We investigate whether income inequality affects subsequent growth in a cross-country sample for 1965-90, using the models of Barro (1997), Bleaney and Nishiyama (2002) and Sachs and Warner (1997), with negative results. We then investigate the evolution of income inequality over the same period and its correlation with growth. The dominating feature is inequality convergence across countries. This convergence has been significantly faster amongst developed countries. Growth does not appear to influence the evolution of inequality over time. Outline

https://www.econstor.eu/bitstream/10419/81822/1/02-28.pdf

Economic growth and income inequality

The concept of 'employability' plays a crucial role in informing labour market policy in the UK, the EU and beyond. This paper analyses current and previous applications of the term and discusses its value as an exploratory concept and a framework for policy analysis. It then traces the development of the concept, discusses its role in current labour market and training strategies (with particular reference to the UK) and seeks to identify an approach to defining employability that can better inform labour market policy, by transcending explanations of employment and unemployment that focus solely on either supply-side or demand-side factors. Although the literature offers a range of definitions of 'employability', many policy-makers have recently used the term as shorthand for 'the individual's employability skills and attributes'. It is argued that this 'narrow' usage can lead to a 'hollowing out' of the concept of employability. The paper concludes by presenting a broad framework for analysing employability built around individual factors, personal circumstances and external factors, which acknowledges the importance of both supply- and demand-side factors.

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The Concept of Employability

The Price of Inequality: How Today's Divided Society Endangers Our Future. Joseph E. Stiglitz, 414 pages, New York: W. W. Norton & Company, 2012.I LOVE THESE GUYS''(Joseph Stiglitz) is an insanely great economist,'' so writes Paul R. Krugman, who should know. These two like to write books for the populace at large on the topic of macroeconomics. Krugman also likes to spout offon Sunday news shows like ''Meet the Press,'' and on all the cable news programs. You can see Krugman arguing with Bill O'Reilly on Meet the Press. From YouTube: ''Don't call me a liar, pal, that's what you do all the time,'' says O'Reilly; ''This is not your show, so you can't cut offmy mic,'' says Krugman. Judging by their expressions, I was glad Tim Russert (6- 3-) was there in the studio at the time to protect Krugman (5- 7-) (O'Reilly stands 6- 4-). Conservative pundits dislike both economists, but pretty much leave Stiglitz alone.Krugman makes it a point to stay out of government affairs. Stiglitz does just the opposite, and he sometimes gets burned. Stiglitz was part of Bill Clinton's Council of Economic Advisers and was Chief Economist for the World Bank. After much criticism of the way the International Monetary Fund (IMF) conducted lending to developing countries, he was pretty much fired from the World Bank. Comparing the two, you would have to say that Stiglitz is more the bleeding heart, while Krugman says that what he dislikes most is the dishonesty he sees in political-economic discourse. Both are champions of the common man.Since Stiglitz can make the very valid claim for being ''an insanely great economist,'' most everything he says in his books should be taken seriously. There are some real gems in this book. I especially like the perspective he lends to some of the more peculiar things that happened before, during, and after the financial crisis. People hear about these things in the news from some announcer who makes them sound like just more news-bites, but they are, after all, unprecedented (and largely absurd). Take ''robo-signing'' for instance (page 198).WHAT GOES FOR NEWSRobo-signing was part of what happened during the foreclosure process after the massive numbers of defaults of subprime mortgages. Big banks intentionally did not follow mandated law. Apart from ignoring debtors' rights, an ensuing mess followed. Robo-signing was nothing less than a blatant attempt at rewriting property law, and resulted in lying to the courts about the state of each property's title, literally hundreds of times. No bank officer was charged with a crime. By contrast, the savings and loan crisis of the 1980s led to 829 individual convictions and 650 prison sentences. Nowadays the big banks just pay fines as part of settlements where they admit no guilt, and it's just part of doing business.Take algorithmic or ''flash'' trading in the stock exchanges (page 164). These are buys and sales made in nanoseconds on the basis of extracting information from the patterns of prices and trades. Nothing like real information gathered through market research on an industry, or on a firm in a certain industry, backs up these trades. But traders swear that ''price discovery'' is happening this way, and that all this backs up the efficient markets model. So on May 6, 2010 stock prices plummeted to a point where the Dow Jones temporarily lost 10% of its value. There are reasons to believe that these trades ''make markets not just more volatile but also less 'informative' '' (page 166). Still, the talk on the street is all about efficient markets (echoing Alan Greenspan's failures at the Federal Reserve).Take failed privatizations. When electric power in California was liberalized and Enron manipulated prices and public power to its advantage, this was a story about the company's accounting practices, not about privatizing something that had no business being privatized. …

The Price of Inequality: How Today's Divided Society Endangers Our Future

I discuss the failure of the canonical search and matching model to match the cyclical volatility in the job finding rate. I show that job creation in the model is influenced by wages in new matches. I summarize microeconometric evidence and find that wages in new matches are volatile and consistent with the model's key predictions. Therefore, explanations of the unemployment volatility puzzle have to preserve the cyclical volatility of wages. I discuss a modification of the model, based on fixed matching costs, that can increase cyclical unemployment volatility and is consistent with wage flexibility in new matches.

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The unemployment volatility puzzle: is wage stickiness the answer?

In the 1970s, European unemployment started increasing It increased further in the 1980s, to reach a plateau in the 1990s It is still high today, although the average unemployment rate hides a high degree of heterogeneity across countries The focus of researchers and policy makers was initially on the role of shocks As unemployment remained high, the focus has progressively shifted to institutions This paper reviews the interaction of facts and theories, and gives a tentative assessment of what we know and what we still do not know

European Unemployment: The Evolution of Facts and Ideas

This paper is an empirical analysis of unemployment patterns in the OECD countries from the 1960s to the 1990s, looking at the Beveridge Curves, real wages as well as unemployment directly. Our results indicate the following. First, the Beveridge Curves of all the countries except Norway and Sweden shifted to the right from the 1960s to the early/mid 1980s. At this point, the countries divide into two distinct groups. Those whose Beveridge Curves continued to shift out and those where they started to shift back. Second, we find evidence that these movements in the Beveridge Curves may be partly explained by changes in labour market institutions, particularly those which are important for search and matching efficiency. Third, labour market institutions impact on real labour costs in a fashion which is broadly consistent with their impact on unemployment. Finally, broad movements in unemployment across the OECD can be explained by shifts in labour market institutions although this explanation relies on high levels of endogenous persistence as reflected in a lagged dependent variable coefficient of around 0.85. JEL Numbers: E240, J300.

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The Beveridge Curve, Unemployment and Wages in the OECD from the 1960s to the 1990s

This paper highlights the contrasting trends in youth labour market performance over the past decade using a wide range of indicators. It presents new evidence on the length of transitions from school to work, and the degree to which temporary jobs serve as either traps for young people or stepping-stones to good careers. The paper also reviews some recent policy innovations to improve youth employment prospects.

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The changing nature of the school-to-work transition process in OECD countries

Mismatches between workers’ competences and what is required by their job are widespread in OECD countries. Studies that use qualifications as proxies for competences suggest that as many as one in four workers could be over-qualified and as many as one in three could be under-qualified for their job. However, there is significant variation across countries and socio-demographic groups. Our meta-analysis of country studies suggests that over 35% of workers are over-qualified in Sweden compared with just 10% in Finland, with most other OECD countries located between these two extremes. There is also extensive evidence that youth are more likely to be over-qualified than their older counterparts and the same is found to be true for immigrant workers compared with a country’s nationals. On the other hand, no definitive evidence has been found of the persistence of qualification mismatch, with some papers showing that over-qualification is just a temporary phenomenon that most workers overcome through career mobility and others finding infrequent transitions between over-qualification and good job matches. Across the board, over-qualified workers are found to earn less than their equally-qualified and well-matched counterparts but more than appropriately-qualified workers doing the same job. Under-qualified workers are found to earn more than their equally-qualified and well-matched counterparts but less than appropriately-qualified workers doing the same job. Over-qualified workers are also found to be less satisfied about their job and more likely to leave their work than well-matched workers with the same qualifications….

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Over-qualified or under-skilled: a review of existing literature

This study focuses on the risk of automation and its interaction with training and the use of skills at work. Building on the expert assessment carried out by Carl Frey and Michael Osborne in 2013, the paper estimates the risk of automation for individual jobs based on the Survey of Adult Skills (PIAAC). The analysis improves on other international estimates of the individual risk of automation by using a more disaggregated occupational classification and identifying the same automation bottlenecks emerging from the experts’ discussion. Hence, it more closely aligns to the initial assessment of the potential automation deriving from the development of Machine Learning. Furthermore, this study investigates the same methodology using national data from Germany and United Kingdom, providing insights into the robustness of the results.
The risk of automation is estimated for the 32 OECD countries that have participated in the Survey of Adult Skills (PIAAC) so far. Beyond the share of jobs likely to be significantly disrupted by automation of production and services, the accent is put on characteristics of these jobs and the characteristics of the workers who hold them. The risk is also assessed against the use of ICT at work and the role of training in helping workers transit to new career opportunities.

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Automation, skills use and training

This paper considers three aspects of the job insecurity facing British men in the last two decades. The probability of becoming unemployed, the costs of unemployment in terms of real wages losses and the probability that the continuously employed will experience substantial real wage losses. The first of these has not risen in the last two decades, the second has risen by around 50 percent and the third has risen, particularly for the top skill groups.

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Glenda Quintini

Papers

The Beveridge Curve, Unemployment and Wages in the OECD from the 1960s to the 1990s

The changing nature of the school-to-work transition process in OECD countries

Over-qualified or under-skilled: a review of existing literature

Automation, skills use and training

A Picture of Job Insecurity Facing British Men