The Unassuming Economist

Excerpts from the National Bureau of Economic Research’s (NBER) recent working paper (2021) by authors Jacob Greenspon and Lawrence H. Summers of the Harvard Kennedy School of Government and Anna M. Stansbury of MIT Sloan School of Management:

“We study the productivity-pay relationship in the United States and Canada along two dimensions. The first is divergence: the degree to which the levels of productivity and pay have diverged. The second is delinkage: the degree to which incremental increases in the rate of productivity growth translate into incremental increases in the rate of growth of pay, holding all else equal. We show that in both countries the pay of typical workers has diverged substantially from average labor productivity over recent decades, driven by both rising labor income inequality and a declining labor share of income. Even as the levels of productivity and pay have grown further apart, we find evidence for some linkage between productivity and pay in both countries: a one percentage point increase in the rate of productivity growth is associated with a positive increase in the rate of pay growth, holding all else equal. This linkage appears stronger in the US than in Canada. Overall, our findings lead us to tentatively conclude that policies or trends which lead to incremental increases in productivity growth, particularly in large relatively closed economies like the USA, will tend to raise middle-class incomes. At the same time, other factors orthogonal to productivity growth have been driving productivity and typical pay further apart, emphasizing that much of the evolution in middle-class living standards will depend on measures bearing on relative incomes.”

Click here to read the full paper.

Ahead of December 3rd, 2021 that marked the international day of disabilities, the World Bank Group released its regional report titled, ‘Disability-Inclusion in Latin America and the Caribbean: A Path to Sustainable Development’, calling for the inclusion of nearly 85 million disabled persons, making up 14.7% of the entire population of the world today.

The report quantifies the magnitude of the problem by taking a life-cycle approach. It sheds light on the disappointing fact that nearly 15% of specially-abled children are not able to access education in the world, and even among those who do- dropouts are increasingly the norm. Besides, there is the added burden of social stigma preventing parents from sending children to school, and the segregation that happens in classrooms. Later in life, it has been observed that nearly 1 in every 2 heads of households who live with a disability do not participate in the labor market, thus depressing incomes and future prospects of later generations. The report also deliberates upon the compounding factor with which such deprivations get exacerbated, such as racial and religious differences especially for Africans, Latinos, and people from the Caribbean.

Delving deeper into the prevalence of discrimination in public spaces, jobs, educational opportunities, and other social events, the report goes on to discuss measures to combat such problems such as the use of data to design better-targeted policies, increased participation of the disabled in policymaking procedures, the government’s role in improving access to facilities and public goods, etc.

Click here to read the full blog and access the executive summary of the report.

In a recent piece (2021), researchers at McKinsey & Company discuss the merits of a data-based approach to food security by tailoring nutritional offerings, and how building out partner networks can help payers realize the potential of food-support programs. They elaborate upon some of the recently adopted nutrition benefit programs by payers in the USA that have helped the society overcome major medical bumps, helped payers retain members and reduce costs.

The article then discusses some of the barriers to scaling up adoption of such nutritional benefit programs, including issues the need for accurate need assessment, designing proper interventions, forging stakeholder partnerships, and measuring and precise reporting of outcomes of the rolled out intervention properly to ensure ease of replication of a similar program elsewhere. On similar lines, it provides insights on how policymakers can overcome each of these barriers for improving health outcomes of the vulnerable communities, besides realizing tremendous social benefit in the form of reduced care costs.

Click here to read the full article.

Max Walter, the executive director of Centre for Development Alternatives (a Uganda based independent think tank) writes for the Brookings Institution about the revival of industrial policy for pushing growth in Africa. Governments across the continent are using industrial policy tools to push for industrialization through agro-processing, labour-intensive light manufacturing, natural resource extraction and value addition, some knowledge-intensive manufacturing, and “industries without smokestacks” such as high-value agriculture and tradable services.

The article explores reasons which may have driven this revival and then moves on to explain some notable examples. From Uganda’s National Development Plan (2020) which focuses on the use of several industrial policy tools for bolstering supply chains of cocoa production, to Morocco and South Africa’s policies to upgrade automobile manufacturing industries- examples are aplenty.

The article also delves into the importance of failures of such policies for evidence-based strategic policymaking.

Click here to read the full column.

Economists Christian Gayer and Andreas Reuter of the European Commission (EC) and Fiona Morice of the French National Institute of Statistics and Economic Studies write about the EC’s new index of uncertainty in a recent column for the VoxEU blog.

For the lack of a better indicator, economists have often resorted to measuring uncertainty using proxies like deviation of agents’ views on economic outlooks or forecast errors. However, this new index aims to study the evolution of uncertainty in response to the Covid-19 pandemic and related stringent restrictions based on the EU-wide Programme of Business and Consumer Surveys. It also compares the indicator to survey-based indicators of economic confidence, as well as to other existing uncertainty gauges, and offers a glimpse of the rich set of geographical, sectoral, and sub-sectoral breakdowns of the new data.

The column dives deeper into the levels of analysis possible using disaggregated data on various parameters that it presents, such as at the industrial and sub-sectoral level, for consumers grouped by several socio-economic categories etc., and then discusses some key insights.

Click here to read the full blog.