Browse by: "2012"

This study complements OECD analyses on commodity price volatility by providing quantitative assessments of the impact of two structural changes that a number of market observers have identified as contributing to world wheat market price volatility. The factors examined relate to changes in demand in the large emerging countries of the BRICs (comprising Brazil, the Russian Federation, India and China), as a result of continuing economic growth and development and the effect of a lower levels of global wheat stocks in recent years. A further scenario extends the analysis of the role of stocks in price volatility by examining some effects of a hypothetical international buffer stockholding scheme to stabilise international wheat prices. Each scenario was undertaken with the Aglink-Cosimo model and the stochastic baseline as reported in the OECD-FAO Agricultural Outlook, 2011-2020. The results suggest that both factors have contributed to the recorded volatility in world wheat markets in recent years. However the increase in market volatility arising from economic development and income growth is likely to occur gradually, while the moderating effect of larger stocks may only be fleeting. The stylised wheat buffer stock scheme with a price band may lead to slightly lower market volatility under highly specific conditions and constraining assumptions. These, however, have proven difficult to achieve and sustain in practice, as observed from past attempts to implement such schemes.

Reducing the extent of inactivity and promoting labour supply is essential to foster labour market outcomes in Hungary in the medium term. Notwithstanding specific factors linked to education, the pension system or family and disability policies, financial disincentives play an important role in this regard. This paper describes the impact of recent reforms of the tax and benefit system in Hungary on some indicators of financial incentives to enter the labour market derived from OECD tax and benefit models. While personal income taxes were cut and the system of tax allowances for families became more generous other welfare benefits were reduced or phased out, which causes significant changes in the incentives for workers, inactive or unemployed people. Between 2010 and 2012, the average tax wedge dropped for high-income earners and/or families with two children, but increased mainly for individuals without children and income below the 80th percentile, which was partly mitigated by the implementation of compensation schemes. However, there is still a large gap in the average tax wedge with the OECD average and regional peers, notably driven by high social security contributions. The implicit tax on returning to work from unemployment remains relatively high and increased below the average wage for most family types. However, it was cut above that level. The absolute level of the implicit tax on returning to work from inactivity is significantly lower notably following across-the-board cuts for lone parents and one-earner married couples with two children, somewhat offset by increases below the average wage for families without children.

This paper uses data from the Gallup World Poll to explore the determinants of subjective well-being. The paper builds on the existing literature on the determinants of subjective well-being in three areas. First, the paper systematically examines the drivers of measures of affect as well as the determinants of life satisfaction that are more prevalent in the existing literature. Overall, items relating to health status, personal security, and freedom to choose what to do with one’s life appear to have a larger impact on affect balance when compared to life satisfaction, while economic factors such as income and unemployment have a more limited impact. The second part of the paper considers the degree to which there is heterogeneity in the weights assigned by different population sub-groups to the different determinants of subjective well-being. Relatively small differences are found between men and women, but priorities change significantly over the life course. Finally, the paper uses OECD data on the labour market and health policy regimes in different countries to test for the impact of these policy regimes on subjective well-being. Significant results are found for the replacement rate for unemployment assistance, employment protection legislation, and the extent of health co-payments. Although these results are tentative, they suggest that looking for the impact of policy changes on subjective well-being in large cross-country datasets is a promising area for research.

When you think of someone who is an engineer, do you imagine a man or a woman wearing a hardhat? How about when you imagine a teacher standing in front of a class of schoolchildren? If you answer “a man” to the first question, and “a woman” to the second, there’s probably a reason. And the reason is simply that more men than women pursue careers in fields such as science, technology, engineering and mathematics, while women are over-represented in the humanities and medical sciences. This type of gender segregation in the labour market is still prevalent in many countries. But will it continue? Girls now do as well as, and often better than, boys in most core school subjects; and proficiency in a subject influences 15-year-olds’ thinking about the kind of career they want to pursue. Or does it?

This paper reviews the literature and contributes with some evidence based on the World Values Survey on the drivers of tax morale around the world, with an emphasis on developing countries. It shows that socio-economic factors such as age, religion, gender, employment status and educational attainment have a significant impact on people’s levels of tax morale. In terms of institutional determinants, it finds that the satisfaction with democracy, trust in government and the satisfaction with the quality of public services plays an important role in increasing tax morale. The paper also discusses future directions for research and policy action in this area.

• The percentage of students who expect to complete university is highest in Korea (80%) and lowest in Latvia (25%).
• Many high-performing students do not expect to go to university, representing potentially lost talent to an economy and society while many low-performing students think they will make it to university, even if their current performance suggests they are not likely to succeed.
• Around one in four students expects to end his or her formal schooling at the upper secondary level and thus needs the skills to make a smooth transition into work and adulthood.

• Schools are providing support for new teachers in the form of mentoring and induction programmes, but nearly one third of new teachers report a high level of need for professional development around student discipline and behaviour problems.
• Contrary to what is often reported, the schools in which new teachers teach are no different than those of their more experienced colleagues.
• According to the countries surveyed in the Teaching and Learning International Survey (TALIS), new teachers1 spend less time on teaching and learning and more time on classroom management and report lower levels of self-efficacy than experienced teachers.

Investing in higher (tertiary) education is one of the more significant decisions a person can take. In some countries, the direct costs of higher education can be large, often requiring a significant investment of an individual’s personal funds, either in up-front payments or loan repayments later on. Even in countries where the direct costs of higher education to an individual are much lower, such as Finland, Norway, and Turkey, the time invested in pursuing a degree – and the opportunity cost of foregone earnings while an individual is in school – can be a major factor. In light of the personal costs associated with pursuing a tertiary degree, how do the benefits compare? OECD analyses based on the most recent year of available data (2007 for most countries), suggest that as far as the long-term economic benefits of higher education are concerned, the return on investment is very good.

The water debate in relation to poverty alleviation has one dimension that is often sidelined: its relationship with public governance. This report attempts to shed some light on the governance of water policy in Latin American and Caribbean (LAC) countries. It argues that public governance of water in most LAC countries is fragmented, as it is in the OECD area as well, and that greater efforts to co-ordinate water with other policy areas are crucial to maximise the impact on poverty reduction. It emphasises the need to design water policies in a more integrated manner and implement effective water governance tools and mechanisms that are context-specific, flexible and beneficial to the poor.

This working paper is one in a series of OECD Working Papers on Regional Development of the OECD Public Governance and Territorial Development Directorate, conducted under the responsibility of Joaquim Oliveira Martins, Head of the OECD Regional Competitiveness and Governance Division (www.oecd.org/regionaldevelopment).

This paper discusses how to improve Canada’s business innovation in order to boost labour productivity and output growth. Many general framework conditions are highly favourable to business risk-taking and innovation, including macro stability, openness, strong human capital, low corporate tax rates, low barriers to firm entry and flexible labour markets. However, they can be improved further by reduced external and interprovincial barriers in network and professional service sectors, more efficient capital markets, fewer capital tax distortions and improved patent protection. A second focus should be on ensuring that incentives arising from government subsidies are targeted on actual market failures. The very high level of support to business R&D via the federal Scientific Research and Experimental Development (SR&ED) tax credit and provincial top-ups may affect the incentives of small firms to grow and should be redesigned. A plethora of small, fragmented granting programmes, mainly geared to SMEs, should be streamlined for better government-business collaboration. The large public share in venture capital should be wound down, as it may crowd out more productive private finance. A final focus should be on boosting manager and worker skills that are intrinsic to all forms of innovation, by filling gaps in training, mentoring and education. This Working Paper relates to the 2012 OECD Economic Review of Canada (www.oecd.org/eco/surveys/Canada).

This report discusses the main areas in which national strategies to expand broadband networks affect universal service objectives, proposes criteria to rethink the terms of universal service policies, and shares the latest developments across a selected group of OECD countries.

Each year SIGMA produces assessment reports as a contribution to the EC’s annual reports on EU candidate countries and potential candidates, as well as to its programming of technical assistance. These reports assess progress made in public administration reform by our beneficiary countries. The report for Turkey analyses and takes stock of progress achieved by this country in 2012, with an aim to also provide inputs into its reform agenda. It focuses on civil service and administrative law, integrity, public expenditure management and control, and public procurement.

Policymakers cannot directly adjust the tax burden of labour income, but they can reform the statutory elements of the tax system, which ultimately determine average and marginal tax rates. To shed light on the determinants of average and marginal personal tax rates, this paper discusses historical and cross-country trends in statutory personal income tax rates, the income thresholds where personal income tax and employee social security contribution rates apply, and other statutory provisions that shape the tax burden on labour income in OECD countries. Trends in the difference between statutory, average and marginal personal income tax rates are also analysed and graphically illustrated. The impact of employee social security contributions on top marginal personal tax rates is also discussed. The most pronounced trend that emerged from 2000 to 2010 in OECD countries is a reduction in top statutory personal income tax rates. This trend was accompanied by reductions in the threshold where the top rate applies, as well as reductions in the statutory rate applicable at average wage earnings.

Favourable conditions such as the growth of pension fund assets, privatisation trends and changing regulations have increased the interest of institutional investors in infrastructure investment. However, data on pension fund investment in infrastructure is limited. National statistical agencies do not currently collect separate data on these investments, and the different modes available to investors to gain exposure to infrastructure means that information is buried under different headings.

This paper is based on a recent survey of some of the largest pension funds across different regions, accounting for over USD 7 trillion of assets under management. We look at how much these investors have allocated to infrastructure, what is considered as infrastructure, where it fits in the total portfolio allocation, what approaches and forms of investment have been taken, what are recent trends in relation to infrastructure and asset allocation, regulation and green investment. A better understanding of these issues is necessary from a policy perspective in order to be able to attract institutional investors to the infrastructure sector.

This report examines skill trends in 24 OECD countries over the past several decades. The skill measures used include broad occupation groups, country-specific direct measures of skill requirements from international surveys, and direct skill measures from the Occupational Information Network (O*NET) database applied to both United States and European labour force surveys. Each kind of data has its own strengths and limitations but they tell a consistent story.

Transnational organised crime (TOC) refers to a fluid and diversified industry that engages in illicit activities ranging from drug and human trafficking to drug smuggling, piracy and money laundering. Although it may affect strong states, conflict-affected and fragile states are especially vulnerable to the dynamics of TOC and may provide more favourable conditions for its development. The implications for those states are many and serious. This paper outlines the ways in which TOC has evolved in recent years and how policy might be adapted to take account of this evolution. It emphasises that TOC today is less a matter of organised cartels established in producer or end-user states, but increasingly characterised by fluid, opportunistic networks that may for example specialise in transport and logistics. The paper recommends tackling the problem through a comprehensive approach that considers TOC as but one element within a greater complex of cause and effect. This would entail a re-evaluation of many current assumptions about TOC and a reformulation of current policies.

International trade produces income gains across the world by facilitating an efficient allocation of production among trading countries. However, increased trade exposure also creates some challenges, and there are adjustment costs associated with changing trade patterns. Effective complementary policies, by promoting flexibility and adaptation within economies, can reduce adjustment costs associated with increased trade, and therefore ensure the benefits are maximised. This paper highlights these issues with reference to recent experience in Australia. Computable General Equilibrium modelling shows how the recent improvement in Australia‘s terms of trade is likely to have increased incomes and that the magnitude of these gains is directly linked to the degree of flexibility of the economy.

This paper explores the productivity impact of trade, product market and financial market policies over the last decade in China – a fast growing country where, despite significant reform action, regulatory stance remains still far from OECD standards. The paper makes a critical distinction between downstream and upstream industries, focusing on the indirect effects of regulation in upstream industries on firm performance in downstream manufacturing industries. This framework allows investigating the link between these policies and productivity growth depending on how far incumbents are relative to the technological frontier. The analysis is novel in several respects. Drawing on new OECD policy indicators of sector-level product market regulation and firm level data, econometric estimates deliver new evidence on the potential gains from product and financial market reforms in China, two policy areas that had not been studied in previous empirical literature. Firm-level microeconomic data further allow shedding light on the differential effects of policies within industries, while also highlighting the potential channels through which productivity is affected by reform. The key conclusion that can be derived from the empirical analysis is that further product, trade and financial market reforms would bring substantial gains in China and could therefore speed up the convergence process. Taken at face value, the empirical estimates would imply that aligning product, trade and financial market regulation to the average level observed in OECD countries would bring aggregate manufacturing productivity gains of respectively 9%, 4% and 6.5% after five years. Trade and product market reforms are found to deliver stronger gains for firms that are closer to the industry-level technological frontier, while the reverse holds for financial market reforms.

Innovation is critical to creating new sources of growth. Trade is one of the framework conditions that can strengthen innovation in the business sector, as set out in the OECD Innovation Strategy in 2010. This paper broadly sets out three channels through which trade affects innovation. First, imports and foreign direct investment (FDI) as well as trade in technology serve as channels of technology diffusion. Second, imports, FDI and technology licensing contribute to intensifying competition, which can affect incentives for innovation. Third, exports can affect innovation as it serves as a learning opportunity and gives incentives for innovative activities...