the structure of unemployment we test for a unit root in postwar unemployment rates for sixteen oecd countries when a one time structural break is incorporated the unit root hypothesis can be rejected for most of the countries and the measured persistence of unemployment falls dramatically we then test for multiple structural changes and find evidence of one or two breaks for those countries for which the unit root hypothesis could be rejected almost all of the breaks are positive reflecting the sustained rise in european unemployment the major exception is the united states where long term unemployment rose in the 1970s and fell in the 1980s

the impact of the new economic model on latin america s agriculture abstract this paper examines the changes in policy instruments and public institutions under the new economic model nem that have affected latin american agriculture with particular attention to brazil mexico and chile in general production has increased while acreage and rural employment have declined in many countries in the context of a shift from traditional to nontraditional products there has been a sharp reduction in the number of small farmers often accompanied by a greater inequality while the rural sector needs efficient public institutions the retreat of the state has left important gaps not yet filled by the private sector with negative consequences in particular for small producers

from shadow to green linking environmental fiscal reforms and the informal economy in the past few decades many papers have analysed in some depth different environmental tax reforms and the double dividend hypothesis i e the possibility of improving not only the environment but also the economy through the reduction of distortions in the tax system recently more stress has been placed on testing empirically what effects a reduction in labour taxes may have on unemployment when accompanied by a carbon or other environmental tax however such studies have not modelled the effects of the presence of a shadow economy even though informal markets account for a significant and growing part of gdp in many developed economies this paper analyses this link using an applied general equilibrium model for the case of spain which has one of the highest unemployment rates in the world and one of the biggest informal economies of any wealthy country we conclude that our analysis strengthens the case for an environmental tax reform in spain if revenues from a co2 tax are recycled via a labour tax reduction

are contributions to public pension programmes a tax on employment many studies describe the potentially adverse impact on employment of the payroll costs of financing public pension programmes conventionally empirical studies treat contributions to public pension programmes as a pure tax in for example calculations of the tax wedge by oecd but this approach ignores any future rights to benefits that are perceived by contributors in fact public pension programmes contain both an actuarial and a redistributive component the former closer to saving the latter a tax the paper constructs indicators of the tax component of pension programmes both between and within generations across a range of oecd countries and time periods it uses these measures in a cross country panel analysis of the determinants of age and gender specific economic activity rates the results reveal robust evidence that when public pension programme contributions are broken down into a tax component and a savings component the tax component of the payroll contribution reduces economic activity rates among women while a higher retirement saving component has the opposite effect there is little evidence that average tax rates however constructed have any adverse impact on the economic activity rates of men richard disney

development trajectories and new comparative advantages costa rica and the dominican republic under globalization summary this paper compares the experiences of costa rica and the dominican republic in creating new comparative advantages in manufacturing exports and its impact on economic development it makes three main arguments first the apparel sector is currently unlikely to act as an engine of economic development second high public spending in health and education and selective targeting of foreign investment have been fundamental in the creation of comparative advantages away from apparel into exports with higher technological content in costa rica third the new export sectors still lack sufficient linkages to the rest of the economy and most of their value added goes into profits for the transnational corporations

small and medium sized manufacturing enterprises in latin america and the caribbean under the new economic model abstract this paper describes the performance of small and medium sized manufacturing enterprises smes in 10 latin american countries under the new economic model nem based on an original databank the authors analyze sme performance in relation to production employment and productivity and in comparison to larger enterprises the paper shows that smes have not been marginal players under the nem they did not experience a generalized drop in production and employment and in some countries even increased their productivity relative to that of larger firms macroeconomic conditions have been the main determinants of sme performance trade liberalization had a strong impact on sectoral restructuring within sme production but did not affect negatively smes as a whole

is incomes policy the answer to unemployment in western europe unemployment has remained obstinately high ever since 1975 what has prevented governments from reducing it the answer is simple if unemployment were reduced by normal methods inflation would rise it follows that the only way to cut the long run level of unemployment is to find some other way of controlling inflation no such device will be costless but if we could find any method that was less costly than unemployment we ought to adopt it maurice chevalier was asked in later life what he thought of old age it s not so bad he replied when you consider the alternative that was a true economist talking and it is also the spirit in which i shall approach the unhappy choices open to us my argument will proceed roughly as follows first imagine that a costless incomes policy is available then most people would probably agree that if inflation was too high a temporary incomes policy would be a good idea in order to get inflation down but what then when it was down we would still be left with far too high an unemployment rate only a permanent incomes policy can substantially reduce the non inflationary level of unemployment however against these benefits have to be set the costs of an incomes policy a conventional incomes policy which permanently suspended collective bargaining would be out of the question in a free society so we have to have an incomes policy that works by incentive rather than by regulation the best thing would be a tax on wage increases levied on employers and proportional to wage increases above a prescribed norm i shall spend some time discussing this tax using various different models of wage setting to explain how it would have its effect and finally i shall try producing a first draft of the operator s manual

structural change and labor productivity growth in latin american manufacturing industries 1970 96 abstract this paper examines recent changes in the pattern of production specialization attained by latin american manufacturing industries comparing argentina brazil colombia chile and mexico to the united states the paper identifies catching up and lagging behind industries during 1970 96 it considers the evolution of macro and micro forces that affect whether an industry manages to close down the gap with the international technological frontier evidence is presented showing that recent structural reforms did not result in a major discontinuity with the past rather path dependency forces have acted as a major factor explaining differential performance among industries after recent changes in the global incentive regime

labor market policy evaluation with ace abstract i develop an agent based computational economics ace model with which i evaluate the aggregate impact of labor market policies the findings are that government financed training measures increase the outflow rate from unemployment to employment although the overall effect is positive this effect is achieved by reducing the outflow rate for those who do not receive subsidies furthermore the outflow rate would have been downward biased had one supposed a matching function that is exogenous to policies

the time varying nairu and its implications for economic policy the nairu the unemployment rate consistent with a constant rate of inflation is estimated in this paper as a parameter allowed to vary over time value is determined in an econometric model where the inflation rate depends on its past values demand and supply shocks the nairu estimated for the gdp deflator varies over the past forty years within 5 4 to 6 5 percent its estimated value for the most recent quarter 1996 q2 is 5 6 percent the nairu has declined in recent years in response to global competition immigration other factors weakening labor s bargaining position and the rapidly declining prices of computers and other electronics

corporate strategies for fdi in the context of latin america s new economic model abstract the nem in latin america radically altered foreign direct investment inflows to the region previously restrictive national policies became ones that facilitated foreign direct investment fdi in the context of new business opportunities transnational corporations tncs took a new look at the region in the context of their evolving corporate strategies examples being efficiency seeking corporate strategies in the automotive mexico and the apparel industry caribbean basin and the market access strategy for services in the telecommunications and electrical energy industries brazil two interrelated problems arose a tnc objectives were often attained but those linked to national development goals often were not and b national policies did not channel fdi to priority development activities

an introduction to the wage curve en conomists and policymakers are interested in understanding the forces that determine the level of unemployment and the level of wages this paper describes an empirical discovery made with the help of international microeconometric evidence covering more than a dozen nations about a link between these two variables the connection can be portrayed on a graph with the level of unemployment on the horizontal axis and the level of wages on the vertical axis then the wage curve as shown in figure 1 is a downwardsloping locus this relationship tells us that holding others things constant if a region has a rise in unemployment in a particular year those who live there will have a fall in their wages in that year what does this curve mean how in a field where fully controlled experiments are almost impossible could there be any convincing scientific basis for this wage curve what is the relationship between the wage curve and a phillips curve other than that the curve of figure 1 looks like a phillips curve with the vertical axis mislabeled how does the wage curve fit into existing economic knowledge and is the empirical finding consistent with competitive theory this paper sketches answers to these kinds of questions the discussion draws on our book the wage curve blanchflower and oswald 1994 where the points raised here are investigated more fully it also rests upon work done by other economists whose work is listed in the paper and the bibliography

new economic policies and the diffusion of machine tools in latin america abstract this paper argues that both old and new economic regimes in latin america only partially ensured the successful diffusion of machine tools in the region import substitution policies focused on suppliers with resulting advances in domestic imitative adaptive and innovating capabilities but at high cost for users in expensive and technically inferior machine tools the new economic model nem focus on the user has provided wider availability and lower price of technologies with resulting increases in productivity and efficiency but domestic suppliers cannot establish themselves nor make the technologically crucial jump into the electronics era the paper suggests an approach focusing on the joint upgrading of users and suppliers and proposes policy initiatives aimed at addressing market failure and systemic issues

environmental taxation employment and public spending in developing countries this paper investigates the consequences of environmental tax reforms for unemployment and welfare in the case of developing countries with a large informal sector rural urban migration and three different assumptions about public spending 1 as part of a revenue neutral policy 2 fixed and 3 varying endogenously under the indexation of unemployment benefits and informal sector income that give rise to a double dividend a lower level of public spending is associated with a smaller negative impact on the after tax income of households and a higher increase in employment these policies however still lead to a reduction in social welfare even more so in the case of endogenous public spending although it is associated with a higher increase in employment and a smaller reduction in private sector incomes the model implies that complementary policy in terms of lower public spending is unlikely to be socially acceptable and does not support the case for a green tax reforms in developing countries

stochastic trends and economic fluctuations are business cycles mainly the result of permanent shocks to productivity this paper uses a long run restriction implied by a large class of real business cycle models identifying permanent productivity shocks as shocks to the common stochastic trend in output consumption and investment to provide new evidence on this question econometric tests indicate that this common stochastic trend cointegration implication is consistent with postwar u s data however in systems with nominal variables the estimates of this common stochastic trend indicate that permanent productivity shocks typically explain less than half of the business cycle variability in output consumption and investment copyright 1991 by american economic association

permanent vs transitory components and economic fundamentals any non stationary series can be decomposed into permanent or trend and transitory or cycle components typically some atheoretic pre filtering procedure is applied to extract the permanent component this paper argues that analysis of the fundamental underlying stationary economic processes should instead be central to this process we present a new derivation of multivariate beveridge nelson permanent and transitory components whereby the latter can be derived explicitly as a weighting of observable stationary processes this allows far clearer economic interpretations different assumptions on the fundamental stationary processes result in distinctly different results but this reflects deep economic uncertainty we illustrate with an example using garratt et al s 2003a small vecm model of the uk economy

unemployment benefits contract length and nominal wage flexibility we show in a union bargaining model that a decrease in the unemployment benefit level increases not only equilibrium employment but also nominal wage flexibility and thus reduces employment varia

an open economy new keynesian phillips curve for the u k abstract we estimate a pricing equation or new keynesian phillips curve nkpc obtained from a structural dynamic model of price setting based on rotemberg 1982 sticky prices in the united states journal of political economy 90 6 1187 1211 and extended to capture employment adjustment costs and the openness of the united kingdom this model nests the baseline gali and gertler 1999 inflation dynamics a structural econometric analysis quarterly journal of economics 110 127 159 and sbordone 2002 prices and unit labor costs a new test of price stickiness journal of monetary economics 49 265 292 relationship between inflation and marginal cost in the limiting case of no employment adjustment costs no impact of relative prices of imported inputs on real marginal cost and a constant equilibrium markup our findings indicate that each of our modifications to the baseline nkpc model is important for u k data so that inflation in the u k is explained both by changes in employment and by changes in real import prices in general and real oil prices in particular external competitive pressures also seem to affect u k inflation via their impact on the equilibrium price markup of domestic firms

latin america s new economic model micro responses and economic restructuring abstract this paper introduces a special issue on the microeconomics of latin america under the new economic model nem the paper reviews the rationale and policies of the nem and analyzes the impact of the reforms at the macroeconomic sectoral and microeconomic levels at the firm level the contributions to this issue demonstrate that a considerable adjustment process is taking place as sectoral structural change indices demonstrate however this has not resulted in widespread shifts of resources between sectors nor has it resulted in significant improvement in overall employment productivity and growth the authors analyze the reasons for this disjuncture and suggest policy alternatives

a reconsideration of import substitution this paper studies the origins of an import substitution strategy of development summarizes the consequences of that strategy and reviews the problems that led to its failure the fundamental difficulty was its discouragement of the indigenous social learning necessary for sustained independent development the emergence of an outward oriented minimal government strategy is due to the success of korea and taiwan this strategy fails to recognize that social learning requires a strong role for national agents and that this role can be penalized by undue openness an effective strategy must protect and induce domestic learning without penalizing exporting

the new economic model and marine fisheries development in latin america the new economic model nem has profoundly influenced fisheries development in latin america facilitating the emergence of new and increasingly influential interest groups within the industry it has also stimulated new forms of production and prompted new legislation to regulate fishing in the region s most important fishing countries these changes have coincided with latin america s increasing importance in world fisheries production and trade the nem has not however resolved the sector s fundamental problems such as overfishing overcapitalization and conflict and has arguably exacerbated them

testing steady state implications for the nairu estimates of the nairu are usually derived either from a phillips curve or from a wage curve this paper investigates the correspondence between the operational nairu concepts and the steady state of a dynamic wage price model we derive the parameter restrictions that secure that correspondence the full set of restrictions can be tested by econometric analysis of the wage price system and this method is demonstrated for norwegian data a set of necessary conditions can be tested from estimated wage curves alone existing international evidence from empirical wage equations are reinterpreted in light of these conditions

optimal monetary policy in economies with dual labor markets abstract we present a dynamic stochastic general equilibrium dsge new keynesian model with indivisible labor and a dual labor market a walrasian one where wages are fully flexible and a unionized one characterized by real wage rigidity we show that the negative effect of a productivity shock on inflation and the positive effect of a cost push shock are crucially determined by the proportion of firms that belong to the unionized sector the larger this number the larger are these effects consequently the larger the union coverage the larger should be the optimal response of the nominal interest rate to exogenous productivity and cost push shocks the optimal inflation and output gap volatility increases as the number of the unionized firms in the economy increases

labour supply search and taxes abstract classical labour supply theory is one of the most sophisticated parts of labour economics yet there is no compelling theoretical reason to believe in an outcome on a classical labour supply curve and it is unclear whether it is a good empirical description of the way in which labour markets actually work this paper uses the techniques of search theory to analyse the impact of changes in the tax system on incentives to work when individuals do not have flexibility of hours within jobs it is shown how the traditional comparative statics are of some use but are rarely the whole story and some comparative statics results are surprising

the impact of employment tax cuts on unemployment and wages the role of unemployment benefits and tax structure abstract i model and simulate the effects of employment tax cuts on unemployment and wages in four equilibrium models competitive union bargaining search and efficiency wages i find that if the ratio of unemployment compensation to wages is fixed the effect of the tax cut is mainly on wages but if income out of work is fixed in real terms there are substantial employment effects when wages are determined by bargaining revenueneutral reforms that make the tax more progressive also reduce unemployment thus policy towards unemployment compensation and tax structure are key influences on the effect of taxes on unemployment

innovation systems and technological specialization in latin america and the caribbean abstract this paper examines the national systems of innovation nsi of latin american and caribbean lac countries and attempts to assess their performances although it points out at a number of specific successes overall the region s nsi have evolved since their inception in the 1950s into weak entities science and technology institutions and organisations are not fully performing an enabling role links and interactions between government support organisations businesses and academia are tenuous investment in intangibles and human capital is low and public policy is only partially effective the main result of such weakness is that lac countries innovative performance has as measured by the index of the technological specialisation its which relates the world s normalised shares of high to low tech exports with the only exception perhaps of mexico remained stagnant or has fallen and has lost relatively to many countries that started at similar levels twenty years ago

unemployment responses to skill biased technology shocks the role of labour market policy do skill biased shocks that increase the spread of labour productivities interacting with different policy regimes explain the rise in unemployment in europe relative to the united states in the 1980s and 1990s the hypothesis is an implication of a version of the mortensen and pissarides 1994 model of equilibrium unemployment which allows for worker heterogeneity a calibrated version of the model implies that a similar unemployment increase would have occurred in the united states over this period given changes in relative productivity by education implied by observed wage changes had unemployment compensation and employment protection policies been at european levels

understanding economic policy reform one of the eventual consequences of the global debt crisis was a wave of market oriented economic reforms this paper discusses the state of our knowledge on the political economy of this process why were inefficient and often unsustainable policies maintained for so long why are so many governments reforming now after decades of adherence to policies of an opposite kind have the reformers internalized the correct lessons from the east asian experience finally are there any helpful rules for reformers to follow in guiding their policies through complicated political terrain

the behavior of manufacturing firms under the new economic model abstract a study of medium and large domestic manufacturing firms in latin america shows that the region s new economic model has led to significant transformations in firm behavior the study results may not be generalizable however since the sample is small and not statistically representative nevertheless they provide insights into the behavior of the most modernizing domestic manufacturing firms and into the role of policy aimed at encouraging firms to upgrade

the political economy of strategic trade policy and the brazil canada export subsidies saga in this paper we study the on going trade dispute between canada and brazil on export subsidies in the aircraft industry and the reasons for its escalation this is a peculiar case of strategic trade policy insofar as the good i e regional jets is heavily dependent on sub systems that are imported in the two countries the hypothesis that the dispute solely derives from the search for rents and externalities is therefore incomplete without downplaying the role of interest politics we argue that in both countries ideas about the goals of trade policy have an important place in explaining why this dispute drags on for canada the belief in a rules based trading regime has led it to strongly oppose violations while insecurity about its competitiveness has led to a variety of government schemes to support firms in advanced sectors like aerospace for brazil its place as a leader of the developing world acted as a rallying point for government and firms alike the research also argues that the wto process has actually made a resolution of the dispute more difficult by making it too costly for firms and countries to comply with the costs of losing

employment effects of payroll taxes an empirical test for germany this study tests to what degree the incidence of payroll taxes in germany is on employment and whether in consequence payroll taxes in particular social insurance contributions are the culprit behind the growing unemployment problem using industry level data for 18 years 1977 1994 a system of five dynamic factor demand equations is estimated various simulations indicate that the employment effects of payroll taxes are minimal

investor protection and corporate governance recent research has documented large differences among countries in ownership concentration in publicly traded firms in the breadth and depth of capital markets in dividend policies and in the access of firms to external finance a common element to the explanations of these differences is how well investors both shareholders and creditors are protected by law from expropriation by the managers and controlling shareholders of firms we describe the differences in laws and the effectiveness of their enforcement across countries discuss the possible origins of these differences summarize their consequences and assess potential strategies of corporate governance reform we argue that the legal approach is a more fruitful way to understand corporate governance and its reform than the conventional distinction between bank centered and market centered financial systems

unemployment questions and some answers in more or less every country in the oecd unemployment was lower in the decades following the second world war than in any other period of comparable length either before or since for example in britain unemployment has exceeded 5 in every peacetime decade from 1850 onwards except for the 1950s and 1960s alternatively as we can see in table 1 p 779 average unemployment in the 1980s and 90s is higher generally much higher than in the 1960s in every country considered why this is so is one of the questions which underlies this paper a second question which is also illustrated in the unemployment numbers presented in table 1 p 779 concerns the causes of the enormous variation in unemployment rates across the oecd countries as we shall see these are difficult questions the first in particular is one for which we do not have a complete answer by this i do not mean that we do not have theories which are broadly consistent with these numbers in fact we have theories consistent with more or less any numbers what we lack is a satisfactory empirical explanation of the time series pattern of oecd unemployment in what follows we remain focused on these two questions first considering the theoretical background and then looking at some possible answers we finish with some speculative conjectures on the first question

optimal redistributive taxation in a search equilibrium model this paper characterizes optimal non linear income taxation in an economy with a continuum of unobservable productivity levels and endogenous involuntary unemployment due to frictions in the labour markets redistributive taxation distorts labour demand and wages compared to their efficient values gross wages unemployment and participation are lower average tax rates are increasing marginal tax rates are positive even at the top finally numerical simulations suggest that redistribution is much more important in our setting than in a comparable mirrlees type setting

wage dynamics reconciling theory and evidence u s macroeconomic evidence shows a negative relation between the rate of change of wages and unemployment in contrast most theories of wage determination imply a negative relation between the level of wages and unemployment in this paper we ask whether one can reconcile the empirical evidence with theoretical wage relations we reach three main conclusions first we derive the condition under which the two can indeed be reconciled we show the constraints that such a condition imposes on the determinants of workers reservation wages as well as the relative importance of workers outside options as opposed to match specific productivity in wage determination second in the light of this condition we reinterpret the presence of an error correction term in macroeconomic wage relations for most european economies but not in the united states third we show that whether this condition holds or not has important implications for the effects of a number of variables from real interest rates to oil prices to payroll taxes on the natural rate of unemployment this abstract was borrowed from another version of this item

is the nairu more useful in forecasting inflation than the natural rate of unemployment recent studies have indicated that the terms nairu non accelerating inflation rate of unemployment and natural rate of unemployment are not interchangeable while nairu is an empirical macroeconomic relationship estimated via a phillips curve the natural rate is an equilibrium condition in the labour market reflecting the market s microeconomic features this study evaluates comparatively the inflation forecasting power of alternative time varying estimates of the natural rate of unemployment relative to the nairu the natural rate of unemployment in the usa since the second world war is estimated three alternative methods are utilized the kalman filter a structural determinants approach and the hodrick prescott filter the section that follows assesses how each estimator of the natural rate compares with the others as well as with the nairu derived from a phillips curve in forecasting inflationary changes in the usa in the second half of the twentieth century the analysis reveals that th

industrial policy changes and firm level technological capability development evidence from northern brazil summary much has been written about the impacts of the policy changes of the 1990s on industrial performance particularly in latin america most of the studies are based on aggregated analyses that argue for or against such reforms in the policy regime this study offers an alternative view to this debate based on a longitudinal empirical scrutiny of technological capability development in 46 local and foreign firms from three sectors in northern brazil there were inter sector and inter firm variations in terms of the manner and rate of capability development for specific technical functions overall the patterns of firm level capability development exhibited a positive response to the structural reforms but such responses were not a mere consequence of trade openness a combination of government policy foreign competition and intra firm capability building efforts proved essential for speeding up capability development in some of the sampled firms thus policies for accelerating industrial technological capability development in a developing area such as the one examined here would involve not only macro level incentives and competition but very importantly measures that facilitate intra firm capability building efforts

how to promote clusters policy experiences from latin america abstract in this paper we propose to differentiate between three types of clusters when it comes to formulating cluster oriented policies in latin america survival clusters of micro and small scale enterprises owe their existence more to unfavorable macroeconomic conditions and less to entrepreneurial competence and dynamism their competitive potential is limited support measures should mainly aim at improving the conditions for survival since these clusters are important in creating employment opportunities the impetus should be to break through the low skills low investment vicious circle more advanced and differentiated mass producers have been flourishing in the import substitution era but are coming under enormous pressure with the transition to open economies in these clusters the main challenge is to create an environment that stimulates and supports learning innovation and constant upgrading clusters of transnational corporations are typically dominated by foreign firms not only at the final assembly stage but also in parts production these clusters often are showcases of best practice manufacturing this can be used to stimulate the upgrading of domestic firms notably by involving them in the supply chain of transnationals

maquila economic reform and corporate strategies abstract corporate strategies in maquila have changed over time while they were originally geared only to the exploitation of low paid low skilled labor nowadays firms are upgrading human capital and increasing the scope and technological complexity of production processes the adoption of the new economic model in host countries aimed precisely at this type of strategy change but cannot solely be credited for it in addition policies regarding maquila under the nem did not achieve all the stated goals regarding corporate strategy change trends in local procurement and technology transfer are still unsatisfactory strengthening of local supply and absorption capabilities is required

socioeconomic context family regimes and women s early labor market experience the case of colombia and venezuela abstract this paper compares the early labor market experience of mature and young cohorts of women in bogota and caracas the cross country cross cohort comparisons demonstrate the importance of both rising women s human capital and family regimes to women s labor market behavior while divorce was a central stimulus of women s work in both contexts the more stable patriarchal family regime in bogota more strongly conflicted with employment than the matrifocal and flexible pattern in caracas results also show important changes in the dynamics of female employment as younger cohorts exhibit more intermittent and unstable employment patterns

a non walrasian labor market in a monetary model of the business cycle abstract this paper investigates to what extent a new keynesian monetary model with the addition of a microfounded non walrasian labor market solely based on union bargaining is able to replicate key aspects of the business cycle the presence of a representative union offers an explanation for two features of the cycle first it generates an endogenous mechanism which produces persistent responses to both supply and demand shocks second labor unionization reduces the elasticity of marginal costs to output this leads to lower inflation volatility model simulations show that the unionized framework can better reproduce european business cycle data than can a model with a competitive labor market

policy directions for the new economic model in latin america abstract the new economic model nem has been extremely successful in reducing inflation and in increasing exports but quite disappointing in terms of the growth of output and productivity it is argued that this calls for a second generation of reforms especially centered at the plant level and its surrounding factor markets to close the huge productivity gap separating firms from best practice and so enable the accelerated growth rates typical of successful late starters policies should emphasize the systematic identification of those technologies and practices best suited to local conditions and their rapid transfer adaptation and diffusion throughout the economy

measuring the nairu evidence from seven economies several specifications of state space models are used to obtain estimates of the nairu for the g7 except japan plus australia over the past 28 years a phillips curve type regression is shown to deliver estimates that do not mimic low frequency movements in unemployment rates even when a drift is included in the specification of the nairu standard errors around the estimates are extremely large using information about the behavior of unemployment in addition to inflation alleviates both these shortcomings

oecd unemployment structural breaks and stationarity the paper is concerned with testing the unemployment rate of twenty two oecd countries for stationarity a sequential testing procedure was applied where the break data is endogenized three different models were tested for unit roots it was found that the crash model which allows for a shift in the level of the unemployment rate was most relevant furthermore most breaks were associated with the first oil price shock results suggest that in nine countries the unit root can be rejected in ten countries the null hypothesis cannot be rejected and in three cases the results suggest possible trend stationarity

local business taxes theory and practice local taxes which are borne by business are an aspect of local government revenue systems in almost all western countries these taxes cover a wide range of possible structures from the highly visible and direct such as taxes on business profits assets and wealth to the more indirect which bear on the inputs to a firm such as payroll property and resource rentals and severance taxes or taxes which bear on outputs such as sales taxes most local governments also employ in addition to taxes user fees and charges the range of local business tax is still further widened when we extend consideration beyond corporate business to include sole traders and partnerships in this case in addition to most of the above taxes we must also consider local taxes on personal income capital gains capital transfers and inheritance hence the range of taxes to be considered amongst local business taxes is both large and very complex

testing for the cointegrating rank of a var process with structural shifts tests for the cointegrating rank of a vector autoregressive process are considered that allow for possible exogenous shifts in the mean of the data generation process the break points are assumed to be known a priori it is proposed to estimate and remove the deterministic terms such as mean linear trend term and a shift in a first step then systems cointegration tests are applied to the adjusted series the resulting tests are shown to have known limiting null distributions that are free of nuisance parameters and do not depend on the break point the tests are applied for analyzing the number of cointegrating relations in two german money demand systems

export processing zones in the dominican republic schools or stopgaps summary the following paper explores the variable consequences of offshore manufacturing in the dominican republic while foreign transplants have been treated as tenants in most of the country and have thereby made transitory contributions to export and employment growth they have been treated as tutors in the cibao valley and have thereby made more lasting contributions of skill and technology what accounts for the variation i find that the agro commercial elites who have traditionally dominated the cibao valley are simultaneously more tolerant of foreign investment than the import competing industrialists found in the capital of santo domingo and more likely to diversify into manufacturing than the absentee landlords found elsewhere in the country

alleviating unemployment the case for green tax reforms abstract it has been argued recently that imposing taxes on pollution produces additional tax revenues which can be used to replace labour taxes and thus reap a double dividend in the form of improving environmental quality and alleviating unemployment this paper analyses the employment effects of revenue neutral green tax reforms by focusing on the revenue recycling effect our model contains three features which are important when looking at the employment effects of green tax reforms first there is unemployment in equilibrium second wages are determined endogenously third various institutional arrangements for taxing unemployment benefits for the price indexation of unemployment benefits and the personal tax exemption are considered it is shown that these institutional arrangements are crucial for the effectiveness of green tax reforms a revenue neutral green tax reform will boost employment if unemployment benefits are nominally fixed and taxed at a lower rate than labour income employment actually falls if unemployment benefits are price indexed and taxed at the same rate a revenue neutral green tax reform which increases the personal tax credit will never increase employment

recovery of a mexican cluster devaluation bonanza or collective efficiency abstract mexico as many other developing countries in latin america and elsewhere has been moving in the 1980s toward a liberalized trade regime after a long period of import substitution this paper analyzes the impact of trade liberalization on the cooperative behavior of shoe firms located in a cluster in guadalajara the empirical evidence shows that cooperation has increased it also suggests that cooperation positively influences firms performance and together with a favorable market environment contributes to the cluster s recovery the study is based on fieldwork carried out in guadalajara in 1996 qualitative information was collected through in depth interviews and quantified responses came from a questionnaire survey covering a sample of 63 shoe manufacturing enterprises

effort taxation and unemployment abstract the importance of the design of the income tax system for the incentive to supply effort is considered in a situation where firms set wages a tax reform raising marginal taxes at all income levels and increasing decreasing average taxes at high low income levels may lead to higher wages lower employment and higher unemployment

estimating the natural rate of unemployment in euro area countries with co integrated systems given that for france germany italy and the netherlands the unemployment rates are best classified as i 1 we apply permanent transitory decompositions based on co integrated vector autoregressions var with relevant variables labour productivity wages tax wedges foreign relative prices to estimate the time varying natural unemployment rates in general all variables seem to matter and the results are quite different from published organization for economic co operation and development oecd nairus our implied unemployment gaps are better than the oecd gaps in predicting unemployment changes and inflation gaps but they are except for italy as bad as the oecd gaps for forecasting inflation changes

a comparison of clustered and dispersed firms in the small scale clothing industry of lima abstract this study provides empirical evidence on the strength and type of clustering advantages contrasting the performance of small clustered firms with several control groups of dispersed producers in the garment industry of lima peru repeated measurement facilitates an evaluation of the ability of clustered firms to respond to pressures arising from the swift trade liberalization carried out in peru after 1990 the evidence suggests that clustering advantages have been significant particularly for the smallest firms cost reductions and information spillovers are the dominant type of advantages these are however passive advantages of clustering they largely arise at the level of transactions in goods and services and to a lesser extent in the transformation of inputs into output while significant these advantages are insufficient for sustaining competitiveness in the liberalized markets the garment cluster runs the risk of entropic death if information spillovers remain limited in origin and diversity and if interfirm cooperation does not cross local borders