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Focusing on consumer demands in OECD markets and voluntary initiatives taken in the private sector, this study investigates how consumers are informed about the social and environmental conditions under which products have been produced. Consumers of OECD increasingly attach importance to how companies they buy from conduct their business, and the voluntary adoption of CSR policies is spreading in the private sector. But how do consumers know...

Fan charts were pioneered by the Bank of England and Riksbank and provide a visually

appealing means to convey the uncertainty surrounding a forecast. This paper describes a

method for parameterising fan charts around GDP growth forecasts by which the degree of

uncertainty is based on past forecast errors, but the skew is derived from a probit modelbased

assessment of the probability of a future downturn. The probit-based fan charts

clearly out-perform the Bank of England and Riksbank approaches when applied to

forecasts made immediately preceding the Global Financial Crisis. These examples also

highlight weaknesses with the Bank of England and Riksbank approaches.

• The Riksbank approach implicitly assumes that forecast errors are normally

distributed, but over a long track record this is unlikely to be the case because

forecasters are generally poor at predicting downturns, which leads to bias and skew

in the pattern of forecast errors. Thus, the Riksbank fan chart is neither an accurate

representation of past forecast errors, nor is it a reflection of the risk assessment

underlying the forecast.

• The Bank of England approach relies heavily on the judgment of the members of

the Monetary Policy Committee to assess risks. However, even when they have

correctly foreseen the nature of future risks, the quantitative translation of these

risks into the fan chart skew has been too timid. Perhaps one reason for this is that

the fan chart prediction intervals based on historical forecast errors already appear

quite wide so that inflating them by adding skew may appear embarrassing (at least

ex ante).

The approach advocated in this paper addresses these weaknesses by recognising that

forecast errors are not symmetrical: firstly, this leads to more compressed prediction

intervals in the upper part of the fan chart (representing the possibility of under-prediction);

and secondly, using the large forecast errors from past downturns to calibrate downward

skew clearly supports a more bold approach when there is a risk of a downturn. A weakness

of the probit model-based approach is that it will not predict atypical downturns. For

example, in the current conjuncture it would not pick up risks associated with a ‘no deal’

Brexit or a global trade war. However, a downturn triggered by atypical events may be

more severe if risk factors describing a typical business-financial cycle are also high.

Thanks to financing from the European Regional Development Fund (ERDF) (2009-2013 Programme) and other Italian funding programmes, the Campania Region has begun a project to improve the quality of its school buildings, in partnership with the research centre CISEM of Milan.1 The Educational Quality Facilities (EQF) project has a total budget of about EUR 600 million. The Campania Region will allocate the necessary funds to the municipalities and provinces for the construction and equipment involved.

Bayesian Model Averaging techniques are used to analyse how robustly it is possible to identify factors that may lead to the bursting of asset price bubbles in OECD economies. A large set of variables put forward in the literature is assessed, as well as interactions of these variables with estimates of asset price misalignments to evaluate the importance of the different channels postulated by theory. The results indicate that asset price misalignments are not robust determinants of house price reversals unless their interaction with other characteristics of the economy (credit growth, population growth and interest rate developments) is taken into account. On the other hand, stock price reversals are affected by misalignments, as well as other real and monetary variables. Out-of-sample prediction exercises provide evidence that dealing explicitly with model uncertainty using Bayesian model averaging techniques leads to better forecasts of reversals in asset prices than relying on model selection. Conclusions regarding the importance of dealing quantitatively with model uncertainty are drawn to improve the anticipation of asset price reversals.

Historically, discussions of income inequality have emphasised cross-sectional comparisons of levels of inequality of income. These comparisons have been used to argue that countries with more inequality are less healthy, less democratic, more crime-infested, less happy, less mobile and less equal in economic opportunity, but such comparisons implicitly presume that current levels of inequality are steady state outcomes. However, the income distribution can only remain stable if the growth rate of income is equal at all percentiles of the distribution. This paper compares long-run levels of real income growth at the very top, and for the bottom 90% and bottom 99% in the United States, Canada and Australia to illustrate the uniqueness of the post-WWII period of balanced growth (and consequent stability in the income distribution). The ‘new normal’ of the United States, Canada and Australia is ‘unbalanced’ growth – specifically, over the last thirty years the incomes of the top 1% have grown significantly more rapidly than those of everyone else. The paper asks if auto-equilibrating market mechanisms will spontaneously equalise income growth rates and stabilise inequality. It concludes that the more likely scenario is continued unbalanced income growth. This, in turn, implies, on the economic side, consumption and savings flows which accumulate to changed stocks of indebtedness, financial fragility, and periodic macroeconomic crises; and, on the social side, to increasing inequality of opportunity and political influence. Greater economic and socio-political instabilities are therefore the most likely consequence of increasing income inequality over time.

In recent years, India has enjoyed one of the highest growth rates worldwide, weathering the global financial crisis better than many other countries. Prudent macroeconomic policies will be critical to prolonging the current expansion, given the risks associated with high inflation and volatile capital flows. A steadfast commitment to fiscal consolidation is needed to continue to reduce the large deficit that emerged in the aftermath of the slowdown and avoid crowding out private investment. Stepping up structural reforms will also be necessary if double-digit growth rates are to be achievable over the coming decade or so. Indeed, the operating environment for private business remains challenging. While infrastructure is improving in key sectors, partly thanks to greater private investment, bottlenecks endure and efforts to intensify competition and ensure continued strong investment are required. Labour market reforms are also required to promote job creation. Rapid economic development has boosted living standards and reduced poverty but poverty remains high. There is a need to strengthen social welfare systems and access to health and education to ensure widespread benefits from continued high growth. This Working Paper relates to the 2011 OECD Economic Survey of India (www.oecd.org/eco/surveys/india)

Two contemporary developments are buffeting legislative work on the budget.

One is the drive to discipline public finance by constraining the fiscal aggregates;

the other is the effort to enlarge the legislature’s role in revenue and spending

policy. Whether these trends turn out to be complementary or contradictory will

shape the budgetary role of national legislatures in the years ahead. One scenario

is for the legislature to reinforce fiscal discipline by taking responsibility for the

budget’s totals; another is for it to undermine discipline by bombarding the budget

submitted by the government with legislative amendments that trim revenues

or boost expenditures...

Finding a suitable balance of work and family life is not an easy task for parents who face multiple, and potentially conflicting, demands. Childcare policies play a crucial role in helping parents reconcile care and employment-related tasks. But inconsistent or poorly implemented policies can also introduce additional barriers that make it harder for families to arrange and share their responsibilities according to their needs and preferences. This paper quantifies the net cost of purchasing centre-based childcare in OECD countries taking into account a wide range of influences on household budgets, including fees charged by childcare providers as well as childcare-related tax concessions and cash benefits available to parents. Building on these calculations, family resources are evaluated for different employment situations in order to assess the financial trade-offs between work and staying at home. Results are disaggregated to identify the policy features that present barriers to work for parents whose employment decisions are known to be particularly responsive to financial work incentives: lone parents and second earners with young children requiring care.

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.

Certain growth-promoting policies can have negative side-effects by increasing the vulnerability of economies to financial crises. Typical examples are greater openness to financial flows or more liberalised financial markets. This paper investigates whether the growth benefits of policy reforms in these growth-enhancing areas, and others such as trade openness, exceed the possible costs of occasional, albeit potentially severe, crises for a sample of 100 developed and emerging economies from 1970 to 2010. The results suggest that the pro-growth effects of greater capital account openness outweigh the negative effects of a higher propensity to twin crises. Greater domestic financial liberalisation is associated with faster growth, but also with a higher propensity to systemic banking and twin crises. A free floating exchange rate and greater openness to trade, by reducing the likelihood of currency crises, are associated with higher growth. While pro-competitive product market regulations and lower corporate taxes are associated with higher growth, they do not seem to influence financial fragility via higher probability of crises.

During the past century, access to education increased in countries all over the world. Up until the early decades of the 20th century, people attended school for only a few years. Towards the end of the century, adults in high-income countries completed 12 years of schooling, on average. Today in OECD countries, a larger share of the population than ever before completes tertiary education. For many, especially socio-economically disadvantaged students whose parents had attained only low levels of education, this expanded access to education has led to upward educational mobility – attaining a higher level of education than their parents did.

But just as economic growth does not necessarily reduce income inequality, so the expansion of access to education does not automatically result in greater equity in educational attainment. For that to happen, disadvantaged students need to benefit as much as or more than advantaged students. A recent PISA report, Equity in Education, explores how upward educational mobility has changed over recent decades. It finds that, despite the expansion of access, socioeconomic disparities in the completion of tertiary education remain large. However, the report also shows that when students with low-educated parents perform at high levels by age 15, as measured by PISA, their chances of completing tertiary education improve considerably.

The achievement of the Sustainable Development Goals (SDGs) demands unprecedented resources and efforts. Remittances as one of the largest development finance flows are an important source of income for millions of households in developing countries and offer tremendous potential to contribute towards the achievement of Agenda 2030. However, the high cost of sending remittances limits their full potential. The global average cost of sending USD 200 is 6.9% of the remittance. SDG 10 C aims to reduce the cost to less than 3% and to eliminate remittance corridors with cost higher than 5% by 2030. Blockchain technology promises to disintermediate banks, transform the financial landscape and drastically reduce the cost of cross-border transactions, yet there is a need for further evidence on this topic.

The OECD Development Co-operation Directorate (DCD) has developed this paper to provide an overview of diverse perspectives on the intersection of blockchain technology and remittances by exploring the opportunities and challenges of this technology for reducing the cost of remittances. The paper identifies several limitations, such as data privacy risks, regulatory uncertainty and last-mile delivery, among others, while investigating whether blockchain technology is the solution to reduce the cost of remittances.

Previous OECD reports have concluded that disability policy has changed substantially in many OECD countries in recent decades. Nevertheless, large employment gaps remain between people with a disability and those without. This paper builds on earlier OECD analysis and recent extensions to OECD’s tax-benefit model (http://oe.cd/TaxBEN) for selected countries. The paper aims to assess the adequacy of income support programmes for people with reduced work capacity and their related work incentives. It describes how the system characteristics of these programs shape labour-market behaviour and employment. The paper finds evidence that the broader institutional setup of a disability programme does not necessarily have a major impact on key aspects of social-protection effectiveness. All types of scheme can achieve reasonable levels of benefit adequacy and broad benefit coverage for people with work limitations. However, design specifics matter considerably for people’s likelihood of (re-)employment.

Equity is a fundamental value and guiding principle of education policy and practice, but it is not necessarily actualised in schools and education systems around the world. There are large variations across PISA-participating countries and economies in the magnitude of the difference that socio-economic status makes in students’ learning, well-being and post-secondary educational attainment. This suggests that policy and practice have a key role to play in reducing socio-economic inequalities in education.

Equity does not mean that all students obtain equal education outcomes, but rather that differences in students’ outcomes are unrelated to their background or to economic and social circumstances over which the students have no control. Equity in education means that students of different socio-economic status achieve similar levels of academic performance, and of social and emotional well-being, and that they are equally likely to earn desirable post-secondary education credentials, such as university degrees, that will make it easier for them to succeed in the labour market and realise their goals as adult members of society. Education systems need to determine how individual students learn best and tailor learning opportunities to meet their needs.

The newly released PISA report, Equity in Education: Breaking Down Barriers to Social Mobility, shows that narrowing the differences related to socio-economic status in what students near the end of compulsory schooling can do with what they have learned could offer more opportunities for children and young people born into disadvantaged families to move up the socio-economic ladder.