情况下,中国据其采取相应的对策已经不可避免。由于美国主导下的TPP对知识产权领域的重视以及美国和中国在版权保护期限上的明显差异,中国在TPP语境下面临着是否延长版权保护期限的困境。文章基于预期效用函数理论,建立了版权保护期限对社会总体福利产生影响的线性模型,并据此对不同的版权保护期限产生的经济影响进行相应的分析。根据分析结果和现实的版权保护期限互相印证,可以发现过长和过短的版权保护期限均会损害社会总体福利,而且欠发达社会的最佳版权保护期限要短于发达社会。因此,中国作为发展中国家的一员,虽然在经济建设上已经取得了相当的成就,但在创意产业方面仍然落后于欧美日等创意产业发达的国家,应当采取的最佳版权保护期限肯定要低于欧美日等发达国家。中国不能为了加入WTO而盲目迎合美国的版权保护期限标准,而必须根据自身的经济利益确定是最适当的版权保护期限。     

新能源汽车产业发展的政策支持

新能源汽车是低碳经济的必然选择,代表汽车产业的发展趋势。新能源汽车产业化发展的直接推动力就是国家的相关扶持政策。美国、日本和欧洲的发达国家对新能源汽车技术高度重视,从汽车技术变革和产业升级的战略出发,颁布了优惠的政策措施。中国新能源汽车产业的发展也在政府支持下开局、破局和蓬勃发展。