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Tackling regional inequality “while we wait for levelling up”

Source: Financial Times

Territorial inequality of productivity is the core problem; it is what causes inequality of incomes that can only partly be remedied by redistribution. It also suggests an enormous amount of waste — if lagging regions could close at least some of their productivity shortfall, a lot of prosperity would be gained.

This article delves into ways in which policymakers can deal with regional inequality in the UK, as the wait for further governmental action on it continues. It discusses some aspects on which productivity growth depends, like “slow-to-acquire resources such as infrastructure and skilled labour” and “productive businesses choosing to expand”. Further, it goes on to suggest measures by which this regionally lagging productivity growth can be remedied and ways to target such policies better.

Click here to read the full article.

Related Reading:

The Great Divide: Regional Inequality and Fiscal Policy

Source: Financial Times

Territorial inequality of productivity is the core problem; it is what causes inequality of incomes that can only partly be remedied by redistribution. It also suggests an enormous amount of waste — if lagging regions could close at least some of their productivity shortfall, a lot of prosperity would be gained.

This article delves into ways in which policymakers can deal with regional inequality in the UK,

Read the full article…

Posted by at 10:45 AM

Labels: Inclusive Growth

Productivity and Pay in the US and Canada

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.

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,

Read the full article…

Posted by at 9:18 AM

Labels: Inclusive Growth

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