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This working paper presents the background and the details of the simulations behind Box 1.4 of the May 2013 OECD Economic Outlook. A small simulation model is used to evaluate the contribution that the three pillars of the government’s strategy – fiscal consolidation, growth-boosting structural reforms and higher inflation – could make to reversing the rise in Japan’s public debt ratio, currently about 230% of GDP. The findings indicate that fiscal consolidation amounting to around 10 percentage points of GDP is necessary by 2020 to eliminate the primary deficit, as targeted in the current medium-term fiscal strategy. With moderately higher growth coming from increased female labour force participation and higher productivity growth, as well as inflation gradually rising to 2% thanks to unconventional monetary policy measures, the debt ratio would likely be put on a resolute downward trajectory by the end of this decade, although it is likely to remain around 200% of GDP in 2035.
Since 1997 several ministries in Japan have collaborated on an eco-school programme, which applies to both newly constructed and renovated school buildings, in an effort to make its schools more environmentally friendly.
The New Growth Strategy aims to create demand and jobs through regulatory reform and fiscal measures. The Strategy focuses on key challenges, notably climate change and population ageing, which can be turned into sources of growth. Given Japan’s precarious fiscal position, it is essential to co-ordinate spending related to the Strategy with the medium-term fiscal plan, in part by increasing the emphasis on regulatory reform. Such measures should cover the entire economy, rather than being limited to the seven areas identified in the Strategy. Among those areas, effectively promoting green innovation will require market-based instruments to place a price on carbon, preferably through a mandatory and comprehensive emissions trading system, to promote private investment, accompanied by a range of other policies. Achieving deeper economic integration with Asia depends on reducing support for agriculture to facilitate more bilateral and regional trade agreements, while bringing down barriers to foreign direct investment and foreign workers. Policies to expand venture capital would help launch innovative firms. This Working Paper relates to the 2011 OECD Economic Survey of Japan (www.oecd.org/eco/surveys/Japan).

Japan is in the process of developing much closer economic ties with its Asian neighbours, at both the government and private-sector levels. While there is little official support in Japan for the creation of any formal regional integration scheme, there is evidence of Japanese behaviour leading to what can be termed soft regionalisation with Japan as the dominant actor. A major increase in direct investment, supported by large amounts of foreign aid helping to create the necessary infrastructure for that investment, is the principal vehicle for the increasing Japanese involvement in Asia. Regional trade flows have shown less of a shift toward Japan, but that could change in the 1990s.

The developing nations of Asia have been quite receptive to this rapid increase in the Japanese economic presence, and would be quite foolish to restrict the inflow of foreign aid and direct investment. Recipient countries should recognize however that the co-ordination between ...

A small simulation model is used to evaluate the contribution that the three arrows of the government’s strategy – bold monetary policy to achieve higher inflation, flexible fiscal policy and growth-boosting structural reforms – could make to reversing the rise in Japan’s public debt ratio, currently about 230% of GDP. The findings indicate that with fiscal consolidation amounting to around 7½ percentage points of GDP by 2020, modestly higher growth coming from increased female labour force participation and higher productivity growth, as well as inflation gradually rising to 2% thanks to unconventional monetary policy measures, the debt ratio could be put on a downward trajectory by the end of this decade, although it is likely to remain above 200% of GDP in 2035. Among the many uncertainties surrounding this scenario, the risk of a larger-than-projected increase in interest rates stands prominently and could prevent the turnaround in debt dynamics.

JEL classification codes: E63; H68.
Keywords: Japan; debt; deficit; fiscal; budget; projection; simulation; arrow; consolidation; growth; inflation; reform.

This paper reviews recent literature on job gains and job losses. Economies exhibit high rates of gross job reallocation - both high levels of job gains and job losses. For the OECD nations for which data are available, total turnover averaged more than twenty per cent during the 1980s. This is a result of differing behaviour of establishments (firms) in the face of similar general economic conditions.

Two streams have developed in the literature in attempting to characterize the influence of structural change on job turnover. The first sees structural turnover as continuous, and emphasizes the importance of establishment openings as the primary means through which more significant changes in an economy occur. An alternative view emphasizes the concentration of job losses stemming from structural change in cyclical downturns. The timing and pace of structural change can have an important influence on labour market policies.

The behaviour of the four components of job turnover over ...

The nature, content and milieu of work – i.e. the quality of the working environment – matter in many ways for people, firms and society as a whole. There is a great deal of evidence to show clear associations between job quality and the health of workers, their ability to successfully combine work and life while fully mobilising their skills and abilities to build a career, and their productivity. Investments in quality working environments can be welfare enhancing and economically efficient. Policies and practices reflect these findings insufficiently, an apparent paradox that finds its roots in various market failures. There is scope for public intervention to raise awareness, to ensure better coordination of key stakeholders (employers, workers’ representatives and various public entities) and to put in place the right financial incentives for firms to invest in better working conditions. Action in this field is also important in view of ongoing considerable changes in the labour market. The future of work is very uncertain at this stage; the digitalisation and uberisation of work have the potential for improvements in working conditions but also bear the risk of de-skilling, lower pay, lower job security and poor working conditions for parts of the labour force.

This report presents new cross-country evidence on labour market transitions in sectors exposed to growing volumes of international trade, and the job characteristics of workers employed in these sectors. It shows that export growth is significantly associated with lower job loss risk. In commercial services sectors, exports offer over-proportional employment opportunities to those currently outside the workforce. Men and women are not always impacted identically. For example, involuntary part time employment amongst women falls with growing export volumes, while there is no such effect for men. These results show that the distributional effects of international trade are not limited to wage effects or net changes in employment numbers and highlight the need for a comprehensive assessment of trade implications for individual workers.

Australia has a dynamic labour market with high job turnover. According to the HILDA Survey data, about one-fifth of all employees separate from their job every year, and about one fifth of those are displaced workers - laid off for economic reasons. Using multivariate probit regression we find that men, older workers and workers with less than secondary education tend to be displaced more often. In certain industries, such as construction and manufacturing, the incidence of displacement has been higher over the last fifteen years. Workers with lower tenure and casual employees also face a higher probability of displacement. However, a very high proportion - close to 80% percent - of displaced workers find a new job within two years. Among certain groups of workers, the share finding new employment is significantly lower: women, older workers, and less educated workers, workers who had a casual job and part-time workers. However, not all groups search for a job after being displaced. We find evidence that women, older workers and workers in low-skilled occupations are quite likely to exit the labour force following displacement.

This paper analyses the role of job mobility for job reallocation and aggregate wage growth in Norway and the United States using linked employer-employee data. It provides four main findings. First, despite lower overall job mobility in Norway, the speed of worker reallocation from low-wage to high-wage firms is similar to that in the United States. Second, job reallocation tends to be counter-cyclical in Norway, but pro-cyclical in the United States, due to the weaker tendency of high-wage firms in the United States to hoard workers during economic downturns. Third, the reallocation of workers from low to high wage firms through job-to-job mobility disproportionately benefits high-skilled workers in Norway and low-skilled workers in the United States. Fourth, the slowdown in aggregate wage growth primarily reflects a weakening of on-the-job wage growth in both countries rather than a reduced role of job reallocation between low and high-wage firms (although this does also play a role in the United States).

Labour markets across the OECD have polarised in recent decades, as the share of middle skill occupations has declined relative to that of both high- and low skill occupations. This paper shows that, contrary to what is often assumed in the public debate, job polarisation has not resulted in a decline in the share of households with middle-income across 18 OECD countries. Most of the changes in the share of middle-income households result instead from changes in the propensity of workers in different occupations to be in it. In fact the results point to a change in the relationship between occupational skill levels and household income as both middle and high skill jobs increasingly fail to deliver on the promise of the relative income status traditionally associated with their skill level. These changes might help explain some of the social frustration that has been at the centre of the political debate in recent years.

Many countries invest considerable resources into promoting employment and the creation of jobs. At the same time, policies and institutions still pay relatively little attention to the quality of jobs although job quality has been found to be a major driver of employee wellbeing and may be an important factor for work productivity. Eventually, job quality might also influence labour supply choices and lead to higher employment. Providing robust evidence for the relationship between job quality and worker productivity could make a strong case for labour market policies directed at the improvement of job quality. This paper reviews existing evidence on the relationship between the quality of the work environment and individual at-work productivity, defined as reduced productivity while at work, and assesses the effect of health on this relationship.

After screening 2 319 studies from various fields and disciplines, including economics and medicine, 48 studies are reviewed. Strong evidence is found for a negative relationship between job stress or job strain and individual at-work productivity and for a positive relationship between job rewards and productivity. Moderate evidence is found for a negative relationship between work-family conflict and at‑work productivity and for a positive relationship between fairness at work and social support from co-workers and productivity. Health influences the relationship between the quality of the work environment and productivity. Specifically, the relationship is stronger for people in good health.

Job quality needs a more prominent place in labour market policy. More attention needs to be paid to workers’ perceptions of the quality of their work environment and how policies and practices at both the level of the worker and the work environment may influence this. Furthermore, as health‑related factors significantly influence the relationship between job quality and productivity, multidisciplinary approaches are needed to support at‑work productivity.

Job retention (JR) schemes have been one of the main policy tools used by a number of OECD countries to contain the employment and social fallout of the COVID-19 crisis. By May 2020, JR schemes supported about 50 million jobs across the OECD, about ten times as many as during the global financial crisis of 2008-09. By reducing labour costs, JR schemes have prevented a surge in unemployment, while they have mitigated financial hardship and buttressed aggregate demand by supporting the incomes of workers on reduced working time. Looking forward, governments need to be vigilant to ensure that JR schemes are not downscaled too quickly, and allow viable jobs to be destroyed, or too slowly, and become an obstacle to the economic recovery. When the health and economic situation improves, JR support needs to be better targeted to jobs that are viable but at risk of being terminated and place a greater focus on supporting workers at risk of becoming unemployed rather than their jobs.

This paper reviews the literature on job-related training and the effects of these investments for different groups of individuals. The paper also elaborates on the theories, empirical explanations, and policy implications that can be drawn from these findings. Employer-provided training is by far the most important source of further education and training after an individual enters the labour market. A substantial portion of these human capital investments are financed by firms and it appears that the contribution by individuals are in most circumstances relatively modest. At the same time, substantial gains for individuals participating in training are documented in a large number of studies. The benefits are not only confined to wage returns as research has also shown that training leads to increased internal employability and job-security; and external labour market effects such as higher labour participation rates, lower unemployment, and shorter unemployment periods. Training is not equally distributed among employees. Older, low skilled workers, and to some extent female workers typically receive less training than other groups of employees. However, we do not find any clear-cut evidence that returns to training varies with gender, educational or skills levels, which suggests that inequalities do not arise because of differences in returns to training, but are more a consequence of inequalities of the distribution of training investments. The findings of this review further suggest that the returns to training are higher in the case that it is financed by the employer and that the returns to training are substantially higher for those leaving for a new employer. Employer-financed training appears, however, to lower the probability of an individual leaving for a new job elsewhere. The analysis of the distribution of returns to training reveals that although individuals benefit from these investments, the employer reaps most of the returns to training which suggests that the productivity effects are substantially larger than wage effects.
Evidence from many OECD countries shows that immigrants, in particular recent arrivals, tend to be especially affected by an economic downturn. The available tentative evidence on unemployment suggests that this is also the case in Norway in the current downturn, particularly with respect to the many recent labour migrants from the new EU member countries. Since this can have a lasting effect on their labour market outcomes, it is important that the integration of immigrants remains a priority for policy.

This Joint Assessment compares the strengths of four donors in Tanzania, namely Denmark, Finland, Ireland and Japan, as well as the challenges facing them, and makes observations on their aid programmes. The aim of the Joint Assessment of these four donors (2-13 March 2003) was to understand the way in which the implementation of donors’ partnership strategies contributes to country ownership. The paper looks at the challenges for donors posed by the Tanzanian aid co-ordination mechanisms, which strongly promote Tanzanian ownership of the development programme. It concludes with a series of lessons for DAC donors...


System resilience is the ability for complex, dynamic-adaptive socio-technical systems to absorb and rebound from trauma or stress, and to avoid “jousting with dragons” where results are uncertain and often fatal. In a safety context, the term “dragons” originates from Professor David Woods at Ohio State University and the relatively new field of Resilience Engineering.
Dragons are an illustration for the consequence of “surprise” as depicted in ancient seafarer maps that filled the seas beyond the known boundaries of the ancient world with fire-breathing dragons, and certain death. In a modern day sense, dragons represent the unintended, and often unforeseen and unpredictable, consequences of crossing operational boundaries that are difficult to identify precisely, are often influenced by various actors, and are continually changing. In particular, due to the complex, dynamic-adaptive behaviour of systems, classic statistical metrics used in current Safety Management Systems (SMS) no longer allow us to predict the next undesired event. We need to change our focus and find new ways of capturing the faint signals of impending failure. This will require structural, psychological and social changes in the way SMSs work. In this paper, the issues of understanding and managing complex, dynamic-adaptive systems through the quality of resilience, and how to avoid “jousting with dragons” in the transport sector using a Resilience Engineering lens are addressed.

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