Georg Duernecker, Berthold Herrendorf, 01 May 2018

Recent research has shown that, in contrast to the prediction of basic theory, income tax increases in OECD countries have led people to spend less time working and more time on leisure activities, with little change in hours of household work. This column uses new estimates of household productivity to resolve the discrepancy between the evidence and basic theory. The OECD countries in which governments increased income taxes also tended to experience increases in the productivity of household production.

Jan Willem van den End, Marco Hoeberichts, 25 April 2018

Persistent low interest rates prompt the question of whether the natural, or equilibrium, rate of interest has similarly shifted downwards. This column uses data for seven OECD countries to explore how low interest rates have affected potential output. The results lend support to concerns that a prolonged period of low real interest can reduce the natural rate. This causality can run through both real and financial channels.

Koen De Backer, Sébastien Miroudot, Davide Rigo, 19 April 2018

Multinational enterprises that produce goods rely on services to organise their value chain, so barriers to investment in services are likely to affect their production. The column uses a new and comprehensive OECD database to measure the share of services in the exports of multinational enterprises, and also in the output of their foreign affiliates. The results suggest that policymakers may need to focus more on the services that support manufacturing industries.

Orsetta Causa, Mikkel Hermansen, 23 March 2018

Growing wealth inequality has become a key concern for economists, and tackling it requires a deep understanding of how tax and transfer systems affect the income distribution. Using OECD data, this column argues that taxes and transfers are less effective at reducing inequality today than they were in the mid-1990s. This drop in effectiveness has largely been driven by declining cash transfers, with a smaller, more heterogeneous role for personal income taxes.

Roel Beetsma, Ward Romp, Ron van Maurik, 13 November 2017

Population ageing means that many current pension regimes are unsustainable, but the timing of pension reform measures is a political as well as an economic decision. This column uses new data on OECD pension reforms since 1970 to show that their timing has not been driven by projected demographic developments or political change, but by the state of the economy at the time when reforms were legislated. Pension systems have expanded more frequently during booms, and have contracted during economic downturns.

Sandrine Cazes, Andrea Garnero, Sébastien Martin, 10 July 2017

Trade union membership has been declining since the 1980s. Recently, however, there has been renewed interest in the potential of collective bargaining to address rising wealth inequality and poor wage growth. This column presents an OECD report on collective bargaining institutions and practices across member countries and selected emerging economies. Despite substantial variation across member countries, the overall pattern is one of a broad decline in the use of collective bargaining to set the terms of employment.

Aida Caldera, Alain de Serres, Filippo Gori, Oliver Röhn, 28 March 2017

Severe recessions have been frequent among OECD countries over the past four decades. This column explores the implications of various broad types of policy to minimise the risk and frequency of such episodes for the trade-off for the growth-fragility nexus. Product and labour market policies improve growth but are essentially neutral with regards to economic risks, while better quality institutions increase both growth and economic stability. Macroprudential and financial market policies, on the other hand, entail a trade-off between growth and risk.

Kai Konrad, Tim Stolper, 22 November 2016

The reasons why a country would comply with international standards of transparency in the face of sizeable returns in the tax haven business are unclear. This column highlights fundamental coordination problems in the fight against offshore secrecy regimes and their implications for optimal policies, and explores whether the fight will be successful or not.

Brian Nolan, Max Roser, Stefan Thewissen, 27 August 2016

With inequality rising and household incomes across developed countries stagnating, accurate monitoring of living standards cannot be achieved by relying on GDP per capita alone. This column analyses the path of divergence between household income and GDP per capita for 27 OECD countries. It finds several reasons why GDP per capita has outpaced median incomes, and recommends assigning median income a central place in official monitoring and assessment of living standards over time.

Stefano Scarpetta, Mark Keese, Paul Swaim, 25 July 2016

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.

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.



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