The Unassuming Economist

Source: World Bank Blogs

A recent blog by the World Bank discusses the pertinent issue of effectively measuring primarily female-run enterprises in developing and developed nations across the world. Through a compilation of resources such as the report, Women, Business and the Law, 2022 and endeavors in the We-Data project which collects data on women’s access to various business-related resources, the blog attempts to provide a broad picture of the status quo. It explores some regulatory barriers (e.g., laws prohibiting married women from being signatories to commercial contracts or accessing capital independently), operational hurdles, and data-related challenges that countries face while capturing this segment of businesses.

Read on to know more.

Watch: World Bank’s 9th South Asia Economic Policy Network conference on Social Norms and Gender Equality (May 11th and 12th, 2022)

Source: Project Syndicate

“The explosive growth of Bitcoin and other cryptocurrencies has opened up a new front in the broader climate crisis by threatening to offset the progress made in recent years toward decarbonization. For the technology to gain wider adoption over the long term, its proponents will have to get serious about reducing its energy usage“, writes Marion Laboure of Harvard University.

The extensive power requirements in the cryptocurrency mining process, especially of those currencies limited in supply like Bitcoin, have generated a global debate on the sustainability of the process. While China banned the mining of cryptocurrency in September 2021 amidst an already debilitating energy crisis, other countries like El Salvador have adopted other methods like establishing a crypto mining city near a volcano to power the process using geothermal energy. Clearly, the world is divided on the matter. This article explores the issue in greater detail, charts out the environment-revenue trade-off before economies, and explores potential solutions.

Read on to know more.

Source: Peterson Institute of International Economics

While a lot of research conducted from 2021 until March of 2022 suggests that labor markets in the US reached record high levels of tightness as job openings and quits rose, recent evidence collected by the Peterson Institute indicates the possibility of a potential cool down. The underlying argument driving this idea is that the sharp spike in nominal wages in 2021 could have been a result of some post-pandemic factors that shaped expectations of longer-run inflation which ultimately got dragged until 2022. So even though labor force participation rates in the US in April 2022 remained at 3.6%, 0.1% higher than the corresponding pre-pandemic level, the authors argue that this shortfall in employment is driven by a labor supply shortage as demand is robust.

The article also touches upon related issues like rising nominal wages that are beginning to plateau now and a somewhat alarming drop in real wages.

Read the full article to know more.

From a new paper by Davide Furceri, Prakash Loungani, Jonathan D. Ostry, and Pietro Pizzuto:

“This paper provides evidence on the impact of major epidemics from the past two decades on income distribution. The pandemics in our sample, even though much smaller in scale than COVID-19, have led to increases in the Gini coefficient, raised the income share of higher income deciles, and lowered the employment-to-population ratio for those with basic education compared to those with higher education. We provide some evidence that the distributional consequences from the current pandemic may be larger than those flowing from the historical pandemics in our sample, and larger than those following typical recessions and financial crises.”

Source: VoxEU CEPR

Abstract: Since the beginning of the pandemic, labour market indicators have been sending different signals about the degree of slack in the US labour market. This column uses time-series and cross-section data to show that firm-side unemployment (figure underneath) – a measure that ties together the unemployment rate with the vacancy and quits rate – predicts wage inflation better than the unemployment rate or the employment ratio, and that firm-side unemployment currently experienced in the US corresponds to a degree of tightness previously associated with sub 2% unemployment. The findings suggest that labour markets in the US are extremely tight and will likely contribute to inflationary pressures for some time to come.

Figure: Actual unemployment rate versus firm-side estimated unemployment rate