Category Archives: Interview

Marco Leonardi on the fate of the Italian labor market reforms & his new book

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.  

The author – The book – The Interview

The author

Marco Leonardi

Former 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.

The book

To buy the book

“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).

The Jobs 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 open-ended contracts.

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.”

The interview

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)

Marco Leonardi & Klaus F. Zimmermann

Ends;

WageIndicator celebrates twenty years of activity: Congratulations to Director Pauline Osse and her global teams! Interview with Pauline Osse.

This year, the WageIndicator movement, Pauline Osse and 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.

The Interview

Pauline Osse

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 Responsibility.  

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 not.

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.

Share and Compare Wages, Labor Laws and Career

Ends;

The cold Brexit is most likely to come: What does it mean for the rest of Europe? Martin Kahanec and Klaus F. Zimmermann of GLO analyze the situation.

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 Kahanec is 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).

The Views

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”.

Reference Link.

Ends;

#Brexit deal rejected by 230 votes – “the largest defeat for a sitting government in history” (BBC). First evaluations of top economists.

With a majority of 230 votes, the British Parliament has rejected the Brexit deal of Theresa May with the EU late 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).

The Interview

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.

Ends;

The Eurasian Economic Review (EAER) seeks to attract high quality research papers in macro labor and on the interrelationships between financial and labor markets

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.

Short Bio

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).

Dorothea Schäfer

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.

Research on Africa shows: A rise in the disease risk increases fertility: Interview with Professor Yoo-Mi Chin

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.

The paper is freely downloadable for a short period.

Yoo-Mi Chin & Nicholas Wilson, Disease risk and fertility: evidence from the HIV/AIDS pandemic, Journal of Population Economics, 31 (2018), 429–451.

Yoo-Mi Chin

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.

The Story

Yoo-Mi Chin & Nicholas Wilson, Disease risk and fertility: evidence from the HIV/AIDS pandemic, Journal of Population Economics, 31 (2018), 429–451.

The paper is freely downloadable for a short period.

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.

The Author

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.

YOO-Mi Chin and Editor-in-Chief Klaus F. Zimmermann during the award ceremony in Atlanta

2019 Journal of Population Economics: Issues

Issue 2019/1: Is already out! Please see Table of Content: Volume 32, Issue 1, January 2019

The Lead Article is about:
Migration as an adjustment mechanism in the crisis? A comparison of Europe and the United States 2006–2016

Issue 2019/2: Will be out in a few weeks. See forthcoming announcements.

Ends;

GLO-Interview with Alfredo Toro Hardy about his new book on the Latin American view of the future of globalization

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.

Alfredo Toro Hardy and Klaus F. Zimmermann enjoying a lovely evening in the Rockefeller Foundation Bellagio Center in 2017

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.

Uncertainty 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.

Globalization 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 economies. 

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.

The book

Ends;

Expert Michele Bruni says: African mass emigration is not an option, but unavoidable.

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

References

Bruni, Michele (2017), Egypt Labour market report. Demographic trends, labour market evolution and scenarios for the period 2015-30, International Organization for Migration, Cairo.

Bruni, Michele (2017), Promoting a Common Understanding of Migration Trends. Analysis and Policies, International Organization for Migration, Cairo.

Bruni, Michele (2018), Ageing, the socioeconomic burden, labour market and migration. The Chinese case in an international perspectiveDownload PDF, GLO Discussion Paper No. 222.

Cervellati, Matteo, Uwe Sunde & Klaus F. Zimmermann, Demographic Dynamics and Long-Run Development: Insights for the Secular Stagnation Debate, Working Paper #604, Princeton University, Industrial Relations Section, UNU – MERIT Working Paper # 2016-049, ZEF Discussion Papers on Development Policy #226 & CEPR Discussion Paper DP 11569. Published:  Journal of Population Economics , Volume 30, Issue 2, pp 401–432; DOI: 10.1007/s00148-016-0626-8.

Zimmermann, Klaus F. et al. (2013), Youth Unemployment and Vocational Training, Foundations and Trends® in Microeconomics 9, 1-157.

Ends;

Oded Galor of Brown University becomes Editor of the Journal of Population Economics. Interview with Galor about Unified Growth Theory and journal editing.

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.

Journal of Population Economics

Number of Submissions to the Journal of Population Economics:

Journal of Economic Growth

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

  1. 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.

  1. 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.

  1. 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 Editor Michaella Vanore and Klaus F. Zimmermann working intensively together at UNU-MERIT, Maastricht.

Ends;

Erdal Tekin (American University) leaves position as Editor of the Journal of Population Economics. Followed by Oded Galor of Brown University. Interview with Erdal Tekin about public policy research and journal editing.

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.

  1. 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.

  1. 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.

  1. 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.

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Nauro Campos on the Perspectives of Comparative Economics

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.

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How marriage delays cause earnings increases and what it means for society: Interview with author Le Wang of the University of Oklahoma

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.)
 

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