Many advanced economies have experienced a productivity slowdown in recent years. Italy, however, has been experiencing such a slowdown since the mid-1990s. This column provides a detailed analysis of Italy’s patterns of misallocation over this period. Firms in the Northern regions, as well as large firms, have experienced the sharpest increase in resource misallocation. To tackle the resulting productivity slowdown, reforms need to address unemployment benefits and higher education, as well as encouraging investment in intangible assets.
Sara Calligaris, Massimo Del Gatto, Fadi Hassan, Gianmarco I.P. Ottaviano, Fabiano Schivardi, 28 June 2016
Marianne Bertrand, Patricia Cortes, Claudia Olivetti, Jessica Pan, 21 June 2016
Marriage rates of skilled and unskilled women have evolved quite differently across countries since 1995. The rate is lower overall for skilled women but the gap is narrowing, and even reversing, in some countries. This column uses evidence from 23 countries between 1995 and 2010 to consider how skilled women’s labour market opportunities impact their marriage prospects in different societies. Generally, more conservative societies have lower marriage rates for skilled women relative to unskilled women, with the effects of an increase in skilled women’s wages depending on the degree of conservatism.
Santiago Caicedo, Robert E. Lucas, Jr., Esteban Rossi-Hansberg , 14 May 2016
A large part of people’s wages rewards the knowledge embedded in them that they use in a production endeavour. Knowledgeable individuals specialise in hard, complicated tasks, while less knowledgeable ones specialise in simpler, more common tasks. This column uses a dynamic model of knowledge accumulation over time and career paths to find an underlying cause for wage inequality in the US over the last few decades. A good explanation for the wage inequality is the discrepancy between the rate of technological change and the rate at which the distribution of knowledge catches up.
Robert Dixon, Guay Lim, Jan van Ours, 03 May 2016
Okun’s law describes the positive empirical relationship between unemployment and the output gap. This column explores how this relationship differs depending on age and gender, taking into account different labour market institutions. Using data for 20 OECD countries over three decades, the authors find that the effect of Okun’s relationship decreases with age. Labour market institutions have similar effects on the unemployment rates of all groups, though magnitudes vary by age and gender.
Nobel Prizes in Economics Joseph Stiglitz, Angus Deaton and Michael Spence will lecture at the I.S.E.O International Summer School 2016 focused on "Looking forward: new challenges and opportunities for the World Economy”. The course takes place in a wonderful location in northern Italy and it's promoted by I.S.E.O Institute chaired by Robert Solow. Post graduate students, young economists and researchers are eligible. Partial scholarships available. Info www.istiseo.org or [email protected].
Wolfgang Dauth, Sebastian Findeisen, Jens Südekum, 21 February 2016
A common theme of recent trade theory models is that globalisation-related shocks induce worker sorting across industries, labour markets, and plants. However, there is little empirical evidence of shocks causing such endogenous mobility responses. This column explores how rising international trade exposure affected the job biographies and earnings profiles of German manufacturing workers since the fall of the Berlin Wall. Individuals are found to systematically adjust to globalisation, with a notable asymmetry in the individual labour market responses to positive and negative shocks. Critically, the push effects out of import-competing manufacturing industries are not mirrored by comparable pull effects into export-oriented branches.
Italo Colantone, Rosario Crinò, Laura Ogliari, 04 December 2015
Influential studies have shown that trade liberalisation is associated with substantial adjustment costs for workers in import-competing jobs. This column uses UK data to shed light on one such cost that has not been considered to date – subjective well-being. Import competition is found to substantially raise mental distress, through worsened labour market conditions and increased stress on the job. These findings provide evidence of an important hidden cost of globalisation.
Adriana Kugler, Maurice Kugler, Juan Saavedra, Luis Herrera, 28 January 2016
Vocational training programmes offer a second chance to those who drop out of the formal education system. Most studies of the success of such programmes, however, typically only analyse outcomes directly after participation. This column examines the medium- and long-term outcomes of a vocational training programme in Colombia. Results suggest that vocational training and formal education are complementary investments and that there are educational spillover effects for family members, in particular among applicants with high baseline educational attainment.
Christopher T. Stanton, Catherine Thomas, 03 November 2015
Outsourcing labour tasks to lower wage countries has been made much easier by the emergence of global online labour markets. This column argues that there are significant frictions in these markets, making it difficult for workers to get their first job and establish a reputation. However, new types of organisations have emerged that allow the sharing of reputations among groups of high-quality workers. These organisations seem to rely on offline social ties between workers to help reduce information-related trade barriers.
William Kerr, Martin Mandorff, 31 October 2015
Immigrants are more likely to concentrate around specific industries and entrepreneurship. Market integration and discrimination only go a certain way towards explaining this phenomenon. This column explores how social interactions affect immigrants’ employment decisions in the US. Fifteen ethnic groups are found to cluster around certain industries at a rate 10 times greater than the native population. Immigrants are argued to be drawn to the same industries as their countrymen due to the ease of diffusing skills through social interactions in the group, along with higher earnings due to specialisation.
Simone Moriconi, Giovanni Peri, 19 October 2015
Unemployment rates vary widely across EU countries. While national institutions and policies explain much of the variation, cultural values, attitudes, and beliefs may also play a role. This column uses survey data from 26 EU countries to investigate the existence of culturally transmitted preferences for work. Country-specific preferences for work are found to have a positive effect on emigrants’ labour market outcomes, with those from countries with an above-average preference for work having higher employment rates abroad. Cultural preferences are significant enough that EU countries may never converge to the same employment rate.
Juan J. Dolado, 09 February 2015
Youth unemployment has been a problem in Europe for several decades, but some European countries have fared much better than others in recent years. This column summarises the policy lessons to be drawn from a new VoxEU.org eBook that compares the labour market experiences of different European countries and provides an early evaluation of the European Commission’s Youth Guarantee scheme.
Manudeep Bhuller, Magne Mogstad, Kjell G. Salvanes, 22 September 2014
The impact of education on earnings over the life cycle is a critical factor for policy decisions ranging from education to taxation and pensions. This column exploits a unique Norwegian population panel data set to estimate an internal rate of return to additional schooling of about 10%. The standard Mincer-regression approach is also shown to substantially underestimate schooling’s rate of return.
Peter Cappelli, 21 September 2014
Many high-paying jobs in the US cannot be filled, raising concerns about an existing skills gap. However, this column does not find evidence in support of serious skills gap or shortages in the US labour force. Similarly to other developed economies, the prevailing situation in the US is due to skill mismatches. This could have implications for students and their tuition-paying families.
Michele Battisti, Gabriel Felbermayr, Giovanni Peri, Panu Poutvaara, 08 August 2014
Immigration continues to be a hotly debated topic in most OECD countries. Economic models emphasising the benefits of immigration for natives have typically neglected unemployment and redistribution – precisely the things voters are most concerned about. This column analyses the effects of immigration in a world with labour market rigidities and income redistribution. In two-thirds of the 20 countries analysed, both high-skilled and low-skilled natives would benefit from a small increase in immigration from current levels. The average welfare gains from immigration are 1.25% and 1.00% for high- and low-skilled natives, respectively.
Alex Edmans, 25 July 2014
Happy workers might well be more productive than unhappy ones, but high worker satisfaction could also be a sign that workers are overpaid or underworked. This column examines the link between worker satisfaction and future stock returns in 14 countries. In most but not all countries, employee satisfaction is associated with higher future stock returns. Abnormal returns to companies with high worker satisfaction are significantly increasing in the flexibility of their countries’ labour markets.
David Autor, 02 May 2014
David Autor talks to Viv Davies about his recent research that analyses the differential effects of trade and technology on employment patterns in US local labour markets between 1990 and 2007. While the effect of trade competition is growing over time, the effect of technology has shifted from automation of production activities in the manufacturing sector towards computerisation of information-processing tasks in the service sector. The interview was recorded in April 2014 at the annual conference of the Royal Economic Society.
Pierre Brochu, David A Green, 22 January 2014
Economic research finds little evidence in support of the hypothesis that an increase in minimum wages significantly affects employment – either positively or negatively. This column discusses a study of the impact of minimum-wage changes on turnover rates. Minimum-wage increases are associated with a lower probability that a job will end, and with a lower probability that an unemployed person will find work. The former effect is established only for newly hired workers. Increases in the minimum wages are also associated with more stable jobs for all low educated workers. Thus, the trade-off between fewer jobs with higher wages and more job stability versus easier access to jobs should be taken into account in the minimum-wage policy debates.
Bob Butcher, 17 December 2013
The labour market ‘hollowing out’ thesis suggests that there are far fewer intermediate-level jobs and far more low- and high-level jobs than two or three decades ago, primarily due to technological advancement. This column reviews recent research that finds little evidence in support of this conclusion. Though the composition of intermediate-level jobs has changed, their volume has probably not. Policy implications for specific groups of job seekers are discussed.
Bernhard Dachs, Bernd Ebersberger, Steffen Kinkel, Oliver Som, 07 September 2013
European offshoring mostly concerns factory jobs, but some worry that innovation will soon follow. This column shows that offshoring firms employ more people in R&D and design, introduce more frequently new products, and invest more frequently in advanced process technologies compared to non-offshoring firms. Concerns that offshoring may hurt innovation because of the lost links between production and product development are not supported by the evidence.