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22. Labor Market Slack in the United Kingdom
- Author:
- David G. Blanchflower and David N. F. Bell
- Publication Date:
- 07-2014
- Content Type:
- Working Paper
- Institution:
- Peterson Institute for International Economics
- Abstract:
- This paper examines the amount of slack in the UK labor market and finds the downward adjustments made by the Monetary Policy Committee (MPC) to both unemployment and underemployment invalid. Without evidence to support its assessment of the output gap, the MPC reduces the level of unemployment based on its claim that long-term unemployment does not affect wages. The authors produce evidence to the contrary and present arguments on why the MPC's halving of the level of underemployment in the United Kingdom is inappropriate. Bell and Blanchflower set out arguments on why they believe the level of slack is greater than the MPC calibrates. Consistent with that is the fact that real wages in the United Kingdom continue to fall.
- Topic:
- Economics, Markets, and Labor Issues
- Political Geography:
- United Kingdom and Europe
23. Role of Apprenticeships in Combating Youth Unemployment in Europe and the United States
- Author:
- Natalia Aivazova
- Publication Date:
- 08-2013
- Content Type:
- Policy Brief
- Institution:
- Peterson Institute for International Economics
- Abstract:
- Five years since the global economic crisis began in 2008, many of the world's advanced economies are still struggling with sluggish growth and high levels of joblessness, especially among younger workers. In June 2013 the European Council expressed concern that “youth unemployment has reached unprecedented levels in several Member States” and called for “urgent action.” Much of the debate in Europe and the United States has focused on fiscal and monetary measures; while macroeconomic policy can address cyclical problems, a wide consensus recognizes the need to address structural challenges. One such challenge is a mismatch between the skills demanded by employers and those available among the population, especially younger workers. This mismatch can be addressed in part through the implementation of apprenticeship programs. The European Council recently concluded that “high quality apprenticeships and work-based learning will be promoted, notably through the European Alliance for Apprenticeships.” However, in the United States, where many are struggling to find jobs after graduating, apprenticeship programs hardly draw government and private-sector resources. Boosting apprenticeships could give both European and US workers the much-needed skills and competitive edge.
- Topic:
- Economics, Markets, Labor Issues, and Youth Culture
- Political Geography:
- United States and Europe
24. The Greek Debt Restructuring: An Autopsy
- Author:
- Jeromin Zettelmeyer, Christoph Trebesch, and Mitu Gulati
- Publication Date:
- 08-2013
- Content Type:
- Working Paper
- Institution:
- Peterson Institute for International Economics
- Abstract:
- The Greek debt restructuring of 2012 stands out in the history of sovereign defaults. It achieved very large debt relief— over 50 percent of 2012 GDP—with minimal financial disruption, using a combination of new legal techniques, exceptionally large cash incentives, and official sector pressure on key creditors. But it did so at a cost. The timing and design of the restructuring left money on the table from the perspective of Greece, created a large risk for European taxpayers, and set precedents—particularly in its very generous treatment of holdout creditors—that are likely to make future debt restructurings in Europe more difficult.
- Topic:
- Debt, Economics, Monetary Policy, and Financial Crisis
- Political Geography:
- Europe and Greece
25. How to Measure Underemployment?
- Author:
- David G. Blanchflower and David N. F. Bell
- Publication Date:
- 08-2013
- Content Type:
- Working Paper
- Institution:
- Peterson Institute for International Economics
- Abstract:
- One of the factors that may inhibit reductions in unemployment as the economy recovers is the extent to which existing workers would like to work more hours and employers may prefer to let them work longer hours before making new hires. This phenomenon suggests that the unemployment rate does not capture the full extent of excess capacity in the labor market. But how should it be measured? In this paper we argue that the United States does not have the necessary statistical tools to calibrate this form of underemployment. We describe an index that captures the joint effects of unemployment and underemployment and provides a more complete picture of labor market excess capacity. We show how this index can be implemented using British data and describe its evolution over the Great Recession. Comparisons of our index with unemployment rates suggest that unemployment rates understate differences in labor market excess capacity by age group and overstate differences by gender. We also show that being unable to work the hours that one desires has a negative effect on well-being. Finally, we recommend that the Current Population Survey conducted by the US Bureau of Labor Statistics might be extended to enable the construction of an equivalent US index.
- Topic:
- Economics, International Trade and Finance, Markets, and Labor Issues
- Political Geography:
- United States and Europe
26. How to Form a More Perfect European Banking Union
- Author:
- Ángel Ubide
- Publication Date:
- 10-2013
- Content Type:
- Policy Brief
- Institution:
- Peterson Institute for International Economics
- Abstract:
- The euro area has made significant strides in the last six months in designing a banking union. The goal has been to centralize supervisory decision making and improve the management of failing banks while protecting European taxpayers and imposing costs on creditors through so-called bail-ins to reduce moral hazard. Euro area leaders have reached some political agreements, and legislation is being prepared for eventual adoption by the European Parliament and then the various member states. This progress has been hailed as a step in the right direction, with particular praise for the euro area leaders' plan to endow the European Central Bank (ECB) with supervisory powers and create new rules for managing troubled banks.
- Topic:
- Economics, Markets, Regional Cooperation, and Monetary Policy
- Political Geography:
- Europe
27. Ukraine's Choice: European Association Agreement or Eurasian Union?
- Author:
- Anders Åslund
- Publication Date:
- 09-2013
- Content Type:
- Policy Brief
- Institution:
- Peterson Institute for International Economics
- Abstract:
- Since gaining independence in December 1991, Ukraine has vacillated between the European Union and Russia for economic and political cooperation. Until recently neither had offered Ukraine much, but in the last few months, things have heated up. Ukraine's intention to sign an Association Agreement for political association and economic integration with the European Union has raised a furor in the Kremlin, which is now trying to block Ukraine from aligning itself with the European Union. Moscow has imposed trade sanctions in clear violation of its obligations in the World Trade Organization (WTO) and is pursuing an intense confrontation.
- Topic:
- Economics, Treaties and Agreements, World Trade Organization, and Bilateral Relations
- Political Geography:
- Russia, Europe, Ukraine, Asia, and Moscow
28. Financial Services in the Transatlantic Trade and Investment Partnership
- Author:
- Simon Johnson and Jeffrey J. Schott
- Publication Date:
- 10-2013
- Content Type:
- Policy Brief
- Institution:
- Peterson Institute for International Economics
- Abstract:
- In July 2013, the United States and the European Union launched negotiations on a Transatlantic Trade and Investment Partnership (TTIP). The talks aim to craft a comprehensive accord matching or exceeding the reforms achieved in their previous trade pacts. Since both sides have included financial services in prior free trade agreements (FTAs), they implicitly recognized that the TTIP accord would also cover this sector. But what will be included in the financial services chapter is still subject to debate.
- Topic:
- Economics, International Trade and Finance, Treaties and Agreements, and Bilateral Relations
- Political Geography:
- United States and Europe
29. The Hyperglobalization of Trade and Its Future
- Author:
- Arvind Subramanian and Martin Kessler
- Publication Date:
- 07-2013
- Content Type:
- Working Paper
- Institution:
- Peterson Institute for International Economics
- Abstract:
- This paper describes seven salient features of trade integration in the 21st century: Trade integration has been more rapid than ever (hyperglobalization); it is dematerialized, with the growing importance of services trade; it is democratic, because openness has been embraced widely; it is criss-crossing because similar goods and investment flows now go from South to North as well as the reverse; it has witnessed the emergence of a mega-trader (China), the first since Imperial Britain; it has involved the proliferation of regional and preferential trade agreements and is on the cusp of mega-regionalism as the world's largest traders pursue such agreements with each other; and it is impeded by the continued existence of high barriers to trade in services. Going forward, the trading system will have to tackle three fundamental challenges: In developed countries, the domestic support for globalization needs to be sustained in the face of economic weakness and the reduced ability to maintain social insurance mechanisms. Second, China has become the world's largest trader and a major beneficiary of the current rules of the game. It will be called upon to shoulder more of the responsibilities of maintaining an open system. The third challenge will be to prevent the rise of mega-regionalism from leading to discrimination and becoming a source of trade conflicts. We suggest a way forward—including new areas of cooperation such as taxes—to maintain the open multilateral trading system and ensure that it benefits all countries.
- Topic:
- Economics, Emerging Markets, Globalization, and International Trade and Finance
- Political Geography:
- Europe, Asia, and North America
30. Asian and European Financial Crises Compared
- Author:
- Edwin M. Truman
- Publication Date:
- 10-2013
- Content Type:
- Working Paper
- Institution:
- Peterson Institute for International Economics
- Abstract:
- The European and Asian financial crises are the two most recent major regional crises. This paper compares their origins and evolution. The origins of the two sets of crises were different in some respects, but broadly similar. The two sets of crises also shared similarities in their evolution, but here the differences were more significant. The European crisis countries received more external financial support, despite the fact that they involved more solvency issues while the Asian crises involved more liquidity issues. On balance, the reform programs in the European crises were less demanding and rigorous than in the Asian crises. Partly as a consequence, the negative impacts on the global economy have been larger. I draw three lessons from this analysis: First, history will repeat itself; there will be other external financial crises. Second, other countries have a stake in appropriate crisis management. Third, the IMF and other countries were mistaken in treating the European crises as individual country crises rather than as a crisis for the euro area as a whole that demanded policy conditionality on all members of the euro area.
- Topic:
- Economics, International Trade and Finance, International Monetary Fund, and Financial Crisis
- Political Geography:
- Europe and Asia