Public debt and economic growth – economic systems matter

Most studies on the relationship between public debt and economic growth implicitly assume homogeneous debt effects across their samples. We –in accordance with recent literature– challenge this view and state that there likely is a great deal of cross-country heterogeneity in that relationship. However, other than scholars assuming that all countries are different, we expect that clusters of countries differ. We identify three country clusters with distinct economic systems: Liberal (Anglo Saxon), Continental (Core EU members) and Nordic (Scandinavian). We argue that different degrees of fiscal uncertainty at comparable levels of public debt between those economic systems constitute a major source of heterogeneity in the debt-growth relationship. Our empirical evidence supports this assumption. Continental countries face more growth reducing public debt effects than especially Liberal countries. There, public debt apparently exerts neutral or even positive growth effects, while for Nordic countries a non-linear relationship is discovered, with negative debt effects kicking in at public debt values of around 60% of GDP.     

The impact of firm-provided training on productivity,wages, and transition to regular employment for workers in flexible arrangements

This paper examines the incidence and density of firm-provided training for workers in flexible work arrangements – i.e., non-regular employees who are working part-time or with fixed-term employment contracts – and analyzes the effect of this training on skills, productivity, and wage growth, using a unique survey of Japanese workers. Among non-regular employees, those who work on a full-time basis are found to receive a higher density of both on-the-job training (OJT) and off-the-job training (Off-JT). Participation in firm-provided training is shown to improve job skills and productivity, but does not appear to impact the wage growth of non-regular workers. However, training participation is shown to make the transition from non-regular to regular employment in the current occupation more likely, enhancing the probability of future wage increases.     

Wage dispersion in Germany and the US: is there compression from below?

Wage compression from below is a common diagnosis for Germany compared to the U.S. We develop alternative hypotheses in order to identify the so-called accordion effect, i.e. reduced inter-quantile distances below the median especially for low skilled and other ill-paid groups. Our results are partly at odds with wide-spread beliefs. Using large micro data sources we find evidence of an accordion effect at the low end of the distribution for the U.S. The results for Germany, however, are contrary to what one would have expected in case of marked wage compression from below. For low-skilled workers of both genders and for female workers in general we find higher inter-quantile distances below rather than above the median. By contrast, there is strong evidence for the accordion effect if skilled male workers are considered.     

Union coverage and non-standard work in Britain

Using representative data from the British Household Panel Surveyfor the period 1991–97, we document the extent of unioncoverage across standard and non-standard workers in Britain.Non-standard employment—defined in terms of contracts,places, times, and hours of work—involves approximately60% of the employed population. Most workers in non-standardemployment are less likely to be union covered than otherwiseidentical workers in standard employment. In particular, womenacross nearly all types of non-standard jobs are significantlyless likely to be covered than women in regular employment.For men, this negative relationship is only found for thoseworking on fixed term contracts or short hours. Gender differencesare therefore large and significant. We cannot detect an expansionof union coverage towards any type of non-standard employmentover our sample period. Finally, we find significant differencesin the relationship between non-standard work and union coveragein the private and public sectors.     

Cities and Megalopolises: The Problem of Definitions and Sustainable Development Indicators

The persistent lack of a generally accepted scientific definition of city seriously hinders the implementation of sustainable development goals adopted by the United Nations as universal strategic guidelines for world progress until 2030, including the sustainable development of cities and settlements. In connection with this, actual problems of defining city and megacity (megalopolis) have been analyzed. A system of integrated indicators of sustainable urban development with regard to the global level has been considered. Particular attention has been paid to the new task for Russia of adapting these indicators to domestic specific natural and socioeconomic conditions, with consideration of the long-term prospects.     

The Valuation Effect of Accounting Standard 158 on Firms with High and Low Financial Risk

SFAS 158 mandated balance sheet disclosure of the funded status of firms’ Defined Benefit Pension Plan using the Projected Benefit Obligation (PBO) to estimate the pension liability. SFAS 158 caused a market phenomenon because the use of the PBO engendered dramatically higher estimates of pension liability and hence the perception of risk. Our work focuses on two aspects of this change in pension accounting: first, how will industry firms change their accounting strategy in light of the new rules, and second, how will firms’ stock prices be affected by the new allegedly better estimate of pension liability? Our research suggests that firms’ accounting strategies changed in that they use higher discount rates to estimate pension liability which offset the dramatic impact of using the PBO. In addition, we find that high financial risk firms’ tendencies to use higher discount rates increase with the firms’ leverage and decrease with liquidity. To test the market reaction we utilize standard event study methodology to investigate the effects of SFAS 158 on stock returns. Our findings suggest that firms with high (low) financial risk earn negative (positive) abnormal returns on and around relevant event dates preceding the implementation of SFAS 158.     

Ideological myths of modern economic theory and reality

According to the authors, the concept of a market and its antipode, central planning, essentially represent different tools in the arsenal of the state regulation of the economy. The dominance of a particular instrument (the market in modern Russia and centralized planning in the Soviet Union) defines only the predominant type of government regulation and not fundamental differences between economic systems.     

Ludwig Von Mises’ Neoclassical Analysis of Dumping

The paper explores similarity in the analysis of dumping by Ludwig von Mises, which he labels as margin monopoly, in Human Action: A Treatise on Economics (1949), and by Joan Robinson in The Economics of Imperfect Competition (1933). Mises, though, does not admit to similarity with Robinson, and five reasons are suggested why he was unwilling to acknowledge Robinson. Robinson’s analysis is neoclassical, and so is that of Mises, which is an anomaly for Mises, an Austrian economist who generally focuses on activity in disequilibrium.     

The analysis of the dynamics of the Russian economy using the output gap indicator

In this paper we estimate the indicator output gap for the Russian economy in 2000–2015 using univariate and multivariate versions of the Hodrick–Prescott filter and the Kalman filter for the model of unobserved components (taking into account the Phillips curve). The calculation results show a slowdown of potential output after 2014.     

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.     

The Impact of US Uncertainty Shocks on Small Open Economies

In this paper, we investigate the impact of US uncertainty shocks on GDP growth in nine small open economies: Australia, Canada, Denmark, Finland, Iceland, New Zealand, Norway, Sweden and the United Kingdom. We compare the impact of two types of shocks: i) stock market volatility shocks and ii) policy uncertainty shocks. Using quarterly data from 1986Q1 to 2016Q1, this issue is analysed using Bayesian VAR models. Our results suggest that policy uncertainty seems to matter more than stock market volatility. Stock market volatility shocks appear to robustly have significant effects on Danish GDP growth. Policy uncertainty shocks, on the other hand, reliably lowers GDP growth in all five Nordic countries in a statistically significant manner. Statistically significant effects of policy uncertainty shocks on the Anglo-Saxon countries in our sample are harder to establish and are, in our preferred specification, only found for the United Kingdom.     

An Analysis of Perceptions of Job Insecurity among White and Black Workers in the United States: 1977–2012

While objective measures indicate that the risk of job loss is higher for black workers than for white workers, there is little research on how what workers’ expectations of job loss differ by race. This study looks at how secure black and white workers are feeling about their jobs and how their perceptions of job insecurity have been affected by time trends and regional unemployment rates. I find that perceptions of job security of black male workers, older black workers, and black high school graduates have deteriorated relative to their white counterparts during the period 1977–2012. Among those who attended college, white workers’ perceived job insecurity has increased. Black blue-collar workers’ and construction workers’ perceptions of job insecurity also have increased relative to their white counterparts. Moreover, perceptions of job insecurity among several black groups, such as high school dropouts and old workers, are more sensitive to regional unemployment rates than their white counterparts.     

Peasant labour for urban industry: Temporary contract labour,urban-rural balance and class relations in a Chinese county

Urban-rural relations in China have a dual character: while a higher level of urban-rural economic balance than most other countries has been achieved, a sharp structural cleavage between workers and peasants has been maintained, based mainly on strict household registrations. Peasants are prevented from migrating to towns and gaining employment there, except under specially approved contracts arranged to resolve local shortages of industrial labour. Contract labour has complex and important effects on rural and urban industrial development. It also embodies the duality of urban-rural relations in China: at the same time as it redistributes wage funds from urban to rural areas, it reinforces the class cleavage between workers and peasants (including contract workers). It also opens up a complex web of inequalities and cleavages among those peasants with contract work and those without. Contract workers have been placed in a contradictory class position which has been a flashpoint of political conflict. The relationships of contract labour to urban industrial and rural development, urbanization, urban-rural balance and structural cleavage, class structure and political conflict are examined through a study of Shulu County, an ordinary rural area with agrowing industrial centre in which over half of the industrial labour force is comprised of peasant contract workers.     

Job Satisfaction and Contingent Employment

This paper analyses job satisfaction as an aggregate of satisfaction with several job aspects, with special focus on the influence of contingent-employment contracts. Fixed-effect analysis is applied on a longitudinal sample of Dutch employees in four work arrangements: regular, fixed-term, on-call and temporary agency work. Our results indicate that temporary agency work is the only contingent employment relation that is on average associated with lower job satisfaction compared to regular workers. Decomposition of this gap indicates that the major part is due to the low satisfaction experienced by agency workers regarding the content of their jobs. A lack of job security is also responsible for part of the gap. For fixed-term and on-call workers the negative satisfaction effect originating from the lack of job security and lower wages is compensated by other job aspects and a variant relationship between total job satisfaction and its components. However, male and high educated on-call workers do experience lower job satisfaction.     

Is it really more dispersed?

The ECB’s one size monetary policy is unlikely to fit all euro area members at all times, which raises the question of how much monetary policy stress this causes at the national level. I measure monetary policy stress as the difference between actual ECB interest rates and Taylor-rule implied rates at the member state level. These rates explicitly take into account the natural rate of interest to capture changes in trend growth. I find that monetary policy stress within the euro area has been steadily decreasing prior to the recent financial crisis. Current stress levels are not only lower today than in the late 1990s, they are also in line with what is commonly observed among U.S. states or pre-euro German Länder.     

Does Central Bank Financial Strength Really Matter for Inflation? The Key Role of the Fiscal Support

This paper examines whether weak central bank finances affect inflation by scrutinizing the key rationale for such a relationship: that the absence of Treasury support makes central bank finances relevant for price stability. Specifically, I ask whether central banks which are not likely to enjoy fiscal support when needed experience higher inflation as their financial situation deteriorates. I find this to be true among a large sample of 82 countries between 1998 and 2008. De facto potential fiscal support appears relevant, while de jure fiscal support, which I survey analyzing 82 central bank laws, does not appear to matter. The results also bring forward an explanation for the conflicting results of the previous empirical studies, which neglected this key component.     

Does the dispersion of unit labor cost dynamics in the EMU imply long-run divergence?

Using unit labor cost (ULC) data from Euro area countries as well as US States and German Länder we investigate inflation convergence using different approaches, namely panel unit root tests, cointegration tests and error-correction models. All in all we cannot reject convergence of ULC growth in EMU. However, country-specific deviations from the rest of the currency union are much more pronounced and much more persistent in Europe than in the US or Germany. This holds before and after the introduction of the common currency. Hence, asymmetric shocks in the future might take a long time to dissipate.     

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     

A panel data analysis of the formal-informal sector labour market linkages in South Africa

This study explores the labour market linkages between the informal and formal sectors, using the first four waves of the National Income Dynamics Study data. The main focus is on three groups of employed: worked in the formal sector in all waves; worked in the informal sector in all waves; moved between the two sectors across the waves. Only 27% of informal sector workers in wave 1 transitioned to the formal sector in wave 4; 38% remained in the informal sector while 33% had their status changed to either inactive or unemployed. The econometric analysis indicates that older and more educated individuals living in urban areas and coming from households with fewer old-age grant recipients are significantly more likely to work in the formal sector, whereas more educated white males are associated with a significantly greater likelihood of transitioning from informal to formal sector employment.