Human capital in growth regressions: how much difference does data quality make? An update and further results

We construct estimates of educational attainment for a sample of OECD countries using previously unexploited sources. We follow a heuristic approach to obtain plausible time profiles for attainment levels by removing sharp breaks in the data that seem to reflect changes in classification criteria. We then construct indicators of the information content of our series and a number of previously available data sets and examine their performance in several growth specifications. We find a clear positive correlation between data quality and the size and significance of human capital coefficients in growth regressions. Using an extension of the classical errors in variables model, we construct a set of meta-estimates of the coefficient of years of schooling in an aggregate Cobb-Douglas production function. Our results suggest that, after correcting for measurement error bias, the value of this parameter is well above 0.50.

Inflation and factor shares

We use results from the literature on the determinants of price-cost margins to derive an equation relating labor's share of national income to the inflation rate (as well as to the output gap, the unemployment rate and the capital stock per worker). The equation is tested with a panel of 15 OECD countries. We obtain a robust positive relationship between inflation and the labor share. Our results suggest that disinflation is not distributively neutral, provide empirical support for the distinct concern about price stability shown by trade unions and employers' organizations, and help explaining the negative impact of inflation on growth.

Recent trends in Spanish income distribution: a robust picture of falling income inequality

Income distribution in Spain has experienced a substantial improvement towards equalisation during the second half of the seventies and the eighties; a period during which most OECD countries experienced the opposite trend. In spite of the many recent papers on the Spanish income distribution, the period covered by those stops in 1990. The aim of this paper is to extent the analysis to 1996 employing the same methodology and the same data set (ECPF). Our results not only corroborate the (decreasing inequality) trend found by others during the second half of the eighties, but also suggest that this trend extends over the first half of the nineties. We also show that our main conclusions are robust to changes in the equivalence scale, to changes in the definition of income and to potential data contamination. Finally, we analyse some of the causes which may be driving the overall picture of income inequality using two decomposition techniques. From this analyses three variables emerge as the major responsible factors for the observed improvement in the income distribution: education, household composition and socioeconomic situation of the household head.

Entrepreneurship, management services and economic growth

We model the joint production of entrepreneurs and workers where the former provide both entrepreneurial (strategic) and managerial (coordination, motivation) services, and management services are shared with individual workers in an output maximizing way. The static equilibrium of the model determines the endogenous share of entrepreneurs in the economy in a given moment of time. The time dynamics of the solution implies that a given growth rate in quality of entrepreneurial services contributes to productivity growth proportionally to the share of entrepreneurs at the start of the period and improvement in quality of entrepreneurial services is convergence enhancing. Model predictions are tested with data from OECD countries in the period 1970-2002. We find that improvements in quality of entrepreneurial services over time explain up to 100% of observed average productivity growth in these countries.

Multimarket contact in pharmaceutical markets

The purpose of this paper is to analyze the effect of multimarket contact on the behavior of pharmaceutical firms controlling for different levels of regulatory constraints using IMS MIDAS database. Theoretically, firms that meet in several markets are expected to be capable of sustaining implicitly more profitable out- comes, even if perfect monitoring is not possible. Firms may find it profitable to redistribute their market power among markets where they are operating. We present evidence for nine OECD countries with different degrees of regulation and show that regulation affects the importance of economic forces on firms' price setting behavior. Furthermore, our results confirms the presence of the predictions of the multimarket theory for more market friendly countries (U.S. and Canada) and less regulated ones (U.K., Germany, Netherlands), in contrast, for highly regulated countries (Japan, France, Italy and Spain) the results are less clear with some countries being

The Social contract with endogenous sentiments

Moral values infuence individual behavior and social interactions. A specially signif- cant instance is the case of moral values concerning work e¤ort. Individuals determine what they take to be proper behaviour and judge the others, and themselves, accordingly. They increase their esteem -and self-esteem- for those who perform in excess of the standard and decrease their esteem for those who work less. These changes in self-esteem result from the self-regulatory emotions of guilt or pride extensively studied in Social Psychology. We examine the interactions between sentiments, individual behaviour and the social contract in a model of rational voting over redistribution where individual self-esteem and relative es-teem for others are endogenously determined. Individuals di¤er in their productivities. The desired extent of redistribution depends both on individual income and on individual attitudes toward others. We characterize the politico-economic equilibria in which sentiments, labor supply and redistribution are simultaneously determined. The model has two types of equilibria. In "cohesive" equilibria, all individuals conform to the standard of proper behav- iour, income inequality is low and social esteem is not biased toward any particular type. Under these conditions equilibrium redistribution increases in response to larger inequality. In a "clustered" equilibrium skilled workers work above the mean while unskilled workers work below. In such an equilibrium, income inequality is large and sentiments are biased in favor of the industrious. As inequality increases, this bias may eventually overtake the egoistic demand for greater taxation and equilibrium redistribution decreases. The type of equilibrium that emerges crucially depends on inequality. We contrast the predictions of the model with data on inequality, redistribution, work values and attitudes toward work and toward the poor for a set of OECD countries.

An empirical analysis of wealth taxation: equity Vs.tax compliance

Capital taxation is currently under debate, basically due to problems of administrative control and proper assessment of the levied assets. We analyze both problems focusing on a capital tax, the annual wealth tax (WT), which is only applied in five OECD countries, being Spain one of them. We concentrate our analysis on top 1% adult population, which permits us to describe the evolution of wealth concentration in Spain along 1983-2001. On average top 1% holds about 18% of total wealth, which rises to 19% when tax incompliance and under-assessment is corrected for housing, the main asset. The evolution suggests wealth concentration has risen. Regarding WT, we analyze whether it helps to reduce wealth inequality or, on the contrary, it reinforces vertical inequity (due to especial concessions) and horizontal inequity (due to the de iure and to de facto different treatment of assets). We analyze in detail housing and equity shares. By means of a time series analysis, we relate the reported values with reasonable price indicators and proxies of the propensity to save. We infer net tax compliance is extremely low, which includes both what we commonly understand by (gross) tax compliance and the degree of under-assessment due to fiscal legislation (for housing). That is especially true for housing, whose level of net tax compliance is well below 50%. Hence, we corroborate the difficulties in taxing capital, and so cast doubts on the current role of the WT in Spain in reducing wealth inequality.

Threshold Effects of Dismissal Protection Regulation and the Emergence of Temporary Work Agencies

Labour market regulations aimed at enhancing job-security are dominant in several OECD countries. These regulations seek to reduce dismissals of workers and fluctuations in employment. The main theoretical contribution is to gauge the effects of such regulations on labour demand across establishment sizes. In order to achieve this, we investigate an optimising model of labour demand under uncertainty through the application of real option theory. We also consider other forms of employment which increase the flexibility of the labour market. In particular, we are modelling the contribution of temporary employment agencies (Zeitarbeit) allowing for quick personnel adjustments in client firms. The calibration results indicate that labour market rigidities may be crucial for understanding sluggishness in firms´ labour demand and the emergence and growth of temporary work.

The long run relationship between stock prices and goods prices: new evidence from panel cointegration

We examine the long run relationship between stock prices and goods prices to gauge whether stock market investment can hedge against inflation. Data from sixteen OECD countries over the period 1970-2006 are used. We account for different inflation regimes with the use of sub-sample regressions, whilst maintaining the power of tests in small sample sizes by combining time-series data across our sample countries in a panel unit root and panel cointegration econometric framework. The evidence supports a positive long-run relationship between goods prices and stock prices with the estimated goods price coefficient being in line with the generalized Fisher hypothesis.

Do political incentives matter for tax policies? Ideology, opportunism and the tax structure

This paper investigates the importance of political ideology and opportunism in the choice of the tax structure. In particular, we examine the effects of cabinet ideology and elections on the distribution of the tax burden across factors of production and consumption for 21 OECD countries over the period 1970-2000 by employing four alternative cabinet ideology measures and by using the methodology of effective tax rates. There is evidence of both opportunistic and partisan effects on tax policies. More precisely, we find that left-wing governments rely more on capital relative to labor income taxation and that they tend to increase consumption taxes. Moreover, we find that income tax rates (but not consumption taxes) tend to be reduced in preelectoral periods and that capital effective tax rates (defined broadly to include taxes on selfemployed income) are reduced by more than effective labor tax rates.

A Bootstrap Neural Network Based Heterogeneous Panel Unit Root Test: Application to Exchange Rates

This paper proposes a bootstrap artificial neural network based panel unit root test in a dynamic heterogeneous panel context. An application to a panel of bilateral real exchange rate series with the US Dollar from the 20 major OECD countries is provided to investigate the Purchase Power Parity (PPP). The combination of neural network and bootstrapping significantly changes the findings of the economic study in favour of PPP.

Equilibrium Exchange Rate Determination and Multiple Structural Changes

The large appreciation and depreciation of the US dollar in the 1980s stimulated an important debate on the usefulness of unit root tests in the presence of structural breaks. In this paper, we propose a simple model to describe the evolution of the real exchange rate. We then propose a more general smooth transition (STR) function than has hitherto been employed, which is able to capture structural changes along the (long-run) equilibrium path, and show that this is consistent with our economic model. Our framework allows for a gradual adjustment between regimes and allows for under- and/or over-valued exchange rate adjustments. Using monthly and quarterly data for up to twenty OECD countries, we apply our methodology to investigate the univariate time series properties of CPI-based real exchange rates with both the U.S. dollar and German mark as the numeraire currencies. The empirical results show that, for more than half of the quarterly series, the evidence in favour of the stationarity of the real exchange rate was clearer in the sub-sample period post-1980.

EAACI Position Paper: prevention of work-related respiratory allergies among pre-apprentices or apprentices and young workers.

ABSTRACT: Apprenticeship is a period of increased risk of developing work-related respiratory allergic diseases. There is a need for documents to provide appropriate professional advice to young adults aiming to reduce unsuitable job choices and prevent impairment from their careers. The present document is the result of a consensus reached by a panel of experts from European and non-European countries addressed to allergologists, pneumologists, occupational physicians, primary care physicians, and other specialists interested in this field, which aims to reduce work-related respiratory allergies (rhinoconjunctivitis and asthma) among allergic or nonallergic apprentices and other young adults entering the workforce. The main objective of the document is to issue consensus suggestions for good clinical practice based on existing scientific evidence and the expertise of a panel of physicians.

Linkages of dietary patterns, international trade and land use: the case of olive oil in the European Union

Within only two decades olive oil developed from a niche product which could hardly be found in food stores outside the producing regions towards an integrated component in the diets of industrial countries. This paper discusses the impacts of the promotion of the “healthy Mediterranean diet” on land use and agro-ecosystems in the producing countries. It examines the dynamics of olive oil production, trade and consumption in the EU15 in the period 1972 to 2003 and the links between dietary patterns, trade and land use. It analyses the underlying socio-economic driving forces behind the increasing spatial disconnect between production and consumption of olive oil in the EU15 and in particular in Spain, the world largest producer during the last three decades. In the observed period olive oil consumption increased 16 fold in the non-producing EU15 countries. In the geographically limited producing regions like Spain, the 5 fold increase in export production was associated with the rapid industrialization of olive production, the conversion of vast Mediterranean landscapes to olive monocultures and a range of environmental pressures. High amounts of subsidies of the European Common Agricultural Policy and feedback loops within production and consumption systems were driving the transformation of the olive oil system. Our analysis indicates the process of change was not immediately driven by increases in demand for olive oil in non-producing countries, but rather by the institutional setting of the European Union and by concerted political interventions.

The ‘Dragon’ and the ‘Elephant’ and Global Imbalances

Global financial imbalances receive a great deal of attention in relation to the emerging economies China and India. This chapter analyzes this relation, but argues first that they are actually re-balancing the existing structural inequality in the world economy, in which for so long only the Western economies and Japan dominated economic growth and international trade, moving towards a more multi-polar world economy. China in particular, with its rapid export-led growth, has indeed been part and parcel of the emerging financial imbalances, feeding the ‘over-consumption’ in the US and using its accumulating international reserves in buying US-treasury bonds. Finance therefore is moving to the economy that ‘least needs it’. This imbalance can only be redressed if the US (and some of the other OECD countries) start saving more and consuming less (and become more competitive), with China further stimulating domestic demand (which it already did in response to the crisis). China and to a lesser extend India, as emerging large economies and a more important roles in global markets, also contribute to new imbalances, such as the influence of the insatiable appetite for resources (carbon-hydrates, minerals and bio-mass) of these relatively energy-inefficient economies, while at the same time attracting an increasing share of FDI towards them. The chapter finally raises the issue that these three mentioned imbalances make it more difficult for developing countries (except for those who are resource-rich) to get access to the necessary development finance.