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With all the economic turmoil of the past several years, have you ever wished you could buy an insurance policy to protect against the effects of a global recession? Well, such an insurance policy already exists – and it’s called higher education. During the first two years of the global economic crisis, in country after country, people with a tertiary (higher) education were much less likely to be unemployed, much more likely to be participating in the labour force, and more likely to have higher earnings, compared to their less-educated counterparts. These and other findings are discussed in the first issue of the OECD’s new education brief series, Education Indicators in Focus.
Dans le contexte de tourmente économique qui règne depuis plusieurs années, n’avez-vous jamais souhaité posséder une assurance pour vous protéger des effets de la crise mondiale ? Eh bien une telle assurance existe réellement : elle s’appelle « enseignement supérieur ». Au cours des deux premières années de la crise économique mondiale, tous les pays ont pu constater les uns après les autres que posséder un enseignement tertiaire (ou supérieur) réduisait les risques de se trouver au chômage et accroissait les chances de participer au marché de l’emploi, ainsi que de percevoir des revenus supérieurs à ceux des personnes moins qualifiées. Ces constatations, ainsi que d’autres conclusions, sont présentées dans le premier numéro de la série de synthèses Les indicateurs de l’éducation à la loupe.
Les technologies de l'information et de la communication révolutionnent non seulement la vitesse de transmission des informations, mais aussi les modalités de diffusion et de réception de ces dernières. Les innovations technologiques modifient en profondeur les types de compétences requises à l'heure actuelle sur le marché du travail et les catégories d'emplois offrant le meilleur potentiel de croissance. La plupart de ces emplois nécessitent désormais une certaine familiarité avec la navigation sur support électronique, voire la maîtrise de cette dernière qui demande aux lecteurs de déterminer eux-mêmes la structure de ce qu'ils lisent au lieu de suivre simplement l'ordre pré-établi du texte, comme dans un livre…
Information and communication technologies revolutionise not only the speed at which information can be transmitted, but also how information is conveyed and received. Technological innovations have a profound effect on the types of skills that are demanded in today's labour markets and the types of jobs that have the greatest potential for growth. Most of these jobs now require some familiarity with, if not mastery of, navigating through digital material where readers determine the structure of what they read rather than follow the pre-established order of text as presented in a book…
Jobs are important in maintaining social cohesion. Employment provides income, but also a sense of self-worth and a meeting place for social interactions that weave the social fabric. With over 200 million unemployed globally, the number of jobs created has taken centre stage, especially in countries hit hard by the economic crisis. And yet, labour relations have become tense in many parts of the world, including those still experiencing economic growth. In 2010, China witnessed a marked increase in strikes, labour disputes and even suicides in the workplace. Understanding the economic and institutional determinants of good labour relations matters for designing and implementing better labour market policies.
The increase in labour disputes in China coincided with the end of the era of surplus labour. While labour was abundant in rural hinterlands, manufacturing firms could rely on cheap labour as migrant workers would still be better off than if they stayed at home. As it became increasingly difficult for manufacturing firms in urban centres and the coastal provinces to recruit labour, wages were bid up throughout the economy. This process however, was all but smooth, as the increase in labour disputes shows. What is needed is a set of labour market institutions that help the transition in labour markets to be not only efficient, but also peaceful and equitable.
This paper by Cai Fan and Wang Meiyan, from the Institute of Population and Labour Economics of the Chinese Academy of Social Sciences, documents the increase in labour disputes in China and seeks to understand their determinants. The main finding is that the increase in disputes is linked to a change in regime in the labour market with the end of surplus labour. The paper therefore calls for further advances in establishing labour market institutions to adapt to the new labour market situation. The paper finds that disputes result from a better awareness of rights on the part of workers and that they are more common in thriving and export-oriented areas. The authors go on to discuss the Chinese government’s responses to the growing problem, from pro-active labour market policy to increasing the importance of collective contracts. In doing so, this paper provides an important building block in the understanding of the role of labour market institutions for social cohesion.
The paper presents the results of the first application of cyclical analysis to economic activity in Serbia. The analysis refers to the period 2001-07, which marked the start of democratic and economic reforms, since short term fluctuations in economic activity prior to 2001 were the result of various exogenous shocks like hyperinflation, wars and international economic sanctions. In the post-reform period, the Serbian economy exhibits characteristics of a small, open, marketoriented economy. Economic activity shows an upward trend, and with special regard to growth dynamics and their cyclical properties, cyclical analysis is relevant. In analysing cyclical fluctuations in economic activity, a deviation-from-trend approach is applied. For dating turning points in economic activity, the monthly gross domestic product (GDP) is used since the coincident properties of the index of industrial production could not be statistically verified for Serbia as there were a small number of quarterly observations available for GDP.
The Optimal Currency Area theory stresses the importance of co-movement of the business cycles of member states in order for the common currency to be successful. Yet, the identification of (European) business cycles has been inconclusive and is complicated by the enlargement to the new member states in 2004 and their transition to market economies. In this paper, we show how to decompose a business cycle into a time-frequency framework in a way that allows us to compare the growth rate spectra and coherences for the Hungarian, Polish, Czech, German and French economies. We find that, since joining the EU, there has been convergence on the euro area economy at short cycle lengths, but little convergence in long cycles. We argue that this shows evidence of nominal convergence, but little real convergence. The standard Maastricht convergence criteria for membership of the euro therefore need to be adapted to test for real convergence.
JEL Classification: C22, C29, C49, F43, O49
Keywords: Time-Frequency Analysis, Coherence, Growth Rates, Business Cycles
JEL Classification: C22, C29, C49, F43, O49
Keywords: Time-Frequency Analysis, Coherence, Growth Rates, Business Cycles
This paper examines rationales, aspirations, assumptions and methods shaping an international assessment of learning outcomes: the OECD’s Assessment of Higher Education Learning Outcomes (AHELO) feasibility study. The first part of the paper is analytical, exploring formative rationales, and shaping contexts and normative perspectives that frame the evaluation. The discussion then turns to review scientific and practical challenges involved in an assessment of the study, which will be tested on an international scale, and to sketch ideas and innovations being created in response. In conclusion, the paper offers reflective suggestions for positioning AHELO in global higher education, should the initiative prove feasible.
The Organisation for Economic Co-operation and Development (OECD) began to use a band-pass filter, based on the Hodrick-Prescott filter (HPband-pass filter), to calculate the composite leading indicators (CLIs) in December2008. Other than the filter adopted by the OECD, there is an alternative HPband-pass filter. This note examines whether the application of these two alternative HPband-pass filters in the calculations of the OECD’s CLIs lead to negligible differences.
JEL Classification: E32; C22
Keywords: Hodrick-Prescott band-pass filter; Composite leading indicators.© beawolf - Fotolia.com
JEL Classification: E32; C22
Keywords: Hodrick-Prescott band-pass filter; Composite leading indicators.© beawolf - Fotolia.com
Survey data on expectations and economic forecasts play an important role in providing better insights into how economic agents make their own forecasts and why agents disagree in making them. Using data from the European Survey of Professional Forecasters (SPF), we consider measures of uncertainty and disagreement at both aggregate and individual level. We overcome the problem associated with distributional assumptions of probability density forecasts by using an approach that does not assume any functional form for the individual probability densities but just approximates the histogram by a piecewise linear function. We extend earlier works to the European context for the three macroeconomic variables – GDP, inflation and unemployment – and we analyse how these measures perform with respect to different forecasting horizons. There are two main results. First, uncertainty and disagreement are higher for GDP and unemployment than inflation, in particular for the short and medium forecast horizons. Second, the results do not support the evidence that, if uncertainty or disagreement are relatively high for one variable, then it is the same for the others.
JEL classification: C53, E37, C83.
Keywords: Survey professional forecast, uncertainty, disagreement, probability distribution.
JEL classification: C53, E37, C83.
Keywords: Survey professional forecast, uncertainty, disagreement, probability distribution.
Despite energy price hikes in recent years, growth rates turned out to be high in most industrialised countries. This pattern starkly contrasts the adverse effects that energy price shocks exerted on growth in the 1970s and 1980s. This study investigates whether a reduction in the energy cost share or different sources of energy price hikes are responsible for this divergence. By adding an exogenous twovariable VAR to a new open economy model for Germany, both energy prices and global economic activity are specified to be independent from domestic variables but assumed to influence each other. We show that it is sensible to calibrate the model in accordance with long-run fluctuations in important, observable, structural parameters and VAR coefficients on a period by period basis. Increases in energy prices and in global output serve as supply side and demand side shocks respectively. Our results suggest that the effects of recent energy price hikes have been different from past experiences because they were demand driven. Therefore, supply driven energy price increases could still be an important source of business cycle fluctuations.
JEL Classifications: E31, E32, F41
Keywords: Oil prices, new Keynesian open economy model
JEL Classifications: E31, E32, F41
Keywords: Oil prices, new Keynesian open economy model
Unconditional and conditional quantile regressions are used to explore the determinants of labour earnings at different parts of the distribution and, hence, the determinants of overall labour earnings inequality. The analysis combines several household surveys to provide comparable estimates for 32 countries. The empirical work suggests that, in general, a rise in the share of workers with an upper-secondary or post-secondary non-tertiary degree, a rise in trade union membership, a rise in the share of public employment and a rise in the share of workers on permanent contracts are associated with a narrowing of the earnings distribution. By contrast, a shift in the sector composition of the economy is not found to have a large impact on overall earnings inequality. As for tertiary education, the impact remains ambiguous as there are several offsetting forces.
Eligibility criteria for unemployment benefits, which require recipients to actively look for work, take up suitable job offers or take part in active labour market programmes (ALMPs), or risk benefit sanctions, can play an important role in offsetting the negative impact of generous unemployment benefits on employment incentives. This paper presents information on the strictness of eligibility criteria for unemployment benefits for 36 OECD and/or EU member countries. It covers entitlement conditions (employment and/or contribution requirements to gain access to benefits and sanctions for voluntary unemployment), job-search requirements (availability requirements during ALMPs and suitable work criteria), monitoring of job-search effort and sanctions for refusing a job offer or ALMP placement. These qualitative data are then used to compile a composite indicator of the strictness of eligibility criteria and some comparisons are made with the results of a similar exercise for earlier periods. This indicator complements existing cross-country indicators relating to unemployment benefits, such as net replacement rate data from the OECD Tax and Benefits database and data on ALMP expenditure compiled annually by Eurostat and the OECD.
This paper takes a fresh look at the nature of financial and real business cycles in OECD countries using annual data series and shorter quarterly and monthly economic indicators. It first analyses the main characteristics of the cycle, including the length, amplitude, asymmetry and changes of these parameters during expansions and contractions. It then studies the degree of economic and financial cycle synchronisation between OECD countries but also of economic and financial variables within a given country, and gauges the extent to which cycle synchronisation changed over time. Finally, the paper provides some new evidence on the drivers of the great moderation and analyses the banking sector’s pro-cyclicality by using aggregate and bank-level data. The main findings show that the amplitude of the real business cycle was becoming smaller during the great moderation, but asset price cycles were becoming more volatile. In part this was linked to developments in the banking sector which tended to accentuate pro-cyclical behaviour.
Poverty is an important policy issue in OECD countries and the recent crisis has made it even more pressing. This paper highlights poverty rate differences across countries and reviews the various policies to tackle it. The OECD-wide poverty rate has drifted up, reaching around 11% in the late 2000s. In the majority of OECD countries, children suffer from a higher poverty rate than working-age people and poverty is more wide-spread among women than men. Albeit boosting employment is essential to reduce poverty rates durably, work alone does not suffice to eliminate it as in-work poverty is a problem in many countries The redistribution system is effective in reducing poverty. Countries achieving a greater reduction in market-income poverty tend to redistribute more towards people at the bottom of the income distribution. Policies aiming at facilitating paid work along with employment-conditional cash transfers to top-up the income of low-wage workers can offer effective ways to combat poverty. Child poverty is also a major concern because of its adverse long-term effects. Countries with low levels of child poverty combine low levels of joblessness among parents with effective redistribution policies towards children. This suggests these two policy approaches are complementary and relying exclusively on only one of them is likely to be insufficient to reduce poverty among children significantly.
The wealth distribution within OECD countries is very concentrated and much more so than the income distribution. Wealth dispersion is especially high in the United States and Sweden. The latter illustrates that the most wealth unequal countries are not necessarily the most income unequal. Wealth inequality came down since the beginning of the 20th century until the 1970s, but has since been on the rise. Major explanations for this development are soaring financial markets in the aftermath of financial market deregulation in the 1970s, a lighter taxation of top incomes and wealth, which has favoured the accumulation of wealth, and the rising importance of inheritances and inter vivos gifts.
Over the past decades, top incomes have soared, especially in the English-speaking countries. Despite a considerable amount of research on top income developments, there is still substantial disagreement about the causes for their rapid increase. Potential explanations include changes in taxation, technical progress, globalisation and changes in way the remuneration of top income recipients is set.
Countries differ widely with respect to the level of labour income inequality among individuals of working age. Labour income inequality is shaped by differences in wage rates, hours worked and inactivity rates. Individual labour income inequality is the main driver of household market income inequality, with family formation as well as self-employment and capital income dispersion playing a smaller role. Household disposable income dispersion is lower in all OECD countries than household market income inequality, due to the redistributive effect of tax and transfer systems, but redistribution differs widely across countries. This paper maps income inequality for all OECD countries across various inequality dimensions and summarises them in inequality outcome diamonds. It also provides a cluster analysis that identifies groups of countries that share similar inequality patterns.
The global economic and financial crisis exacerbated the need for fiscal consolidation in many OECD countries. Drawing lessons from past episodes of fiscal consolidation, this paper investigates the economic environments, political settings and policy measures conducive to fiscal consolidation and debt stabilisation using probit, duration, truncated regression and bivariate Heckman selection methods. The empirical analysis builds on the earlier literature and extends it to include new aspects that may be of importance for consolidating governments. The empirical analysis confirms previous findings that the presence of fiscal rules – expenditure or budget balance rules – is associated with a greater probability of stabilising debt. Crucial in determining the causal link behind the association, the results also reveal an independent role for such rules over and above the impact of preferences for fiscal prudence. Also, while the analysis confirms that spending-driven adjustments vis-à-vis revenue-driven ones are more likely to stabilise debt, it also reveals that large consolidations need multiple instruments for consolidation to succeed. Sub-national governments, in particular state-level governments can contribute to the success of central government consolidation, if they co-operate. To ensure that state-level governments do co-operate, having the right regulatory framework with the extension of fiscal rules to sub-central government levels is important.
The economic and financial crisis was the catalyst for a fiscal crisis that engulfs many OECD countries. In most countries, budget deficits soared as a result of the economic slump, weaker revenues and the policy response to the crisis. Consolidating the public finances is an important challenge for many countries. Estimates of fiscal gaps suggest that substantial and sustained fiscal tightening will be needed in nearly all countries to bring debt down to prudent levels. However, given a weak global economy, implementing a large fiscal tightening could be particularly costly. Structuring consolidation packages to use instruments with low multipliers initially and enhancing the institutional framework for fiscal policy to lend greater credibility to the commitment to consolidate over time may help minimise the trade-offs with growth in the short run. In most countries there is scope to target spending programmes more effectively and eliminate distortions in taxation and re-orientate taxation to minimise distortions. Such measures, buttressed by structural reforms, such as to unsustainable pension systems, can underpin fiscal sustainability, while minimising the costs to long-run growth.