Portugal. In economics, we call it conflict of interest! CEPS Commentary, 12 April 2013

Faced with limited options for coming up with the funds needed to pay off the next instalment on its bailout loan, Portugal is advised in this Commentary by economist Leonor Coutinho to trim the number of public sector employees, in combination with an increase in public sector working hours, among the lowest in Europe. In her view, these measures will have the best long-term implications both in terms of fiscal sustainability and of labour productivity, and may finally allow the country to resume the catching-up process that has been stalled since the start of EMU.

Subsidiarity between Law and Economics. Research Papers in Law, 1/2005

From the Introduction. The present contribution is an attempt to raise awareness between the 'trenches' by juxtaposing the two approaches to subsidiarity. Subsequently, I shall set out why, in economics, subsidiarity is embraced as a key principle in the design and working of the Union and how a functional subsidiarity test can be derived from this thinking. Throughout the paper, a range of illustrations and examples is provided in an attempt to show the practical applicability of a subsidiarity test. This does not mean, of course, that the application of the test can automatically "solve" all debates on whether subsidiarity is (not) violated. What it does mean, however, is that a careful methodology can be a significant help to e.g. national parliaments and the Brussels circuit, in particular, to discourage careless politicisation as much as possible and to render assessments of subsidiarity comparable throughout the Union. The latter virtue should be of interest to national parliaments in cooperating, within just six weeks, about a common stance in the case of a suspected violation of the principle. The structure of the paper is as follows. Section 2 gives a flavour of very different approaches and appreciation of the subsidiarity principle in European law and in the economics of multi-tier government. Section 3 elaborates on the economics of multi-tier government as a special instance of cost / benefit analysis of (de)centralisation in the three public economic functions of any government system. This culminates in a five-steps subsidiarity test and a brief discussion about its proper and improper application. Section 4 applies the test in a non-technical fashion to a range of issues of the "efficiency function" (i.e. allocation and markets) of the EU. After showing that the functional logic of subsidiarity may require liberalisation to be accompanied by various degrees of centralisation, a number of fairly detailed illustrations of how to deal with subsidiarity in the EU is provided. One illustration is about how the subsidiarity logic is misused by protagonists (labour in the internal market). A slightly different but frequently encountered aspect consists in the refusal to recognize that the EU (that is, some form of centralisation) offers a better solution than 25 national ones. A third range of issues, where the functional logic of subsidiarity could be useful, emerges when the boundaries of national competences are shifting due to more intense cross-border flows and developments. Other subsections are devoted to Union public goods and to the question whether the subsidiarity test might trace instances of EU decentralisation: a partial or complete shift of a policy or regulation to Member States. The paper refrains from an analysis of the application of the subsidiarity test to the other two public functions, namely, equity and macro-economic stabilisation.2 Section 5 argues that the use of a well-developed methodology of a functional subsidiarity test would be most useful for the national parliaments and even more so for their cooperation in case of a suspected violation of subsidiarity. Section 6 concludes.

Key Issues in Agricultural Labour Markets: A Review of Major Studies and Project Reports on Agriculture and Rural Labour Markets. Factor Markets Working Paper No. 20, February 2012

This paper provides a synthesis of the empirical literature on the key issues in agricultural and rural labour markets since 1960s, drawing mainly upon studies from the United States and the European Union, but also including relevant material from developing countries. The contribution of this meta-analysis lies in its unique structure as it covers the main research questions which have been addressed in the literature and includes the most cited papers from the American Journal of Agricultural Economics, Journal of Agricultural Economics, European Review of Agricultural Economics, Agricultural Economics as well as other reports and EU funded projects. Each research question is accompanied by tabular summaries which classify the individual studies according to the methodology and the variables employed. The heterogeneous conditions across countries, the different research questions and methodologies, and the type of data employed, have sometimes led to conflicting results. Nonetheless, by comparing the results it is possible to assess the significance and the direction of the determinants of rural labour allocation and its adjustments, and thus contribute to a better understanding on the functioning of rural labour markets. Lastly, by recognising the importance of the institutional framework, the paper provides useful policy insights.

Compositional effects on productivity, labour cost and export adjustments. Bruegel Policy Contribution 2012/11, June 2012

Sectoral shifts, such as shrinkage of low labour productivity and the low-wage construction sector, can lead to apparent increased aggregate average labour productivity and average wages, especially when capital intensity differs across sectors. For 11 main sectors and 13 manufacturing sub-sectors, we quantify the compositional effects on productivity, wages and unit labour costs (ULCs) based and real effective exchange rates (REER), for 24 EU countries. Compositional effects are greatest in Ireland, where the pharmaceutical sector drives the growth of output and productivity, but other sectors have suffered greatly and have not yet recovered. Our new ULC-REER measurements, which are free from compositional effects, correlate well with export performance. Among the countries facing the most severe external adjustment challenges, Lithuania, Portugal and Ireland have been the most successful based on five indicators, and Latvia, Estonia and Greece the least successful. There is evidence of downward wage flexibility in some countries, but wage cuts have corrected just a small fraction of pre-crisis wage rises and came with massive reductions in employment even in the business sector excluding construction and real estate, highlighting the difficulty of adjusting wages downward.

Productivity, labour cost and export adjustment: Detailed results for 24 EU countries. Bruegel Working Paper 2012/11, 12 July 2012

As a background document for Bruegel Policy Contribution 2012/11 ‘Compositional effects on productivity, labour cost and export adjustment’, this working paper presents detailed results for 24 EU countries on: • The sectoral changes in the economy; • The unit labour costs (ULC) based real effective exchange rate (REER) and its main components; • Export performance. • The ULC-REERs are calculated: • For the total economy, the business sector (excluding agriculture, construction and real estate activities), and some main sectors; • Using both actual aggregates and fixed-weight aggregates, as the latter are free from the impacts of compositional changes; • Against 30 trading partners and against three subsets of trading partners: euro-area, non-euro area EU, non-EU.

Women's Labour Market Performance in Europe: Trends and Shaping Factors. CEPS Special Report, September 2012

We investigate the changes in women’s employment patterns across EU countries over the last 20 years both in terms of labour market participation and type of jobs using individual data from ECHP and EUSILC databases. Using a logistic multilevel model, we then pin down the role played by institutional and policy changes in explaining women’s employment. The key results indicate that women’s employment trends are related to the institutional and policy changes that have been introduced in almost all European countries since the end of the 1990s. Such changes had an important impact on the labour market opportunities’ of women by affecting the quality of potential jobs available, the chances to (re-)enter the labour market and the opportunity costs of employment (vs. non-employment).