Browse by: "2017"

A well-functioning democracy relies on the knowledge, skills and engagement of its citizens as well as good institutional design. Empowering citizens to understand their rights and fully participate in their societies is part of the mission of schools in all OECD countries.

This paper investigates the effect of export entry on productivity, employment and wages of Latvian and Estonian firms in the context of global value chain (GVC). Like in many countries, exporting firms in Latvia and Estonia are more productive, larger, pay higher wages and are more capital intensive than non-exporting firms. While this is partly because firms that are originally more productive and have better performances are more likely to enter export, Latvian and Estonian firms also realise more than 23% and 14% higher labour productivity level as the result of export entry. Export entry also increases employment and average wages. Gains in productivity and employment are particularly large when firms enter exports that are related to participation in knowledge-intensive activities found in the upstream of GVC. For instance, Latvian firms that start exporting intermediate goods or non-transport services (which include knowledge intensive services) enjoy significantly higher productivity gains than those starting to export final goods or transport services. These findings underscore the importance of innovation policies that strengthen firms’ capabilities to supply highly differentiated knowledge-intensive goods and services to GVC.

The paper examines between-country differences in the mechanisms through which education could promote generalised trust using data from 29 countries participating in the OECD’s Survey of Adult Skills (PIAAC). Results indicate that education is strongly associated with generalised trust and that a large part of this association is mediated by individuals’ literacy skills, income and occupational prestige. However, education gradients in levels of generalised trust and in the extent to which they are due to social stratification mechanisms or cognitive skills mechanisms vary across countries. Differences across countries in birthplace diversity and income inequality are correlated with how strongly education is associated with trust in different countries, as well as in the relative magnitude of direct and indirect associations. In particular, the relationship between literacy skills and generalised trust is stronger in the presence of greater birthplace diversity but is weaker in the presence of greater income inequality.

Lowering high levels of unemployment and inequality are amongst the largest challenges facing South Africa. More entrepreneurs and thriving small businesses would contribute to inclusive growth. Measures of entrepreneurial activity are lower in South Africa than in other emerging economies. Barriers to entrepreneurship include bureaucratic procedures and licensing, which are also an ongoing burden on small firms. Public procurement is being used to overcome the dominance of large incumbents, but so far its net effect on small firms is not clear. An education system that better equipped students with basic skills as well as entrepreneurial skills would grow the pipeline of entrepreneurs. New forms of financing are slowly emerging in a system that is dominated by banks. A better evidence base is crucial for more effective financial and non-financial support programmes to boost start-up rates and small firms’ growth.

Switzerland makes more use of its human resources than most other OECD countries. Labour force participation is high and the unemployment rate low for most segments of society. This ensures a high standard of living for most Swiss people. Nevertheless, productivity growth is relatively slow. While this may in part be attributable to already being an advanced economy, it also means that Switzerland cannot be complacent with regard to education and skills. Its admirably low youth joblessness suggests that the transition from education to work is functioning soundly. However, there is mounting evidence that as the structure of industry is changing, due to globalisation and digitalisation for instance, vacancies and skills mismatches are spreading. The mix of skills being taught differs from those taught in most other high income OECD countries in which a common secondary school track predominates and the emphasis is on equipping young adults with academic tertiary qualifications. In this context, it is important that the system is flexible enough to respond to shifts in the demand for skills and that workers continue to learn. While the participation of women and immigrants in the economy compares relatively well, more can still be done to improve equity in the accumulation of skills.
This Working Paper relates to the 2017 OECD Economic Survey of Switzerland
(http://www.oecd.org/eco/surveys/economic-survey-switzerland.htm).

The personal tax system has a large influence on incentives to work, save and invest and hence growth. At the same time it is a key policy lever for income redistribution. This paper analyses how income distribution patterns changed in Spain before and after the crisis using the personal income tax samples constructed by the Spanish Institute of Fiscal Studies for the period 2002 to 2011. We find that the top and bottom of the income distribution gained the most from the boom period, and the bottom suffered proportionally more in the subsequent bust. Although Spain's average personal tax rates were above the OECD average, personal tax revenue as a share was below the OECD average. One reason for this is substantial fiscal benefits that significantly reduce total tax received by the government. We examine the distribution of the tax burden, and especially how income deciles benefit from the different fiscal benefits, namely tax exemptions, reductions and tax credits. This reveals that Spain's personal income tax system is progressive, especially for labour income, but far less so for capital income. Some fiscal benefits, notably the tax credit on maternity, are highly progressive. Other fiscal benefits, mainly exemptions and reductions, are regressive. These include the exemptions on renting and on the interest from investing in dwellings and the reduction for contributions to personal pension plans.

The mixed growth performance of emerging market economies has revived angst about a "middle-income trap". However, a forensic review of statistical evidence shows that middle-income countries “escape” to higher income levels more often than both poorer and richer countries. At the same time, growth slowdowns are also more frequent in this group. Recent econometric research confirms that the impact of economic policies on GDP growth is greater at middle than at lower and higher income levels. Middle-income countries harvest higher returns from structural reforms, but also meet special political economy obstacles in implementing them. The resulting policy divergences imply differences in performance, reflecting notably the uneven expansion of their high-productivity entrepreneurial firms. The paper highlights the channels through which performance improves when obstacles to policy innovations are overcome and reforms are implemented.

This paper explores how the integration of rice markets in ASEAN countries influences the import, export, production, consumption, and prices of rice in those countries, as well as in the rest of the world. The analysis describes current policies applied to ASEAN rice markets, then evaluates the ten-year impacts of two reform scenarios using the OECD-FAO Aglink-Cosimo model. The first scenario involves the elimination of tariffs within the region, while protection vis-à-vis countries outside the region remains unchanged. The second scenario involves closer price integration across the region, again with protection versus countries outside the region unchanged. The analysis finds that opening up the regional trade market will lead to greater overall production, consumption and trade across the region. The overall welfare gains are over fifteen times higher with full price integration, as opposed to just tariff reform. Significant price changes create winners and losers within all countries, underscoring the need for complementary policies to accompany a rice market integration agenda.

This report presents evidence on how services trade restrictions influence the decisions and performance of firms engaged in international markets, drawing on micro-data from Belgium, Finland, Germany, Italy, Japan, Sweden, the United Kingdom, and the United States. It first describes the patterns of services exports and affiliate sales at the firm level, uncovering a number of stylised facts about the firms engaged in international trade in services, their choices of modes of supply and the links between services trade and manufacturing activities. The report then relates these outcomes to services trade policy barriers in destination markets as measured by the OECD STRI. It demonstrates that complex and restrictive regulatory environments limit the volume of services that firms are able to trade as well as the number of firms that engage with those markets. Hence services trade restrictions reflect not only ad valorem trade costs, but also fixed and sunk costs. Such barriers do not affect all firms equally. Restrictive services trade regulations disproportionately discourage SMEs. Size, productivity and previous exporting experience appear to be decisive factors in dealing with at-the-border and behind-the-border trade barriers. Finally, the cost of regulatory compliance is lower for foreign-owned firms with headquarters located in the export destination country and for firms that trade bundles of services and manufacturing products, than it is for pure services exporters.

Prevalence of non-communicable diseases has increased in past decades in the OECD. These conditions have many risk factors, including poor quality diet, insufficient physical activity, and excess sedentarism. These behaviours are also at the root of overweight and obesity, which are themselves risk factors leading to non-communicable diseases. Using the most recent data available from individual-level national health surveys and health interviews, this paper paints a picture of the situation in terms of diet and physical activity in eleven OECD countries.
Fruit and vegetable consumption remains low in all countries, as daily consumption of five fruit and vegetables per day rarely reaches 40%; diet quality can also be improved, although it is higher in some countries. Physical activity levels are more encouraging, with over 50% of the population reporting to reach the World Health Organization target in all countries, and excess sedentarism is high in two of the seven countries studied. Disparities by level of education and socio-economic status are visible for all health behaviours: overall, those with higher socio-economic characteristics consume a healthier diet and are more physically active, but also more sedentary. Inequalities and gender gaps vary by country and by health indicator. A latent class analysis was run to classify individuals into different groups, depending on their various health behaviours (adherence to national diet guidelines, sufficient physical activity, and low sedentarism). This approach demonstrated that these behaviours are linked, and allowed to determine the traits (demographic, health) of individuals in each class. This analysis allows policy-makers to specifically target these populations with interventions aiming to improve their health. Globally, men with higher socio-economic characteristics were more likely to be in the groups displaying less healthy behaviours.

Citizen engagement is being promoted in many countries as a mechanism to improve the efficiency, quality and relevance of research and improve transparency and trust in science. At the same time, digitalisation is opening up new opportunities for consultation and exchange with citizens. This report includes an analysis of 7 different initiatives to engage citizens in the co-design of research agendas . These cases varied considerably in their scientific focus, geographic scale and overall aims and methodology. Nevertheless a number of consistent messages came through in relation to: 1. the rational for engaging citizens in setting research agendas; 2. how to do so effectively; 3. the resource implications and potential impact. The report includes 10 key observations or lessons learned to help guide policy-makers, research funders and researchers who are interested in citizen engagement in science.

Shared research infrastructures are playing an increasingly important role in most scientific fields and represent a significant proportion of the total public investment in science. Many of these infrastructures have the potential to be used outside of their traditional scientific domain and outside of the academic community but this potential if often not fully realised. A major challenge for potential users (and for policy-makers) is simply identifying what infrastructures are available under what conditions. This report includes an analysis of 8 case studies of digital platforms that collate information and provide services to promote broader access to, and more effective use of, research infrastructures. Although there is considerable variety amongst the cases, a number of key issues are identified that can help guide policy-makers, funders, institutions and managers, who are interested in developing or contributing to such platforms.

This paper analyses how technological progress embodied in capital goods raises productivity and income, while at the same time it can modify the allocation of consumption, investment and the capital stock. With capital-embodied technological progress, new capital goods become more productive, thus more valuable, but the production capacity of the existing capital goods declines comparatively and they become less valuable. In a dynamic and stochastic general equilibrium framework, a shock to the process of capital-embodied technological progress is shown not to raise investment as much as could be expected, allowing the owners of capital goods mainly to raise consumption instead. As a result, overall capacity taking account of the improvement in the quality of capital goods rises only modestly. The muted investment response might seem very conservative, because the owners of capital could take greater advantage of the sudden acceleration in the improvement of the quality of capital goods which allows them to raise their production capacity more than usually. However, this conservative behaviour is consistent with an anticipated faster decline in the value of capital goods which become quickly obsolete, raising the cost of capital for the owners. Finally, this paper analyses the implications of the shock to capital-embodied technological progress coinciding with other shocks, namely, a positive one to the investment accelerator mechanism and a negative one to the risk premium. With deceleration in the quality improvement of capital goods, investors would require higher rates of return while affecting negatively the valuation of the capital stock.