The appropriate level of public sector wages is debated frequently in every country, and the debate has intensified in the wake of the Global Crisis. This column presents evidence that regional wage differentials in Japan are greater in the private sector than in the public sector. In regions where public sector wages are relatively high, skilled individuals may self-select into public sector jobs. At the same time, public sector employers in metropolitan regions such as Tokyo may have difficulty in hiring high quality employees.
Patented pharmaceuticals diffuse across international borders slowly, and sometimes not at all. This column analyses the effect of patent protection and price regulation on the speed of and extent to which drugs enter new markets. There is a fundamental tradeoff between affordability – taking the form of low patent protection and strong price regulation – and rate of entry into a national market.
Global hyperconnectivity and increased system integration have led to vast benefits in terms of income, education, innovation and technology. Yet globalisation has also created serious concerns about how local events can so easily cascade over national borders to become crises that affect everyone. This Vox Talk discusses the widening gap between systemic risks and their effective management. Goldin argues that the new dynamics and complexities of globalisation are endemic and will potentially destabilise our societies unless they are addressed immediately and more effectively.
The ECB estimated that Eurozone banks would face a capital shortfall of €25 billion in a severe crisis. Earlier work by the authors estimated the shortfall to be 30 times higher. This column argues that this striking divergence can be explained by the ECB’s reliance on static risk-weights.
One frequently used argument in favour of secession is that there are economic benefits from independence. However, whether or not this is the case remains largely unexplored. This column addresses this question by examining the economic implications of secession in the case of the former Yugoslavia. The authors find that independence had no favourable economic impact. The way secession was achieved, however, mattered. Whereas secession without real conflict did not leave any noticeable economic impact, violent secession has, by contrast, led to a significant destruction of wealth.
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