OECD Journal: Economic Studies

Frequency :
1995-2856 (online)
1995-2848 (print)
Hide / Show Abstract

OECD Journal: Economic Studies publishes articles in the area of economic policy analysis, applied economics and statistical analysis, generally with an international or cross-country dimension. While it draws significantly on economic papers produced by the Economics Department and other parts of the OECD Secretariat for the Organisation’s intergovernmental committees, the submission of articles produced by non-OECD authors is encouraged. We also welcome comments on articles previously published in the journal. Now published as part of the OECD Journal package.


Latest Articles Hide / Show all Abstracts

Mark Number Date Article Volume and Issue Click to Access
  18 Nov 2015 Can pro-growth policies lift all boats?
Orsetta Causa, Alain de Serres, Nicolas Ruiz

In a majority of OECD countries, GDP growth over the past three decades has been associated with growing income disparities. To shed some lights on the potential sources of trade-offs between growth and equity, this paper investigates the long-run impact of structural reforms on GDP per capita and household income distribution. Pro-growth reforms can be distinguished according to whether they are found to generate an increase or a reduction in household disposable income inequality. Those that contribute to reduce inequality include the reduction in regulatory barriers to competition, trade and FDI, as well as the stepping-up in job search assistance and training programmes. Conversely, a tightening of unemployment benefits for the long-term unemployed is found to lift mean household income but to lower income among poorer households, thus raising inequality. Several other reforms have no significant impact on income distribution.

JEL Classification: 047, D37, E61
Keywords: Growth, inequality, pro-growth policies

Online first
  12 Oct 2015 Experience and the returns to education and skill in OECD countries
Stijn Broecke

Using the Survey of Adult Skills (PIAAC), this paper documents how the returns to education and skill change with experience for a sample of 22 OECD countries. It does this within the framework of the Altonji and Pierret (2001) employer learning model, and therefore also tests the relevance of this theory in a wide range of countries using comparable data and a consistent methodology. Significant heterogeneity is found in the experience profiles of the returns to education and skill across countries, and convincing evidence in support of the employer learning theory is only found in a sub-set of the countries analysed. While these countries vary significantly from one another in terms of their labour market institutions and educational systems, the analysis does seem to suggest that employer learning is most common in those countries where employment protection legislation on temporary contracts is weak. This is consistent with a model in which temporary contracts allow employers to test and learn about young workers, and give them the flexibility to adjust wages in line with observed productivity.

JEL codes: J24, J32, D83
Keywords: Employer learning, returns to education, returns to skill

Online first Click to Access: 
  • PDF
  • http://www.keepeek.com/Digital-Asset-Management/oecd/economics/experience-and-the-returns-to-education-and-skill-in-oecd-countries_eco_studies-2015-5jrs3sqrvzg5
  • READ
  07 Oct 2015 Trade patterns in the 2060 world economy
Jean Chateau, Lionel Fontagné, Jean Fouré, Åsa Johansson, Eduardo Olaberría

This paper presents long-term trade scenarios for the world economy up to 2060 based on a modelling approach that combines aggregate growth projections for the world with a detailed computable general equilibrium sectoral trade model. The analysis suggests that over the next 50 years, the geographical centre of trade will continue to shift from OECD to non-OECD regions reflecting faster growth in non-OECD countries. The relative importance of different regions in specific export markets is set to change markedly over the next half century with emerging economies gaining export shares in manufacturing and services. Trade liberalisation, including gradual removal of tariffs, regulatory barriers in services and agricultural support, as well as a reduction in transaction costs on goods, could increase global trade and GDP over the next 50 years. Specific scenarios of regional liberalisation among a core group of OECD countries or partial multilateral liberalisation could, respectively, raise trade by 4% and 15% and GDP by 0.6% and 2.8% by 2060 relative to the status quo. Finally, the model highlights that investment in education has an influence on trade and high-skill specialisation patterns over the coming decades. Slower educational upgrading in key emerging economies than expected in the baseline scenario could reduce world exports by 2% by 2060. Lower up-skilling in emerging economies would also slow down the restructuring towards higher value-added activities in these emerging economies.

JEL classification codes: E23, E27, F02, F17, F47
Keywords: General equilibrium trade model, long-term trade and specialisation patterns, trade liberalisation

Online first Click to Access: 
  • PDF
  • http://www.keepeek.com/Digital-Asset-Management/oecd/economics/trade-patterns-in-the-2060-world-economy_eco_studies-2015-5jrs63llqgjl
  • READ
  07 Oct 2015 The dynamics of social expenditures over the cycle
Anna Cristina d’Addio

This paper studies the cyclical behaviour of public social spending in 20 OECD countries observed over the period between 1982 and 2011. In view of the recent discussion on cutting the budget deficit, the paper pays particular attention to whether social spending is pro-cyclical or countercyclical, whether it changes asymmetrically during expansions and recessions and whether the asymmetric changes in social spending contribute to a drift in social expenditures over time. The links between social spending levels and key economic variables, such as economic growth, provide also a useful context for discussing current social expenditure trends. The estimates, based on a system-GMM estimator, suggest that an upward ratchet effect exists. The effect is robust to a large number of alternative specifications.

JEL classification: E32, E62, H50, I00
Keywords: Fiscal policy, economic cycles, social spending, ratchet effect

Online first Click to Access: 
  • PDF
  • http://www.keepeek.com/Digital-Asset-Management/oecd/economics/the-dynamics-of-social-expenditures-over-the-cycle_eco_studies-2015-5jrs63lpkmxr
  • READ
  27 Mar 2015 The effect of the global financial crisis on OECD potential output
Patrice Ollivaud, David Turner

Potential output losses from the global financial crisis are estimated by comparing recent OECD published projections with a counter-factual assuming a continuation of pre-crisis productivity trends and a trend employment rate which is sensitive to demographic trends. Among the 19 OECD countries which experienced a banking crisis over the period 2007-11 the median loss in potential output in 2014 is estimated to be about 5½ per cent, compared with a loss in aggregate potential output across all OECD countries of about 3½ per cent. The loss does, however, vary widely across countries, being more than 10% for several smaller European, mainly euro area, countries. The largest adverse effects come from lower trend productivity, which is a combination of both lower total factor productivity and lower capital per worker. Despite large increases in structural unemployment in some countries, the contribution of lower potential employment is limited because the adverse effect on labour force participation is generally much less than might have been expected on the basis of previous severe downturns. This may partly reflect pension reforms and a tightening up of early retirement pathways. Pre-crisis conditions relating to over-heating and financial excesses, including high inflation, high investment, large current account deficits, high total economy indebtedness and more rapid growth in capital-per-worker are all correlated with larger post-crisis potential output losses. This suggests that underlying the potential output losses was a substantial misallocation of resources, especially of capital, in the pre-crisis boom period. On the other hand, more competition-friendly product market regulation is associated with smaller losses of potential output, suggesting that it facilitates a reallocation of resources across firms and sectors in the aftermath of an adverse shock and so helps to mitigate its consequences.

JEL classification: E32; E44.
Keywords: Banking crisis, financial crisis, global financial crisis, potential output.

Volume 2014 Issue 1 Click to Access: 
  • PDF
  • http://www.keepeek.com/Digital-Asset-Management/oecd/economics/the-effect-of-the-global-financial-crisis-on-oecd-potential-output_eco_studies-2014-5js64l2bv0zv
  • READ
  27 Mar 2015 Rescuing the Phillips curve
OECD, Elena Rusticelli

Despite the increased importance of cyclically-adjusted measures of labour market slack for policymaking, estimates of the NAIRU have become increasingly fragile. Particularly for euro area countries, NAIRU estimates represent a crucial input to compute cyclically-adjusted budget balances adopted to formulate medium-term fiscal objectives under the EU fiscal surveillance framework. However, the apparent reduced sensitivity of inflation to labour market dynamics and unemployment gaps seriously undermines the use of Phillips curve equations in estimating the NAIRU. Estimates of the NAIRU are particularly problematic when changes in unemployment are both very large and rapid as in the aftermath of the global crisis. This paper proposes a refinement to the standard OECD approach of using a Kalman filter to estimate the NAIRU in the context of the Phillips curve. The proposed refinement strengthens the relationship between inflation and labour market developments by considering the risk of hysteresis effects associated with changes in long-term unemployment. Testing the revised methodology on a broad selection of OECD countries gives mixed results. For a group of countries in the euro area periphery (Greece, Ireland, Italy, Portugal and Spain) there is an increase in the magnitude and statistical significance of the unemployment gap, with the NAIRU revised upward by on average 1¾ percentage points. However, the revised methodology provides less improvement to the standard OECD methodology for a second set of countries considered, namely the G7 excluding Italy. The United States is an interesting intermediate case as the statistical evidence for the proposed methodology is marginal, but the policy implications of the revised point estimate of the NAIRU are major.

JEL classification: C32, E24, E31, E32, J64.
Keywords: Long-term unemployment, flattening Phillips curve, NAIRU, euro area periphery, Kalman filter.

Volume 2014 Issue 1 Click to Access: 
  • PDF
  • http://www.keepeek.com/Digital-Asset-Management/oecd/economics/rescuing-the-phillips-curve_eco_studies-2014-5jxrcm2cdff6
  • READ
  27 Mar 2015 Lessons from OECD forecasts during and after the financial crisis
Christine Lewis, Nigel Pain

This paper assesses the OECD’s projections for GDP growth and inflation during the global financial crisis and recovery, focusing on lessons that can be learned. Growth was repeatedly overestimated in the projections, which failed to anticipate the extent of the slowdown and later the weak pace of the recovery. Similar errors were made by many other forecasters. At the same time, inflation was stronger than expected on average. Analysis of the growth errors shows that the OECD projections in the crisis years were larger in countries with more international trade openness and greater presence of foreign banks. In the recovery, there is little evidence that an underestimate of the impact of fiscal consolidation contributed significantly to forecast errors. Instead, the repeated conditioning assumption that the euro area crisis would stabilise or ease played an important role, with growth weaker than projected in European countries where bond spreads were higher than had been assumed. But placing these errors in a historical context illustrates that the errors were not without precedent: similar-sized errors were made in the first oil price shock of the 1970s. In response to the challenges encountered in forecasting in recent years and the lessons learnt, the OECD and other international organisations have sought to improve their forecasting techniques and procedures, to improve their ability to monitor near-term developments and to better account for international linkages and financial market developments.

JEL classification: E17, E27, E32, E37, E62, E66, F47, G01
Keywords: Forecasting, economic outlook, economic fluctuations, fiscal policy

Volume 2014 Issue 1 Click to Access: 
  • PDF
  • http://www.keepeek.com/Digital-Asset-Management/oecd/economics/lessons-from-oecd-forecasts-during-and-after-the-financial-crisis_eco_studies-2014-5jxrcm2glc7j
  • READ
Add to Marked List