The trinity of wage setting in EMU: A policy proposal

Diverging labor cost developments are often considered to be one of the most important factors that led to large current account imbalances in the euro area (EA) in the run-up to the global financial crisis. It has also been shown that wage growth differentials have significantly lowered the co-movement of EA countries’ business cycles – the most widely used meta-criterion for optimum currency areas. Against this background, this paper develops a wage-setting benchmark that aims to keep the economy in internal equilibrium and to maintain price stability, while it also exhibits the capacity to correct for external imbalances. The proposed wage benchmark is very simple and may serve as an anchor for the macroeconomic dialogue in Economic and Monetary Union. In order to demonstrate the potentially beneficial effects of such a wage benchmark we present some simulations showing how current account balances and labor costs would have developed across EA countries if the rule had served as a benchmark already in the run up to the crisis.     

Are government wages interlinked with private sector wages?

The ongoing fiscal and financial crisis with significant macroeconomic imbalances in the euro area raises the question in how far public–private wage interaction and even wage spirals contribute to fiscal and competitiveness problems. In this vain we analyse empirically whether the evolution of public sector wages is decoupled from that of the private sector. Using data for number of OECD countries, we find: (i) a strong and extremely robust positive annual contemporaneous correlation of public and private sector wages over the business cycle; (ii) evidence of co-movement of these variables over the medium and long run. From a policy perspective, the findings of this study suggest public wage restraint and private wage flexibility coupled—where needed—with institutional reform to prevent or break public–private wage spirals.     

The asymmetric impact of the pandemic crisis on interest rates on public debt in the Eurozone

The outbreak of Covid-19 has played the role of a ‘game changer’ in the way countries of the Eurozone have faced the economic consequences of the pandemic crisis. This paper investigates what has happened to the interest rates of the sovereign bond in selected countries of the Eurozone during 2020. While the pandemic crisis can be interpreted as a symmetric shock, we found some important asymmetric consequences both in the sovereign bond market and the credit default swap market. Even though the European Central Bank (ECB) has played a fundamental role in easening tensions, especially with the announce of the Pandemic Emergency Purchase Programme (PEPP), countries with a higher pre-Covid level of the debt-to-GDP ratio have been found to undergo a significant jump in interest rates and a greater perceived risks of default. Important policies implications emerge in relation to the future role of the ECB.     

Does export concentration matter in economic adjustment programs? Evidence from the euro-area

The recent crisis in some euro area countries is intensively fueling the political and economic policy debate about the effectiveness of the applied adjustment programs. This paper aims to contribute to explaining why the results of these programs could be different across countries, flagging the crucial role of exports. In view of recent economic literature about substitution between domestic and foreign sales, helping exports when domestic demand is adjusting, this paper uses panel data techniques to assess the role of the export structure in explaining this substitution effect in the euro area countries. Building a novel indicator for product concentration, the results suggest that domestic demand developments are more relevant to explaining exports in countries with a lower product concentration index (that is, more diversified exports). This contributes to explain why euro area countries under stress registered different economic performance, in particular the clearly less favorable behavior of Greece, where exports structure is concentrated more strongly in some goods and services than in other euro area countries. With different export behavior the final evaluation of the Greek adjustment would be certainly different. These results suggest that export structure should be taken into consideration when designing or evaluating this type of adjustment programs.     

Wearing corset,losing shape: The euro's effect on trade imbalances

When does trade become a one-way relationship? We study bilateral trade balances for a sample of 18 European countries over the period from 1948 through 2008. We find that, with the introduction of the euro, trade imbalances among euro area members widened considerably, even after allowing for permanent asymmetries in trade competitiveness within pairs of countries or in the overall trade competitiveness of individual countries. This is consistent with indications that pair-wise trade tends to be more balanced when nominal exchange rates are flexible. Intra-euro area imbalances also seem to have become more persistent with the introduction of the euro, some of which is linked to labor market inflexibility. Reviewing the direction of imbalances, we find that bilateral trade surpluses are decreasing in the real exchange rate, decreasing in growth differentials, and increasing in the relative volatility of national business cycles. Finally, countries with relatively higher fiscal deficits and less flexible labor and product markets exhibit systematically lower trade surpluses than others.     

Are there monetary clusters in the Eurozone? The impact of ECB policy

This paper analyses what effects the monetary policy of the European Central Bank have on the economic activity of Eurozone countries. We identify groups of countries which exhibit different economic responses to monetary policy and the factors driving such spatial differences. We distinguish three periods, spanning from 2001 to 2017 and examine conventional as well as unconventional monetary policies in different economic backgrounds of expansion and crisis. We find problems of spatially asymmetric transmission of monetary policy in the period 2008M10–2014M12 and note that different spatial responses might operate in favour of monetary policy or be indifferent to this policy.     

劳动剩余条件下的供给不足与工资上涨——基于家庭分工的视角

基于贝克尔家庭经济学和时间配置理论可以证明,劳动剩余条件下的劳动供给并不是无限的。受制于家庭分工的约束,供给曲线呈特殊的阶梯形态：随劳动供给的增加,农业劳动力的保留工资不断提高,且幅度不断扩大。劳动供给对工资的反应是非连续的：只有当工资上升到新的保留工资水平时,劳动供给才会增加;否则,工资上涨并不能带来供给增长。与这种特殊的供给形态相对应,工资上涨的主要动力从农业收入转向工业劳动需求。内蒙、甘肃两省1,500个农户的调查数据证明了上述判断。当劳动需求扩张时,由于工资的微调不能带动供给的微调,劳动力市场将长期难以出清。这提醒我们,当前农民工工资上涨与用工短缺并存现象很可能源于劳动剩余条件下的供给不足,并不必然意味着剩余劳动力枯竭,不能作为刘易斯拐点到来的证据。     

Towards expenditure rules and fiscal sanity in the euro area

The study demonstrates the key role of expenditure policies in explaining fiscal developments during EMU in the euro area, its three largest members and four “macro-imbalances” countries. It compares actual primary expenditure trends with those that would have prevailed if countries had followed neutral policies based on expenditure rules since the start of EMU. Moreover, the implications for debt trends are calculated. Results show that all sample countries except Germany applied expansionary expenditure policies already before the crisis. Consequently, expenditure and debt paths were much higher compared to a counterfactual neutral expenditure stance. Rule-based expenditure policies could have led to much safer fiscal positions much more in line with the EU's Stability and Growth Pact. An empirical analysis of the determinants of countries’ expenditure stance confirms the need for stronger fiscal rules and institutions in the euro area.     

The impact of opening markets on Mexican male/female wage and occupational differentials

This article addresses the effect of a more open market under NAFTA on the economic status of Mexican women. It is assumed that increases in export processing and tourism, industries that have a high demand for female labor, will result from the agreement. The approach of this study is to use regression and correlation analysis to compare wage and occupational differences in two Mexican cities: Tijuana, on the U.S.-Mexican border, and Torreon, in the interior. A major findings is that the overall wage gap is statistically significantly lower where there is increased export processing activity, but there appears to be very little change in occupational segregation. Three additional impacts are: first, that labor force participation rates increase for both men and women, but proportionally more for women. Second, the higher labor demand appears to weaken the relationship between the job qualifications of education and experience and wages. Third, wages by gender are more equal, but for the labor force as a whole there is a greater level of wage dispersion.     

Analysis of China＇s Unequal Income Distribution from the Perspective of Functional Income Distribution

中国收入分配的不平等在很大程度上表现为功能性收入分配的不平等，即随着经济的发展，工资性收入占国民收入的比例越来越小，而现阶段中国二元经济结构下的无限劳动力供给则是其主要原因。在一个具有凯恩斯主义特征的非均衡动态模型框架下，我们的分析表明，劳动力的无限供给，不仅使工资无法对劳动力市场的供求状况进行反应，而且使劳动生产率和物价变化对工资的影响也不敏感。这意味着，当存在着劳动生产率的提高或由经济增长所带动的物价上涨时，工资的提高不够显著，从而由经济增长或劳动生产率的提高所带来的利益大部分转化为利润而非工资。基于此，要彻底扭转中国收入分配恶化趋势，根本途径仍然是保持经济的高速增长，加快工业化和城市化进程，从而使农村剩余劳动力能够尽快被吸收。     

The impact of regulatory reforms for systemically important institutions,defined as “other” (O-SII)

This study examines the effects of the announcement of a prudential rule introducing the framework for other systemically important institutions (O-SII) in euro area countries. Following the announcement of the framework, there has been some slowdown in balance sheet expansion for O-SIIs relative to other banks. O-SII banks have altered their balance sheet structure, consistent with the incentive given by the O-SII buffer to reduce complexity and interconnectedness. This has been accompanied by somewhat weaker pricing power of O-SII banks, which along with higher capital requirements seem not to have led to higher risk-taking by O-SII banks. No discernible change in risk-taking strategies along with the reduction in the funding cost advantage may have contributed to a decline in profitability of O-SIIs. Overall, the introduction of the structural, non-cyclical higher capital buffers for the key nodes of the euro area banking sector seems to have helped strengthen the resilience of these banks, and, by extension, of the financial system.     

Collective bargaining levels,employment and wage inequality in Spain

After the increase in inequalities following the Great Recession, studies on wage bargaining systems have increasingly focused on wage inequality. This research examines wage inequality associated with collective bargaining levels in Spain, based on matched employer–employee microdata and quantile regression methods. These methods are applied across the wage distribution, following the method proposed by Firpo et al. (2011), to estimate wage premiums associated with agreement levels and to decompose the wage differentials observed at different points of the wage distribution. From the evidence obtained it can be concluded that, although the higher wages found in firm-level agreements are explained by the better observed characteristics of firms and workers covered by these collective agreements, there remains a positive wage premium. Although this premium is seen throughout the wage distribution, it favours mostly workers in the middle and upper-middle end. This slightly increases wage inequality in comparison with sectoral agreements. In contrast, workers without collective bargaining coverage generally suffer a wage penalty. This penalty is only observed on the left of the wage distribution. It becomes a significant wage premium in the upper end of the distribution, which implies a significant increase in wage inequality. In short, the evidence of this research suggests that reducing the coverage of collective bargaining could be associated with a significant increase in wage inequality. A better policy option for countries with a predominant sectoral model, such as Spain, would be to move towards an organized decentralization model. This would cause significant gains in employment as suggested by OECD (2019) and only a slight increase in wage inequality.     

SPECIAL ISSUE： MIGRANT WORKERS IN THE COURSE OF URBANIZATON Wages for migrant workers in the Pearl River Delta： determining factors

本文通过对珠江三角洲农民工问卷调查资料的回归分析,试图检验在市场转型下的企业制度和社会环境对农民工工资的影响。研究发现,人力资本中的教育年限、本企业工龄等变量对农民工工资有显著的正向影响,年龄和性别也有显著影响;企业制度中的工种对工资有显著影响,表现出明显的等级性。企业所属行业、规模和企业性质对工资没有显著影响,是否签订劳动合同和缺工情况同样如此。社会资本变量和社会环境变量对农民工工资水平没有显著影响。文章由此认为,农民工的工资是处于分割的二元劳动力市场一端,是高度市场化的,缺乏企业内部劳动力市场或晋升机制,也少受劳动力市场用工情况变化影响,没有地区性差异,是一个实实在在的、刚性的低工资。     

Macroeconomic asymmetry in the Eurozone before and after the Global Financial Crisis: An appraisal of the role of the ECB

The launch of the euro in 1999 was assumed to enhance macroeconomic convergence among EMU economies. We test this hypothesis from a comparative perspective, by calculating different indices to measure the degree of macroeconomic dispersion within the Eurozone, the UK and the USA (1999–2019). We use common factor models to produce a single index for each monetary area out of different measures of dispersion. These indices can be used to inform on the degree of optimality of a monetary area. Our results show that macroeconomic dispersion in the Eurozone increased notably even before 2007 and it took significantly longer to return to pre-crisis levels, as compared to the UK and the USA. The paper shows the critical role played by the ECB’s asset purchases programmes in reducing macroeconomic divergences among EMU member states since 2015.     

The dynamics among entrepreneurship,innovation, and economic growth in the Eurozone countries

Economic growth in the Eurozone has been lacklustre over the last two decades due to increased global competition from economic players in other regions, economic and financial crisis, and political uncertainties within the zone. To increase the global competitiveness of the region, the European Union launched the Europe 2020 Strategy to raise the level of entrepreneurship and innovation, which are purported to be key drivers of economic growth. The main purpose of this paper is to investigate whether this assertion is true. Thus, the paper investigates the Granger causal relationships among entrepreneurship development, innovation, and economic growth for a sample of the Eurozone countries for the period 2001–2016. Using a vector error-correction model, the study finds that in the long run, both entrepreneurship and innovation stimulate economic growth. In the short run, strong causal links exist but are not always uniform. The results reveal that Eurozone countries should indeed base their growth strategies on policies that promote innovation and policies that create incentives for entrepreneurship.     

Transmission of monetary policy in the US and EU in times of expansion and crisis

In this work, the effectiveness of monetary policy and its transmission channels are analyzed before and after the 2007 economic crisis in the United States and the Eurozone by using a VAR model. We find that, in the United States, monetary policy before and after the crisis have been effective, with special emphasis on the “risk channel”. In the Eurozone, monetary policy was also effective before the crisis, being transmitted through the “credit channel”. Once the crisis erupted, unconventional monetary policy remained effective only at the start of the crisis; the risk channel then became the effective transmission mechanism.     

农民工的就业与工资决定：教育与培训的重要性

在城市劳动力市场上,农村劳动力根据个人的人力资本积累状况和当地的劳动力市场条件,在成为自我经营者和工资收入者之间进行就业选择。简单的Mincer工资方程回归结果显示,工资收入者比自我经营者的教育回报率高出2个百分点左右。在矫正了样本选择偏差之后,拓展的Mincer工资方程对工资收入者的教育回报率估计结果在5.3%-6.8%之间。从培训角度看,简单培训、短期培训和正规培训对农民工再流动都有显著作用,但简单培训对农民工的工资收入作用不显著,而短期培训和正规培训则对其工资收入有着重要的决定作用。此外,工资拖欠等权益保护问题也对农村劳动力再流动有重要影响。在处理农民工的个人异质性和教育内生性问题时,本文还发现父母受教育年限不是一个理想工具变量。     

Did We Overestimate the Value of Health?

Adam Smith's idea that wage differences reveal preferences for risk rests on strong theoretical foundations. This paper argues, however, that the dominant approach to identify compensating wage differentials—regressing individual wages on aggregate measures of risk—may lead to arbitrary estimates of these risk differentials. In a dataset with information on both, the incidence of illnesses or injuries across firms and industries, I calculate an implicit value of one injury or illness of about (1990) USD 18,800 pursuing the dominant approach. In contrast, regressing wages on the incidence of risk across firms produces a value of one injury or illness of about USD 11,300.     

Fiscal policy analysis in the euro area: Expanding the toolkit

The absence of historical quarterly fiscal data has limited the analysis of the macroeconomic impact of fiscal policies in the euro area, including the interactions of fiscal and monetary policies. To overcome this gap, we construct a quite disaggregated euro area quarterly fiscal database for the period 1980Q1–2012Q4, based on a rich set of input fiscal data taken from national sources. We discuss how this dataset has allowed and can allow the profession to tackle new policy-relevant research topics. We also provide stylized facts on the cyclical properties of main euro area fiscal aggregates, focusing on the recent economic crisis period.     

Exchange rate and wage policies in Central and Eastern Europe

After the eastern enlargement of the European Union (EU) and due to increasing labor market integration, wage determination in Central and Eastern Europe (CEE) has become a key issue in European economic policy making. In addition, a controversial discussion concerning the monetary integration of CEE countries into the EMU has emerged. Both issues have earned particular academic and political interest because Eastern and Western Europe are at different stages of economic development and volatile international capital flows seem to require either a higher degree of wage or exchange rate flexibility. Based on the Scandinavian model of wage adjustment by Lindbeck (1979), we analyze the role of exchange rates in the wage determination process of the Central and Eastern European countries to identify which exchange rate strategy contributes to faster wage convergence in Europe. Panel estimations suggest that workers in countries with fixed exchange rates are likely to benefit in the long run from higher wage increases.