The labour market recovery in OECD countries has been steady but slow since the Great Recession. More worrying is the fate of wage growth over the same period. This column assesses the implications of stagnation in the labour market for growth, wages, and inequality. It finds that structural weaknesses in labour market performance have become more visible as markets recover from the Great Recession. The policy response must include macroeconomic policies aimed at strengthening investment, and structural policies to support growth while nudging workers towards higher-skilled jobs.
Stefano Scarpetta, Mark Keese, Paul Swaim, 25 July 2016
Sandra Black, Jason Furman, Emma Rackstraw, Nirupama Rao, 06 July 2016
Labour force participation among men ages 25-54 in the US has been falling for more than six decades. This column examines this longstanding decline, its potential causes, and its implications for public policy and the future of the US labour market.
Jean-Marc Fournier, 26 May 2016
The limits of the European Single Market have often been highlighted. This column argues that although implicit barriers remain, the Single Market has delivered substantial benefits to member countries. New empirical evidence is presented of the trade and FDI gains that Central and Eastern European countries have enjoyed since joining the Single Market. On top of making regulations more competition-friendly, regulatory harmonisation can boost the economic links between countries.
Stefano Scarpetta, Sandrine Cazes, Andrea Garnero, 20 April 2016
Job quality plays a significant role in individuals’ well-being as well as promoting labour force participation, productivity, and economic performance. But it can be an elusive concept if not grounded in hard data. This column presents a new OECD framework to measure and assess the quality of jobs based on three measurable dimensions – earnings quality, labour market security, and quality of the working environment. The data reveal a great deal of heterogeneity in job quality across OECD countries and also across socioeconomic groups. Furthermore, the relationship between the quantity and quality of jobs is more complex in the short term, especially in the aftermath of the Global Crisis.
Pablo Pincheira, Jorge Selaive, Jose Luis Nolazco, 15 February 2016
One thing economists can agree on is that inflation is hard to forecast. This column argues that in this context, the idea that ‘core inflation’ may be a useful predictor is very appealing, especially for central banks that need to know where inflation is heading. Evaluating the ability of core to forecast headline inflation for OECD and some non-OECD countries, it seems that sizable predictability emerges for a very small subset of countries, but it is either subtle or undetectable for most other economies.
Nauro Campos, Jeffrey Nugent, 28 January 2016
Labour market liberalisation is both one of the most important structural reforms and one of the least well understood. This is partly due to a lack of data. This column introduces a new index of labour market regulations rigidity covering over 140 countries from 1950 onwards. Trade liberalisation and per capita income are shown to be more powerful explanations of the dynamics of labour market reform than ‘legal origins’.
Rudiger Ahrend, Alexander Lembcke, Abel Schumann, 19 January 2016
A city’s metropolitan governance structure has a critical influence on the quality of life and economic outcomes of its inhabitants. This column quantifies the impact of governance on productivity using data from five OECD countries. Administrative fragmentation, which complicates policy coordination across a city, has a negative effect on individual productivity. This finding, combined with benefits from good governance such as improved transport and lower pollution levels, highlights the importance of well-designed metropolitan authorities.
Dino Pinelli, István Székely, Janos Varga, 22 December 2015
Italy’s economic performance is lagging behind other Eurozone and OECD countries. This column argues that radical changes in human capital, financial, innovation and product markets, and taxation would restore growth, but will take time to bear fruits. This leaves no room for complacency in the ongoing reform efforts.
Frédéric Docquier, Çağlar Özden, Giovanni Peri, 06 October 2014
Researchers have devoted little attention to the effects of emigration from OECD countries, and the absence of detailed emigration data is the main culprit. Using a new and improved migration database, this column analyses the effect of migration on the wages of less educated native workers. The results suggest that, as far as labour market outcomes of less educated workers are concerned, governments should worry less about new arrivals and more about the potential consequences of their high emigration rates.
Laurence Ball, 01 July 2014
Whereas textbook macroeconomic theory suggests that output should return to potential after a recession, there is mounting evidence that deep recessions have highly persistent effects on output. This column reports estimates of the long-term damage caused by the Great Recession. In most countries in the sample, the loss of potential output – 8.4% on average – has been almost as large as the loss of actual output. In the countries hit hardest by the recession, the growth rate of potential output is much lower today than it was before 2008.
Chiara Criscuolo, Peter Gal, Carlo Menon, 26 May 2014
Young firms are known to play a central role in job creation. This column presents the results of a new OECD project on the dynamics of employment (DynEmp) based on an innovative methodology using firm-level data. It confirms that young firms play a central role in creating jobs, and in enhancing growth and innovation. Public policies can help by enabling firms to experiment, and by fostering the reallocation of resources towards the most productive firms. Structural reforms to product, labour, and capital markets, as well as bankruptcy laws that do not overly penalise failure, are particularly relevant.
Leandro Prados de la Escosura, 07 April 2014
Measures of economic freedom provide useful cross-country comparisons, but lack the time dimension to track intertemporal progress. This column presents a new measure and extends it back in time to tell a history of economic freedom over the course of the twentieth century.
Patrick Messerlin, Sébastien Miroudot, 07 September 2012
Public spending on large-scale projects is often a way of sneaking in protectionism through the back door and there are many cases of outright corruption. With the EU and US pushing hard for more open public procurement elsewhere in the world, this column asks just how open these markets are, particularly in the EU, which claims to have the most open market in the world.
Ashoka Mody, Damiano Sandri, Franziska Ohnsorge, 22 February 2012
Uncertainty rose sharply during the Great Recession, as did saving rates. This column shows that these two developments were related. Using a panel of OECD countries, it estimates that at least two-fifths of the increase in households’ saving rates between 2007 and 2009 was due to increased uncertainty about labour-income prospects. It adds that restoring higher levels of consumption and aggregate demand will require employment-friendly social insurance and reduced policy-induced uncertainty.
Pierre Cahuc, Stéphane Carcillo, 01 February 2011
One method for combating unemployment during the global crisis has been the use of short-time work schemes that allow employers to temporarily reduce hours worked while compensating workers for the induced loss of income. In the first of two columns on labour markets, the authors present new evidence establishing that these schemes do indeed reduce unemployment. But they are no panacea and are not without their own problems.
Oriana Bandiera, Valentino Larcinese, Imran Rasul, 11 January 2010
The effect of increasing class size in tertiary education is not well understood. This column estimates the effects of class size on students’ exam performance by comparing the same student’s performance to her own performance in courses with small and large class sizes. Going from the average class of 56 to a class size of 89 would decrease the mark by 9% of the observed variation in marks within a given student. The effect is almost four times larger for students in the top 10%.
Helmut Reisen, 05 June 2008
Sovereign wealth funds have raised fears in developed countries, but development economics suggests a number of legitimate motives for such investment vehicles. This column explains why there is no need for suspicion – only level-headed policy responses.
Denis Drechsler, Johannes Jütting, 07 March 2008
Discrimination against women significantly hampers the economic development of many poor countries. This column introduces two new OECD Development Centre efforts to assess and reduce gender discrimination, including a new portal www.wikigender.org.
Julia Lane, Harry Holzer , Fredrik Andersson, 15 October 2007
Research has long shown that workers who take temp jobs subsequently do better in the labour market. New research from the US suggests that the positive effects seem mostly to occur because those working for temp agencies have a higher chance of subsequently working for higher-wage firms.
Hiau Looi Kee, Alessandro Nicita, Marcelo Olarreaga, 18 July 2007
Trade openness matters, so the measurement of trade restrictiveness matters. Commonly used measures, however, are deeply flawed. New research, using theory-based measures, has generated two new global databases on the restrictiveness of trade policy at the most disaggregated level.