The Unassuming Economist

From the remarks by Managing Director Christine Lagarde:

“As of now, I see the contours of this agenda revolving around the following three priorities.

Priority 1: How to create a vibrant private sector for higher growth and more jobs

The old model where the state is employer of first resort is no longer viable. The private sector needs to step in and step up, and in some aspects government actions can help. This means leveling the playing field for private firms by combating corruption, increasing competition, and taking advantage of global trade and new technologies.

It also means firms investing more within the region, paying their fair share of taxes, and collaborating with the public sector to improve infrastructure.

Priority 2: How to support excluded groups

Integrating youth, women, rural populations, and refugees requires targeted policies. This means preparing people for jobs in the economy – through better education and active labor market policies that help youth and women find meaningful employment.

Financial inclusion can also be an important empowering agent, especially for women. And as I have said so often, including women financially and economically is a potential global game-changer.

I look forward to my conversation after lunch with remarkable women from across the region, and to discussing practical solutions to close gender gaps.

Priority 3: How to use fiscal policy to invest in people and infrastructure

Fiscal policy can and must be redesigned to support inclusive growth in the region. Today, social spending – on social safety nets, health and education services – is less than 11 percent of GDP. This compares to 19 percent in emerging Europe. Infrastructure needs are also large in many countries.

The question is then how to increase spending on social services and infrastructure when budgets are so tight? A key priority is building broader and more equitable tax bases. All must pay their fair share, while the poor must be protected.

And if countries can make progress in moving away from the state being the employer of first resort, as mentioned above, this too can help make room for high-return social and infrastructure outlays.”

Continue reading here.

A new IMF working paper “assesses the effects of foreign direct investment (FDI) on gender development and gender inequality. In fact, FDI through increased labor demand, technological spillovers but mostly through corporate social responsibility and economic growth, can potentially influence women’s welfare. Using a panel dataset of 94 developing countries from 1990 to 2015, we find that FDI inflows improve women’s welfare and decrease gender inequality. However, the impact is lower in countries where women have low access to resources and face a heavier burden to open a business. This suggests that for countries to fully benefit from FDI inflows, they should ensure that women can enjoy free access to the labor market and associated income.”

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A new IMF working paper “describes a new database of major labor and product market reforms covering 26 advanced economies over the period 1970-2013. The focus is on large changes in product market regulation in seven individual network industries, employment protection legislation for regular and temporary workers, and the replacement rate and duration of unemployment benefits. The main advantage of this dataset is the precise identification of the nature and date of major reforms, which is valuable in many empirical applications. By contrast, the dataset does not attempt to measure and compare policy settings across countries, and as such is no substitute for other publicly available indicators produced, for example, by the ILO, the OECD or the World Bank. It should also be seen as work in progress, for researchers to build on and improve upon. Based on the dataset, major reforms appear to have been more frequent in product markets than in labor markets in the last decades, and were predominantly implemented during the 1990s and 2000s.”

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From a new IMF Staff Discussion Note:

“Overall income inequality has remained broadly stable in the EU over the past decade but disparities in poverty and income inequality across generations have increased markedly. Developments and drivers of overall inequality are well documented but the generational dimension of inequality has received much less attention. In Europe, real disposable incomes of the young have fallen behind those of other generations. Also, the young are facing increasing risks of poverty relative to those faced by other generations.”

“High youth unemployment has been a major source of growing youth poverty. Unemployment disproportionately affects the young. Also, there is a strong association in the data between unemployment and youth poverty. Facilitating the integration of the young into the labor market is a crucial task facing policymakers. In this regard, market-based and meritocratic institutions in general can help mitigate inequality of opportunity, offering relatively larger benefits for the young.”

“Fiscal redistribution needs to be more inclusive to better tackle youth poverty. Social protection schemes have reduced old-age poverty but they have not prevented an increase in youth poverty following the global financial crisis. Reducing youth poverty is likely to require additional resources. However, for countries with an already high level of social spending and a heavy tax burden, as well as limited fiscal space, this may not be an option. In these countries, reducing youth poverty and inequality across generations in a fiscally-neutral way may require partially rebalancing fiscal redistribution to better protect the young, while continuing to protect minimum pension assistance schemes to avoid reversing the trend decline in old-age poverty.”

Continue reading here.

On income inequality

• Top Income Inequality in the 21st Century: Some Cautionary Notes – AEA
• Capitalists in the Twenty-first Century – Paper
• Long Run Developments of Income and Wealth Inequality: Do They Move Together? – AEA
• Has Middle Class Wealth Recovered? – Paper
• Income and Wealth Inequality in America, 1949-2013 – Paper
• Recent Trends in the Variability of Men’s Earnings: Evidence From Administrative and Survey Data – Paper
• Taxes, Regulations of Businesses and Evolution of Income Inequality in the United States – Paper
• Origins of Wealth Inequality – AEA
• An Empirical Institutionalist Analysis of the Determinants of Income and Wealth Inequality in USA Since the 1980s – Paper
• Road to Despair and the Geography of the America Left Behind – AEA

On gender inequality

• Top Income Inequality and the Gender Pay Gap – Paper and Presentation
• Choosing Between Career and Family – Gender Roles as a Coordination Device in a Specialization Game – AEA
• Gender Inequality in Post-capitalism: Theorizing Institutions for Democratic Workplaces – Paper

On racial inequality

• Examining the Black-White Earnings Differential with Administrative Records – Paper
• Occupational Licensing Reduces Racial and Gender Wage Gaps: Evidence From the Survey of Income and Program Participation – AEA
• Higher Education in Orthodox, Heterodox, and Stratification Economics Perspectives on Racial Economic Inequality – AEA
• Poverty and Inequality – AEA
• Inequality Between and Within Immigrant Groups in the United States – Paper
• Revising The Racial Wage Gap Among Men: The Role Of Non-employment And Incarceration – AEA
• Revisiting Bergmann’s Occupational Crowding Model – AEA
• Racial Differences in Labor Force Participation Since the Great Recession: What’s Happening? – Paper
• The Color of Wealth: Evidence Across United States Cities – AEA
• No End in Sight? The Widening Racial Wealth Gap Since The Great Recession – AEA

On populism and globalization

• Understanding the Rise of Populism: Financialisation, Household Balance Sheet Structures, and Inequality in the United States Since 1980s – Paper
• Trade and Inequality: Evidence From Worker-level Adjustment in France – AEA
• Trade, Jobs, and Inequality – AEA
• Globalization and Inequality in Innovation: A Perspective from U.S. R&D Tax Credit Policy – Paper
• Making Financial Globalization More Inclusive – Paper and Presentation
• Making Globalization More Inclusive: When Compensation Is Not Enough – Paper

On labor

• Earnings Inequality and Mobility Trends in the United States: Nationally Representative Estimates from Longitudinally Linked Employer-employee Data – Paper and Presentation
• Theories of Redistribution and Share of Labor Income – Paper
• Labor Unions and Wealth Inequality – AEA
• The Care Penalty and the Power Premium: Earnings Inequality in the United States – AEA
• Inequality, Good Governance and Endemic Corruption – Paper
• Inequality and the Disappearing Large Firm Pay Premium – Paper
• Earnings Inequality and the Minimum Wage: Evidence From Brazil – Paper
• Unequal Growth in Local Wages: Rail Versus Internet Infrastructure – Paper
• Determinants of the Wage Share: Evidence From Firm-level Data – Presentation
• Declining Labor and Capital Shares – Paper
• Labor Share and Technology Dynamics – Paper
• Theories of Redistribution and Share of Labor Income – Paper
• Earnings Inequality and the Role of the Firm – Paper and Presentation
• Inequality in Retirement Wealth – Paper and Presentation
• Delayed Retirement and the Growth in Economic Inequality by Work Ability – Paper
• Robots, Growth and Inequality: Should We Fear the Robot Revolution? – Paper and Presentation
• Endogenous Skill Choice as Source of Productivity Dispersion – Presentation
• The Fall of the Labor Share and the Rise of Superstar Firms – Paper

On Africa

• Inclusive Finance for SMEs in South Africa and Its Impact on Growth and Inequality – Paper
• Institutions, Structures and Policy Paradigms: Toward Understanding Inequality in Africa – AEA

On other issues

• Extreme Inequality: Evidence From Brazil, India, the Middle-East, and South Africa – Paper and Presentation
• When Inequality Matters for Macro and Macro Matters for Inequality – Paper
• Estimating Unequal Gains Across United States Consumers With Supplier Trade Data – Paper and Presentation
• Why Does Portfolio Choice Correlate Across Generations? – Paper
• Ten Years after the Crisis: A Lost Decade? – Paper
• Military Expenditures And Income Inequality, Evidence From A Panel Of Transition Countries (1990-2015) – AEA
• Tax Rates and Progressivity: Was the System More Progressive when the Top Rate was 91 Percent? – Paper and Presentation
• Rising Inequality, Household Debt, And The Slow Recovery After Great Recession – AEA
• Consumption Inequality and The Frequency of Purchases – Paper
• Mergers and Acquisitions, Technological Change and Inequality – Paper
• Same Storm, Different Disasters: Consumer Credit Access, Income Inequality, and Natural Disaster Recovery – Paper
• Rethinking Inequality in 21st Century – Financial Sector, Household Balance Sheet Structures and Distribution in the United States Since 1980s – Paper
• The Effects of Technical Change: Does Capital Aggregation Matter? – AEA