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.     

Reciprocated unilateralism in trade policy

Using the menu-auction approach to endogenous determination of tariffs and allowing additionally for lobby formation itself to be endogenous, this paper analyzes the impact of unilateral trade liberalization by one country on its partner's trade policies. We find that such unilateral liberalization may induce reciprocal tariff reductions by the partner country. Intuitively, unilateral liberalization by one country has the effect of increasing the incentives for the export lobby in the partner country to form and to lobby effectively against the import-competing lobby there for lower protection.     

Labor versus capital in trade-policy: The role of ideology and inequality

Trade policy depends on the extent to which the government wants to redistribute income as well as on a country's overall factor endowments and their distribution. While the government's desire to redistribute income itself is dependent on asset distribution, it is to a large extent also driven by the partisan nature of the government, i.e., whether it is pro-labor or pro-capital. Using cross-country data on factor endowments, inequality and government orientation, we find that, conditional on inequality, left-wing (pro-labor) governments will adopt more protectionist trade policies in capital-rich countries, but adopt more pro-trade policies in labor-rich economies than right-wing (pro-capital) ones. Also, holding government orientation constant, higher inequality is associated with higher protection in capital-abundant countries while it is associated with lower protection in labor-abundant countries. These results are consistent with the simultaneous presence of both inequality as well as ideology as determinants of protection within a two-factor, two-sector Heckscher-Ohlin framework. Overall, various statistical tests support an umbrella model (that combines both the ideology and inequality models) over each of the individual models.     

Gender Equality and Economic Growth: Is it Equality of Opportunity or Equality of Outcomes?

This article explores the impact of gender equality on economic growth. In particular, we focus on the multidimensional nature of gender equality with the object of identifying the relative salience of different aspects of equality. Using exploratory factor analysis on five measures of gender equality, we identify two distinct dimensions: equality of economic opportunities and equality in economic and political outcomes. Regression analysis conducted on an unbalanced panel of 101 countries taken over nonoverlapping five-year periods from 1990 to 2000 reveals that a standard deviation improvement in equality in economic opportunity increases growth by 1.3 percentage points and a corresponding improvement in participatory equality improves growth by an average of about 1.2 percentage points. However, this impact is contingent on a country's stage of development: while developing economies experience significant improvements in growth from greater equality in opportunity, developed societies see significant improvements resulting from greater equality in outcomes.     

Kernel Conditional Quantile Estimation for Stationary Processes with Application to Conditional Value-at-Risk

The paper considers kernel estimation of conditional quantilesfor both short-range and long-range-dependent processes. Undermild regularity conditions, we obtain Bahadur representationsand central limit theorems for kernel quantile estimates ofthose processes. Our theory is applicable to many price processesof assets in finance. In particular, we present an asymptotictheory for kernel estimates of the value-at-risk (VaR) of themarket value of an asset conditional on the historical informationor a state process. The results are assessed based on a smallsimulation and are applied to AT&T monthly returns.     

THE RECENT DECLINE IN THE EMPLOYMENT OF PERSONS WITH DISABILITIES IN SOUTH AFRICA, 1998‐2006

This paper shows that there has been a significant decline in the employment and labour force participation of persons with disabilities in South Africa over the 1998 through 2006 period. Disability is defined based on activity limitations. Data are from the October and the General Household Surveys. The paper also deals with the possible causes of the decline. While several causes can be invoked, preliminary evidence suggests that the rise of the Disability Grant programme might be responsible for a part of the decline. Recommendations are made for future research and data collection on disability and employment.     

On capital accumulation paths in a neoclassical stochastic growth model

Summary. Boldrin and Montrucchio [2] showed that any twice continuously differentiable function could be obtained as the optimal policy function for some value of the discount parameter in a deterministic neoclassical growth model. I extend their result to the stochastic growth model with non-degenerate shocks to preferences or technology. This indicates that one can obtain complex dynamics endogenously in a wide variety of economic models, both under certainty and uncertainty. Further, this result motivates the analysis of convergence of adaptive learning mechanisms to rational expectations in economic models with (potentially) complicated dynamics. Received: June 21, 1996; revised version: October 31, 1996     

Utilitarianism for infinite utility streams: A new welfare criterion and its axiomatic characterization

A definition of a utilitarian social welfare relation (SWR) for infinite utility streams is proposed. Such a relation is characterized in terms of the Pareto, Anonymity and Partial Unit Comparability Axioms. The merits of the utilitarian SWR, relative to the more restrictive SWR induced by the overtaking criterion, are examined.     

Temporary shocks and offshoring: The role of external economies and firm heterogeneity

We construct a model of offshoring with externalities and firm heterogeneity. Due to the presence of externalities, temporary shocks like the Y2K problem can have permanent effects, i.e., they can permanently raise the extent of offshoring in an industry. Also, the initial advantage of a country as a potential host for outsourcing activities can create a lock in effect, whereby late movers have a comparative disadvantage. Furthermore, the existence of firm heterogeneity along with externalities can help explain the dynamic process of offshoring, where the most productive firms offshore first and the others follow later. Finally, we work out some unexpected welfare implications which show that net industry profits can be lower in an outsourcing equilibrium than in a regime of no outsourcing. Consumer welfare rises, and under fairly plausible conditions this effect can offset the negative impact on profits.