With immediate effect, Grégory Ponthière (UCLouvain) joins the group of Editors of the Journal of Population Economics. He will work with Editors Shuaizhang Feng (Jinan University), Oded Galor (Brown University), Terra McKinnish (University of Colorado Boulder), Editor-in-Chief Klaus F. Zimmermann (UNU-MERIT) and with Managing Editors Michaella Vanore (UNU-MERIT) and Madeline Zavodny (University of North Florida).
Interview with Grégory Ponthière
GLO: What brought you to population economics?
Grégory Ponthière: As a Ph.D. student in Economics in Cambridge in the early 2000s, I became interested in the measurement of human welfare across long periods of time. From that perspective, variations in survival conditions play a fundamental role, since the finiteness of life is a major cause of scarcity and deprivation for humans. This definitely oriented my research at the intersection of economic theory and demography.
GLO: Why can micro theory help us to understand demographic processes?
Grégory Ponthière: Demographic outcomes (fertility, mortality, migration) are influenced by economic factors, in particular individual endowments in terms of physical or human capital, and also by prices faced by individuals (e.g. the wage rate, housing prices). Thus demographic processes cannot be understood without considering the economic conditions under which they take place. This makes the microeconomic analysis of demographic trends fundamental: focusing on microeconomic foundations allows us to identify conditions under which existing population trends can be rationalized or explained. But I would go even further, and defend the view that most economic processes – in particular accumulation mechanisms and dynamics – cannot be understood without considering demography. Economic and demographic outcomes are joint products, and this makes population economics a central field of economic analysis.
GLO: Explain us your field of specialization!
Grégory Ponthière: My research lies at the intersection of economic theory and demography. It focuses, from a theoretical perspective, on multidirectional relations between economic variables and demographic outcomes. I published several papers on the economic rationalization of mortality variations (within a population at a given period and across long periods of time), and also on the microeconomic study of the timing of births (in particular the advancement of births in the early 20th century, followed by a postponement of births starting in the 1970s). Besides those positive studies, my research also examined the design of optimal public policies when demographic outcomes are endogenously determined within the economy, and depend on material living conditions faced by individuals. Those normative studies involved the design of prevention policies, pensions, long term care social insurance, family policies (in particular family allowances) and fiscal policies (the taxation of savings and bequests).
GLO: What excites you most in your current research?
Grégory Ponthière: My current research focuses on the construction of a fair Welfare State, and on the normative foundations behind public policies. Since the pioneer works of Bentham and Mill, there is a long tradition, in Economics, which adopts utilitarianism as an ethical benchmark (the principle of “the largest happiness for the largest number”). My current research aims at identifying the unattractive implications of utilitarianism in the context where the population is heterogeneous on important dimensions (e.g. the genetic background determining longevity outcomes or the natural fecundity of individuals), and proposes to rethink the design of the Welfare State while adopting alternative normative foundations, which lay a stronger emphasis on equalizing welfare across individuals (either in ex ante terms or in ex post terms). Taking unequal demographic outcomes into account – beyond the mere “representative agent” – does not leave the design of the Welfare State unchanged.
GLO: Why have you accepted to take the Editor position?
Grégory Ponthière: I have been doing research in population economics since the beginning of my Ph.D. thesis, almost 20 years ago. Thus I have a long-lasting interest in that field of economic research. During that period, my research has greatly benefited from the (indirect) supervision of editors of journals, and also from the work of a large number of anonymous reviewers. It is time for me to contribute to the public good, by participating more actively to the life of scientific journals, not only as an author or as a reviewer, but also as an editor. Joining the Editorial team of the Journal of Population Economics is a unique opportunity to contribute actively to the flourishing of that exciting area of research.
GLO: Where do you see promising fields for population theory the Journal could explore?
Grégory Ponthière: At the micro level, I can see two promising areas of research, which are quite complementary. The first one concerns the modelling of the human life cycle, which faces serious limitations when considering basic decisions (e.g. the long term care insurance puzzle). In particular, the inclusion, within the lifecycle model, of the risk about the duration of life is challenging. A second – related – field concerns the modelling of the interests of economic agents at the two extremities of life: childhood and old-age dependency. Public policies should take the interests of the very young and of the very old into account, but the problem is that those individuals may not have well-defined preferences in the same way as adults can have. The microeconomic analysis of the family thus still faces major challenges, and those challenges are also relevant for the macroeconomic study of demographic trends. Finally, another fundamental challenge for population economics concerns the design of the Welfare State when demographic variables react to public policies, i.e. abstracting from the usual “ceteris paribus” assumption. This last point is most relevant in the context of the corona crisis.
GLO: Will the coronavirus change the world of academic publishing?
Grégory Ponthière: It is too early to know what will be the long-run consequences of coronavirus on the society, and on the world of science in particular. But one thing is certain: the corona crisis does not only affect health and mortality outcomes around the world, but it also deteriorates teaching and learning conditions in all universities. As such, this deteriorates the foundations of science in the future.
*************************** With Editor and GLO FellowGrégory Ponthière spoke Klaus F. Zimmermann, GLO President & Editor-in-Chief of the Journal of Population Economics.
GLO FellowGregory Ponthiereis a Professor of Economics and Philosophy at the Hoover Chair in Economic and Social Ethics, UCLouvain, and an Editor of the Journal of Population Economics. Before joining UCLouvain, he held permanent positions at the Ecole Normale Superieure and at the University Paris XII, and was an Associate Researcher at the Paris School of Economics. His research focuses on relations between economic and demographic outcomes, from a positive perspective (rationalization of stylized facts) and a normative perspective (design of a fair Welfare State). His publications include three books and articles in journals such as the Journal of Economic Theory, the International Economic Review, Social Choice and Welfare and the Journal of Public Economics. He is an Honorary Fellow of the Institut Universitaire de France.
Ilhom Abdulloev, Executive Director Open Society Institute Assistance Foundation – Tajikistan, GLO Fellow and GLO Country Lead for Tajikistan, reflects in an interview the challenging situation in the economy and on the labor market. He touches long-run trends, deals with the implications of the coronavirus pandemic and the Chinese “Belt and Road Initiative”, and reveals his mission and vision as researcher.
Some core messages of the interview:
The coronavirus pandemic has decreased families’ wellbeing substantially also in Tajikistan.
The size of remittances has reached 28% of GDP in 2019.
Despite its positive contribution to economic activities, China’s “Belt and Road Initiative” impact on external debt is raising alarms.
The mission of the Open Society Foundation in Tajikistan is the promotion, popularization, and protection of the principles of the foundation in the Republic of Tajikistan through humanitarian assistance and charity.
In his research, he is currently studying the effect of migration on labor supply and job satisfaction of members of migrants’ families,
GLO Fellow Ilhom Abdulloev is Executive Director Open Society Institute Assistance Foundation – Tajikistan and GLO Country Lead for Tajikistan.
GLO: How is the Tajik labor market doing in the Covid-19 crisis?
Ilhom Abdulloev: Even before the pandemic, the economy of the Republic of Tajikistan could not create enough jobs for the growing working-age population. About half of the working-age population in Tajikistan is not economically active. Women’s participation in the labor force is very low, and many young people (15%) have become discouraged and have given up searching for domestic employment. Informal employment is also high (55%) and mainly concentrated in agriculture and rural areas, where most of the population lives. Under such conditions, emigration becomes a primary employment option for many young people in Tajikistan.
During the coronavirus outbreak, although Tajikistan did not declare a lockdown, it closed country’s borders and education facilities sending pupils and students to early vacation. Seventy four percent of families had to take care of children more than usual during the pandemic and that translates to an additional investment of time, money and resources towards caregiving. As a result, many unemployed people did not look for jobs as they were more engaged in housework and schooling activities. Many families (64%) spent their savings to stock up on food and other necessities during the pandemic, and many others experienced lower earnings because of reduced business revenue, temporary furloughs and layoffs due to the pandemic.
Additionally, some people have looked for paid work during the pandemic, which implies that families’ experienced budget constraints (due to increased prices) and job losses. This also indicates that the pandemic has contributed to increased unemployment. Compared to urban areas, families in rural areas are engaged in farming on their own land or animal husbandry, which reduces the negative impact of employment and creates alternative sources of livelihood. Overall, the pandemic has decreased families’ wellbeing.
With reduced business revenues because of the pandemic, many employers decided to keep businesses open and running as long as possible which necessitated the implementation of safety measures including protective equipment for staff, all of which increases operational costs. This resulted in employers cutting operational costs by any means available including the dismissal of workers without fair compensation, or offering lower paid informal jobs. Such workers require legal support and the government’s attention.
GLO: Tajikistan has been one of the world’s most remittance-dependent countries of the world, largely affiliated with Russia. What were the implications and how will this change in the pandemic?
Ilhom Abdulloev: Migration was playing an augmenting role for Tajikistan’s economy before the pandemic. It helped lift the budget constraint and supported families’ food consumption. Almost every other household in Tajikistan has had a family member migrate. The majority of migrants work in low-skill occupations in construction, retail trade and care services in the Russian Federation. The size of remittances reached 28% of GDP in 2019.
All labor migrants have been affected by travel restrictions that were imposed because of the pandemic. Since the migration from Tajikistan is seasonal, many migrants who were at home during the winter were expecting to migrate during the spring. They were not able to migrate because of the border closures. Some of these returned migrants were able to find some form of paid work in Tajikistan, but their current earnings do not compensate for the income they would have earned abroad. Most returnees are waiting for travel restrictions to be lifted so they can emigrate to Russia.
At the same time, the current migrants in destination countries were not able to return home to Tajikistan. They face financial difficulties due to loss of jobs and the inability to pay for their lodging and meals in their destination country or for charter fights tickets to return to Tajikistan. The decline in economic activities in Russia and the reduced demand for migrant labor may lead to an increase in unemployment among international migrants, forcing them to return to their home countries.
Remittance income fell dramatically from April-August pushing the poverty rate higher. The unknown period of borders closure and the lack of employment opportunities in both Russia and Tajikistan would further decrease incomes and consumption of migrants’ families in Tajikistan.
GLO: How is the country involved in the Chinese “Belt and Road Initiative”?
Ilhom Abdulloev: Chinese financing plays an important role in Tajikistan, making a significant contribution to improving the economic infrastructure and the influx of new technologies. Chinese investment has increased significantly over the past decade reaching the total of 2.6 billion US$ in 2019, but at the cost of slowing down some other reforms. China’s Belt and Road initiative aims to strengthen ties with Central Asian countries through investment in economic infrastructure, technical assistance, and trade expansion. It became attractive for Central Asian governments because it does not impose any conditionality on human rights and good governance as does aid coming from other international financial institutions.
Despite its positive contribution to economic activities, China’s impact on external debt is raising alarms. Tajikistan has the largest debt to the China Eximbank which was over 1.1 billion US$ in 2020. A further increase in the debt to GDP ratio could make servicing the external debt unsustainable. The large debt repayments may reduce the amount available for investment in public services in the future. After starting to repay the Chinese debt, the country may attempt to borrow from other international financial institutions, causing the problem to spiral and amplify. With any inability of foreign debt repayment, China may request debt-for-assets or debt-for-nature swaps.
Tajikistan should consider positive reforms aiming at the business investment to other foreign investors and good governance, fighting against corruption and building the skilled labor force. The government can work closely with civil society organizations in promoting the transparency and accountability of state institutions and businesses.
GLO: What role has the Open Society in Tajikistan?
Ilhom Abdulloev: The Foundation in Tajikistan is a part of an international network of the Open Society Foundations, which work to build vibrant and tolerant democracies whose governments are accountable to their citizens. To achieve this mission, the Open Society Foundations seek to shape public policies that assure greater fairness in political, legal, and economic systems and safeguard fundamental rights. On a local level, the Open Society Foundations seek to implement a range of initiatives to advance justice, education, public health, and independent media. The Foundations places a high priority on protecting and improving the lives of people in marginalized communities.
The mission of the Foundation in Tajikistan is the promotion, popularization, and protection of the principles of open and civil society in the Republic of Tajikistan through humanitarian assistance and charity. The Foundation prioritizes the following open society and civil society principles in its activities:
– Promotion and protection of rights and freedom, including freedom of thought, freedom of conscience and belief, protection of rights to freedom of opinion and expression. – Protection of equality, including protection from all forms of discrimination as well as ensuring gender equity. – Building solidarity, including access to social welfare, ensuring dignified standard of living, health, and affordable education.
The Foundation’s current strategy is based on the following four priorities:
1. Focusing economic advancement on those most in need. 2. Strengthening social resilience in critical dimensions of education and public health. 3. Defending fundamental rights and the civic space in which they are expressed. 4. Enhancing independent oversight over public and private sectors.
GLO: What are your recent research interests?
Ilhom Abdulloev: My main research area is the impact of labor migration on the migrants’ families and their members who remained in the home country. I am currently studying the effect of migration on labor supply and job satisfaction of members of migrants’ families, as well as their decisions on schooling, particularly on forsaken professional schooling. I also study the labor market tendencies in transitional economies, informal employment, and female and youth participation in the labor force.
************* With Ilhom Abdulloev spoke Klaus F. Zimmermann, GLO President.
The rising rivalry between China and the US generates concerns around the world (timeline U.S. relations with China). In his new book (China versus the US. Who will prevail?), Alfredo Toro Hardy (Venezuelan Scholar and Diplomat) provides an insightful analysis of open questions and mysteries drawing from his life-long experience as a diplomat. In the interview below, he addresses some of the issues of concern.
The Chinese have made their aims more difficult to attain.
China would not accept to subordinate itself indefinitely to America’s leadership in its own part of the world.
Although the US possesses overall technological superiority, China will be able to match it or surpass it in a group of key technologies.
America’s democratic but utterly dysfunctional political system is being globally compared to China’s authoritarian but responsive one. There is no doubt that for many the latter results more attractive.
While globalization has allowed China to lift 800 million people out of poverty, nationalism identifies itself with the belief that the country’s ancient history and its tradition of centrality entitles it to a position of privilege.
Technological human displacement is not privative to China.
The confrontation between China and the US has become structural and not simply conjectural.
GLO Fellow Alfredo Toro Hardy, Venezuelan Scholar and Diplomat, is a former Ambassador of the Bolivarian Republic of Venezuela to the US, UK, Spain, Brazil, Chile, Ireland and Singapore.
GLO: Why has US-China competition become inevitable?
Alfredo Toro Hardy: Both countries perceive themselves as pinnacles within human history. The Middle Kingdom and the Exceptional Nation feel entitled to leadership by history or providence. Both look at the future under the lenses of their national myths. Under those circumstances none will be ready to yield to the other. Specially so as the gap in their comprehensive national power is rapidly closing.
GLO:Was China challenging the US too early?
Alfredo Toro Hardy: There seems to be no doubt that by speeding times, heralding their ambitions and boasting about their capabilities, while at the same time hardening their geopolitical and military stance, the Chinese have made their aims more difficult to attain. They have created for themselves many unnecessary problems. However, for a county as obsessed as China in continuously measuring its comprehensive national power, it would seem to be out of context to have provoked U.S. reaction if they have felt unprepared for a measurement of forces.
GLO: The obvious US response would be a long-term containment policy of China. How could this work?
Alfredo Toro Hardy: A long-term containment of China by the United States, would be the latter’s preferred option. Specially so, given the final success of this policy in relation to the Soviet Union. However, there is a big difference in both cases. During the Cold War, neither the Americans nor the Soviets challenged each other’s main spheres of influence (Cuba excepted, and this almost led to war). The contrast with the current situation is notorious. The United States’ containment of China not only includes Taiwan (which China considers to be an integral part of its territory) but takes place in an area that for millennia was a tributary dependent region of China. China would not accept to subordinate itself indefinitely to America’s leadership in its own part of the world.
GLO:You seem to suggest that China has the better cards to win the competition for world leadership, why?
Alfredo Toro Hardy: Although the United States still prevails in military, economic and technological capabilities, reverse trend in motion favor China. Economically, China’s ascendancy and its surpassing of the US seems inevitable. Militarily, China’s asymmetric power has the capacity to neutralize much of the current US superiority, while the inversely evolving budgetary capability of both countries will clearly play in favor of China. Moreover, America’s superiority in nuclear weapons may prove to be more theoretical than real if China’s overwhelming advantage in conventional ballistic missiles can match the US tactical nuclear capability, while China’s second-strike capacity can deter an American first strike. Finally, although the US possesses overall technological superiority, China will be able to match it or surpass it in a group of key technologies. On the other hand, China’s emphasis on strategically oriented basic research outweighs America’s market oriented applied research.
GLO:Globalism is under thread anyway. There is a global tendency to strengthen nationalism and autocratic regimes. A good time to popularize the Chinese model?
Alfredo Toro Hardy: Contrary to the Cold War with the USSR, America’s emerging Cold War with China is not based in ideology but in the efficiency that both countries’ models can exhibit. If we measure such efficiency by the handling of the Covid 19 pandemic, a clear difference emerges. Although the initial lack of transparency by China had a great impact in the global diffusion of the Coronavirus (and this certainly plays against its model), the extraordinary efficiency shown by this country in the domestic containment of the virus grossly contrasts with the botched response by the United States. America’s democratic but utterly dysfunctional political system is being globally compared to China’s authoritarian but responsive one. There is no doubt that for many the latter results more attractive.
GLO:In the Chinese understanding, there is complementarity of nationalism and globalization. What is the explanation?
Alfredo Toro Hardy: Chinese culture includes the complementary of opposites as exemplified by the duality of yin and yang. Within that context, globalization (so far synonymous of economic prosperity) and nationalism are seen as interdependent expressions of state policy, which converge in the aim of legitimizing the regime in the eyes of its citizens. While globalization has allowed China to lift 800 million people out of poverty, nationalism identifies itself with the belief that the country’s ancient history and its tradition of centrality entitles it to a position of privilege. Moreover, a century of humiliation by foreign powers impose the need to stand tall. This dual policy has been conceptualized under the aphorism of “grabbing with the two hands”. However, keeping the equilibrium between these forces is a daunting task. One false step, one overreach, one overreaction and everything might be blown to pieces.
GLO:Unlike the US, China’s future is burdened with its demographic problems (ageing, immigration pressure) and the need to achieve welfare increases through international trade, e.g. by importing necessary food. Is this not a challenge for the Chinese ambitions?
Alfredo Toro Hardy: With a rapidly aging population, as a result of the combination of low fertility rate and rising life expectancy, technology becomes a providential answer to the country’s quest to attain its “rejuvenation” –a nationalistic catchword that glues together the Chinese Communist Party and the Chinese population. Technology and rejuvenation thus become inseparable notions. Under those circumstances the search of economic prosperity and nationalism, the two strongest legitimizing forces of the regime, blend in their support to technology. However, even if technology “rejuvenate” the country it also displaces human labor and can significantly affect the welfare of many segments of society. Technological human displacement, though, is not privative to China. On the contrary, it is in the process of becoming one of the world’s biggest challenges of the Twenty First century. For the US, with a much larger percent of relay population and a lack of unifying national banners, this may lead to a more complex situation than China’s.
GLO:What role can the results of the forthcoming US Presidential elections play for the next phase of the US-China competition?
Alfredo Toro Hardy: I am afraid that a change in the White House may not change much. The confrontation between China and the US has become structural and not simply conjectural. Xi Jinping pursues fenfa youwei, meaning the attainment of great aims. This translates into a position of leadership in world affairs and a redefinition of its geopolitical footprint in Asia. For the United States this represents an unacceptable challenge to its leadership. In the same manner in which an expansive Chinese nationalism upholds Xi’s aims, a wide domestic coalition and an anti China popular sentiment sustain America’s reaction to that country’s assertiveness. Under those circumstances, Trump’s departure from the White House would only bring down Washington’s circus show, but not the emerging Cold War.
************* With Alfredo Toro Hardy spoke Klaus F. Zimmermann, GLO President.
Greece has performed very well in the management of the COVID-19 crisis but faces now a huge economic downturn. What are the elements of success, the challenges ahead and the role of scientific experts? Some insights from an interview with top policy advisor Panos Tsakloglou.
Some core messages of the interview:
Greece has done well since the government followed the advice of epidemiologists and the population respected the requested rules.
Non-essential traveling to the Greek islands was forbidden and hence very few cases of COVID-19 infections were reported.
Trust in was a crucial factor of success.
There were few infections recorded in refugee camps and settlements : They were dealt with swiftly and the authorities tried to create a sanitary zone.
Greece will experience the strongest negative economic impact from the pandemic among all EU countries since it relies excessively on activities that particular sensitive in the current crisis.
The country soon expects expert proposals for a new growth plan of the economy and the reforms necessary for its implementation.
Greece lacks behind in Europe in the development of the digital economy, but has made progress in the crisis.
The Greek lesson for the government: (i) listening to the experts, (ii) taking swift and early action, and (iii) convincing the population about the necessity of the actions taken.
The Greek government is prepared to listen to expert opinion.
GLO Fellow Panos Tsakloglou is Professor at the Athens University of Economics and Business. He is a Research Fellow of IZA and the Hellenic Observatory of LSE. During the period 2012-2014 he was Chairman of the Greek Government’s Council of Economic Advisers.
Middle photo by Mika Baumeister on Unsplash
GLO: How has Greece outperformed most of Europe in the handling of the coronavirus pandemic?
Panos Tsakloglou: It seems that this can be attributed to the combination of two factors. First, the government followed the advice of medical experts (epidemiologists) and imposed lockdown and social distancing measures quite early. Second, unlike the stereotype image of unruly Mediterraneans, the population respected the rules. As a result, in the middle of June Greece has just 18 deaths due to COVID-19 per million of population.
GLO: Are there natural advantages, like the many islands Greece has?
Panos Tsakloglou: Not really. Apart from the largest of these islands, most of them do not have the appropriate hospital facilities to deal with serious COVID-19 cases. However, in the framework of lockdown measures, non-essential traveling to the islands was forbidden and, therefore, very few cases of COVID-19 infections were reported.
GLO: Trust in the activities of the government is often seen as a crucial factor. What role did this play?
Panos Tsakloglou: This was a crucial factor, indeed. Several opinion polls taken since the outbreak of the pandemic record levels of trust to the government handling of the crisis that we have not seen in Greece for a very long period of time.
GLO: Migrants and refugee camps are sensitive elements of the challenge in many countries. What is the Greek strategy?
Panos Tsakloglou: With one major exception that, fortunately, did not result to loss of life, there were few infections recorded in refugee camps and settlements and they were dealt with swiftly. Early on, the authorities tried to create a sanitary zone to such facilities since an outbreak there could have had devastating consequences. On the contrary, the rate of infections of other vulnerable groups, such as Roma, was higher than the population average, although nowhere near the rates recorded in other European countries.
GLO: What role can Europe play for the Greek recovery?
Panos Tsakloglou: The timing of the pandemic was quite unfortunate for Greece, since it happened just when the economy was taking off after years of recession. Although so far Greece has handled the pandemic successfully, the OECD, the IMF and the European Commission predict that this year Greece will experience the strongest impact from the pandemic among all EU countries, since it relies excessively on activities that are likely to be severely hit in the current crisis (such as tourism and shipping) and, further, due to the high public debt the fiscal space of the country is limited. The inclusion of Greece in the Pandemic Emergency Purchase Programme of the ECB allowed Greece to access international capital markets in favorable terms, while if the Recovery Fund proposal of the European Commission is accepted, Greece will be one of the largest beneficiaries with plenty of resources available for investments that can facilitate a speedy recovery in the coming years.
GLO:How does Greece prepare for the economic revival of the country?
Panos Tsakloglou: Even before the eruption of the pandemic, the government had asked a group of economists led by Nobel laureate Sir Christopher Pissaridis to make proposals for a new growth plan of the economy and the reforms necessary for its implementation. Naturally, after the pandemic and in anticipation of the inflow of resources available through the Recovery Fund, the work of this committee had to be adjusted accordingly. Their proposals are expected in the coming weeks.
GLO:What role will the digital economy play for the future of Greece?
Panos Tsakloglou: According to the latest report of the European Commission only Bulgaria ranks below Greece in the EU in terms of digital skills of the population and progress in digital economy. However, during the pandemic there was rapid and substantial progress in several aspects of digital government – an area that Greece’s record is abysmal. The government has stated on many occasions that digital economy is among its priorities. If there is, indeed, a rapid digitization of the economy in the coming years we are likely to experience both an outburst of growth and an improvement in the citizens’ daily lives.
GLO:What can Europe learn from Greece?
Panos Tsakloglou: I think that Greece’s handling of the pandemic was one of the few nice surprises of the current crisis. Greece’s success was due to a combination of government’s (a) listening to the experts, (b) taking swift and early action, and, (c) convincing the population about the necessity of the actions taken. This is, probably, the lesson that Europe can learn from Greece.
GLO: Is the Greek government listening to scientists these days?
Panos Tsakloglou: The examples cited above about decisions on lockdown and social distancing measures based the advice of medical experts and the formation of the Pissaridis committee to draft a growth plan for the economy probably demonstrate that the Greek government is, indeed, prepared to listen to expert opinion. Nevertheless, we should not forget that in democracies decisions are taken by elected politician; not unelected experts.
************* With Panos Tsakloglou spoke Klaus F. Zimmermann, GLO President.
Why has Slovakia, a small open economy, done so well with low mortality rates in response to the crisis? And what to do now in face of an expected huge recession? Some insights from an interview with top policy advisor Martin Kahanec.
Some core messages of the interview:
Slovakia has done a tremendous job stopping the spreading of the virus, for instance the low mortality rate put the country at the very last place in the ranking in Europe.
The success can be traced back not so much to a rigorous, but to a fast and effective response.
But the Slovak economy is paying a huge price for the shutdowns in the country and among the trade partners.
Income maintenance schemes to strengthen the demand side and measures to preserve liquidity to grease the wheels of the economy are essential for a fast recovery.
My role in the advisory body of the Slovak government is to evaluate crisis management procedures and risks and assess possible measures and their effects.
GLO Fellow and GLO Cluster Lead “Labor Mobility” Martin Kahanec (Central European University and Bruegel) is also the Director of the Slovak Think Tank CELSI. He was just appointed by his government to the Slovak COVID-19 Economic Crisis Council. He reports on the Slovak experiences and the way to recovery.
Middle photo by Mika Baumeister on Unsplash
GLO:How well did Slovakia get through the COVID-19 crisis in terms of infections and death cases?
Martin Kahanec: Slovakia has done a tremendous job stopping the spreading of the virus. After more than 11 weeks since its first case of COVID-19, recorded on March 6, 2020, as of 25 May 2020 Slovakia had only 1,513 cases (of which only 163 active). Its 5 deaths per million inhabitants (28 in total) put Slovakia at the distant last place in the ranking of European countries by this mortality measure. For comparison, during the same period (eleven weeks into the pandemic) similarly-sized Ireland recorded more than 16 times as many cases and more than 55 times as many deaths and Denmark more than 7 times as many cases and nearly 20 times as many deaths. In spite of local outbursts in care homes and marginalized Roma settlements, the “first wave” of the pandemic in Slovakia was only a wavelet, as the country has to date recorded only 6 days with more than 50 new cases.
For the record, this result is not an issue of (the lack of) testing or isolation of the country: per million of inhabitants Slovakia has done fewer tests than Denmark, but more than Sweden, France, or the Netherlands, and just about as many as Finland. Slovakia is a small open economy with a very busy international transportation system, and the share of cross-border workers is the highest in Europe, at about 5.2% of its labor force – many of whom work in care homes and touristic resorts in Austria and northern Italy. Slovaks spend on average more nights abroad than Czechs, Italians, or Spaniards. Bratislava and Vienna are among the closest national capitals in the world, just about 65 km apart, Czechia is about the same distance from Bratislava, and Hungary, just like Austria, share borders with Bratislava city.
GLO: Is this success the result of a more rigorous Slovak response strategy?
Martin Kahanec: Perhaps not as much rigorous as enacted early on. Within ten days since the first case, Slovakia had shut down schools (in Bratislava within less than a week), introduced mandatory face masks in public transportation (first in Europe), closed non-essential shops, introduced border controls and mandatory quarantine for people returning from abroad (within a week), and shut down international air as well as bus and train passenger services. An important factor has been the impressive compliance of the general public, with face masks becoming the norm immediately, with politicians and television celebrities as well as news anchors leading by example and wearing facemasks on all occasions. Several mistakes have been made, but overall the system of measures has worked effectively.
GLO: What were the consequences in terms of GDP losses?
Martin Kahanec: Slovakia is paying a hefty price for the shutdowns in the country and among our trade partners. Primarily due to weakened foreign demand, in Q1 2020 Slovak GDP shrank by 3.9% y-o-y, which was one of the largest drops in Europe. Fitch has downgraded Slovakia from A+ to A on May 8. In April 2020 the unemployment rate increased by 1.38 percentage points y-o-y. On the other hand, the government is now gradually removing the restrictions, and the automotive sector, one of the backbones of the Slovak economy, is rebounding, with the four large car making plants in Slovakia (VW, PSA, Kia, Land Rover) gradually returning to their capacity.
GLO: What can be done to foster a fast recovery?
Martin Kahanec: During the trough of the crisis the government should help those who have been hit the hardest and lost their livelihoods. This moral obligation is strengthened by the fact that keeping especially the workers with the highest risks of spreading the virus at home reduces the negative externality their continued activity would inflict on the rest of the society and that, for this reason, some sectors were shut down directly by the government. For a swift recovery, as soon as the epidemiological situation permits, workers should be allowed to return to jobs and children to schools. Effective testing, tracing, and isolating of the cases is needed to avoid a possible second wave.
Income maintenance schemes to strengthen the demand side and measures to preserve liquidity to grease the wheels of the economy are essential. For Slovakia, as a small open economy, coordination with its key trading partners and, especially, at the European level is of key importance.
But it is important to understand that the crisis will make some products, services, or even sectors obsolete, and it will open new opportunities and avenues for innovative economic activities at the same time. Therefore, what will matter in the long run is how the measures adopted will facilitate the reallocation of resources to the most promising economic endeavors, rather than cementing them in those, which have no economic future.
GLO: You have been just appointed to the Slovak COVID-19 Economic Crisis Council; what is the role of this council?
Martin Kahanec: The Economic Crisis Council is a temporary advisory and coordinating body at the Ministry of Finance during the COVID-19 crisis. Its purpose is to evaluate crisis management procedures and risks for the development of the Slovak economy and assess possible measures and their effects. We elaborate on specific proposals in response to the economic crisis caused by the global COVID-19 pandemic in Slovakia.
************* With Martin Kahanec spoke Klaus F. Zimmermann, GLO President.
The Journal of Population Economics welcomes submissions dealing with the demographic aspects of the Coronavirus Crisis.After fast refereeing, successful papers are published in the next available issue. An example:
May 28, 2020: Don DeVoretz (*May 28, 1942; + March 14, 2020), a prominent migration researcher, GLO Fellow and long-term collaborator of the GLO President, Klaus F. Zimmermann, would have been 78 today. We bemoan and remember a great scientist and friend.
Don DeVoretz obtained his doctorate in Economics from the University of Wisconsin (Madison) in 1968. He was the co-director of the Centre of Excellence for the Study of Immigration (1996-2007) and Professor of Economics at Simon Fraser University (since 1968) and Professor Emeritus (since 2010).
Don DeVoretz has held visiting positions at Duke University, University of Ibadan (Nigeria), University of the Philippines, University of Wisconsin, and the Norwegian School of Economics.
Don DeVoretz was named the Willy Brandt Professor in 2004 at IMER, Malmö University.
Don DeVoretz, a friend of the late Julian Simon, gave the first Julian Simon Lecture at IZA in 2004.
Don DeVoretz, Nahikari Irastorza. Economic Theories of Citizenship Ascension. In: Ayelet Shachar, Rainer Bauböck, Irene Bloemraad, Maarten Vink (Eds.), The Oxford Handbook of Citizenship. Oxford 2017.
Don J. DeVoretz. The Economics of Immigrant Citizenship Ascension. In: Amelie Constant, Klaus F. Zimmermann, International Handbook on the Economics of Migration, Edward Elgar 2013.
Klaus F. Zimmermann, Martin Kahanec, Amelie F. Constant, Don J. DeVoretz, Liliya Gataullina, Anzelika Zaiceva. Study on the Social and Labour Market Integration of Ethnic Minorities. Report for the High Level Advisory Group on Social and Labour Market Integration of Ethnic Minorities and the European Commission, Bonn 2008, IZA Research Report No. 16.
Don J. DeVoretz. Immigration Policy: Methods of Economic Assessment. International Migration Review, 2006, 40 (2), 390-418. (Based on the Julian Simon Lecture 2004.)
Don J. DeVoretz, Samuel A. Laryea. Canadian Immigration Experience: Any Lessons for Europe? In: : K.F. Zimmermann (ed.), European Migration – What Do We Know? Oxford University Press, 2005.
Don J. DeVoretz (Ed.). Diminishing Returns: The Economics of Canada’s Recent Immigration Policy. C. D. Howe Institute 1995.
Ather Akbari, Don J. DeVoretz. The Substitutability of Foreign Born Labour in Canadian Production: Circa 1980. Canadian Journal of Economics, 25(3): 604-614. 1992.
Interviews with Associates
Below are two interviews with close associates of Don DeVoretz:
GLO Fellow Ather Akbari is Professor of Economics at Saint Mary’s University in Canada and Chair of the Atlantic Research Group on Economics of Immigration, Aging and Diversity. He is a former PhD student of Devoretz.
GLO Fellow Pieter Bevelander is a Professor at Malmö University and Director of the Malmö Institute for Studies of Migration, Diversity and Welfare. He is a former research partner of Devoretz.
Interview with Ather Akbari
GLO: How was Don as a teacher and PhD supervisor?
Ather Akbari: I wrote my doctoral thesis, entitled “Some Economic Impacts of Immigrant Population in Canada” under Don’s supervision. At that time (1980s), there was a paucity of empirical research on Canadian immigration, but interest in impact of immigration was growing in public policy circles, as well as in general public. Under Don’s supervision, I really learned to communicate results of an academic research for both academic and nonacademic audience. Results of my thesis attracted a lot of attention in news media and in public policy circles and I owe it a lot to my training under Don.
GLO: What was your joint prominent paper in the Canadian Journal of Economics about?
Ather Akbari: This paper entitled “Substitutability of Immigrants in Canadian Production Circa 1980” (not a part of my thesis) was the first in Canada to assess if immigrants displaced Canadian born workers in Canadian industries. Using data from Canadian census, we estimated a translog production function and found that although there was displacement in some industrial sectors, overall there was no displacement effect.
GLO: Migration research was his focus, can you outline an example from his work?
Ather Akbari: I think Don’s most important contribution to migration research are his many contributions to the economics of citizenship. He has published conceptual and empirical research in this area. He also co-edited a book on the issue with Pieter Bevelander (Malmö University) with a preface written by Irene Bloemraad (Berkley University). This volume had contributions from Europe and North America. Main focus of the book was to present evidence on the impact of citizenship status on economic performance and contributions of immigrants in the host country. Very important policy implications as rights for citizenship ascension vary much across countries.
GLO: What was his contribution to policy advice, in particular to Canadian migration policy?
Ather Akbari: In the late 1980s, the Canadian government undertook a demographic review of Canadian population. All forecasts based on the demographics of the time indicated that Canada was moving towards a population distribution which will be more heavily skewed towards the elderly. This could could cause economic and labor market challenges. Don was very passionate in recommending to the Canadian government that it should liberalize its immigration policy as one important tool to meet these challenges. He was also in favor of attracting international students and for liberalizing rules for their permanent residency. Over time, Canadian immigration policy became more liberal. He was also very much in favor of immigration policy based on evidence-based research. He promoted an increased availability of data for researchers and was among the proponents of the use of administrative data in connection with survey data (especially the Longitudinal Immigration Database, IMDB).
GLO: Don was increasingly worried about the future of migration, what do you think are the major challenges ahead?
Ather Akbari: Globalization has resulted in greater movement of goods and people around the world and has resulted in great benefits. However, many have also been hurt, economically and politically, by unequal distribution of these benefits. In the West, this has led to the current wave of nationalism which threatens free movements of goods and of people. World leaders, academic researchers and news media need to address this seriously.
Interview with Pieter Bevelander
GLO: How did you get connected with Don?
Pieter Bevelander: I met Don DeVoretz in Spring 2004. He had just taken up the Willy Brandt Guest Professorshipat the Department of International Migration and Ethnic Relations at Malmö University. He felt a bit lost among all non-economists that were working there. I was myself just on a post doc visit at the Erasmus University in Rotterdam, and met him when I was on a visit. During his first weeks in Malmö he had read my dissertation on the employment integration of immigrants in Sweden and showed especially large interest into the citizenship analysis. Further that Spring, he organized in Malmö a multidisciplinary workshop on the consequences of citizenship ascension in different countries and from different disciplinary angles.
GLO: You published together the edited volume The Economics of Citizenship. How did this project evolve?
Pieter Bevelander: Since the workshop in 2004 and his time in Malmö we slowly started to have conversations on a volume on the economic effects of citizenship in different countries. Don was a Research Fellow at IZA and met often its Director in Bonn. Through this network it was possible to meet either in Bonn or on his way into Europe in Malmö. We presented our ideas and papers at conferences and started to screen possible researchers for being part of the volume. We published then the book in 2008.
GLO: How has this project affected your both careers and the profession?
Pieter Bevelander: For us both, Don and me, this volume has been very valuable. It was followed by subsequent articles, handbook chapters, policy papers for think tanks and government institutions, all analyzing why immigrants take up the citizenship of another country and whether this leads to increased economic integration in new environment. Don, for instance, was involved in policy recommendations through the think tank Center for American Progress in 2014 about how to find a way for allowing undocumented migrants to become full citizens in the US. Today, I am an advisor for the Swedish government’s investigation about changing citizenship regulations.
NOTE *********** With Ather Akbari & Pieter Bevelander spoke Klaus F. Zimmermann, GLO President.
Klaus F. Zimmermann: Don DeVoretz has been a academic companion for most parts of my life as a migration researcher.
We met 1992 when we both participated at the famous migration workshop, Herbert Giersch organized in Vancouver for the Egon-Sohmen-Foundation. (Herbert Giersch, Ed., Economic Aspects of International Migration, Springer Berlin. Heidelberg, 1994.)
He visited me during my tenure as Professor of Economics at the University of Munich and was part of the migration network I had created at the time as Programme Director Migration for the Centre of Economic Policy Research (CEPR) in London. A CEPR conference on “European Migration – What Do We Know?”, which I organized 1997 at the University of Munich mobilized the network which enabled the publication of K.F. Zimmermann (ed.), European Migration – What Do We Know? Oxford University Press, 2005.
After I created IZA, the Institute for the Study of Labor, as the Founding Director in 1998 in Bonn, Don DeVoretz and the migration network moved with me, and I appreciated his experienced support for two decades. Within this period, he was instrumental in large research projects for the Volkswagen Foundation (“The Economics and Persistence of Migrant Ethnicity”, 2005 – 2008) and the European Commission (“Study on Social and Labour Market Integration of Ethnic Minorities”, 2006 – 2007). He helped building up and developing the IZA migration network together with Amelie Constant and Barry Chiswick. He started the prominent IZA Julian Simon Lecture series in 2004, and was a regular visitor throughout the period.
Don DeVoretz stayed in contact with email exchange and ambitious research projects until earlier this year. We all miss his friendship, sharp thinking and helpful advice.
Recently, the WageIndicator Foundation had announced the Continuous Global Online Survey ‘Living and Working in Corona Times’. (See also the report in the GLO NEWS on March 29.) Two months later, the team has already collected 14,000 valid observations from 72 countries, with much more to come. The WageIndicator Foundation is led by GLO Fellow Paulien Osse as the Director, is a long-term partner of the GLO. (For more information about Director Osse, see our 2019 interview.) The right moment to interview Paulien Osse about the new venture, to give a progress report, and outline difficulties, challenges and the huge potentials.
The Continuous Global Online Survey ‘Living and Working in Corona Times’
GLO: Any global crisis needs short-term data for nowcasting. How can WageIndicator help?
Paulien Osse:WageIndicator tries to help in two ways. First, we started a special Corona – Work Life Survey on March 23. Two months later it already collected 14,000 valid observations from 72 countries. Each day the state of affairs as covered by this living & working survey in corona-times is updated and shown in refreshed infographics, global, regional and country-specific. The survey is ongoing, 24/7, and will last as long as the pandemic is raging. Results show increased anxiety and dissatisfaction across the board, also in countries which remained almost untouched by the coronavirus, but with lockdowns in force.
Asecond global survey (which we run since 2014), mapping cost of living-levels, may become more and more relevant. Face-to-face data collection on streets and market places is not everywhere possible, but we do as we always do online and now also include web-based food shops. We understand that during the pandemic there are more online food shops, and people get more digitalised, EVERYWHERE. We want to show price levels as per July first world-wide in an attempt to picture the corona-impact on the cost of living and living wage-levels. As far as we can see now we will cover 120 countries with prices and living wages. 12 interns from FLAME University help us out!
These are our nowcasting contributions.
GLO: You execute a special Covid work life survey for “everybody” and one for HR. What do you want to achieve, what is the focus? Paulien Osse: Generally speaking, we want to provide insight into the impact of the coronacrisis on the work/life balance of working individuals and their families. We assume there will be a long lasting aftermath, with less jobs, increased job insecurity, and a great variety in the consequences for different occupational groups, male/female, formal/informal employment etc. How will this work out for each of us? To be precise: in the survey you can select different contract types (for employees, workers, informals, and employers). You may choose from 1,700 occupations.
Our HR-survey is directed at (big) companies that have already participated in earlier compliance research, in Indonesia, Ethiopia and Uganda, both in the garment and flower industry. We now combine it with questions regarding health & safety and company policies to survive the coronacrisis. This data is shared each fortnight with trade union partners in these countries, as input for bipartite and tripartite negotiations and consultations. Highly in demand, since precise.
GLO: You have many country teams, how do they work and what problems do they face?
Paulien Osse: Like everybody else, our team members have to comply with lockdown regulations. Practically this has meant that, to varying degrees, all stayed at home much of the time, starting at the end of March beginning of April. For some this was a slight inconvenience. I personally work from home already for many years, so my routine did not change much. Others, like in India, lost help in the household or food delivery that they were used to. Now they shop and cook and clean and work and look after the kids all at once Some are not even allowed to leave the house (45 degrees), or get medication for their ailing mother in an emergency. Another colleague saw her boy friend confined to the oil rig where he works. Forever it seems. There are many stories like these and worse, like in Mozambique where corona is for Rogerio, our Portuguese content manager, just another nuisance on top of terrorist acts and civil war. Very unnerving, all this.
But as teams used to working and communicating online, we thrive. We are not beginners online, like many others have become just now. We have meetings more frequently, shorter, more efficient. And we Zoom-socialize on Fridays at a fixed time, sharing fun, frustrations and small victories, and the Italians serve Prosecco.
But, as already mentioned, the face-to-face data collection unfortunately has to be shelved for another few weeks, like in Bangladesh. This blocks progress, where we were about to embark on a nationwide wage and cost of living survey.
GLO: How do you judge the productivity of your teams in comparison to normal times?
Paulien Osse: Team members travel less – I mean NOT. So there are many more hours for productive work. Also, we see each other more frequently for online consultations. Thanks to the growing quality of Zoom, I must say. Because of all this practice we have faster, shorter meetings, more to the point. So, result: a nice set of new projects! After 2 months however, I notice that this higher gear holds the risk of exhaustion. But when WageIndicator offers an escape from depressing living conditions under severe restrictions of movement, ‘take a rest’ is easier said than done. Some of us haven’t seen sunshine for many weeks.
GLO: Can the surveys identify losers and winners of the crisis, and what can we learn?
Paulien Osse: Our first scientific report from Pablo Pedraza, Martin Guzi and Kea Tijdens (see GLO DP # 544) covers the data collected in the first 6 weeks since the launch of the corona-survey. We must be very cautious given the paucity of data. Yet, on the most general level of outcomes we can say that there are no winners of the crisis, just losers. Working people do not feel less, but more anxious as a result of state-imposed emergency measures. Having to stay home and wear protective gear when going out, makes people not just more anxious but also more dissatisfied.
Not surprisingly, reduced income or prospects also increases anxiousness and dissatisfaction. Changes in the workload and/or routine have the same effect: an increase of tasks, but a decrease of the workload too, makes people more anxious and dissatisfied.
Our researchers conclude that their findings are relevant for policy-makers who design paths to recovery. They endorse the pursued maintenance of employment for as many people as possible: ‘protecting jobs implies the protection of citizen’s well-being’. They say this applies to the lockdown period studied, but also to the much needed recovery.
GLO: Covid-19 has affected first the developed world, but now reaches the developing economies: can you trace differences in the major challenges?
Paulien Osse: The global lockdown was initiated to protect the infected, more developed parts of the world, first and fast. Several months into the pandemic it now becomes clear that the less developed and least-infected countries are paying a heavy economic price just the same. In Mozambique for instance, with very low corona-infection and zero death rates – but people report that they have lost their job last month. In Madagascar, also almost corona-free and no corona deaths reported, even 1 in 5 respondents say they lost their job already. A similar situation can be seen in Vietnam, where close to 1 in 10 respondents report to have lost their job as a consequence of the corona lockdown. Yet, corona-related death rates are zero in Vietnam. The figures are from the first week of May.
Keep in mind that working from home is an option for the higher educated. Working from home might be cool, but no fun with bad connections, and/or small children around. So in general for developing countries, hardly any corona, yet; but they suffer just the same, if not more.
GLO: Is working from home different between the sexes, e.g. is the burden on females larger and rising?
Paulien Osse: Women report anxiety more often than men, living with a partner makes people more satisfied and less anxious, but having children in the household makes no difference in this respect. But if prevailing gender pay gaps, prejudice and role divisions in the household are anything to go by, one may assume that women are hit harder than men. Also, they usually earn less and have smaller or less protected jobs. Therefore, prospects are not bright and single mothers in particular will need additional support in the recovery period.
By the end of April most respondents in our survey had reported to believe that they will still have their job next month, however 1 in 3 was afraid to lose income in May. There might be a relation with the fact that more respondents around the world report that they got less, instead of more work. But it is too early to measure the real and lasting gender-specific impact, or for female dominated occupations.
GLO: Are older people more lonely and unhappy?
Paulien Osse: More lonely, we cannot say. But surprisingly, 50 plus respondents, though more vulnerable, report lower dissatisfaction and anxiety than the average from our survey.
GLO:How do you provide access for researchers to use country level and individual data?
GLO:How satisfying is it for you to see the project prospering?
Paulien Osse: Fun! So far, we are there to stay. However: The reason for our corona-survey does not make one happy. Neither do the economic prospects for the near future, also and maybe more so in the developing world. Now the return of massive poverty threatens.
Our WageIndicator teams, also and especially from developing countries, are not so easily shocked. We are an experienced lot. For us the joy is to show how fast, lean and precise we can be, working remote. Believing also helps: our data may contribute! We try and keep our spirits high. As one out of 25 recently recruited interns from FLAME university noticed: “WageIndiators are hard working people from all around the world, very inspiring”.
Like in the financial market crisis, the world struggles again in the #coronavirus crisiswith data needs to proper respond to the challenges. Why are data so important, and why are social media data not a simple solution? Some insights from an interview with data scientist Pablo de Pedraza.
Some core messages of the interview:
Data is a source of economic growth and innovation. The data flow in a data economyis semicircular – from households and firms to data holders, but not back.
If knowledge extraction from data is a natural monopoly, the amount of knowledge generated is below the socially desirable amount.
Many agents that could generate valuable knowledge do not have enough access to data.
The more citizens are responding to Covid-19 apps, the more data and knowledge we have about the virus.
In a data economy, the race for innovation is a race for data.
A related new research paper of Pablo de Pedraza on the topic is:
GLO FellowPablo de Pedraza (European Commission, DG Joint Research Centre) is an Economist interested in the use of web data for economic research. His research interests are web data, life satisfaction and the semicircular flow of the data economy. The scientific output expressed does not imply a European Commission policy position. Neither the European Commission nor any person acting on behalf of the Commission is responsible for the use that might be made of this publication.
Middle photo by Mika Baumeister on Unsplash
GLO:What is the “data economy” and its “semicircular flow”?
Pablo de Pedraza: The “Data economy” is an economy where data plays a crucial role. From a consumption perspective, personal data is similar to money; citizens pay online services with their data. From a production point of view, data is like oil; a raw material to produce digital services. Data is a source of economic growth and innovation. Theoretical economic concepts also apply to the “data economy” which has its own market failures. The “semicircular” flow is a theoretical model that aims to simplify the complex reality of the “data economy.” It facilitates discussion about the why and how of data policy. The general idea is that the data flow is semicircular; from households and firms to data holders, but not in the other direction. Households and firms receive data-driven services that are the result of knowledge extracted from data. If citizens would receive data, they would not have the capacity to process nor extract knowledge from that data. One of the objectives of data policy is to empower the individual.
GLO:Why is the level of knowledge below the socially desirable amount?
Pablo de Pedraza: The question is whether the process of extracting knowledge from data is a natural monopoly, which is an empirical question for which we have no answer yet. We can observe how data holders like large technology companies behave. They are data hungry, in the search for the perfect marketing tool. In econometric terms, they are in a race towards N=All and X=everything. If knowledge extraction from data is a natural monopoly, and data holders are profit maximization agents and monopoly theory holds, the amount of knowledge generated is below the socially desirable amount. Therefore, public intervention should focus on increasing knowledge generation. What kind of knowledge? Data is a different type of good depending on the kind of knowledge generated. Using data to generate market power is a demerit good. Data is a merit good if used: to deliver nimbler public policy, to protect competitive markets, to forecast economic cycles, to protect consumer’s rights, and study a pandemic.
GLO:Some people say, we have enough data, but not the right one….
Pablo de Pedraza: The data economy has its own sources of access inequalities similar to income inequalities. Many agents that could generate merit knowledge, such as the scientific community, central banks or anti-trust authorities, do not have enough access to data. For example, research literature shows how online searches can improve forecasting models. One of the main conclusions from that literature is that better understanding of results needs the disclosure of more data. More accurate forecasting is an example of merit knowledge that benefits the whole society, including data holders.
GLO:Can your theory help us to understand the data challenge in the coronavirus crisis?
Pablo de Pedraza: Yes. Think about mobile apps to track Covid-19. The more citizens responding to Covid-19 apps, the more data and knowledge we have about the virus. The semicircular flow of the economy defines the data sharing Laffer curve. It explains the theoretical determinants of optimum data sharing as the point where society generates the maximum amount of data and merit knowledge. Principles that define the curve, such as trust, apply to the covid-19 data challenge. When citizens understand the data dimension of the economy and trust the rule of law, they are more willing to contribute to a solution, install the app, and give consent to share their data. If they do not understand what they are giving their consent for, they will be hesitant to install the app and therefore; data generated will be lower and knowledge will be below the socially desirable amount.
GLO: What are the conclusions for data sharing policies?
Pablo de Pedraza: In a data economy, the race for innovation is the race for data. Leaving data policy only in the hands of data holders will not solve antitrust concerns. The lack of competition stifles innovation although it may initially attract investment. However, excessive intervention discourages investment from data holders and generate surveillance concerns. Countries able to empower well-informed citizens by developing their data literacy, fostering user centric approaches, building strong public data infrastructures and institutions will win the race. Citizens operating in a secure environment will generate more data and increase innovation. In my opinion, data sharing policies are just as vital and important as fiscal and monetary policies. The semicircular flow of the economy is a data sharing theoretical framework. The data dimension of the covid-19 crisis is an illustrative example of that framework.
With immediate effect, Terra McKinnish (University of Colorado Boulder) joins the group of Editors of the Journal of Population Economics. She will work with Editors Alessandro Cigno (University of Florence), Shuaizhang Feng (Jinan University), Oded Galor (Brown University), Editor-in-Chief Klaus F. Zimmermann (UNU-MERIT) and with Managing Editors Michaella Vanore (UNU-MERIT) and Madeline Zavodny (University of North Florida).
GLO: What brought you to economics?
Terra McKinnish: I started as an undergraduate economics major intending to pursue an MBA, but then came to appreciate that economics is a social science that can be used to study a wide variety of interesting topics.
GLO:What is your field of specialization and what excites you most?
Terra McKinnish: My research has focused on topics in population economics and labor economics. I am most interested in how individuals make key life decisions about education, location, family structure and work. My recent research has particularly focused on marriage: how do we pick our spouse and what are the consequences of that choice?
GLO:In the next future, will there be journal space in economics beyond coronavirus research?
Terra McKinnish: I certainly hope so! Economics journals currently support a broad range of research topics, and I like to think that won’t change. Certainly I don’t think we will see many papers using 2020-2021 data for topics that are not specifically Covid19 focused, so there will be a major disruption to non-Covid19 research in that sense.
GLO: Conferences and networking play a major role in academia; will this go on after the crisis?
Terra McKinnish: Yes, I think we will get back there in the medium-run. In the shorter run, I am concerned for younger researchers, who most benefit from face-to-face opportunities to establish their research reputation and develop a network. I hope departments will think about this when scheduling (virtual) seminars, and will consider including less established researchers.
GLO:Is the profession publishing too much?
Terra McKinnish: I think the Economics profession is producing an enormous amount of high-quality research. There is so much competition and standards are very high! The profession has been particularly invigorated by the international diffusion of modern research methodology, which has resulted in high-caliber research being conducted for a wider variety of national and international settings.
GLO:What makes in your view a good academic journal?
Terra McKinnish: An attention to consequential research questions and contributions, combined with high methodological standards, and attention to clarity in exposition.
GLO:Face female researchers still disadvantages in the publishing process?
Terra McKinnish: As someone who has been heavily involved in mentoring junior women in economics, including several years as Associate Chair of Mentoring of CSWEP (AEA standing Committee on the Status of Women in the Economics Profession), I think most of the hurdles for women are adjacent to the publication process rather than directly in the process itself. If women have disproportionate service loads, this will affect their ability to conduct research. If women do not receive the same mentoring, feedback and encouragement as men on their research, this will affect the quality of their publications. If women’s contributions to co-authored research are judged differently than men’s, this will affect their career trajectory.
With Editor and GLO FellowTerra McKinnish spoke Klaus F. Zimmermann, GLO President & Editor-in-Chief of the Journal of Population Economics.
GLO FellowTerra McKinnish is a Professor of Economics and Faculty Associate of the Institute of Behavioral Science at the University of Colorado Boulder, where she is also the Director of the Center to Advance Research and Training in the Social Sciences (CARTSS). Her research focuses on topics in population economics and labor economics, with particular interest in marital sorting, marital quality and women’s labor market outcomes. She has been an Associate Editor of the Journal of Population Economics and she serves on the Editorial Board of Demography.
Editor-in-Chief & Managing Editors
Further Journal of Population Economics News: – The Journal invites studies dealing with the demographic aspects of the Coronavirus Crisis.Qualified articles are published as soon as possible in regular issues. – “Impacts of Social and Economic Factors on the Transmission of Coronavirus Disease 2019 (COVID-19) in China”byQiu, Yun & Chen, Xi & Shi, Wei Forthcoming: Journal of Population Economics, Issue 4, 2020. PDF of the prepublication revised draft.
The world still struggles about a convincing strategy to handle the #coronavirus crisis. What is the right strategy with social distancing. Were the huge lockdowns in many states necessary? How to move out of the lockdowns? Read the insights of one of the leading experts on epidemics world-wide.
Some core messages of theinterview:
Our research showed that those cities that acted early in the big influenza epidemic of 1918, for long periods of time, and used several non-pharmaceutical interventions saw far lower rates of influenza cases and deaths compared to the cities that failed to take such measures or took them too late.
I do not believe letting the virus run wild to achieve herd immunity and leaving things wide open, as in Sweden, is a good idea.
In the fog of war it is always hard to gather good data.
We are all flying by the seat of our pants and making best guesstimates.
At least in the US, we are not there yet to terminate the widespread lockdowns.
I fear that CoVID-19 will be much worse than the influenza epidemic of 1918.
He is the pre-eminent social and cultural historian of medicine, public health, and epidemics in the world. Author of 11 books and has contributed over 500 articles, reviews, essays and book chapters to a wide range of scholarly publications and popular periodicals. He has made hundreds of contributions for the media and is a prominent policy advisor.
More details about his expertise on epidemics below the interview. Full Bio.
Howard Markel: In 2007, my colleagues and I at the University of Michigan Center for the History of Medicine and the U.S. Centers for Disease Control and Prevention studied the use of non-pharmaceutical interventions (NPIs) taken in the U.S. during the 1918-1919 influenza pandemic, which killed, at least, 40 million people around the globe and 500,000 to 750,000 Americans. We evaluated the public health efforts of 43 large cities that implemented some combination of commonly used NPIs:
1) isolating the ill or suspected cases in hospitals or at home; 2) banning public gatherings and in some cases, shutting down roads and railways; and 3) closing schools.
What we discovered was quite remarkable. Many cities acted early, meaning they pulled the levers to shut the gates of their city before the virus reached what is called an inflection point and spread widely causing hundreds if not more cases per day. We estimated that rate to be twice the normally expected number of cases of influenza in that city at that time, based on the previous year’s statistics.
Those cities that acted early, for long periods of time, and used more than one NPIs saw far lower rates of influenza cases and deaths compared to the cities that failed to take such measures or took them too late —after the virus had a chance to spread through the community.
GLO:Social distancing as a concept is applied to some extent in most countries, but was the complete lockdown of societies and economies really necessary? Why are e.g. the policies applied in South Korea and Sweden wrong?
Howard Markel: Early action is the key, of course, because these measures do not cure or prevent the spread of a virus. They only buy time, so that hospitals are not overrun with sick people and, perhaps, modern medicine can manufacture effective anti-viral drugs, treatments, or a vaccine. And because these measures are extremely disruptive to society, they should be employed only as a last resort and only for highly lethal and easily transmissible infections. When is meant by the phrase “last resort,” is that all other measures leading up to such socially disruptive NPIs do not seem to work elsewhere and we are dealing with an epidemics that has an especially high case fatality rate (number of deaths divided by total number of cases).
In 1918, the case fatality rate (CFR) was 2.5% (and in some countries such as India, over 10%), which is staggering compared to seasonal flu case fatality rates of about 0.1%. The 1918 pandemic that merited the most draconian of measures and it is important to note, they had no other tools to use, no antibiotics or antivirals, no vaccines, not even IV fluids. Right now, we are estimating relatively high CFR’s for CoVID-19, but are unsure of the precise number because while deaths are easy to quantify, the total number of cases is unclear—especially those with mild cases that do not see their doctor. We need better testing to be sure but given how sick CoVID-19 makes people and the number of deaths we are seeing, I believe it is better to be safe than sorry.
I do not believe letting the virus run wild to achieve herd immunity and leaving things wide open, as in Sweden, is a good idea given how many people with co-morbid diseases are at risk to get very sick and die. In 2020, there are many people living with cancer, AIDS, heart disease and other serious illnesses who would never be alive in 1918. These people are at serious risk of dying of CoVID-19 herd immunity, meaning 90% or more of a community is immune to a virus to prevent further spread of an epidemic disease, is best achieved by universal vaccination.
And a huge problem with CoVID-19 is that we have never experienced an epidemic with this particular virus and we do not yet have a stable case fatality rate to make good judgments. Hence, the policies we do develop are likely to be influenced by the adage, better safe than sorry. As such, we should not grouse about calls made “too early,” in the cause of fighting what may be a deadly epidemic.
GLO:Now we are in the middle of the fog, and it is difficult to know when to move back to some normal. Why are the statistics we have to rely on world-wide of so low quality?
Howard Markel: Precisely because we are in the fog of war and it is always hard to gather good data on the epidemic disease in question.
GLO:How long does it take to see the effects of public measures in the statistics?
Howard Markel: We should have better data in the coming weeks, late in the epidemic curve of each city, state or province, and country. But we are all flying by the seat of our pants and making best guesstimates based on a great deal of epidemiological data, modeling data and clinical information.
GLO:What could be the statistical indicator to decide on the termination of the widespread lockdowns?
Howard Markel: That’s the million dollar question. We don’t have a precise time to do this even though we know it needs to be late in the epidemic curve, not when cases are doubling every day, but instead are only popping up on a much more slow basis. We also need far more test kits to be able to contact trace the new cases and implement quarantine and isolation procedures for them. Simply put, at least in the US, we’re not there yet.
GLO:Why is New York the center of the epidemic in the US?
Howard Markel: Well, it’s the largest city in the world; it was late to implement social distancing measures, compared to other American cities and states; people live in crowded conditions—especially the poor—and then there is the mass transit system where people travel cheek by jowl on subways. These are just a few speculations but it has been sad to see how seriously my beloved New York City has been affected.
GLO:Moving outside of your territory as a historian, what do you speculate: Will we consider in some decades the coronavirus comparable to the influenza epidemic of 1918?
Howard Markel: To be honest, I fear it will be much worse. Let me put it this way, it will certainly keep historians of epidemics busy for many, many years!
GLO: Thank you very much for these insights!
************* With Howard Markel spoke Klaus F. Zimmermann, GLO President on April 18, 2020. Both have been Rockefeller Foundation Bellagio Fellows in 2017. Further activities and reports of the GLO Research Cluster on the coronavirus.
Review of epidemics-related work of Howard Markel
Dr. Markel is the author, co-author, or co-editor of eleven books including the award-winning Quarantine! East European Jewish Immigrants and the New York City Epidemics of 1892 (Johns Hopkins University Press, 1997; paperback, Johns Hopkins University Press, 1999) and When Germs Travel: Six Major Epidemics That Have Invaded America Since 1900 and the Fears They Have Unleashed (Pantheon Books/Alfred A. Knopf, 2004; paperback Vintage/Random House, 2005).
From 2005 to 2006, Professor Markel served as a historical consultant on pandemic influenza preparedness planning for the United States Department of Defense. From 2006 to 2015, he served as the principal historical consultant on pandemic preparedness for the Division of Global Migration and Quarantine of the U.S. Centers for Disease Control and Prevention. From late April 2009 to February 2011, he served as a member of the CDC Director’s “Novel A/H1N1 Influenza Team B”, a real-time think tank of experts charged with evaluating the federal government’s and President Barack Obama’s influenza policies on a daily basis during and after the outbreak. His historical research has played a pivotal role in developing the evidence base for many community mitigation strategies employed by the World Health Organization, the CDC, the Mexican Ministry of Health, and numerous state, provincial and municipal health departments around the globe during the 2009 influenza pandemic.
In collaboration with colleagues at the University of Michigan and the U.S. Centers for Disease Control and Prevention, Dr. Markel is Co-Editor-in-Chief of The 1918-1919 American Influenza Pandemic: A Digital Encyclopedia and Archive, which was first published in 2012 by the University of Michigan Center for the History of Medicine and the University of Michigan Scholarly Publications Office. Funded by grants and contracts from the CDC, the Robert Wood Johnson Foundation, and the National Endowment for the Humanities, the digital encyclopedia represents one of the largest collections of historical documents ever assembled on a single epidemic and is accessible on the Internet at: www.influenzaarchive.org. The second edition of the 1918-1919 Influenza Pandemic: A Digital Encyclopedia and Archive 2.0 was released in 2016 and a third edition is now in preparation.
During the Ebola epidemic of 2014, he was a much sought-after expert on the history of epidemics and quarantines. Aside from wide press coverage, in the form of interviews, and his contributing several influential op-eds for the New Republic and Reuters Opinion, Professor Markel was the lead interview on NPR’s All Things Considered, BBC World Service, CNN/Sanjay Gupta MD, and PBS NewsHour. Dr. Markel’s landmark scholarship on the tangled history of stigma, politics and contagion was also lauded on the front page of The New Yorker, (Talk of the Town/Comment, November 10, 2014). In the aftermath of the Ebola crisis, in February of 2015, the Presidential (Barack Obama) Commission on Bioethical Issues invited him to consult on the ethical issues surrounding the stigma of epidemic and infectious diseases.
More recently, Dr. Markel played a prominent role in evaluating public health and social distancing policies as they played out in China and around the world during the CoVID-19, or coronavirus, epidemic of 2019-2020. His pioneering 2007-2009 research on the use of community mitigation strategies for influence pandemics was the driving and life-saving force behind the entire global policy to CoVID-19.
On March 11, 2020, Nicholas Kristof, the eminent columnist for the New York Times cited Dr. Markel and his research team’s work as one of the “12 Steps to Tackle the Coronavirus.” On April 1, 2020, he was the subject of a New Yorker magazine profile, “A Medical Historian on Why We Must Stay the Course in Fighting the Coronavirus.” At the National Academy of Medicine CoVid-19 briefing on March 25, 2020, he was “widely credited with coining the term flattening the curve.” On April 6, 2020, Google honored the concept of “flattening the curve,” which he helped coin and scientifically demonstrate, by making it the first in a series of @GoogleDoodles for CoVid-19, on its masthead, dedicated “to public health workers and to researchers in the scientific community” during the crisis. On April 16, in response to those wanting a lifting of the state’s CoVid-19 lockdown, Governor Gretchen Whitmer cited Dr. Markel’s non-pharmaceutical intervention research as the evidence base for her social distancing policies for the State of Michigan.
Markel’s two prominently run “Op-Ed” essays on the Chinese quarantine and containment strategies in Wuhan ran back-to-back in the Washington Post (January 26, 2020) and the New York Times (January 27, 2020) and were translated into multiple languages overseas, for the Chinese, Spanish, Portuguese, Russian, and Polish press. He discussed the impact of modern technology and connectivity on pandemics in an opinion essay for WIRED on March 4, 2020. A highly influential Op-Ed essay on the importance of early school closures as a community mitigation strategy for CoVid-19 appeared online in the New York Times on March 6, 2020 and in print on March 9, 2020. Within a few days of its publication, school districts across the nation shut their doors. He also wrote important op-eds on the use of face masks, for NBC Think (April 3, 2020) and lessons from the 1918 influenza pandemic for The Washington Post (April 8, 2020). Professor Markel was also extensively interviewed about CoVID-19 for hundreds of stories and updates.
The world still struggles about a convincing strategy to handle the #coronavirus crisis. The developed world was affected first, but the forthcoming consequences for the developing countries may be much worse. Some insights from an interview with development economist Asad Islam of Monash University, Australia.
Some core messages of the interview:
The impact of COVID-19 is likely to be more severe in developing countries than in developed countries.
A temporary lockdown makes it possible to alert people that this is a serious health issue and everybody needs to protect themselves as much as possible.
Most developing countries have the capacity to provide three meals a day for its poorest population.
Developing countries need to allow their people to leave the lockdown earlier.
Our proposal for India suggested a broad-based transfer system, targeting more on poor people and increase the global fiscal stimulus substantially.
The pandemic is of more serious concern than initially thought.
Issues previously considered to be local ones are now recognized to be of global relevance and have to be addressed by global collaborations.
GLO Fellow Asad Islam is a Professor at the Department of Economics, and Director of the Centre for Development Economics and Sustainability (CDES) at the Faculty of Business and Economics at Monash University, Australia.
GLO: What is different with COVID-19 in a developing country than in a developed country?
Asad Islam: In developing countries, we see poorer health infrastructure such as a severe lack of hospital beds, intensive care units are not equipped with proper facilities for COVID-19 patients, missing trained nurses and doctors, lack of awareness among masses of people. Thus, the impact of COVID-19 is likely to be more severe in developing countries than in developed countries.
GLO:Is there no alternative to a complete lockdown of society and economy?
Asad Islam: The temporary lockdown in a developing country is a necessary evil to raise awareness about COVID-19. Social distancing won’t work without it. People have now almost stopped going to temple, mosque, church or social gatherings. This won’t happen without a lockdown! Lockdown needs to be temporary with gradual withdrawal (because of concerns for the poor) while making sure that the people try to maintain social distance (1.5 meter), and wear masks. A temporary lockdown makes it possible to alert people that this is a serious health issue and everybody needs to protect themselves as much as possible.
GLO:But unlike in developed countries, it seems very difficult for the government to financially support people. How can they survive?
Asad Islam: Most developing countries have the capacity to provide safety nets (e.g., providing three meals a day) for its poorest segments of the population. The problem is not lack of resources, but absence of mechanisms to reach the food to these poor people. The food distribution system could be made fairer even within this short period of time and most poor people can be brought under a direct transfer system. Of course, the pressure on the government is huge for maintaining this over a longer period. However, supporting its needy 30-40 percent of the population for 3-6 months using a public food distribution system is not an impossible job. International organizations such as the World Bank and the Asian Development Bank can also play a supportive role in ensuring this, particularly in countries where we see a serious lack of resources.
GLO:Lockdowns need to end at some time and one needs good statistics. What to do?
Asad Islam: We need to flatten the curve in developing countries, which means one needs to wait when the number of cases is rising rapidly. While the developed country can wait till there is no new case, in developing countries that would be very hard to achieve considering the economic hardship of poor people. One option is to allow the people to start working (for temporary period) who test negative, and younger people (age 20-50) if they do not have any major pre-existing condition.
GLO:With some colleagues you have recently proposed a strategy for India (see for a media report and the full memorandum). What is the message?
Asad Islam: Our main point was to have a broad-based transfer system, targeting more on poor people to enable them to cope with hardship during the lockdown, and increase the fiscal stimulus in manifold to address the economic woes of people.
GLO:Have economists underestimated the dangers of this pandemic?
Asad Islam: I think there were not enough data to begin with, and as it now stands both the number of infection cases and deaths were not reported accurately. As economists rely mostly on numbers there was more support for herd immunity in the beginning as the death rate was very low. However, as more accurate data are coming and we observe higher rate of deaths/infections we have now started to realize that the pandemic is of more serious concern on both health and economic grounds than initially thought.
GLO:How will the coronavirus change development economics?
Asad Islam: The world should now realize more that there are many issues we should not ignore, issues which sometimes we perceive to be the problem of a country or region only. Many problems including poverty and climate change need to be tackled globally and developed countries have more obligations to address them. The global public health issue will remain a serious concern in the coming years, and the problems of developing countries need to be better understood to address these challenges.
The world still struggles about a convincing strategy to handle the #coronavirus crisis. The taken measures may have helped to contain the development, but generate also very serious challenges for the longer future of the planet and global solidarity. The award-winning Jordanian author Hisham Bustani has been interviewed to provide his insights, requests and visions.
Some core messages of the interview:
The panic of the emergency situation eliminates any possibility to conduct the necessary discussions about the major failures, witnessed so far, of a “system” that has been taken for granted, unquestioned, for too long.
The measures taken in Jordan have succeeded so far to keep the spread of COVID-19 slow and manageable.
As a remedy to the future, a rapid detachment from the global economy should get underway initiating modes of production aimed at local needs, food security and sufficiency, in place of export-oriented “growth” strategies that serve banks and financial elites, not people.
The main challenge is to reconsider the “system” that governs human existence on this planet, and put forward, and struggle for, a more just alternative.
The current experience will be part of my future writing: The destructive presence of humans on Earth is one of the main areas of my literary exploration.
A sense of doom is very present now, along with eye-opening experiences of solidarity, collectiveness, and modesty in front of nature’s might and immensity.
Hisham Bustani is an award-winning Jordanian author of five collections of short fiction and poetry. His fiction and poetry have been translated into several languages, with English-language translations appearing in prestigious journals including The Kenyon Review, Black Warrior Review, The Poetry Review, Modern Poetry in Translation, World Literature Today, and The Los Angeles Review of Books Quarterly. His fiction has been collected in The Best Asian Short Stories, The Ordinary Chaos of Being Human: Tales from Many Muslim Worlds, The Radiance of the Short Story: Fiction From Around the Globe among other anthologies. His book The Perception of Meaning (Syracuse University Press, 2015) won the University of Arkansas Arabic Translation Award. Hisham is the Arabic fiction editor of the Amherst College-based literary review The Common and was the recipient of the Rockefeller Foundation’s Bellagio Fellowship for Artists and Writers in 2017.
GLO: The corona crisis has reached Jordan late on March 15 and the intensity of the disease is still low. How much is public life in your country nevertheless affected by the coronavirus debate and how do you judge the situation?
Hisham Bustani: Like everywhere else around the world, nothing is in the discussion and in the news except COVID-19, mainly in the crude form of statistics, more statistics, and even more statistics – the number of infected people, the number of those who died, and to a lesser extent, the number of those cured.
Although this might be a good way to raise awareness about the seriousness of the disease, and the calamity of the situation (thus stressing the importance of personal preventive measures and social distancing), the fever of numbers and the panic of the emergency situation eliminates any possibility to conduct the necessary discussions about the major failures, witnessed so far, of a “system” that has been taken for granted, unquestioned, for too long.
One can observe that the “free market”, “capitalist globalization”, and the reign of corporations and financial institutions was not just ineffective in dealing with the pandemic (among many other things), but costs tremendous human lives and suffering. This “system” is incapable of functioning in emergencies and is continuously in need of being bailed out with taxpayer’s money instead of bailing out the people themselves. As matters get worse, they get contained with intensive “socialist” remedies, imposed through government-led measures, and intensive government intervention, the exact opposite of the neoliberal doctrines vigorously promoted around the world since the 1980s.
One can observe that the most important people around the world today are not the CEOs of transnational corporations and their incompetent politicians, but the massive army of underpaid public health professionals and other low-paid laborers who are maintaining the necessities of life and survival.
One can observe that what really matters are not useless, valueless, glamor commodities but food essentials, ventilators, and a universal health system for all.
One can observe that the reversal of catastrophic pollution levels is attainable, and desirable results can be achieved in extremely short periods.
One can observe that “collaborative” institutions (like the European Union) have failed their “internal” test as each member state scrambled to contain its own situation, leaving other deeply-affected countries (like Spain and Italy) without help; the only efficiency they can claim is mediating and concentrating power, while during a pandemic: allies are no longer allies but cutthroat competitors for the acquisition of medical supplies and test kits.
While a curfew situation is being imposed in Jordan, as well as in many countries around the world, and while health carers are on the frontlines of confronting the pandemic, doing whatever they can to save lives in haphazard field hospitals erected in boulevards and piazzas; these are the observations that should provide food for thought, the material for a deep public discussion, possibly contributing to initiating another future for us humans, our ways and governing systems, after the disease.
GLO:How did your country initially reacted to the new threat, beyond the many others you already have: development, conflict and peace, and refugees?
Hisham Bustani: In Jordan, the governmental response was rapid and radical. A strict lockdown was imposed for a number of days starting March 21, eased later to a 6pm-10am curfew period while allowing people to go out during the day to purchase necessary items. Cars and not allowed to move except with special permits. The twelve governorates that comprise Jordan are isolated from each other and movement between them is banned. Flights in and out of the country were stopped, all borders closed down, and the last group of people who entered the country (more than 5000) were quarantined in hotels for two weeks.
These measures have succeeded so far at keeping the spread of COVID-19 slow and manageable. The country’s resources, and its political and societal composition cannot bear the consequences of the sort of health sector collapses witnessed in countries like Italy. The majority of Jordanians have been cooperative and collaborative. Except for a massive wave of shopping craze on March 20, just before the lockdown, things quickly returned to a quasi-normal state: grocery shops, bakeries and pharmacies reopened, shortly followed by banks, but all under strict conditions of social distancing and infection control. There are investigation teams that promptly identify and test people who were in contact with any infected person. The only missing element is wide scale testing, simply because test kits are not available, and the limited global supply is snatched by bigger, more powerful countries, sometimes through crooked ways.
There has been an upside to this lockdown situation: in addition to the extended calm and quite, the slowed-down pace of life, the cleaner air, and the reintroduction of walking as a daily routine, a rapid reorientation towards producing for local needs and necessities got under way, signalling that models of need-based self-sufficiency are more important than export-oriented models of massive consumption.
I am not sure what the future holds since many of the more-vulnerable segments of the population received a direct blow: daily workers ended up with no income at all, many employees were, or will be, laid off, and as the lockdown continues, people will become short of money needed to buy food and necessities as they spend their meagre savings.
However, the economic collapse and its effects will be global rather than local, it will happen either way, and I am happy that Jordanian decision makers (so far, and in a rare occurrence) have chosen people over the economy. As a remedy to the future situation, a rapid detachment from the global economy should get underway (there is an excellent window of opportunity to do this), initiating modes of production aimed at local needs, food security and sufficiency, in place of export-oriented “growth” strategies that serve banks and financial elites, not people.
GLO:It seems that the virus has crowded out currently most other major challenges in the world. Rightly or wrongly, there is debate about how large the virus threat really is; but the substantial lockdowns of the economies in most countries will reduce the possibilities to deal with the old challenges when they come back to the table soon. How will your society perceive this challenge?
Hisham Bustani: The main challenge in my society, and probably all other societies around the world, is to reconsider the “system” that governs human existence on this planet, and put forward, and struggle for, a more just alternative.
The COVID-19 experience illuminated for us what is necessary for life, and how destructive those unnecessary elements can be.
The COVID-19 experience showed us how economic concepts based on profit are unable to deal with global human emergencies.
The COVID-19 experience taught us that economic considerations should never come before people-nature nexus, and that the former can be easily compelled to serve the well-being of the latter.
The challenge is to maintain and develop those insights after everything goes back to “normal”.
GLO:War refugees in particular will receive in the future even lower support of the world to fight sources and misery. Countries like Jordan will have to expect further challenges. What do you think is our role as scientists, writers and poets in the corona crisis?
Hisham Bustani: The main role is to expose the hypocrisy and double standards of what goes on in the world today. Example: colonialist Europe has plundered the wealth of the global south, leaving their societies crippled and poor, and then unleashed upon them interventionist wars, interventionist politics and interventionist economics, burying them further into debt, corruption and tyranny, and once people started fleeing this doomed fate to that same Europe, now self-designated as “the bastion of human rights”, they were faced (in most, but not all instances) with barbwires, teargas, truncheons, and racism, left to drown in the Mediterranean.
It is quite revealing that a country like Jordan, with an area of 89,000 square kilometres, of which 75% is a desert, and a population of 9 million, has taken in what is estimated to be 1.3 million Syrian refugees as from 2011 alone, and that is not taking into consideration previous waves of Iraqi, Syrian and Palestinian refugees from 1948 onwards, mostly caused by Euro-US-supported settler-colonialism (in Palestine) and Euro-US invasion and/or interventionism (in Iraq and Syria).
On top of that, Europe offers pennies as “assistance packages” for countries like Jordan to “keep the refugees put”, not allow them to move. What kind of “free world” is that? I will tell you: one that sells aggressive regimes fighter planes for billions of dollars, then sends in their “international aid agency” to finance prosthetic limbs for the victims of its raids for a fraction of a fraction of the profit.
The corona crisis has moved this “divide”, that blockade, that hypocrisy, further up north towards US-Europe itself, in the same sense that (as Sven Lindqvist explains in his book A History of Bombing) massive bombings of native communities in the colonies finally found its way into Europe in WWI and WWII.
Is it not eye opening how the US blocked the export of facemasks to Europe, or how the US, UK and many EU countries failed to take sever measures in the favour of people’s health for the sake of “maintaining the economy” and “business as usual” which basically pours profit in the pockets of the few who flew their private jets to special disaster bunkers? All this happened after neoliberalism has robbed the public sector (in the previous rampage of privatization) of its capacity act efficiently in favour of the public, leaving doctors and nurses struggling with an ever-increasing number of sick people who can’t find a hospital bed, making tough decisions on who lives and who dies because of the lack of social resources created by neoliberalism.
In response to the corona crisis, scientists, writers and poets should think about all this, think about its opposite: an egalitarian future, and the means to achieve it.
GLO:Your work as a poet and a fiction writer has been inspired by the many realities you observe. Will you soon write about the bad and good sides of humans revealed by the crisis?
Hisham Bustani: Two weeks ago, I was invited to contribute to “The Quarantine Chronicles” series, curated by Carol Sansour for The Sultan’s Seal literary e-zine, I obliged by writing “Eyes Without a Face”, a literary text that explores the manifestations created by, and the consequences left behind, the compulsory quarantine: its tragedies, catastrophes, farces, and hopes. The title is inspired by a Billy Idol song with the same name that was playing in the background, the singer making a special appearance in the piece, telling me (from yet another of his songs): “There is nothin’ fair in this world, nothin’ safe, nothin’ sure, nothin’ pure. Look for something left in this world.” “I think about those long held in an indefinite quarantine in refugee camps, prisons and shantytowns,” I wrote in response.
I am sure this experience will be part of my future writing, especially that the destructive presence of humans on Earth is one of the main areas of my literary exploration; examples of this can be found, for example, in my book: The Perception of Meaning.
I’ve written about war and its deeper effect on sanity (as in the short stories: “One Moment Before the End” and “Skybar”), about human’s violence against nature, his selfishness and lack of consideration (as in the poem: “Mirror, Mirror”), the effect of urban enclosures and their continuity within an internal isolation of individuals (as in the prose/poem hybrid piece: “Voices Within”), the reproduction of enslavement in societies that uphold selfish individualism, competitiveness, and consumption as key principal values (as in: “Starddust”), all of this leading to a general sense of doom (as represented in the poem: “Apocalypse Now”, after Francis Ford Coppola’s film of the same name, which is based on Joseph Conrad’s Heart of Darkness).
This sense of doom is very present now, along with eye-opening experiences of solidarity, collectiveness, and modesty in front of nature’s might and immensity. This makes my literary work more relevant than any other time before. It makes art (as juxtaposed to “entertainment”) more relevant than before, since art is all about diving deep, contemplating, and opening up questions: the unleashing of creative possibilities within the recipient, things that entertainment has killed and replaced with passivity and idleness, undermining the “human condition” even more.
************* With Hisham Bustani spoke Klaus F. Zimmermann, GLO President on April 9, 2020. Both have been Rockefeller Foundation Bellagio Fellows in 2017. Further activities and reports of the GLO Research Cluster on the coronavirus.
A substantially revised version of a recent GLO Discussion Paper (also the GLO Discussion Paper of the Month March) on the Coronacrisis in China has been accepted after rigorous peer review for publication in the Journal of Population Economics.The responsible Editor (and Editor-in-Chief, E-i-C) of the Journal, GLO President Klaus F. Zimmermann, has given an interview to IESR, the Institute for Economic and Social Research of Jinan University, which has been published online today. It is documented below. Authors Yun Qiu & Wei Shi are Professors at IESR, Xi Chen is Professor at Yale University.
“Impacts of Social and Economic Factors on the Transmission of Coronavirus Disease 2019 (COVID-19) in China”byQiu, Yun & Chen, Xi & Shi, Wei Forthcoming: Journal of Population Economics, Issue 4, 2020. PDF of the prepublication revised draft.
Stringent quarantine, city lockdown, and local public health measures imposed since late January significantly decreased the virus transmission rate.
Population outflow from the outbreak source region posed a higher risk to the destination regions than other factors including geographic proximity and similarity in economic conditions.
Over 1.4 million infections and 56,000 deaths could have been avoided according to the estimates based on the analysis.
Most effective was found to be “city lockdown” first followed by “closed management of communities” and “family outdoor restrictions”.
IESR: From your perspective, what is the most important contribution of this paper? And what kind of impact would you like to see this paper to have?
E-i-C: To my knowledge this is the first published paper in an economics journal dealing with the coronavirus challenge. We learn a lot about how it happened and what the reactions of public authorities and Chinese people were. It is indeed the objective of this rigorous study to separate the epidemiological process from those responses and to quantify them in the face of a difficult data situation. On this way, the paper defines methodological standards and provides conclusions that will serve as a reference for may studies to come for China and all parts of the world.
IESR: Why do you think this paper is a good fit with the Journal of Population Economics? How does this paper distinguish itself from other related work appeared on scientific and medical journals?
E-i-C: The virus crucially affects human risky behavior, wellbeing and mortality, which is at the core of population economics. The specific economic focus is the weight the paper gives to the analysis of individual and government behavior and counterfactual investigations.
IESR: The editorial process was exceptionally fast for this paper. Why do you think it is very important to have a fast track for this research? And how did the Journal make this expedited process possible?
E-i-C: It typically takes years to get a paper accepted in a top economics journal as a matter of principle. The standard is slow refereeing and substantial revisions of submitted papers and a tough process to access the highest-ranked possible outlet. The Journal of Population Economics is the leader in its field. Authors and Journal have seen the perfect match for this article early on, but the paper nevertheless went through the standard, high-quality anonymous peer refereeing. Three referees provided detailed reports with substantial requests for revision within a week, while a normal response time would be about six weeks. The authors responded within two weeks convincingly and very detailed to all suggestions to reach the best possible output at this time. We kept all administrative procedures at the minimum. All parties were very supportive due to the particular importance of this research for the current global debate.
IESR: Different countries have been taking different actions toward fighting COVID-19. We would like to hear your thoughts on the effectiveness of China’s strategies and actions, and if there are lessons can be learned by other countries.
E-i-C: It is well-known from previous pandemics that social distancing and the tracing of networks of infections are crucial for containing the disease. The lockdown measure of the Chinese strategy has been shown as very important. It has been followed by very many countries, although sometimes with some delay. However, since the challenge without proper medicine and with missing herd immunity is long-term, one should be cautious to pretend that the best detailed strategy is already obvious. The fear about a second wave of infections is present world-wide. We indeed hope to learn also from the differentiated strategies across countries to handle the crisis and to search and test for hard empirical evidence.
IESR: Do you have any other thoughts related to this research that you’d like to share with us?
E-i-C: The core of the best policy advice is good data to understand, follow and influence the process of the disease. The data which is world-wide in use has many difficulties, e.g. even when it comes to understand the basis issues who is infected or recovered, and to separate who died with or because of the virus. We need better statistics and instruments for ad hoc-surveys. We further need to study the global institutional flexibility to better react to pandemics.
********* IESR is the Institute for Economic and Social Research of Jinan University; E-i-C is the Editor-in-Chief of the Journal of Population Economics and GLO President Klaus F. Zimmermann, who was the acting responsible Editor of the paper.
The world still struggles about a convincing strategy to handle the #coronavirus crisis. Radical alternatives focus around (i) herd immunity and selective social distancing and (ii) a total lockdown of the economy and the entire society. In previous posts the GLO website was reporting about the strategy of lockdown, the societal consequences and the arguments against it, and the alternative Swedish strategy. Today we listen to a feedback from Italy, the country hit hardest first after China.
Some core messages of the interview:
The course of the contagion is the same everywhere.
Italy is on its way out of the crisis.
It started in the most populated North with global connections, affecting the most vulnerable.
Italy has an efficient public health system which managed the crisis.
The radical lockdown had no alternative and saved very many lives.
The missing European solidarity may result in the end of European unification.
GLO Fellow Alessandro Cigno is a Professor of Economics at the University of Florence, and Editor of the Journal of Population Economics.
GLO: The coronacrisis in Italy has become a terrible catastrophe, and there is no end in sight…..
Alessandro Cigno: ….not quite true that there is no end in sight in Italy. The number of contagions has stabilized, and the number of intensive care cases is decreasing , the number cured or dead is larger than the number of new cases…..
GLO: But what can the other countries learn from the Italian experiences? Why was the coronavirus affecting Italy suddenly like a tsunami?
Alessandro Cigno: The course of the contagion is the same everywhere. It just started earlier in Italy.
GLO: Why has the disease largely affected first the North and so much the Old?
Alessandro Cigno: The North is more densely populated and has more intense relations with the rest of the world. The old are more likely to have other pathologies.
GLO: What role played the openness of the country, the strength of the healthcare system and the strong family relationships in the Italian culture? What role played missing data and slow government response?
Alessandro Cigno: Openness facilitated the contagion. Fortunately we have an efficient public health system. But the number of intensive care beds per 1000 inhabitants, while double that of the UK, was initially half of that of France and one third that of Germany. That number has been raised very quickly. Strong family relationships helped the contagion, especially from the young to the old. As Italy was the first to start, the government response was unavoidably tentative (that of other countries who started later had no excuse).
GLO: Italy is strongly related to China through the Belt & Road initiative. Has this played any role?
Alessandro Cigno: The Belt & Road initiative may have played a role.
GLO: Were the radical lockdown measures effective?
Alessandro Cigno: Radical lockdown is estimated to have saved 30 000 lives.
GLO: Did Italy discuss alternatives?
Alessandro Cigno: Alternatives to lockdown were and are discussed, but the scientific and medical consensus is that they are inferior.
GLO: How do Italians react to the missing European solidarity in this crisis?
Alessandro Cigno: Italians are offended by the missing European solidarity and fear that it will be the end of European unification.
************* With Alessandro Cigno spoke Klaus F. Zimmermann, GLO President.
The world still struggles about a convincing strategy to handle the #coronavirus crisis. Radical alternatives focus around (i) herd immunity and selective social distancing and (ii) a total lockdown of the economy and the entire society. In previous posts the GLO website was reporting about the strategy of lockdown, the societal consequences and the arguments against it. Today we investigate a constructive alternative, the Swedish strategy.
Some core messages of the interview:
Sweden has clearly focused less on forcing people to increase social distance and more on encouraging people to act responsibly.
There’s clearly social pressure to comply with recommendations from the government.
Government agencies are more independent from political influence in Sweden.
The stated objective has been to “flatten the curve” to avoid overburdening the health care system.
A feared “crisis-fatigue” is one major reason why the Swedish Public Health Authority has been reluctant to push social distancing further.
Sweden’s great registry data will only in the long-run help to understand the viruscrisis better.
Covid-19 will not change the Swedish very positive outlook on globalization.
GLO Fellow Erik Lindqvist is a Professor of Economics at the Swedish Institute for Social Research (SOFI), Stockholm University, and Editor of the Scandinavian Journal of Economics.
GLO: While most of the European governments have applied very restrictive measures to fight the Coronacrisis, Sweden’s reaction remains more relaxed: What are the key elements of the Swedish strategy?
Erik Lindqvist: The Swedish government has implemented a number of measures similar (though less comprehensive) to those in other countries. Public gatherings larger than 50 people are no longer allowed; almost all education in upper secondary-school and universities is now online; visits to nursery homes are no longer allowed, etc. These sharp measures are combined with pleas to the public to reduce travel; to work from home in case it’s feasible; to avoid public transport during rush hour, etc. High-risk groups (especially people above age 70) are strongly encouraged to self-isolate to the extent possible. Yet unlike most other countries, restaurants, schools, gyms and similar facilities are still open. So, Sweden has clearly focused less on forcing people to increase social distance and more on encouraging people to act responsibly.
GLO:Has the Swedish population more “social discipline” than other nations that allow for such a strategy?
Erik Lindqvist: There’s clearly social pressure to comply with recommendations from the government and my impression is many (though not all) do. But whether this pressure is stronger in Sweden than in other countries I really don’t know.
GLO:While the decisive actors in most countries are policymakers, who use the moment to strengthen their profile as conflict managers which ends in what has been called “availability cascades”, Sweden’s policy seems to be more designed by the Swedish Public Health Authority than by the government.
Erik Lindqvist: Compared to most other countries, government agencies are more independent from political influence in Sweden. But I also think the Swedish government has deliberately chosen to rely on advice of the Swedish Public Health Authority regarding the public health-side of the crisis.
GLO:Are there outlined objectives of the Swedish policy, and how do the Swedish authorities measure success?
Erik Lindqvist: The stated objective has been to “flatten the curve” to avoid overburdening the health care system. My impression is that this is the key factor guiding policy. I am unaware of any explicit quantitative targets beyond that.
GLO:How important is it that an initial response is in line with a long-term consistent policy?
Erik Lindqvist: From what I gather, I think a fear “crisis-fatigue” is one major reason for why the Swedish Public Health Authority has been reluctant to push as far ahead with social distancing as other countries have done. My personal hope is that Sweden (and other countries) might be able to implement somewhat less restrictive measures in the long-term by ramping up testing for Covid-19. This also seems to be underway, though perhaps not yet quite as forcefully as I personally would have hoped for.
GLO:What is the data situation in Sweden, which typically has excellent individual-level data. Can those data be used to handle the situation effectively, by connecting them with good measures of infections, deaths and those recovered?
Erik Lindqvist: Sweden indeed has great registry data which in time will allow researchers to learn a lot about Covid-19. Yet because there is a lag of, say, 3-6 months before the relevant registries are updated, such analyses are not yet possible. I think this is unfortunate – analyses using real-time data could help inform policy as the crisis unfolds – but I also understand and respect the fact that updating the data is non-trivial and that the people responsible for it have many other pressing matters to attend to at this moment.
GLO:Will Swedes consider globalization as a burden after this crisis?
Erik Lindqvist: The effect of Covid-19 on globalization is, I think, one of the major issues for the years to come after the crisis. Swedes in general have a very positive outlook on globalization – we are, after all, a small, export-dependent country. My guess is Covid-19 will not change this. But a somewhat soberer view on the extent to which we can rely on global supply chains in times of crisis is inevitable, I think. There seems to be general agreement in Swedish policy circles that we need to increase our storage of basic medical supplies, for instance.
************* With Erik Lindqvist spoke Klaus F. Zimmermann, GLO President.
The world still struggles about a convincing strategy to handle the #coronavirus crisis. Radical alternatives focus around (i) herd immunity and selective social distancing and (ii) a total lockdown of the economy and the entire society. Heavily debated is a recent article in the “Jerusalem Post” on Corona and Lockdown on
by Robert M. Sauer, Professor at Royal Holloway, University of London, and Donald S. Siegel, Professor at Arizona State University.
Some core messages of the article:
The current experiment that is being conducted by supposedly democratic governments throughout the world follows not the standard ethical principles of social experiments.
There is no appropriate cost/benefit analysis of the consequences of the proposed actions.
Media have sensationalized the spread of the virus and pressured policymakers to lockdown entire economies with huge economic and social costs.
Social distancing and strong and focused reactions can be achieved differently.
One needs now to discuss the recovery.
In previous posts the GLO website was reporting about the strategy of lockdown; we now complete the picture by listening to the Sauer & Siegel arguments who also deserve attention. The topic is too important, globalization so much endangered so that we need to have this debate. The link to the article is above, below follows an interview with Robert M. Sauer about his position.
GLO Fellow Robert Sauer is a Professor of Economics, Royal Holloway, University of London, and the Editor-in-Chief of the European Economic Review, European Economic Review Plus and the Journal of Economics, Management and Religion.
GLO: China seems to have managed the Corona Crisis well at the end; what is wrong with the harsh lockdown strategy now implemented in most affected countries, in particular in Israel, following the Chinese model?
Robert Sauer: I believe it is hard to know whether China managed the crisis well. It is well known that all news and data coming out of China is highly suspect. It is also not surprising that a lockdown strategy was implemented in an authoritarian society. What is surprising is that a Chinese authoritarian model would be adopted in the liberal West. The West should rather follow the model of South Korea which is an open society. South Korea did not adopt a policy of indiscriminate lockdown and it seems to have, until now, verifiably handled the crisis with great success. The harsh lockdown policies being implemented in the West, including Israel, will have horrendous unintended consequences. These include massive increases in unemployment, increases in domestic violence and deaths of despair, just to name a few. It is not improbable that the cure will turn out to be worse than the disease. Lockdown is also a terrible precedent for future “crises” in public health and is, in my view, a violation of human rights. Anyone who cares about individual liberty should be very frightened.
GLO:Social distancing is crucial to keep the healthcare systems operational is the argument; and it cannot be sufficiently implemented without legal restrictions. Why do you think that this is wrong?
Robert Sauer: The argument that social distancing is a necessary condition for avoiding an inundation of healthcare systems is a spurious one. Instead of spending billions for unemployment insurance and corporate bailouts, governments can increase expenditures (by much less) by immediately producing more hospital space (e.g., building field hospitals and renting rooms in hotels) and ordering the production of more ventilators. A good example is Richard Branson’s recent offer to produce thousands of ventilators for the state of California. The health system may already be, and would certainly be in a very short time after these policies, able to handle the caseload while society remains mostly open for business as usual.
GLO:Some governments started hesitantly, but now policy actions are dramatic everywhere, why this “availability cascade”?
Robert Sauer: Certainly the government of Israel didn’t start hesitantly. It implemented lockdown when there were no deaths yet in the country. In fact, it would be interesting to see the number of deaths at the time that lockdown was implemented elsewhere. I’m guessing it would show that lockdown occurred very early in the “crisis” in most cases. This is because the international press made us believe that the Italian case was heading our way in a very short time. The data clearly show that Italy is an outlier in many health dimensions and the Italian case is hardly generalisable to other countries.
GLO: Do we have sufficient data to judge the situation well enough to develop a convincing strategy at all?
Robert Sauer: In my view, the best guesses at the death rate that we have now (they are guesses because the problem of selection bias is a huge one, however, it is most likely severely biased upwards) comes nowhere near justifying the affront on individual and economic liberty that the lockdown strategy constitutes. The default strategy should be to not violate freedom. If we do, we are setting a precedent that may lead to the West falling back into authoritarianism, this time through fear-mongering in the name of public health. The government may play a useful role in promoting voluntary social distancing and other recommendations for a healthy lifestyle. This should almost never be imposed by fiat.
GLO:Policymakers typically like to concentrate on short-term issues, while scientists focus on the long-run effects. Are policymakers too short-sighted?
Robert Sauer: They are absolutely short-sighted. In this case, as in many others, I believe politicians have a very strong incentive to over-insure against the number of deaths under their watch. As Dr. Peter Gotzsche MD of the Cochrane Collaboration has said, “Should it turn out that the epidemic wanes before long, there will be a queue of people wanting to take credit for this. And we can be damned sure draconian measures will be applied again next time. But remember the joke about tigers. ‘Why do you blow the horn?’ ‘To keep the tigers away.’ ‘But there are no tigers here.’ ‘There you see!’. I think he’s right. Our short-sighted politicians and our failed public health officials will indeed take the credit. And there seems to be little downside to imposing authoritarian lockdowns. There is little pushback by the public who are scared. It will be interesting to see if that may soon change.
GLO: What are the most important steps for a fast exit strategy?
Robert Sauer: The most important steps are increased production of hospital space, ventilators, test kits, massive testing, fast approval of drugs that are working in the field, and last but not least, immediately ending mandatory lockdown.
GLO: If this is not handled better, is this the end of globalism?
Robert Sauer: This is an extremely dangerous opening shot at the end of globalism and a resurgence of authoritarian government policies in the liberal West.
************* With Robert Sauer spoke Klaus F. Zimmermann, GLO President.
The world struggles about a convincing strategy to handle the #coronavirus crisis and reflects the consequences thereafter: What are the recommendations from Beijing’s top policy advisor Henry Wang?
The most important thing is taking decisive and comprehensive action as soon as the virus starts to spread.
New formats of internet business, including online medical services, online education, and working at home through online apps, have grown significantly.
The virus may rebound if we relax our vigilance.
The pandemic reveals not the failure of globalization, but the need to innovate global governance systems and boost international cooperation.
In the long run, the movement of labor and talent has created more benefits than problems.
GLO Fellow Huiyao (“Henry”) Wang is a Professor and President of the Center for China and Globalization (CCG), the largest non-government think tank in China. CCG and GLO are collaborating institutions.
GLO: China seems to have managed the Corona Crisis. What are the major lessons?
Huiyao Wang: I think the most important thing is taking decisive and comprehensive action as soon as the virus starts to spread. The non-pharmaceutical measures China took might seem economically damaging at first, but it is that the sacrifice gave us a better chance to control the pandemic as quickly as possible. If we had underestimated the coronavirus, the potential losses could have been far greater.
And another thing is the well-equipped internet infrastructure and the thriving internet industries that played a big role in distributing medical resources and basic supplies for people in quarantine during the coronavirus outbreak. Additionally, new formats of internet business, including online medical services, online education, and working at home through online apps, have grown significantly. These businesses helped to allow society to continue operating and lowered the economic pressure so that we could keep the economy going while employing social distancing.
GLO:Will the virus come back?
Huiyao Wang: I think there’s a chance that the virus rebounds if we relax our vigilance. Although China has made it to contain the coronavirus overall, it is too early to relax now due to the global outbreak. We can see that there are dozens of new cases appearing every day, mostly coming from other countries. The Chinese central government and local governments as well as every citizen are staying cautious and alert.
In this special time, all countries should work together and spare no effort against the virus, in line with the joint statement achieved at the G20 summit several days ago. Like President Xi Jinping said, we should build a community with shared future for mankind, since globalization has tied countries together. Discrimination and hatred will not do any good when facing the challenges brought by the virus, and other transnational challenges like climate change.
GLO:Some say the pandemic is the curse of globalism, did it go too far?
Huiyao Wang: The coronavirus indeed has caused a global crisis, however, if we believe globalization will go reverse or countries should decouple to protect themselves, then we are wrong. Coronavirus is just one of the global challenges that we are facing. Climate change, environmental degradation, WTO reforms – these challenges are all awaiting us and none of them can be overcome without international cooperation, bilaterally and multilaterally. The pandemic reveals not the failure of globalization, but the need to innovate global governance systems and boost international cooperation.
I think the G20 meeting was a good start. On the 27th, President Xi and President Trump had a phone call the day after the G20 meeting. This sent a good signal that China and the US are going to set aside the disputes and work together. Despite the talk about competition between China and the US, I believe the two countries have enough reasons to collaborate. Being rivals will do no good to either country.
GLO: How can global solidarity look like in this crisis?
Huiyao Wang: I think it failed to meet our expectations somehow at the beginning, but now after the G20, I hope countries can unite and fight against the virus together.
When the outbreak started in China, many countries donated and helped, which was significant for China to control the coronavirus domestically. However, after the coronavirus began to spread globally, global solidarity appeared vulnerable.
After the G20, the countries have presented a joint statement announcing a fund of 500 million US$ to combat the disease and other key messages about reviving the global economy. If these are carried out, I think we will walk out of the shadow cast by the pandemic.
GLO:The Coronavirus is a strike of nature against globalism: What is its future, in particular for labor migration?
Huiyao Wang: I think it is short-sighted if we blame the outbreak on labor migration, since the cause is more complex than that and we could have taken better precautions to avoid it. In the long run, the movement of labor and talent has created more benefits than problems.
I think we should improve and innovate the global governance of migration rather than go against it. Especially, we should establish an emergency mechanism to regulate transnational movement of people when an outbreak occurs like this time to minimize the impact.
************* With Huiyao Wang spoke Klaus F. Zimmermann, GLO President.
Background interview with Diego Viana, reporter of the Brazilian daily Valor Econômico, who publishes a story on the relationship between the #Coronavirus Crisis and the future of work.Valor Econômico is the largest financial newspaper in Brazil.
A Federal Reserve official estimated a hike in unemployment of up to 30% in the second quarter for the United States. Is this the kind of figures we should be expecting worldwide? How calamitous is this? If the economy recovers quickly, does it leave long-term scars?
Klaus F. Zimmermann: The impression currently is that the damage will be much larger than during the Great Recession in the financial market crisis where the effects were substantially smaller and much more selective to economies and societies. There cannot be a fast recovery, and society will have to carry a long-term burden.
Can the incentive measures announced so far in the US, Europa, Asia, aimed at reducing the dimension of the economic slump, avoid a depression-like scenario of mass unemployment?
Klaus F. Zimmermann: A focus is on compensation (“whatever it takes for everybody”) and to stabilize jobs; but at the same time public life and large parts of production and consumption have been stopped on command. This is not the setting to avoid mass unemployment, just to make it more acceptable. The pressing question, however, is how long the available financial reserves of countries will allow governments to keep such a policy going.
With many people around the world working from home, some analysts see the epidemic as precipitating a trend towards an increase in remote working. Is this the case? Once the coronavirus crisis is over, will home office have become much stronger, maybe to the point where half of the time spent working is outside the office?
Klaus F. Zimmermann: Remote working will get some push, since the available technology now meets the forced increased demand with some persistence. But I nevertheless expect the adjustments to be small. Since two decades people speculate about the rise of the home office and the end of the traditional firm, with only slow practical changes. For instance, digital communication is no substitute for personal social interactions. Also the recent financial market crisis did not sufficiently change the constraints of the banking sector.
As autonomous workers are particularly exposed to a halt in activities, some analysts see the crisis as demanding – or rather precipitating a preexistence demand for – improved forms of social protection for these workers. What could be done for them in the short term, i.e. the acute moment of this crisis? And in the long term, is there anything in view that would correspond to unemployment insurances?
Klaus F. Zimmermann: Social protection for freelancers as the rising work model including health and unemployment is since long recognized as a challenge issue for the future of work. In the current acute crisis, many governments have already decided to offer self-employed individuals and all types of companies generous credit lines or even fixed amounts of non-repayable transfers.
Hong Kong, and now probably the US as well, are adopting a strategy of depositing a lump sum for everyone, which sounds like an emergency basic income. I reckon you are not in favor of a universal basic income, but how do you evaluate an emergency mechanism such as this one?
Klaus F. Zimmermann: All kinds of helicopter money and government transfers to everybody may help to stabilize consumer demand. But such measures are not helpful at this very moment where most government commands aim at social distancing and lower consumption. Such measures could be useful, however, to jump-start the economy after the end of the Corona pandemic.
Maybe I should wrap up the themes of all the previous questions into a more general one: for some, this pandemic will usher in a new “great transformation” in Polanyian terms, with a new form of welfare state, adapted to the 21st century. Could this be the case? Is it possible to give the outlines of what such a welfare state would be like?
Klaus F. Zimmermann: The much I am a believer of the old saying, “Never let a good crisis go to waste”, I am afraid that the Corona Crisis will not initiate the new welfare state needed for the 21st century. What we see will strengthen anti-globalism, nationalism and populism. One can only hope that the global threat of this disease reminds us of the benefits of collaborations and solidarity.
Another attempted response is the reduction of working hours and pay, but many economists consider that this is not a regular crisis and the effect of reduced hours would not be as expected (and may even backfire). Do you see this as a sound possibility?
Klaus F. Zimmermann: Creating jobs for all and re-distributing income through the current reduction of working hours and pay is a bad strategy in the middle and longer perspective, since it can only backfire to keep the most productive underemployed.
Labor conditions in the developing world are already much worse than in the developed world. Do you envisage an even more dire scenario in these countries?
Klaus F. Zimmermann: Core in this crisis is the strength of the health care system of the countries. Given the large differences between the developing and the developed world in health care, I am afraid, global inequality will rise with the Corona Crisis.
Another vulnerable category is that of immigrants, as they often occupy the worst positions in the labor market and also frequently lack any rights at all. How hard can we expect them to be hit?
Klaus F. Zimmermann: Refugees and labor migrants will both be affected strongly, since the short-term effects will be followed by even more powerful long-term consequences. Migrant workers, in general, have to fear a higher risk of unemployment and a stronger wage depression if at work. Further: It was now demonstrated that it is (at least seemingly) possible to close country borders, or even the European Union in general. Labor migration has to be expected to further decline with the end of the Carona Crisis.
The world is shaken by the #coronavirus crisis. Top health economist Xi Chen, who has done new and original research on the virus, explains his conclusions on the management of the crisis based on the Chinese experiences and the challenges for research.
In the past decade, many nations in the world de-invested in their disease control and prevention.
Now it is better to overreact than to underreact.
The Chinese experience shows that only after ten days the harsh measures already altered the infection growth trajectory.
The UK’s strategy of obtaining “herd immunity” is very risky given the little knowledge about this new virus.
Social distancing can saliently reduce the risk of contracting virus via avoiding inhaling droplets or touching through handshake.
This very likely to be a long pandemic.
GLO Fellow Xi Chenis a Professor of Global Health Policy and Economics at Yale University, the GLO Cluster Lead of “Environment and Human Capital in Developing Countries”, and the President of the China Health Policy and Management Society(CHPAMS).
GLO:Your research is on health issues and their societal and economic consequences, how did you come to this research focus?
Xi Chen: The pursuit of health and longevity for mankind has no limits. As health spending has accounted for the largest share of GDP across many countries, it becomes very important to assess if our spending is cost-effective and affordable. A health and labor economist by training, I’m very passionate about using research findings to inform health resources allocation and improve actions at the individual, community, and societal levels.
GLO:You are currently the President of the China Health Policy and Management Society. What is the purpose of this society and what is your role as its head?
Xi Chen: China Health Policy and Management Society (CHPAMS) is a global professional organization with over 2,200 members around the world. Our mission is to improve health and health equity and contribute to the advancement of health research, practice, and education of areas including but not limited to, health policy and management, health economics, epidemiology, and global health. As president of CHPAMS, my Board of Directors and I have been striving to accomplish our mission by fostering and promoting scholarly exchanges among its members and with Chinese public health community, and by building health research capacities of China institutions.
GLO: As a frequent observer and researcher of the health conditions in China: How could the coronavirus outbreak happen and what is to learn?
Xi Chen: The heavily invested infectious disease surveillance system did not sound alarm for this novel virus. Part of the reasons include that the system did not allow medical workers to report new diseases, and that most medical professionals were not well trained to appropriately report cases. This important issue is not unique to China. In the past decade, many nations in the world de-invested in their disease control and prevention. In the meantime, they did not invest appropriately in building a primary care system to initial diagnosis of patients before they all flooded to overstretched hospitals. All these investments should be made ahead before the next pandemic.
GLO:Patient but careful responses or early harsh measures: Is the strict reaction of the Chinese government the right one as a model for the world?
Xi Chen: For infectious diseases, especially COVID-19 that is new to the world, it is better to overreacting than underreacting. The exponential growth trajectory of virus determines that the time it takes to double the number of cases keeps shrinking. Governments, social entities and individuals should intervene early and strong enough to flatten the curve for sustained medical resources to treat severely ill patients, rather than squandering the window of opportunity until reaching healthcare capacity. Overburdened health infrastructure leads to more infections and high fatality rate, like we are observing in Italy. China set a good example after it decided to lock down Hubei province with a number of stringent public health measures. Our latest study forthcoming as a GLO Discussion Paper shows that only after ten days the harsh measures already altered the infection growth trajectory.
GLO:Is re-infection with the virus possible? If the immune system is strengthened during an infection, harsh lock downs of the countries do not remove the need to adjust to the new threat at some time.
Xi Chen: Normally, people once contracted a virus will obtain at least temporary immunity for at least weeks or months. However, this time this is a novel coronavirus, we still know little about this. Some news and published clinical evidence already show cases people (in China’s Guangdong province and other areas) re-infected after being discharged from hospitals. Therefore, I thought the UK’s strategy of obtaining “herd immunity” is very risky given our little knowledge about this new virus. The “herd immunity” needs a threshold of at least 60% of population being infected, many of them are older adults, especially with multiple chronic conditions. A massive number of them will die. From a public policy perspective, we should try the best to protect these vulnerable groups, not leaving them behind as they were during pandemic in history. It is good to see that today the British government seems to change the strategy by offering protection to those above 70 and those living in nursing homes. In America, I was among the 15 Yale and Harvard colleagues to write an open letter to Vice President Mike Pence and the US government for an equitable response to this pandemic, and not unfairly operate at the cost of those most vulnerable.
GLO:What are the most effective single measures so far we understand this today to tame the speed of transitions?
Xi Chen: In my view it is social distancing, such as cancelling large social gathering, allowing flexible work schedule and working from home, leave more person-to-person space in public facilities. Social distancing can saliently reduce the risk of contracting virus via avoiding inhaling droplets or touching through handshake.
GLO:For the world-wide level: Can the disease be contained soon or do we have to accept a longer pandemic?
Xi Chen: I’m afraid it is very likely to be a long pandemic. Part of the reason is the lack of global coordination that delayed the joined efforts to contain the virus or avoid long scale community transmissions. While different countries are at different stages of this pandemic, we already see that most countries already abandoned the strategy of containment. Instead, the mitigating strategy has been widely adopted. Given the stronger infectiousness but weaker virulence of this novel coronavirus compared to other types of coronavirus like SARS and MERS, it is more likely we will see the recurring of this virus outbreak. In other words, we will have to adapt to the world where this virus will coexist with us. My hope is that this outbreak may not last too long to further disrupt the global supply chain.
GLO:Given the large economic and social impacts we observe, where are the larger challenges for research, on the medical or the psychological side?
Xi Chen: On the medical side, it is challenging so far to find the origin of the virus, and intermediate host. We are questing the answer to these questions in order to stop its transmissions to human society and to know the roots of the pandemic. Other challenges are more relevant to our economists. For example, what are the real social costs of this pandemic. We know that patients with other diseases were not able to be treated due to the crowding-out of medical resources. Many residents under lockdown suffer from mental illnesses which can be very costly to treat after the crisis. Finally, we know little about the potential benefits of stringent public health measures, which depends on our understanding of the counterfactual for this new virus outbreak.
GLO FellowFerdinand Dudenhöffer (St. Gallen University & University Duisburg-Essen) is the Founder and Director of the CAR – Center Automotive Research in Duisburg. A media star on issues dealing with the challenges and perspectives of cars and the industry, he operates at the interface between research, business and society. He regularly debates the future of electromobility, autonomous driving, artificial intelligence and their employment impacts, as well as the rise of China and the consequences of the coronavirus crisis. Dudenhöffer has been an early supporter of GLO as a member of the GLO Founding Council in 2017.
GLO: Electromobility and autonomous driving: How fast will these issues dominate the automotive world?
Ferdinand Dudenhöffer: Electromobility willreach Europe, China and California fast. The rest of US is combustion engines with Donald Trump. Probably about 50% of all new cars sold in Europe & China around 2030 will be electric vehicles. Autonomous driving will take more time for passenger cars. I guess only after 2030 we will see progress in that field.
GLO: What are the employment perspectives in the car industry facing the rise of artificial intelligence?
Ferdinand Dudenhöffer: Innovation is the big thing and innovation means AI, 5G and very powerful chips. Thus, the car industry will convert from mechanical engineering to software engineering and computer science. Labor demand will shift in that direction in engineering departments. In car manufacturing, industry 4.0 will possibly lead to one third less blue collar workers by 2030 or so.
GLO: Will China dominate also the future of the automotive industry?
Ferdinand Dudenhöffer: Absolutely. China will become technology leader on a worldwide basis, and not just in the car industry. The USA had been the world innovation leader for the last 50 years. The next 50 years (and possibly forever) China will define the technology development in the world. Companies like Alibaba, Huawei, Geely, Great Wall, CATL will make the pace.
GLO: Facing the coronavirus crisis, how to you evaluate the damage for the industry and the expected role of China in the world?
Ferdinand Dudenhöffer: At the moment, we see the world passenger car market shrinking below the level of 2015, creating an overcapacity of about 10 million cars in 2020. Thus, big red ink will dominate business reports in the car industry in 2020. However, this is based on the assumption that the epidemic will becurtailed at the latest in about two or three months. If not, it will get worse. For the car industry the downturn in 2020 will be stronger than in 2008, when Lehman Brothers shocked the world.
GLO:How is the virus affecting your activities in China?
Ferdinand Dudenhöffer: We organize each year a larger conference in China. It was scheduled for April in line with the Beijing motor show, which is postponed to July or September. No more information is available currently. So, if the motor show will be cancelled for 2020, it would hurt our China program significantly. We could lose a very important year in our development.
With Ferdinand Dudenhöffer spoke Klaus F. Zimmermann, GLO President.
In GLO Discussion Paper No. 450, GLO FellowsStepan Jurajda and Dejan Kovač have recently provided research evidence revealing that given first names of leaders from World War II can predict behavior in the 1991-1995 Croatian war of independence and beyond in society including voting. It provides hard evidence for intergenerational transmission of nationalism. This research work has found already much interest in the scientific community and beyond. It was reviewed by anonymous referees of the Journal of Population Economics and finally accepted for a forthcoming publication in a 2020 journal issue. Below, the authors are interviewed about the background and context of this research.
Stepan Jurajda & Dejan Kovač: Names and Behavior in a War, GLO Discussion Paper 450, 2020. Forthcoming Journal of Population Economics.
GLO: Scientists across various disciplines have found in recent studies that names of individuals reflect important information about norms, preferences and behavior. What is your innovative approach?
Stepan Jurajda: Our analysis implies that having a ‘nationalist’ first name, one that is synonymous with previous war leader(s), predicts costly patriotic behavior in a current war, presumably due to values transmitted from parents. In our analysis, name choices thus act as an indirect proxy for a strong form of nationalism — the willingness to fight and die in a war for national independence.
Dejan Kovač: Such values are in principle difficult to elicit in surveys, which, together with the war context, sets our analysis apart from other research based on names.
GLO: Other researchers show that history, culture and personal experiences long time ago have a strong impact on current behavior. How does this contribute to our understanding of challenging issues of our time?
Dejan Kovač: Our study of the active engagement in the delivery of an extremely costly public good suggests that the living memory of a previous war allows nations to deal with the collective action problem of participation in a current war.
Stepan Jurajda: We also provide evidence on the nature of inter-generational transmission of political values, an issue that is receiving more and more attention in recent research.
GLO: How did you come to this topic of research, names and behavior in a war?
Dejan Kovač: We were aware of previous research on how names affect individual outcomes on the labor market and in many other settings, and we were wondering whether this strategy can help us understand the massive volunteering for the 1991-1995 Croatian War of Independence. After realizing that indeed it can, we also studied how the values we approximate using name choices relate to current political values in the country.
GLO: What can the world learn from your study?
Stepan Jurajda: Our measurement approach for values that are difficult to elicit in surveys and for values that affected historical events is applicable in other countries that feature a sharply divided ethnic mix and in settings where leaders’ names are notoriously associated with their political beliefs. Given the widespread availability of birth certificate records, the approach is available in many historical settings and it naturally lends itself to the study of inter-generational transmission of values within families, which can help us understand why the effects that wars have on political values and on in-group cooperative behavior are so long-lived.
GLO: Dejan, the paper raised a lot of controversy during your recent campaign for President, why?
Dejan Kovač: Unfortunately, in Croatia we have not yet dealt with many important historical debates and there is still a great division today in the society related to the WWII Croatian history. In fact, one of the reasons of my candidacy was to promote not only civic freedoms, but also scientific freedoms to explore “untested” hypotheses. I would say the paper was used to misinform the general public in order to discredit my political candidacy. The paper does not claim that the values related to the names we study are the same as the values of the WWII leadership of Croatia; we simply have a proxy for nationalistic/patriotic values as of 1991-1995 that allows us to study several important questions. The attacks did not relate to the methodology and made little scientific sense; they were purely political and came from individuals who are politically active, either on the far right or the far left part of the political spectrum. Since some of my other research is on political networks and corruption, I guess I should not be surprised to be attacked through misrepresentation of my work. My agenda is purely scientific and I am a firm believer in a well functioning democracy, where we have institutions, which battle corruption. That being said – the research as well as my political activism mission goes on! (Note: See also the recent GLO interview with Dejan Kovač about his Presidential Race in Croatia.)
*** With Stepan Jurajda & Dejan Kovač spoke Klaus F. Zimmermann, GLO President.
About the authors
Stepan Jurajda: CERGE-EI; Professor at Charles University Prague and Academy of Sciences of the Czech Republic. Dejan Kovač: Postdoctoral Research Associate at the Woodrow Wilson School of Public & International Affairs and Economics Department at Princeton University.
In 2019, Dejan Kovač, GLO fellow and a former postdoc at Princeton University, left his position in the US and joined the presidential race in Croatia as a candidate. He did not become the president of Croatia, but in his campaign he highlighted the need for structural reforms, promoted civic and economic freedoms, and most importantly attacked corruption relying on his previous research experience.
Besides his research on corruption, Dejan Kovač is taking another promising research endeavor – rethinking the design of Croatia’s labor market to increase its global competitiveness.
In 2017, the Global Labor Organization (GLO) had supported a large international conferenceDejan Kovač had organized in Umag to debate the challenges of the global world for labor markets. The event was hosting some of the best labor economists of our time, including the former chief economist to president Obama, the late Alan Krueger, a legendary figure and GLO Fellow (see picture below).
GLO: The scientist and politics: How has the presidential campaign changed you?
Dejan Kovač: Before the campaign I was an economist, during the campaign I remained an economist, and after the campaign I am still an economist.
GLO: Was knowledge of economics and of scientific evidence helpful for you during the race?
Dejan Kovač: Not really. Presidential races in Croatia historically have a problem. This is not a competition about the better program, but rather about to what part of the political spectrum one belongs. I was not able to push any economics topic, because we are still trapped by tales from our history and historical revisionism. It is very unfortunate that there is so little voters’ awareness about the importance of particular topics. Especially because Croatia “lost” close to 10% of its population through emigration due to several main issues: high corruption, bad economic conditions and lack of structural reforms.
GLO: Is emigration the main motivation for your newly started project “Designing Croatia’s labor market for global competitiveness” or are there other important issues at play?
Dejan Kovač: The 10% loss of population is a great shock to our economy. One does not have to have a PhD in economics to realize that this will have a detrimental effect on GDP. A larger problem than size is the issue of “brain drain” not only in Croatia, but in the entire region. High-skilled workers are leaving and they would otherwise contribute the most to economic growth. Another problem of our labor market is that the entire education system is not adequate to satisfy domestic labor market needs and especially global trends.
GLO: What is wrong with Croatia’s education system?
Dejan Kovač: Quotas are such that we are “over-producing” some occupations, which we realistically do not need, while we lack for instance STEM workers, who are “under-supplied”. This is still a residue from our past, when both skills and quantities were defined through central planning. Today not only domestic, but also global market forces are at play. Nevertheless, we have a rigid set of quotas for higher education which has not changed in a reasonable manner in decades. That is the first step to take. It is not an easy task, because redesigning the entire education system implies evaluating labor demand and supply in the future. For this we need the entire Croatia, not just a government which represents one part of the political spectrum only. Either policy makers will realize that and do the urgent structural reforms, or with the next wave of emigrations, our problems will intensify significantly.
GLO: What are decisive elements of the needed university reform and how does this relate to the vitalization of the labor market?
Dejan Kovač: Beyond quotas, we need to raise the skill levels of our workers in such a way that knowledge learned at our universities is up to date with the frontier of innovations at the labor market. We lack “intermediaries” such as incubators who can “translate” knowledge from pure theory to applied science which can be used at the labor market. Also we need to revise the entire curriculum at most universities.
*** With Dejan Kovač spoke Klaus F. Zimmermann, GLO President.
Junsen Zhang( Chinese University of Hong Kong) has been one of the editors of the Journal of Population Economicssince 2001. After 19 years of dedicated work he moves on to work as one of the co-editors of the Journal of Human Resources. To enable a smooth transition, his position was already filled earlier this year by appointing Shuaizhang Feng (Jinan University). The whole editorial team is very grateful for the strong and very successful collaboration with Junsen Zhang for nearly two decades and wish him all the best for his future. Although he leaves his position on December 31 this year, the editorial team still looks forward to further collaborations with him. Alessandro Cigno(University of Florence) and Oded Galor (Brown University) remain in their positions as editors. Editor-in-Chief Klaus F. Zimmermann thanked Junsen Zhang for his inspiring and effective work which helped significantly to establish the high reputation and impact the Journal has today. Zimmermann expressed also his gratefulness for a long-term friendship and the insightful advice he received from him over the years.
On this occasion, we publish an interview with Junsen Zhang on journal editing.
Question: What motivates a productive researcher like you to act as a journal editor? Junsen Zhang: I view it as a social responsibility with an honor.
Question: What is your current research focus and how does this relates to your editorial role? Junsen Zhang: Family economics. I have been handling submissions related to that, especially with applications to China.
Question: Is the profession publishing too much? Junsen Zhang: To the extent that many papers are not highly cited, perhaps the economics profession is publishing too much. But ex ante, we are not very sure which papers would be highly cited, so we need to publish more. Also, the rejection rates for most economics journals are still extremely high. Thus, overall, I do not think the publishing amount is excessive.
Question: What makes in your view a good academic journal? Junsen Zhang: Good editors to have sound judgement on high quality, impactful research, and a fast review and publication process.
Question: What are the current trends in the journal business? Junsen Zhang: More evidence-based research with good theoretical or conceptual underpinning, moving away from lengthy papers, and fast turnaround.
With GLO FellowJunsen Zhang spoke Klaus F. Zimmermann, GLO President & Editor-in-Chief of the Journal of Population Economics.
Martin Kahanec, a prominent European economist, is currently Mercator Senior Visiting Fellow at Bruegel, Brussels, and was just selected by the Board of Trustees of Academia Europaea, the European Academy of Humanities, Letters and Sciences, as a member of its Section Committee of Economics, Business and Management Sciences. He is a Professor and former Acting Dean (2017-2019) of the School of Public Policy at the CEU. He is also Founder and Scientific Director of CELSI, Bratislava, a GLO Fellow, and a former Chairperson of the Slovak Economic Association (2016-2018).
Klaus F. Zimmermann is the GLO President, and has been the George Soros Chair at the School of Public Policy, in Spring 2019 in Budapest. Kahanec and Zimmermann have worked and published together over a longer period.
GLO: What can we learn from the CEU experience for academic freedom?
Kahanec: Let me mention three key lessons from this experience. First, never take freedom, and academic freedom in particular, for granted. Second, do not rely on politicians for its protection, it has become just one of the many tokens they are playing with. And there are many tokens they value more, such as political support in the European Parliament, or a military deal. Even worse, for some types of politicians an attack on an academic institution wins voters’ support. Third, we might lose a battle or two, but we will prevail as long as we do not give up nurturing and defending academic freedom. Free, open societies provide for innovation, critical thinking, and the pursuit of happiness and prosperity, and as such are more competitive and prevail in the long run.
GLO: How will this affect academic capacity building in Eastern Europe?
Kahanec: As the Hungarian government is trying to convince the general public that the expulsion of CEU is not a loss for Hungary, it downplays its academic excellence and invests in domestic capacity building – but including pro-Orban institutions only. It also facilitates the opening of branches of foreign schools – from carefully selected countries – in Hungary. For example, PM Orban recently personally supported the opening of Shanghai’s Fudan University campus and an elementary and high school connected to Turkish President Erdogan in Budapest.
But many of the
prominent academics are leaving Hungary and yet more will decide not to come or
return to, or cooperate with, Hungary. As many prominent Hungarian academics
realized early on, the attack on academic freedom was not to be confined to CEU
– it has affected the Hungarian Academy of Sciences and many Hungarian
universities. In the long run, this will be a huge blow to the Hungarian
academe. As the attack on CEU in several ways follows the script already
applied in Russia and Turkey, it is clear there are negative spillovers. How
the contagion will spread to the rest of Europe will also depend on how the
European political elites will respond. So far they have a worryingly poor track
GLO: Will there be a chance for CEU to return back?
Kahanec: We are determined not to abandon Hungary and keep the Budapest campus. We will use it for non-teaching activities. As for our degree programs, my personal opinion is ‘never say never’.
GLO: How supportive is the EU and its Commission for CEU?
Kahanec: Some attempts to save CEU have been made, but they all have been eventually utterly ineffective. The EU has very limited instruments to protect democracy and freedom, let alone academic freedom, in its member states. The EU treaties did not really foresee, let alone provide safeguards against, rogue governments in its member states.
GLO: How well can CEU adjust in Vienna?
Kahanec: This will not be trivial, but we take this crisis as an opportunity to reinvent the university and to update its mission in order to even more strongly respond to the deep challenges societies around the globe are facing. We are opening new programs in Vienna, and I am proud to have stood, as the dean of CEU’s School of Public Policy, at the cradle of the new Masters’ program in International Public Affairs – the first graduate degree program that Central European University accredited in Austria to establish CEU in its new home in Vienna. And I must say, I am deeply impressed by, and grateful for the support from Austrian academics and institutions. There will be many challenges, but I am confidently looking forward to CEU’s future in Austria.
GLO Research Director Danny Blanchflower has just published his challenging and much acclaimed new book: “Don’t trust low unemployment numbers as proof that the labor market is doing fine—it isn’t. Not Working is about those who can’t find full-time work at a decent wage—the underemployed—and how their plight is contributing to widespread despair, a worsening drug epidemic, and the unchecked rise of right-wing populism.”
GLO President Klaus F. Zimmermann: “The book to read this summer. Original, full of evidence based on micro data analysis. Provocative in its conclusions. Entertaining, even if you do not agree. Important to debate for our future.”
David G. Blanchflower is the Bruce V. Rauner Professor of Economics at Dartmouth College, Professor of Economics at the University of Stirling, and a Research Associate at the National Bureau of Economic Research. He is the coauthor of The Wage Curve. Twitter @D_Blanchflower
GLO: Many people think that the
post-crisis recession is over and employment levels are high again. What is
wrong with this observation?
David G. Blanchflower: Working age employment rates, which calculates employment divided by population – have recovered their pre-recession levels in many countries including the UK, Germany, Japan Canada and France. The main exception is the United States where the employment rate is still below starting levels. That is also true in Denmark, Greece, Norway and Spain. The problem with many of the jobs that have been created over the last decade is that they have been low paid and insecure.
GLO: What do you mean by underemployment,
how is it measured and why do you think it is so challenging?
David G. Blanchflower: Even though the unemployment rate in many countries has fallen a lot and is below 4% in the UK, the US and Germany, wage growth is still benign. That seems to be because of underemployment which has replaced unemployment as the main measure of labor market slack in advanced countries. Underemployment occurs when workers are employed for less hours than they would like at the going wage. The Governor of the Central bank of Australia Philip Lowe in a speech has recently emphasised the importance of underemployment there. It is challenging because underemployment remains above pre-recession levels and seems to be used by firms to keep wages down.
GLO: How to avoid the threatening epidemic of unhappiness and self-destruction?
David G. Blanchflower: Now more than a decade since the onset of recession in advanced countries in 2008 wage growth remains benign. In the UK for example real wages are still 5% below starting levels and have grown more slowly than in any recovery in more than 150 years. Insecurity and the lack of decent paying jobs seems to have a major impact and appease central to the rise of right-wing populist movements, including in the US, France, Italy and Brexit in the UK. Hopelessness, isolation and unhappiness have been on the rise around the world. In the US the rise in deaths of despair – from drug overdoses, heavy drinking and suicide – is of particular concern. Putting the pedal to the metal and running advanced at full-employment, – which still seems a long way off – seems an obvious fix. Stimulative fiscal and monetary policy can lower the unemployment rate a lot more without a big pick-up in wage growth or inflation: then the balance of power will swing back to workers for the first time in decades.
In the Spring 2019 term, GLO PresidentKlaus F. Zimmermann has been the George Soros Visiting Chair Professor at the School of Public Policy of the Central European University (CEU) in Budapest. On June 28, he terminated this engagement and returned to the headquarters of the Global Labor Organization (GLO) in Bonn, Germany. See for a REPORT. Threatened by the Hungarian government, CEU has now moved its teaching to Budapest. Other Hungarian academic institutions are under monitoring by the Hungarian government.
On July 11, 2019, SSP published an interview with Zimmermann about his time in Budapest and views about the situation. LINK to the SPP website. See also text below.
SPP: You have been GSVC at SPP. Why SPP/CEU? What does your stay at SPP/CEU offer to you in terms of research, interaction with SPP faculty and students?
KFZ: I am working on European integration and global migration issues, and have published substantially on the European Union East enlargement and its consequences for the wellbeing of European nations. I have visited Budapest a number of times in my life to interact with Hungarian academic institutions. The CEU has over time become a lighthouse institution for the academic transformation of Eastern Europe. CEU’s academic staff and students are so professional, international, multi-ethnic and multidisciplinary; it is a pleasure to interact and learn. My research benefits from the various discussions I had during the visit – with long-term effects. It therefore has been both a pleasure and a great honor the have been the GSVC.
SPP: You have authored a vast body of academic articles, books, edited volumes. Which finding was the most intriguing one, perhaps changing the way we see some policy problems?
KFZ: Unlike what the public and policymakers often think, labor migration is a coming and going. Scientist have called this circular migration. While the inflow is properly noticed, the outflow is often overlooked. If policymakers wish to stop the inflow through regulations or walls, the outcome may be the opposite of what they intended: Workers stay longer, temporary migrants become even permanent, they bring family, and those unwilling to integrate pass these attitudes to their kids who remain disintegrated in the country. At the end there are more than less migrants and their composition is more troublesome. The better solution is free (and legal) labor mobility, where societies, companies and workers are adjusting according to general rules.
SPP: What policy issues are you working on now, and how do they relate to the European project?
Europe sees a rise in nationalism, avoids necessary reform policies and is afraid about foreigners and migration. People think that the world gets better if they ignore the consequences of demographic shifts, climate change and global conflict. This is a global trend, but Europe risks its well-build institutions which brought wealth, wellbeing and peace. Hence, I am writing about the benefits and conditions of well-designed reform policies, world-wide open labor mobility and a proper refugee policy. Europe will collapse if it fails to deal with those challenges.
SPP: You are one of the most prominent advocates of evidence based policy making. What are the necessary conditions for this to work? What is the role of universities in this?
KFZ: For such a policy to work, it needs that policymakers are collaborating with scientists. Researchers have to be willing to address pressing societal issues, execute state-of-the-art research and communicate it properly. They have to provide where possible alternative options, so that politicians can optimize with respect to the opinions of their voters. Policymakers need to listen and be willing to give larger weight to long-term efficiency issues over short-term muddling-through concepts focusing primarily on redistribution policies. Universities and research centers are core in this process, and they can only function with academic freedom. If society attempts to control and command research, the price is loss in welfare and wellbeing.
SPP: You know that Lex-CEU effectively expelling CEU from Hungary. HAS is under pressure, and several other universities. Is this a broader trend, and how should societies and academics respond to this?
KFZ: Although in line with many developments in the world suggesting a decline in the acceptance of science in society, these Hungarian experiences are dramatic. They will have huge damaging long-term effects for the Hungarian economy and society, and possibly push the country out of the European Union. This is a divide between the intellectuals and the ordinary person, a divide between brain and heart. Scientists have to go out to convey their findings, but they also need to activate and motivate the hearts. It is important to work on a European identity, not only to show that Europe creates a better economy.
SPP: You have held several professorial positions, the founding director of a prominent research institute, the Institute for the Study of Labor, the president of Germany’s largest think tank DIW, having significant academic and policy impact. From that experience, can you generalize some key lessons for young researchers, but also students, who aspire to have such an impact?
KFZ: Start as an academic, not as a policy advisor. Publish articles in established respected research journals to create an academic reputation. This is your capital as a policy advisor afterwards. Do not become partisan, or you become a politician and not the independent thinker needed. Wait for the time when the problems become so pressing so that your advice is need. This implies patience and the willingness to execute stand-by research. To be effective, seek the traditional and the social media, to achieve a global standing, and be ready to advise key policymakers at the local or national levels. Be willing to accept the huge administrative and psychological burden of directing large research institutions.
Marco Leonardi, economic advisor to two prime ministers in the Italian government from 2014 to 2018, has just published a new book on his experience in office during the Italian labor market reforms and the threatened future perspectives of those changes:
The hijacked reforms: why there is no coming back from labor and pension reform.Le Riforme Dimezzate, EGEA 2018 (in Italian).
Italy has passed three important reforms in the past four years—of the labor market, of the pension system and the introduction of a universal measure against poverty. All these reforms are already being undone, and yet this book explains, from the perspective of someone who worked within the Prime Minister’s policy unit, why there should not be any coming back from the main changes in the labor market and in the pension system.
Economic Adviser to the Prime Minister of the Italian Government and Full
Professor of Economics at the University of Milan, Italy. He received his PhD
from the London School of Economics and spent visiting periods at MIT,
Georgetown and Berkeley. His research interests are in labor economics,
inequality and education.
“In this book I describe the birth of labor market reform from within the policy unit of the Prime Minister’s Office. In addition, I discuss two other major reforms undertaken in the past four years: the pension reform and the introduction of a universal measure against poverty. I approach these topics from both the political (how and why certain policy decisions were taken) and the technical perspective. I refer to the many (at times difficult) relations between the government and other administrations, as well as the unions, and the lengthy political and administrative process required to enact a law, from the first parliamentary draft up to the implementation of the software to request the new subsidy online (in the case of the new subsidy for the poor). No law produces real effects until the moment it is “online,” and several steps are required to reach that point. Very often the laws are ineffective because their implementation is flawed, and a policy unit’s job is to drive the laws through their implementation process.
The most important reform has been the labor market reform (called the “Jobs
Act”). This reform is recognized internationally because it was adopted amid the
international debate on “flexsecurity” and the increasing protection of the
open-ended contract (or single contract).
During the 1990s there was considerable continuity in the employment
protection legislation of OECD countries, with one major exception: the
deregulation of fixed-term contracts and other non-standard labor relationships.
Particularly in Southern Europe, changes in labor market policy consisted
mainly of measures aimed at introducing “flexibility at the margin,” that is,
making the utilization of non-permanent contracts more loosely regulated while
leaving the discipline of permanent employment unchanged. Flexibility at the
margin, however, amplified the two-tier nature of labor markets, raising
concerns over the risk of labor market “dualism” or “segmentation.” Triggered
by these concerns, public opinion and policy-makers have repeatedly stressed
the importance of searching for “an appropriate balance between flexibility and
security” (the so-called “flexsecurity,” as pointed to by the European
Commission in multiple documents).
Act marks a stark change with respect to the approach to flexibility at the
margin by reducing firing costs for permanent employment and by making them
both (a) predictable ex ante and (b) increasing
according to the worker’s tenure within the firm. By doing so, the Jobs Act
aims at reducing dualism in the labor market, fostering human capital
accumulation, increasing job mobility to cope with structural adjustment, and
favoring workers’ protection “in the market.”
The most controversial aspect of the reform has
certainly been the abolition of the possibility of a worker’s reinstatement (“reintegro”) after illegitimate dismissal
for economic motives. This provision is limited to contracts signed after the
reform (March 7, 2015) and entails a drastic limitation to the possibility of
reinstatement, even in case of disciplinary dismissal. This substantial
uniformity of firing costs for both disciplinary and economic cases is
necessary to curb the incentive to surreptitiously justify dismissals so that
they allow for reinstatement, an outcome that would have certainly increased
the number of cases litigated in court. For consistency, the ability to
reinstate workers has also been excluded for collective dismissals, as they
have in essence an economic motivation. The abolition of the possibility of
reinstatement has certainly given birth to a clear-cut reform, a fact that has
been welcomed by international investors. Besides the new rules on firing
costs, generous employment subsidies were introduced to incentivize the use of
Another qualifying aspect of the reform scheme is the
introduction of a fast track for the settlement of dismissals (“conciliazione rapida”). The aim is to
promote consensual resolution of disputed terminations (as well as other
possible disputes). Contrary to other proposals for a “single contract” with
increasing firing costs, which would have introduced non-appealable
compensation, the reform scheme embraces the fast-track settlement model
introduced by the German and French employment protection legislations. The
latter, though, are different from the solution adopted in the Italian Jobs Act
as they don’t bind the court to award compensation according to a predetermined
schedule (which in the Jobs Act amounts to two months for each year of contract
tenure, up to a maximum of 24 months).
Unfortunately, this feature of the reform was declared illegitimate after
three years, in spring 2018, by the Italian Constitutional Court, and therefore
today the reforms are “dimezzate” (or
“hijacked”: the title of the book refers to the reversal of many reforms under the
new government, of which this case is
among the most serious).
The success of the reform is measured by the reduction
of court litigation in cases of dismissal (which was reduced by 80%, but
unfortunately began to rise again after the decision of the Constitutional
Court), and by the shortening of the amount of time young workers spend in
temporary contracts (that is, the average length of the initial part of one’s
career regulated by fixed-term contracts) and the resulting share of permanent
hiring among total hires. The expected substitution of fixed-term contracts
unfortunately has not happened: in 2014, roughly 70% of hiring was through
fixed-term contracts, and only 17% open-ended; in 2015 and 2016, the share of
open-ended contracts increased considerably, but in 2018, when the generous
employment subsidies ended, the share of new hiring in open-ended contracts
went back to the 2014 levels.
We made a mistake in allowing the coexistence of a
very liberal regime for fixed-term contracts and of the new open-ended contract
with increasing protection. Employers are reluctant to hire on open-ended
contracts, and if left with the easy outlet of fixed-term contracts, they will
not change their preferences. Furthermore, after having established a national
system of active labor market policies to favor the reallocation of workers
(after 20 years of debate, Italy finally has a national agency and a common
measure to manage active labor market policies across 20 regions), we were too slow
in the implementation process; as a result, public opinion has become aware of the
more liberal regime on firings but not the new policy of support through active
labor market policies.
While much of the reform process is now in reversal, when these very
incisive labor market reforms were introduced they faced no opposition and
Italy enjoyed four continuous years of employment growth (which has now been interrupted
under the new government).
Further details of the labor market reforms and my suggestions regarding future action can be found in the interview below. Additional information on some of the other reforms, including pensions, wage bargaining and measures against poverty, can be found in the book, only available currently in Italian.”
GLO: What were the essential elements of the Italian labor market reforms?
Marco Leonardi: The main policy tools of the
Jobs Act (and the main reversals under the new government since June 2018) can
be summarized as follows:
First, “Contratto a tutele crescenti,” i.e., the open-ended contract for new hires (from March 7, 2015), which eliminates the possibility of a worker’s reinstatement after illegitimate dismissal for economic motives (the so-called “article 18”) and embeds increasing monetary compensation in the case of separation. In this respect the Jobs Act marks a stark change with respect to the approach of flexibility at the margin (i.e., the tendency to liberalize the use of fixed-term contracts and leave open-ended contracts untouched by reforms) by reducing firing costs for permanent employment and by making them both predictable ex ante and increasing according to the worker’s tenure within the firm (two months for every month of tenure, starting from a minimum of four months and up to a maximum of 24 months). The Jobs Act is an example of “flexsecurity” in practice: it reduces dualism in the labor market and favors workers’ protection “in the market.”
Recently (in June 2018) the Constitutional Court declared illegitimate the rigid link between tenure and months of compensation in case of illegitimate firing, thus restoring the full discretion of judges in determining the amount of compensation (this will make firing costs uncertain again and the hiring permanent workers less convenient).
Recently (in June 2018) the Constitutional Court declared illegitimate the rigid link between tenure and months of compensation in case of illegitimate firing, thus restoring the full discretion of judges in determining the amount of compensation (this will make firing costs uncertain again and the hiring permanent workers less convenient).
Second, restrictions on self-employment arrangements (“co.co.co.,” “co.co.pro.,” etc.) used in the past to hire dependent workers while saving on both firing costs and social security contributions. In the three years during which the reforms were applied (2015–2018) we witnessed an increase in dependent employment and a decrease in the number of self-employed workers (from a record share of 25% of total employment): most of them took up a fixed-term contract but some of them transitioned to an open-ended contract, exploiting the very generous tax break for open-ended contracts activated in 2015 and 2016. Under the new government this trend has been reversed by a combination of three factors: the limits set by the new government on fixed-term contracts; the sentence of the Constitutional Court which has rendered dependent permanent employment contracts less convenient; and new tax breaks exclusively for the self-employed, which will soon cause the composition of employment to revert to a large share of self-employed.
Third, the reform of unemployment benefits, which have been extended both in terms of eligibility criteria and maximum coverage length, and the concurrent reduction of the short-time work compensation scheme that subsidizes employers that reduce hours of work during a temporary period of falling demand. The unemployment benefit reform aims to make benefits more generous and long-lasting and to include those with discontinuous or uneven employment histories. The reform of 2015 extended the benefits period to exactly half the number of weeks of contribution, up to 24 months. Employees can activate their individual right to a benefit if they have contributed for at least 13 weeks over the previous four years; this criterion has significantly relaxed the contributions requirement and has increased the number of potential beneficiaries to more than 95% of the employed population. The current government has not touched the benefits reform, but it has gone back to a generous regime of subsidies for firms that reduce hours of work. A generous short-time work scheme with loose rules on contributions risks keeping “zombie” firms alive for too long and keeping workers attached to them with little incentive to search for a new job.
Finally, fourth: Reform of active labor market policies, with the establishment of a national agency to coordinate the work of the regions (which have the competence over active labor market policies) and of a “re-training and placement voucher” (i.e., a voucher for placement services provided by both public and private operators), which introduces a quasi-market approach in active labor market policies. Unfortunately, the reform of active labor market policies never actually took off. The popular referendum, which should have moved the competence from the regions to the central state, failed, and the regions are jealous of their autonomy, with the result that the performance of the services is very patchy across Italy.
GLO: What are your recommendations for effective and successful labor reform policies?
Marco Leonardi: Use your political capital fast on your priorities, compensate unpopular reforms with popular ones and spend money to make reforms effective.
First, when you win an election, you may want to use your political capital immediately on your priorities before it is depleted. I think that the absence of strikes during the reform of the labor market was due to the “surprise” effect. Unions were prudent and waited to see what a young new leader of the center-left would bring about. If you aim at important issues (such as removing article 18) you may hope the reforms will endure, but you should expect that the next government will at least want to change the names of things in order to get credit for them.
Second, compensate for unpopular reforms with popular ones. We compensated for firing cost reforms with more unemployment benefits and active labor market policies. Unfortunately, we did not do enough on active labor market policies and we got the timing wrong: active labor market policies should have come prior to firing cost reform, because first you offer the carrot and then the stick and because active labor market policies require a long implementation period and the interaction of various actors: public employment services, the regional governments and private employment agencies.
Third, spend money to make reforms effective. We accompanied the abolition of article 18 with two dedicated measures in the 2015 budget law: (a) a three-year tax break for social security contributions, and (b) a corporate tax (IRAP) cut on labor costs applicable only to permanent contracts. This meant creating a cost wedge between permanent and temporary contracts. Conventional wisdom has it that one of the best ways to make the former more appealing is to make it cheaper than the latter. A generous tax break made a difference by incentivizing the use of permanent contracts and encouraged the perception that the reform was working.
GLO: What is your advice for the current phase of anti-reform sentiments?
Marco Leonardi: There could be two reasons why people seem to be adverse to reforms in many countries. The first might be because the reforms did not work or because they did not work for all in the same way. To make reforms work we need to focus on implementation: you may do less, but what you do must affect people’s lives in a simple way. Politicians often forget that somebody must take care of all the details of the implementation. Let’s take the example of a new measure against poverty for which the beneficiaries must fill in a new request module. Somebody must follow all the administrative processes that bring the law into effect, from the first parliamentary draft up to the implementation of the software to request the new subsidy online. No law produces real effects until the moment it is “online,” and there are several steps that must be taken to achieve this, including the involvement of the many administrations that have to do with the measure at various steps. Very often the laws are ineffective because their implementation is flawed, and a policy unit’s job is to watch over the laws until their implementation is complete.
The second issue regards the distribution of benefits. Many reforms are perceived as targeted at a few people rather than at everyone. In our time, when information is available to everybody through many of the same channels (TV and social media), it is important to stress the redistributive characteristics of all policy measures. In our case, the reform of the labor market occurred concurrently with a significant increase in the number of employed people (probably in part due to the reform itself), and yet people perceived the precariousness of the new jobs that had been created rather than their number. We should have highlighted more the redistributive feature of the reform (more people having a chance to find a job) rather than merely the increase in the number of those employed.
GLO: Thank you very much. (Questions by Klaus F. Zimmermann)
This year, the WageIndicator movement, Pauline Osseand the WageIndicator Foundation with all the teams in so many participating countries, can celebrate 20 years of successful activities around the globe. We take this opportunity to congratulate a great volunteer institution that has contributed to global transparency, understanding and well-being. We have asked the Director a few question about her organization and its work.
Director Pauline Osse has been a journalist for all her life. She worked for various magazines, the Dutch trade union and as a freelancer before she created the WageIndicator movement.
Now, the WageIndicator Foundation is a global player producing an international trademark.
In 2017, Pauline Osse and her organization were supporters of the newly created Global Labor Organization (GLO) from the first hour.
GLO: To collect wage microdata through the internet was quite innovative two decades ago. What was the origin of your initiative?
The first trigger was
the insight that working people everywhere lacked access to adequate wage information. This became clear to me back in 1999 when I set up
the website for the Dutch trade unions. People wanted to know ‘what should I
earn, what can I ask, what is the going market rate for someone like me,
trucker, cleaning lady?’ And the unions could not give that information. What
the Collective Agreement said, yes, maybe, but not the real wage the market
would pay. For the real wages one needed large scale research. And nobody did
this for a lower level then CEO’s.
The second trigger was a
small benchmark tool available online at the time for the Dutch highly educated
white male employee. But what about me, a working women? And what about all the
other working women, taking care for our children, houses, family? Why only
information for the rich and highly educated? What about vulnerable groups at
the lower end of the labor market? And indeed, what about labor markets in
poorer countries? Why wasn’t there such a benchmark tool for everyone?
So I got in touch with Kea Tijdens, a specialist in gender studies at the University of Amsterdam and we sat together. Kea is great at designing surveys and knows how to structure data sets and handle microdata. I knew a bit about the internet already. We put 2 and 2 together and came up with our first online survey. It was 2000, the internet was still young. But it worked. The data we collected was enough to build a salary check, reflecting the real wages for specific occupations. We put our salary check online as a benchmark on a dedicated website and promoted it. This worked too. Ever since we have been refining and extending the salary check, the occupations covered, and the number of national websites. After 20 years – and over 100 countries – the salary check is still very much at the core of our activities.
GLO: You are about to become a truly global player. What brought the breakthrough and what are the major products?
We did not stop at
collecting microdata on real wages and – later – cost of living. Our websites
today have much more to offer than just microdata. We offer statutory minimum
wages, we have living wages for countries and regions within, we have a full
text – and coded Collective Agreement-database and sample Collective Agreements
to draw on, we have built and keep extending a country specific labor law
database with tailor-made information on social security and the like, now
covering 100 countries. Every step, every extension has been a response to what
our web visitors told us they needed. The pressing problems of people we met in
the field while doing offline research were also key in directing our work.
Our work essentially is
piecemeal engineering, really. So it is difficult to pinpoint breakthroughs.
But, as I remember it, a few moments stand out. Take for instance our first
extension abroad. In 2004 we rolled out national WageIndicator websites in 9
European countries. All had a salary check, our prime product. That first
extension abroad may be called a breakthrough: our idea worked there too!
By then we had already
decided that every next step, every extension should be designed and
constructed in such a way that all data was internally consistent and
compatible. Right from the start every tool we use has been of our own making
to make sure that all data and all information we elaborate adds up and is
internationally comparable. All data is coded, all clauses are annotated. As a
result of this early decision, today, as we speak, we run similar operations in
over 100 countries. And we hope to serve people in 150 countries in 2020.
I also remember vividly
Paraguay 2006. We met trade union members there, very poor people, and
explained what we were doing. Their reaction was: what is this talk about
minimum wage, maximum wage. The maximum here is the minimum wage, if we get it
at all. And we don’t even know what the minimum is! If there ever was an eye
opener, it was this one. So we started our collection of minimum wages and we
started it in India, with its highly complex patchwork of minimum wages. Today,
as a result, we offer the largest minimum wage database in the world within
easy reach of everyone, anywhere, including Paraguay. On average each month
50,000 people consult our website there: in Paraguay alone! And a majority
visit the minimum wage page first.
Around 2010 it became
clear that living wage data was in great demand too. But how to come by living
wages? What is a living wage? I thought that the best reference would have been
the wages from Collective Agreements. If anything, that wage level should be
enough to guarantee a decent living. If one supposed that the legal minimum
wage was too low, then one might use the Collective Agreement-wages as a
benchmark to eventually arrive at living wages. We should therefore offer a
simple negotiating tool, based on existing Collective Agreements. This internal
discussion resulted in two databases that we added to our salary check, minimum
wages and labor law database: a living wage concept of our own design and a
Collective Agreement-database from which we derive sample Collective Agreements.
Which brings me to our
Decent Work Check. It is based on labor law and has been inspired by people’s
pressing needs. During 2007 and 2008 in a dozen or so countries in Latin
America, East and West Africa we organized fact finding sessions in remote
rural areas. In order to structure the debate we handed out a small
questionnaire. It took participants a few minutes to fill out by ticking
multiple choice boxes. The answers added up to a score. This score told them
right away where they stood in terms of compliance with working conditions as
in their national labor law. Ten years later this tried and tested tool has
been used to create a factory-level survey for both Indonesia and Ethiopia,
where it has been applied to conduct face-to-face interviews with workers and
hr-staff in the garment sector. After consultation with factory owners the
compliance-with-the-law-results are published as factory pages on our national
websites in those two countries. The factory pages are seen as so called Worker Driven Social
GLO: Nowadays, WageIndicator is a trademark. But it is not protected, so how do you survive?
Well, I don’t know about
the trademark, I couldn’t tell. But in Holland, after 20 years, we surely are a
household-name. And we know that our data is widely drawn upon and used by
policy makers, many small employers, multinationals, journalists and academics.
Even after 20 years, we stick to our policy of putting all our data online as
soon as we have double checked that it is accurate, factual and up to date. We
just have to offer more than others, be faster, better and transparent.
We always try to come up
with creative answers to people’s questions, even like: if you can do this, can
you also do that? Such questions also come from governments and multinationals,
but these don’t pay always. They simply assume that the data we publish is for
free, since it is published. Doing projects together is one way to raise
income. Selling data another.
GLO: Your venture has limited funds. So one does not get rich working for WageIndicator. How do you keep the spirit alive?
We want our data to
reach as many people as possible. We are motivated by the urge to liberate the
ordinary working women and men through empowerment by providing them with clear
cut information that helps them in taking their own decisions. To never take no
for an answer. So that they no longer depend on their parents, the trade union,
the government or any other authority to tell them what is possible and what
This questioning reflex
surely comes from journalism, my trade. Why don’t workers automatically get the
information from the Collective Agreements concluded on their behalf, why do we
have to unearth legal minimum wage information and decipher labor law? Why is
is not made accessible in understandable language in the first place? This
information belongs to the people, by definition. It is unfair to keep it from
them. The way we present it makes them say: ah, now I understand what is in the
law for me, finally. And: I feel respected, thank you for that. This certainly
motivates our team.
We are an internet-based
micro multinational. Our team spirit is highly entrepreneurial. We are
builders. The gender angle that has been with us from the beginning is
reflected in the composition of our global team. Most have children. We make
our own creative flow. If we have the money, we invest in improvement and
extension. If we have less money we continue building and updating anyhow. You
can also look at us as a family enterprise. Even when some cherished team
members leave us, because of an attractive job offer elsewhere, they keep in
touch with the family, and continue with us by offering coaching and mentorship
for free, for ever. They stay with us in the same spirit. We are all about
diversity and inclusion. And the fact that in our daily work we do something
meaningful to liberate simple working people by giving them the information
they need, is a binding force as well.
GLO: What next innovations may we expect?
Perfect websites, perfect databases in 150
countries, many countries with good Collective Agreement databases, factory
pages giving overviews of compliance with the labor law. And a platform with
social protection tools for the platform workers.
The interview partner from GLO has been Klaus F. Zimmermann.
Stability in a dramatic phase of instability: Theresa May remains Prime Minister in a parliamentary vote the day after she has experienced “the largest defeat for a sitting government in history” on her Brexit deal with the EU in the British Parliament on Tuesday night (January 15, 2019). The country is deeply divided, the political system looks like a lame duck. What are the consequences for continental Europe?
Some people argue that the Brexit situation and the uncertainty will also harm the countries on the European continent. But there are also chances to develop Europe better. Martin Kahanec and Klaus F. Zimmermann have written broadly on European integration and the role of migration. Next to many scientific contributions and policy studies, they have also written some books together on the topic. Their views on the situation are below.
A recent survey among 1,693 adults in the UK has investigated the
options for the situation after a rejection of May’s Brexit deal. The
“no-deal”, cold Brexit is expected by 35%, while a “second referendum”
ranks only third with 21% behind 23% for “don’t know”.
Martin Kahanecis a Professor and Head of the School of Public Policy at the Central European University in Budapest. He is Founder and Scientific Director of CELSI, Bratislava, a Chairperson of the Slovak Economic Association and Fellow of the Global Labor Organization (GLO).
Klaus F. Zimmermann is Professor Emeritus of Bonn University, Honorary Professor of Maastricht University, the Free University of Berlin and Renmin University of China, Beijing. He is Co-Director of POP at UNU-MERIT, Maastricht, and President of the Global Labor Organization (GLO).
GLO: Are you surprised about the large rejection of the Brexit deal?
Martin Kahanec: The landslide is perhaps a bit surprising, but there are several well-defined groups who had every reason to vote against the Brexit deal. One group are those, mainly from the Labor camp, who oppose May, or saw a “nay” as the only way to have a second referendum, or both. Among those who wish for a second referendum are probably a good number of conservatives, too. The other group is composed of those, primarily conservatives, who consider it a bad deal, not protecting the UK’s interests adequately. And then there is the DUP, who oppose the Northern Ireland backstop. It is hard to imagine a deal that would be accepted by some majority in the House of Commons and by the 27 EU member states as well, and with May investing very little in cross-party consensus building, the “nay” result was to be expected.
Klaus F. Zimmermann: Yes, this is kind of a Kamikaze behavior, untypical for a Parliament at fairly normal times. It has been know that the British MPs are quite critical about the EU, and the UK was never a friend of a political union in Europe. An acceptance of the May deal with the EU would have finalized the move out on March 29, at least on paper. Once out, one could have acted more radical. Now those responsible have to fear that the potentially large damage of a cold Brexit generates a stronger desire for a second referendum.
GLO: What do you expect to happen now, general elections, a new referendum, a cold Brexit, or else?
Martin Kahanec: I have no crystal ball. I hope for a new referendum, resulting in the UK remaining in the EU. With Corbyn as a staunch Brexiter at the helm of Labor, one important question is what is needed for him to reflect on the preferences of the majority of his party’s constituency, and turn Labor determinedly in favor of Remain. Whereas postponing Brexit by several months can give some time for what I see as forces of reason to take their effects, I am also afraid that a prolonged agony may further deepen the cleavages and sharpen the tensions in the British society, furthering its polarization, and leaving little space for consensus building. But a cross-party consensus, and strong leadership of the Speaker of the House, are very much needed to avoid a crash-Brexit and explore the options for a new deal or a second, possibly binding referendum.
Klaus F. Zimmermann:Now Theresa May wants to speak with all sides among the MPs. This seems a bit too late. Everybody in the Parliament fears general elections, not even the labor party can be sure to win in such a divided situation. The country is split in two nearly equal blocks with opposite positions. It is not even obvious that a second referendum will bring a strong majority for one side. Hence, my best guess is that the outcome is a cold Brexit. However, I think that this would be really a big problem. With such an important decision with very long-term consequences for the well – being of the people it is not a shame to think twice and to correct a mistake.
GLO: What are the consequences for Europe?
Martin Kahanec: On the one hand, the rejection of the deal is a lifeline for Remain hopes. On the other hand, the ultimate outcome is as unclear as ever. This uncertainty is very unhelpful for the European economy. If the UK leaves the EU, the economic consequences for the EU (and even more so for the UK) will be very much on the negative side. In particular, it will be a major challenge for the eastern member states of the EU. Hundreds of thousands of eastern Europeans work in the UK. Some of them will consider returning to their home countries. As they are primarily young, and have acquired many hard and soft skills in the UK, their return would help the labor markets and public budgets back home. However, they would likely be less productive in their home countries than in the UK, and so their incomes would go down. This and the reduced interstate mobility would also decrease productivity in Europe and hurt its capacity to absorb economic shocks. An abrupt return of large numbers of workers to the sending countries could exceed the capacity of their labor markets, social security and health care systems, and social services to absorb them, creating temporary congestion and resulting in tensions between returnees and their compatriots. The UK will also be hurt: it will lose many thousands of skilled, hard working men and women and talented students from eastern Europe. The UK is also a major trading partner and source of investment for the eastern member states. Brexit would significantly reduce the gains from that trade and investment for both parties.
Klaus F. Zimmermann: Never waste a crisis! Europe has better things to do, but forced to adjust there are two potentials: First, in the likely case of a cold Brexit, the damage for the UK will be substantial, and also the remaining EU will suffer. At least Scotland will try to leave the UK and seek to join the EU. This will signal to the 27 member states that it does not pay to leave. Further, it increases the incentives to develop the EU stronger and faster, in particular since the UK was always hesitant about a stronger political and economic integration and can no longer object. Second, if a cold Brexit does not happen because the British MPs fear the consequences, another referendum is likely. It can lead to a “Remain” and start a cultural change in the UK, where the British people better understand the benefits of the larger European Union. The EU could then be more dynamic than it otherwise would have been.
A recent survey among 1,693 adults in the UK has investigated the options for the situation after a rejection of May’s Brexit deal. The “no-deal”, cold Brexit is expected by 35%, while a “second referendum” ranks only third with 21% behind 23% for “don’t know”.
With a majority of 230 votes, the British Parliament has rejected the Brexit deal of Theresa May with the EUlate evening of Tuesday (January 15, 2019). This has been called by BBC as“the largest defeat for a sitting government in history”. This has caused two-sided hopes; while some now expect a hard Brexit without a transition phase, others still push for a second referendum to reverse the Brexit vote.
Most scientific observers of the ongoing spectacle over the last years typically see the facts different than the critics of the European Union and the migration flows, namely largely positive. They expect huge damage for the UK as for Europe in general. Such damage is already visible, although often ignored.
Immediately after the decison, GLO has contacted some of its prominent GLO Fellows, who have done serious research on the Brexit situation, including Nauro Campos and Jonathan Portes.
Nauro Campos, Professor of Economics at Brunel University London, Fellow of the Global Labor Organization (GLO) and Research Professor at ETH-Zürich, is a also the Editor of the influential research journal Comparative Economic Studies.
Jonathan Portes is Professor of Economics and Public Policy, Senior Fellow, UK in a Changing Europe, King’s College, London, and Fellow of the Global Labor Organization (GLO).
GLO: Are you surprised about the large rejection of the Brexit deal?
Nauro Campos: The most surprising thing in UK politics this week is how everything (so far) has occurred as predicted. Before the vote, there was certainty about the defeat but questions about its extent. At the lower-end, the estimated margin was about 160 votes (which would already make it a “historic defeat.”) SkyNews I believe held the upper-end with a defeat by about 225 votes. Thus 230 votes would be shocking only to those that don’t follow the debate closely (and it has been such a repetitive, shallow and infuriating debate that there are indeed many good reasons not to follow it.)
Jonathan Portes:Yes. Few expected quite such a heavy defeat – more than half of Conservative backbenchers rejected it as did almost the entire Parliamentary Labour Party. But the key is that while there was a huge majority against the deal, there is no majority for any particular alternative. Most Conservatives who voted against did so because they prefer No Deal, or think the EU27 will agree under the threat of No Deal to remove the so-called backstop. But most Labour MPs voted against because they want a permanent customs union, Single Market membership, or to remain in the EU.
GLO: What do you expect to happen now, general elections, a new referendum, a cold Brexit, or else?
Jonathan Portes: Nobody knows. The vote clearly increases the probability of No Deal – it also increases the probability of a second referendum. The key is whether the majority in Parliament that rejects No Deal will be able to decide on a single way forward, whether that’s Single Market membership/the “Norway option” or a second referendum. And that will depend on whether enough Conservative MPs are prepared to defy the strong views of their own membership and the obstinacy of Theresa May, who so far has proved entirely unwilling to seek a cross-party compromise.
Nauro Campos: I am writing this less than two hours after the result from the vote so, if predictability will rule this week in Westminster (for a change), than the prime minister will win the vote of no confidence tomorrow closing down a main avenue for a general election. Immediately after voting down the piece of legislation that gives May’s government the reason to be, the DUP (and one should soon expect the rest of the Conservative rebels to come along) said that tomorrow they will show themselves confident, instead. Clearly, it doesn’t matter confident in what. This is the stuff of populism and has been so for the last three years. A hard Brexit seems less likely this week but which of the other options may prevail (second referendum, revocation or extension of A50) should be easier to gauge this time on Monday (after the Prime Minister goes back to parliament with details of her proposed Plan B.)
GLO: What are the consequences for Europe?
Nauro Campos: I guess Europe will continue to do what it has been doing in the last few months regarding Brexit, namely, (1) to wait for Westminster to come to terms with the agreements it signed in December 2017 at the end of phase 1 of the negotiations and (2) continue to prepare for the worse case scenario (a no deal) but confidently showing that it is much better prepared for it than the UK currently is.
Jonathan Portes: The EU27 can do little except wait for the UK to sort itself out. There is little point in making minor changes to the deal on the table when the UK is so divided. We simply are not currently in a position to negotiate in a credible way. The sensible thing for the EU to do is to continue to prepare for No Deal, while being prepared to response positively when the UK – perhaps under a different Prime Minister or government – actually demonstrates that there is a Parliamentary majority for a specific way forward, particularly if it involves extending Article 50 to allow a second referendum, a general election, or some other process.
GLO: Gentlemen, thank you very much! And good night.
Note:GLO here is Klaus F. Zimmermann, UNU-MERIT, Maastricht University and President of the Global Labor Organization.
As of January 2019, the Eurasian Economic Review (EAER) has a new Editor-in-Chief, Dorothea Schäfer. EAER is one of the flagship journals of the Eurasia Business and Economics Society (EBES), which partners with the Global Labor Organization (GLO). Under the leadership of Schäfer, the EAER, while focusing on macro analysis and financial markets, also seeks to attract high quality research papers in macro labor and on the interrelationships between financial and labor markets. Klaus F. Zimmermann (GLO) spoke with Schäfer about her plans.
GLO: In your new role as Editor-in-Chief, where do you see the focus of the EAER under your leadership?
Dorothea Schäfer: The focus of EAER will be on financial markets and applied macro research. The journal has a broad scope in both focus areas. Finance topics may address such issues as financial systems and regulation, corporate and start-up finance, macro and sustainable finance, finance and innovations, consumer finance, public policies within local, regional, national and international contexts towards financial markets, money and banking and the interface of labor and financial economics. Macro economic research includes topics from monetary economics, labor economics, international economics and development economics, preferably but not exclusively, with a link to finance. Typically, the articles published in EAER highlight the economic, political and societal relevance of research results.
GLO: The challenges for the well-being of the world are not smaller today, than after the Great Recession. What can a journal like the EAER contribute to deal with those challenges?
Dorothea Schäfer: Asian countries were exposed to a deep financial crisis 10 years before the Lehman insolvency and had a long way to go before they recovered. Severe deficiencies in financial markets and financial regulations triggered the Lehman failure and the subsequent Great Recession. Many countries have still not fully recovered and new macro risks from trade wars, Brexit and a general loss of trust have evolved. Financial markets are part of those problems, but will also be part of the solutions. Therefore, understanding financial markets is of ever increasing importance for the well-being of the world. The EAER aims to support building the crucial knowledge by publishing rigorous, high-quality research.
GLO: What kind of papers do you wish to attract for EAER from researcher dealing with human resources issues?
Dorothea Schäfer: Papers dealing with the interaction between labor and financial markets are particularly welcome. But since the Journal has a macro focus in addition to finance articles on labor market issues in general are of interest for the journal.
Dorothea Schäfer, Dr. in Economics and habilitation in Business Economics, Research Director Financial Markets at the German Institute for Economic Research (DIW Berlin), Adjunct Professor of Jönköping International Business School, Jönköping University (Sweden); Research Fellow of the Center for Relationship Banking and Economics CERBE, Roma, Italy. She is the Editor-in-Chief of the Eurasian Economics Review and a Fellow of the Global Labor Organization (GLO).
Head of various research projects, inter alia, funded by the Leibniz Research Alliance Crises in a Globalised World, the Research Foundation of the German Savings banks, German Science Foundation, the EU Commission, the Fritz Thyssen Stiftung and the Stiftung Geld und Währung; Evaluator/reviewer of research programs/proposals for the German Science Foundation (DFG), EU Commission (Marie Skłodowska-Curie Individual Fellowships), the Federal Ministry of Education and Research (BMBF) and the LOEWE (Initiative for the Development of Scientific and Economic Excellence, State of Hesse).
She has published in Finance Research Letters, European Journal of Finance, Small Business Economics, Journal of Financial Stability, International Journal of Money and Finance, German Economic Review, Economics of Transition, the Journal of Comparative Economics, Journal of Institutional and Theoretical Economics and many other journals. Schäfer gave expert testimonies for the Commission to Review the Financing for the phase-out of nuclear energy in 2015, for the Finance Committee of the German Parliament (Deutsche Bundestag) (2010, 2011, 2012, 2018) and for the Committee on Social Affairs, Health and Sustainable Development, Parliamentary Assembly, The Council of Europe (2012). In 2012, she was also advisor to the Sub-Committee “Policy for a Sustainable Political and Economic Governance” (Nachhaltige Ordnungspolitik) of the Enquete Committee of the German Parliament, “Growth – Prosperity – Quality of Life” (Wachstum Wohlstand Lebensqualität).
In 2001 Schäfer and her co-author Franz Hubert received the Best Paper Award of the German Finance Association and 2002 the Best Paper Award of DIW Berlin. Main research interests are: financial and banking markets, systems and regulation, financial crisis, financial constraints, start-up finance and innovation, finance and labor, sovereign debt and Euro Area, gender and financial markets, household finance, green finance, crowd financing. Schäfer ranks in the European Union among the top 6% of researcher according to the RePEc ranking analysis in January 2019.
The Kuznets Prize Paper of the Journal of Population Economics was announced and given at the #ASSA2019 meeting in Atlanta. The Award Study shows that a rise in the disease risk increases the total fertility rate and the number of surviving children, a finding which has important policy implications. In every year, the Prize is selected by the Editors of the Journal among the papers published in the previous year. List of Kuznets Prize winners.
Yoo-Mi Chin & Nicholas Wilson, Disease risk and fertility: evidence from the HIV/AIDS pandemic, Journal of Population Economics, 31 (2018), 429–451.
Interview with Author Yoo-Mi Chin, Professor of Economics at Baylor University
GLO: Is a rise of fertility after a disaster not the expected proper Malthusian response?
Yoo-Mi Chin: It is ambiguous whether we can clearly expect a Malthusian response to the HIV/AIDS pandemic. It is true that population might recover from a positive check like diseases by increasing fertility. But after all, HIV is a sexually transmitted disease, and proliferation of HIV may lower fertility by inducing the use of contraception for safe sex. Further, HIV takes a heavy toll on working age adults. Like we see in the case of Black Death, as large-scale mortality causes labor shortages and subsequent higher wages, more women participate in labor market, which would lead to lower fertility. On the other hand, it is also possible that higher wages generate an income effect on the number of children. A lower life expectancy may increase fertility through lower returns to education and the child quantity-quality trade-off. Given such theoretical ambiguity, we find that an empirical examination of the issue is warranted.
GLO: How is fertility affected by a rise in the disease risk?
Yoo-Mi Chin: We find that a doubling of HIV prevalence increased total fertility rate by approximately 1.37 births and increased surviving children by approximately 0.38 children, using distance to the origin of the pandemic as an instrument for HIV prevalence. Although HIV/AIDS likely has increased child mortality, our findings suggest that the increase in births exceeded the increase in child mortality.
GLO: What are the policy implications?
Yoo-Mi Chin: The rise of the HIV/AIDS pandemic appears to have increased total fertility and the number of surviving children. Although the net effect of the pandemic on GDP per capita needs to be more thoroughly examined in future research, the increases in total fertility and the number of surviving children coupled with high mortality of working age adults could potentially lead to increases in dependency ratios and decreases in GDP per capita. Our results suggest that positive externalities generated by HIV prevention efforts might be larger than previously thought in that they contribute not only to reductions in HIV prevalence but also to reductions in total fertility, which could potentially enhance future welfare. Therefore, more resources for HIV prevention efforts are warranted.
Yoo-Mi Chin & Nicholas Wilson, Disease risk and fertility: evidence from the HIV/AIDS pandemic, Journal of Population Economics, 31 (2018), 429–451.
Abstract: A fundamental question about human behavior is whether fertility responds to disease risk. The standard economic theory of household fertility decision-making generates ambiguous predictions, and the response has large implications for human welfare. We examine the fertility response to the HIV/AIDS pandemic using national household survey data from 14 sub-Saharan African countries. Instrumental variable (IV) estimates using distance to the origin of the pandemic suggest that HIV/AIDS has increased the total fertility rate (TFR) and the number of surviving children. These results rekindle the debate about the fertility response to disease risk, particularly the HIV/AIDS pandemic, and highlight the question of whether the HIV/AIDS pandemic has reduced GDP per capita.
Yoo-Mi Chin is an Assistant Professor of Economics at Baylor University with a Ph.D. from Brown University. She is also a Fellow of the Global Labor Organization (GLO). Most of her research focuses on the analysis of domestic violence. She has published her previous work in the Journal of Applied Statistics, the Journal of Health Economics, and World Development, among other outlets. Prior to joining Baylor University, she was an Assistant Professor at the Missouri University of Science & Technology.
The book: The Crossroads of Globalization. A Latin American View. December 2018, 232 pages: World Scientific. More Info.
The author: Alfredo Toro Hardy. GLO Fellow, Venezuelan Scholar and Diplomat. More Info.
The Interviewer: Klaus F. Zimmermann/GLO President. Hardy and Zimmermann have been both Rockefeller Foundation Bellagio Center Resident Scholars in Fall 2017. Zimmermann has written the Preface in the book: Text.
GLO: Globalization seems to be under political pressure around the globe. How does it affect Latin America?
Alfredo Toro Hardy: Two powerful forces are measuring their strength by acting upon globalization. One of them pushes globalization forward, while the other hinders its advance and promotes its demise. At this point in time, it is not clear which of them will end up prevailing.
China’s economic umbrella and Asia’s middle class, whose expansion is estimated to represent 80 percent of the world’s middle class increase up to 2030, remain as the fundamental driving forces of globalization. On the other hand, though, we find populism and the displacement that disruptive technologies bring with them. While populism creates boundaries and discourages free trade, the Fourth Industrial Revolution advances towards a decoupling between developed and developing economies. Under these two very different but converging impulses, globalization is bound to loose ground.
hinders Latin America’s strategic vision. If the future entailed a re-launching
of globalization, it would seem obvious that the region should follow along its
lines, positioning itself in the best possible terms so as to increase its potential
benefits. However, if globalization is entering into a declining phase, Latin
America would need to look for options.
Latin America faces, therefore, not only a dramatic uncertainty as a result of forces beyond its control, but also the need to anticipate, to the best of its abilities, unforeseen events to which it will have to act or react upon.
GLO: How can Latin America adapt best in the future?
Alfredo Toro Hardy: As said, Latin America finds itself at the crossroads of the pro and the anti globalization forces. Were the rules of the game to change now, the region would certainly suffer. Uncertainty, however, is an even greater challenge because positioning itself and planning ahead amid conflicting signs, becomes extremely difficult.
emerged as a result of political intention and technological feasibility. Now,
it finds itself seriously challenged for the very same reasons. In both cases,
political intention and technological feasibility are clearly identified with developed
What kind of route map can Latin America follow amid this confusing
situation? To begin with, it
is necessary to analyze the forces that push for and against globalization,
trying to measure their respective strength, convergence capacity, and
potential impact. This requires, at the same time, looking into the flaws,
weaknesses and contradictions of such forces. With these elements in hand, it
might be easier to envisage where the trends are leading to and, by extension,
where Latin America might end up standing.
However, there seems to be no alternative to playing in both directions, with the aim of minimizing costs and maximizing opportunities. Within this highly fluid situation, pragmatism, resilience, creativeness, imagination, and the joining together of Latin American forces, will have to guide the region’s actions in the foreseeable future.
GLO: What are the challenges for globalization to become profitable for Latin America?
Alfredo Toro Hardy: The curious equation formed by protectionism, populism, political rage, algorithms, deep learning, robots, 3D printing, nanotechnology, indoor and vertical farming, an emerging post animal food industry, and renewable energy, among other elements, may end up suctioning the oxygen of globalization. It is not only that trade barriers emerge, but that it will make no sense to look for cheaper manufactures, products or services afar, when it would become possible to generate them locally at competitive prices.
A decoupling world economy, like the one that may emerge under such equation, presents no benefit for Latin America. Finding a path under such scenario would become extremely stressful and challenging. However, globalization has not been a rose garden for the region. Much to the contrary, it has imposed upon it the need to reconvert into labor-intensive manufacturing or to go back in time to commodities producing. Both of those options have being far from satisfactory.
A globalization that becomes profitable for Latin America would entail the possibility of overcoming such limitations, while opening a path towards a much more international service oriented economy and a more value added manufacturing. Unfortunately, at this point in time options are narrowing not widening.
In an interview with GLO President Klaus F. Zimmermann in Beijing, Michele Bruni, Team Leader and Resident Expert of the EU-China Social Protection Reform Project, outlines that the world will see large, unstoppable demographic imbalances causing substantial challenges. It will in particular involve China, Europe and Africa. Only managed migration and educational efforts can help to deal with this.
GLO Fellow Michele Bruni, Team Leader and Resident Expert of the EU-China Social Protection Reform Project, Beijing.
Michele Bruni holds a Laurea in Political Sciences from the University of Florence and a Ph.D. in Economics from the University of California, Berkeley. He has taught at the Universities of Calabria, Bologna, and Modena. He is a Fellow of the Global Labor Organization (GLO) and member of the Center for the Analysis of Public Policies of the Faculty of Economics “M. Biagi”, University of Modena (CAPP). At present, Bruni lives in Beijing where he is Team Leader and Resident Expert of the EU-China Social Protection Reform Project. For more than twenty five years he has participated as labor market expert in numerous EU, ADB and WB funded projects in Eastern Europe, Africa and South East Asia countries. In his research, Bruni has focused on the development of stock and flow models and their application to the analysis of labor market and migration.
QUESTION: Your research seems to suggest that the world will soon experience the largest demographic imbalances that mankind has ever seen. What do you mean by this?
During this century, the growth of working age population will level off as a consequence of the unstoppable demographic transition. But this will result from two opposite tendencies: the working age population of (i) an increasing number of countries will sharply decline, and (ii) of an decreasing number of countries, the poorest ones, it will explode. This is an unprecedented demographic polarization due to the very different stages countries are currently in the demographic transition.
Over the next 40 years, the world’s working age population will increase from 4.85 billion to 6.21 billion, this is a rise of 1.36 billion people and 28%. This results from positive balances of 1.9 billion and negative balances of 524 million people. The shrinking areas are lead by China with a share of 48.1%, followed by Europe (25.6%), Asia excluding China (18.2%), Latin America (4.1%), and the new world countries (USA, Canada, Australia and New Zealand) with only 3.8%. The positive balances will be concentrated in Africa (56.8%) and in Asia (37.6 %).
QUESTION: Although both shrinking and aging, China and Europe plan to play the “fortress game”. Will this be sustainable?
In absence of migration the working age population of Europe will decline by 134 million and that of China by 252 million over the next 4 decades. Can Europe and China really continue on their path of economic growth and social development without migrants? Is technological change capable to increase productivity as then needed?
The idea that AI and robots will produce a dramatic decline of labor needs has been put forward by gurus of the new technologies, economists, and obviously politicians. However, this is not supported by empirical evidence, it is static and ignores second order effects. Computer-based technologies may destroy jobs, but may also create new ones. Furthermore, the human mind has what appears to be a limitless capacity and fantasy to “invent” new needs and a limitless capacity to invent and produce new goods to satisfy them. It seems therefore evident that for Europe, China – and other numerous countries like Japan and Korea that will experience an even more dramatic decline of working age population – mass immigration is not an option, but a necessity.
To play the “fortress game” by exploiting irrational fears and ignore how the labor market works and how strong the demographic trends are would be totally irrational. Moreover, this game would be undermined by the market itself that will find a way to satisfy its labor needs. At the same time it is difficult to believe that Africa, a continent plagued by war, endemic problems of corruption, and a low educational level will be able to outperform the Chinese economic miracle and create over a 40 year period the more than 700 million jobs necessary to satisfy its increase of labor supply. Therefore, African mass emigration is not an option, but unavoidable.
QUESTION: Would global collaboration help, and could educational investments be part of a solution?
The demographic polarization contains the potential solution to the problems it generates: The structural need of labor of the countries in the last phase of the demographic transition will correspond a structural excess of labor in the countries in the first phase. However, it is unrealistic that in the present political context immigration countries will open their countries sufficiently allowing the market to do the matching. In my work, I have suggested a cooperative management of migration flows recognizing that arrival countries will almost only need migrants with a medium or high level of education. Hence, the necessary education and vocational training should be financed by the immigration countries and organized by a specialized international organization in the origin countries.
QUESTION: How can China and Europe cooperate, and could they absorb African excess supply of labor?
Europe and China cannot absorb the huge rise in the job-seeking African population, but significantly reduce the burden of job-creation there to less than 400 million. Still a large number, but together with the Chinese infrastructure initiatives the proposed educational activities could help to give the African continent a push. This analysis also suggest that Europe, China and other Asian countries could join forces to maximize the potential of demand-driven migrations, while given its location and rich experience in this field, Europe could take the role of the “training center” of the project.
QUESTION: So the face of migration in the future is “African”?
Human history has already recorded two “out of Africa” migrations. It is a matter of speculation whether those early migrations were due to economic reasons or, as I suspect, to one of the basic characteristic of primates, curiosity. This century will record the third out of Africa migration, but this time migrants will be pulled by the labor needs of Europe and Asia.
GLO Experts Bruni & Zimmermann debating the facts and the policy options in a Beijing coffee shop
On 1 July 2018, Oded Galor becomes Editor of the Journal of Population Economics following Erdal Tekin, who has taken the position of Editor-in-Chief of the Journal of Policy Analysis and Management (JPAM) (see for further details). For an interview with Oded Galor see below.
Oded Galor(Herbert H. Goldberger Professor of Economics at Brown University) is the founder of Unified Growth Theory. He has contributed to the understanding of process of development over the entire course of human history and the role of deep-rooted factors in the transition from stagnation to growth and in the emergence of the vast inequality across the globe. He has pioneered the exploration of the impact of human evolution, population diversity, and inequality on the process of development and his interdisciplinary research has redirected research in the field of economic growth to the exploration of the long shadow of history and to the role of biogeographical and demographic forces in comparative economic development.
The Journal of Population of Economics is the top journal in the field of population economics. It is an international research journal that publishes original theoretical and applied contributions on the economics of population, household, and human resources. It is owned by Springer Nature and operates from POP at UNU-MERIT, Maastricht, The Netherlands. It is published in collaboration with the Global Labor Organization (GLO) and the European Society for Population Economics (ESPE).
The Journal of Population Economics is one of the top ranked Springer Nature journals in economics. In 2017 it has published 40 research papers out of 524 submissions, which implies a 92.4% final rejection rate. Submissions have significantly increased, eg. doubled in the last decade from below 300 to nearly 600 this year. The impact factor has increased from 0.5 in 2007 to an expected 1.3 in 2017. For more details of the actual performance of the journal see this post and the just published Report of the Editor-in-Chief 2018.
Number of Submissions to the Journal of Population Economics:
Oded Galor is the Founding Editor of the Journal of Economic Growth also owned by Springer Nature and will remain in the position of Editor of this outlet. The Journal of Policy Analysis and Management (JPAM) is the top field journal in public policy and published on behalf of the Association for Public Policy and Management(APPAM). It has been ranked number 21 for 2016 among economics journals by the impact factor (IF: 3.415) with Journal of Economic Growth rank 20 (IF: 3.440) and Econometrica rank 22 (IF: 3.379). Oded Galor and Klaus F. Zimmermann see a large strategic benefit for both the Journal of Economic Growth and the Journal of Population Economics in a close collaboration.
As Editor-in-Chief Klaus F. Zimmermann, who is also the GLO President, stated:
“Oded is a legendary figure, both as top researcher and an admired journal editor. He has already served for decades as Associate Editor of the Journal of Population Economics and understands the relevance and context of our work. Sandro Cigno, Junsen Zhang, Michaella Vanore and I are very excited to work with him. We all share the same ambitions and the expectations to make the Journal of Population Economics an even more influential academic outlet of the field.”
Interview with Oded Galor
What makes population economics an exciting field of analysis for a leading researcher in the field of economic growth?
Oded Galor: The transition from an epoch of stagnation to an era of sustained economic growth has marked the onset of one of the most remarkable transformations in the course of human history. While living standards in the world economy stagnated during the millennia preceding the Industrial Revolution, income per capita has undergone an unprecedented tenfold increase over the past two centuries, profoundly altering the level and distribution of education, health, and wealth across the globe. The rise in the standard of living has not been universally shared among individuals and societies. Variation in the timing of the take-off from stagnation to growth has led to a vast worldwide divergence in income per capita. Inequality, which had been modest until the nineteenth century, has widened considerably, and the ratio of income per capita between the richest and the poorest regions of the world has been magnified.
Throughout most of human existence, the process of development was marked by Malthusian stagnation. Resources generated by technological progress and land expansion were channeled primarily toward an increase in the size of the population, providing only a glacial contribution to the level of income per capita in the long run. Cross-country technological differences were reflected in variations population densities, and their effect on variation in living standards was merely transitory. In contrast, over the past two centuries, various regions of the world have departed from the Malthusian trap and have witnessed a considerable increase in growth rates of income per capita. The decline in population growth over the course of the demographic transition has liberated productivity gains from the counterbalancing effect of population growth and enabled technological progress and human capital formation to pave the way for the emergence of an era of sustained economic growth.
Thus, the pivotal role of population dynamics in the transition from Malthusian stagnation to sustained economic growth and the emergence of vast inequality across nations, makes the study of population economics central for the understanding of the growth process.
What attracted a leading scholar in the field of economic growth to the Journal of Population Economics?
Oded Galor: In light of the importance of demographic forces in the understanding of the process of development and the vast inequality across the globe, the Journal of Population Economics is in a unique position to make a significant contribution in the understanding of this important relationship.
What kind of research do you wish to attract to the Journal of Population Economics?
Oded Galor: I would like to encourage the submission of research papers that are centered around:
The causes and the consequences of the demographic transition
Population diversity and economic development
Human evolution and the process of development
The interaction between population and economic growth
Population dynamism in the Malthusian epoch
Picture below: Managing EditorMichaella Vanore and Klaus F. Zimmermann working intensively together at UNU-MERIT, Maastricht.
On 1 July 2018, Erdal Tekin becomes the Editor-in-Chief of the Journal of Policy Analysis and Management (JPAM). His role as Editor of the Journal of Population Economics will be taken by Oded Galor. For an interview with Erdal Tekin see below.
Erdal Tekin is a Professor of Public Policy in the School of Public Affairs at American University. He is also a Research Associate at the National Bureau of Economic Research (NBER) and a Fellow of the Global Labor Organization (GLO). His research focuses on health economics and the economics of crime. More information about Erdal Tekin’s research and his other professional activities can be found on www.erdaltekin.com.
The Journal of Population of Economics is the top journal in the field of population economics. It is an international research journal that publishes original theoretical and applied contributions on the economics of population, household, and human resources. It is owned by Springer Nature and operates from POP at UNU-MERIT, Maastricht, The Netherlands. It is published in collaboration with the Global Labor Organization (GLO) and the European Society for Population Economics (ESPE).
The Journal of Population Economics is one of the top ranked Springer Nature journals in economics. In 2017 it has published 40 research papers out of 524 submissions, which implies a 92.4% final rejection rate. Submissions have significantly increased, eg. doubled in the last decade from below 300 to nearly 600 this year. The impact factor has increased from 0.5 in 2007 to an expected 1.3 in 2017. For more details of the actual performance of the journal see this post and the just published Report of the Editor-in-Chief 2018.
Number of Submissions to the Journal of Population Economics:
The Journal of Policy Analysis and Management (JPAM) is the top field journal in public policy and published on behalf of the Association for Public Policy and Management(APPAM). It has been ranked number 21 for 2016 among economics journals by the impact factor (IF: 3.415) with Journal of Economic Growth rank 20 (IF: 3.440) and Econometrica rank 22 (IF: 3.379).
Erdal Tekin has served as an Editor for the Journal of Population Economics between 2000 and 2018 together with the acting editors Alessandro Cigno and Junsen Zhang and Editor-in-Chief Klaus F. Zimmermann. For nearly two decades, Erdal Tekin took responsibility for papers dealing with risky behavior, family and labor. Together with the full team, he considerably shaped the profile and extraordinary success of the Journal of Population Economics. He also supported the development of the European Society of Population Economics(ESPE) by contributing to their annual meetings and making the connections to the local team organizing the very successful 2015 annual ESPE congress at Izmir University of Economics, Izmir, Turkey.
As Editor-in-Chief Klaus F. Zimmermann, who is also the GLO President, stated:
“Erdal has been of invaluable help in developing new areas like risky behavior for the journal, ensuring the highest quality standards and always providing the requested team spirit. The remaining editorial team is grateful for his long-term contributions and will miss his advice, ambitions and inspirations. We wish him all the best in his new role as Editor-in-Chief of this major journal, JPAM.”
The appointment of Oded Galor of Brown University as Editor of the Journal of Population Economics will be detailed in a separate post!
Interview with Erdal Tekin
Questions are by Klaus F. Zimmermann.
What makes policy research so important at this historical time?
Erdal Tekin: The U.S. society and many societies across the globe are facing an increasingly complex set of pressing problems, ranging from climate change and health care to immigration and gun violence. Unfortunately, we sometimes see that the so-called solutions to these problems are debated or evaluated through the lenses of ideology and faith. These non-scientific approaches both prolong these problems and make any remedial efforts later less likely to succeed and much costlier for the public. This is unfortunate because, thanks to the analytic tools developed by social scientists and the availability of large scale and rich data sources, we are in a position to identify effective and efficient solutions to many of these problems today. What we need is less ideology and more data-driven, evidence based approaches that are formulated based upon on policy research.
What does one learn from journal editing?
Erdal Tekin: Editing a journal is a big job – it is extremely time consuming and comes with tremendous responsibility. But at the same time, it is a very gratifying experience to be at a position where you can have an influence the way in which your discipline evolves. In my own experience serving as an editor for the Journal of Population Economics for more than eight years, I have learned tremendously from reading hundreds of papers and thousands of referee reports, which has improved my sense of what constitutes good scientific work. As a result, I believe, or I hope, that I have become a better researcher myself. Editing a journal also forces one to become more disciplined, organized, and patient.
What kind of research do you wish to attract to the Journal of Policy Analysis and Management?
Erdal Tekin: The Journal of Policy Analysis and Management (JPAM) already enjoys a well-deserved reputation of publishing innovative and empirically rigorous research that meets the highest standards of scholarship across disciplines and policy domains. JPAM is not only the most visible journal in the academic community concerned with issues related to public policy and management, but it is also one of the most prominent journals across all social sciences with respect to its reputation and impact factor. I view it as my utmost critical responsibility to ensure that the journal continues to advance in its current trajectory and solidify its reputation as the “go to” outlet for the very best scientific contributions in public policy and management. Accordingly, a key goal of my editorship would be to continue practices that ensure that priorities of high quality and inclusivity of various disciplines and policy domains are met. The vision of JPAM that I embrace is one that emphasizes high standards, wide visibility and impact, inclusivity, and diversity.
Editorial meeting during the 2015 annual ESPE congress at Izmir University of Economics, Izmir, Turkey. From the left: Sandro Cigno, Klaus F. Zimmermann, Katharina Wetzel-Vandai (Economics Editor of Springer Nature) and Erdal Tekin.
Nauro Campos has recently been appointed Editor of the prominent research journal Comparative Economic Studies. He is Professor of Economics at Brunel University London and Research Professor at ETH-Zürich. He is also a Fellow of the Global Labor Organization (GLO). His main research interests include political economy and European integration. Prof. Campos works with a new Editorial Board. We have asked him about his perspectives for this challenging new role.
GLO: Soviet studies, transition economics, new global challenges: What is Comparative Economics today?
Nauro Campos: Comparative economics is today in the cusp of becoming, once again, a really vibrant and exciting research area. Think of institutions 20 years ago, or economic history 10 years ago, and that gives you an idea where comparative economics is today. The Comparative Economic Studies journal (CES) tries to reflect that. It welcomes both submissions that are obviously comparative and case studies of single countries or of regions. It is looking for papers that investigate how economic systems respond to economic structural changes and crises, whether these are brought about by globalization, demographics, institutions, technology, politics, and/or the environment. CES is an economics journal, but is one that openly welcomes contributions from political scientists, historians and sociologists, to name a few selected disciplines. In order to accommodate these aspirations, the new Editorial team has broadened the journal’s regional focus and has changed its mission and objectives accordingly.
GLO: Did you change the regional focus of Comparative Economic Studies?
Nauro Campos: Yes. CES is a journal of the Association of Comparative Economic Studies which when it started out, in the Cold War years of the 1960s to 1980s, was mostly concerned with what one may call “issues of the Soviet economy.” After the fall of the Berlin Wall, CES became a crucial outlet for work on the transition away from central planning. It focused on the Central European and the Former Soviet Union countries. While working hard to maintain this prominent position, the regional focus and scope of CES has now been further enlarged to encompass other areas as well. There is a lot of interest in comparative economics today in European Union as a whole and the journal is very attentive to that. Moreover, the scope has been even further broadened to include studies about Asian, Latin American, and African experiences.
GLO: How will you combine research articles with the mission to connect Comparative Economic Studies to important policy debates?
Nauro Campos: As I said, the new editorial team has made some substantial changes in the mission of the journal as well as on its more specific goals. The overall idea is to move the journal, slowly but surely, towards it becoming an outlet in the mould of the Journal of Economic Perspectives. Think of it as a JEP-style comparative economics outlet; that is what the journal wants to be in the medium-term. We want to publish papers that offer original political economy analysis from a comparative perspective. Papers that are a truly accessible source for state-of-the-art comparative economics thinking. Articles that genuinely encourage cross-fertilization of ideas from various disciplines and that are the forefront of the debate of the directions for future research in comparative studies. But we also want papers that provide materials and insights that become useful and relevant for teaching, for the public policy debate and for the media. This change makes CES quite unique, so we will not be competing with other journals but mostly complementing their work, and the link to policy and to policy debates should become quite natural and hopefully quite strong.
GLO:Thank you very much and good luck with your new venture!
Professor Nauro Campos
Bio note:Nauro Campos is Professor of Economics at Brunel University London and Research Professor at ETH-Zürich. Previously he taught at the Universities Paris 1 Sorbonne, Newcastle, CERGE-EI and Warwick. He was a Fulbright Fellow at Johns Hopkins and Robert McNamara Fellow. He received his Ph.D. from the University of Southern California (Los Angeles) in 1997, where he was lucky enough to learn about institutions from Jeff Nugent and Jim Robinson and (more than) happy to be Dick Easterlin’s RA for three years.
Note: The questions for GLO have been asked by Klaus F. Zimmermann.
The prestigious 2018 Kuznets Prize of the Journal of Population Economics has been awarded to Chunbei Wang and Le Wang of the University of Oklahoma. The prize has been presented at a recent event of the Global Labor Organization (GLO) in Washington DC.
Le Wang, your paper in the Journal of Population Economics (with Chunbin Wang) got the Kuznets Prize 2018. Your research suggests that there is an earnings premium of marriage delays which is larger for females than for males. This causal effect seems to work almost exclusively through more education for both men and women.
GLO: Marrying later generates higher incomes: You say it is “causal”, what does this mean in your context and why is it important?
Le Wang: We often observe that people who marry later also earn higher earnings. This positive association, however, may not necessarily imply that delaying marriages would necessarily lead to higher productivity or higher earnings. It may be simply due to the fact that people who delay their marriages may be different from those who do not. For example, people who delay marriages may be more career oriented or motivated, and thus these people are more likely to have higher earnings, whether they delay marriage or not. By “causal”, we mean that we are actually able to isolate the productivity-enhancing effects of marriage delay. This result has important policy implications because if we can somehow “cause” or induce people to delay their marriages, we could increase their earnings.
GLO: What are the policy implications, who can “cause” marriage delays and make couples richer?
Le Wang: Government can, for example, institute minimum marriage age laws (the differences in such laws across states were also the reason why we can identify the causal impacts of marriage delay). There are also other examples in which rather than regulating the minimum marriage age, governments can provide incentives for people to marry late. For example, Chinese government implemented the “late marriage leave” that allowed workers who get married at age 25 or older to take a 30-day paid leave when getting married.
GLO: Research in the gender-equality literature argues that the more females work full-time, the lower the gender wage gap. What implications do your findings have for this debate?
Le Wang: Much of the gender gap literature has been focused on whether and how human capital characteristics and discrimination can explain the gap. Our results highlight the potential role of family in explaining it. Over the past decades, there have been similar changes in the median age of first marriage between men and women. In light of our findings, such demographic trends could have much greater impacts on women’s earnings, thereby leading to the narrowing gender gap.
GLO Fellow Le Wang of the University of Oklahoma (right) and Klaus F. Zimmermann (GLO President and Editor-in-Chief of the Journal of Population Economics.)