Higher wages, lower pay : public vs. private sector compensation in Peru

Do public sector employees earn less than their counterparts in the private sector? This paper addresses this question in the case of Peru, a country where civil service reform is being debated yet the only available empirical studies on wage differentials date back to the late 1980s. Using data from the 2009 national household survey, the authors perform a multiple step analysis. First, they estimate a single equation with a public sector dummy, which is found to be statistically significant and positive when only monetary wages are taken into account. However, when in-kind payments and bonuses are included to measure compensation, the analysis finds a private sector premium. Second, they estimate for public and formal private employees two distinct wage functions, including the inverse Mills ratio. This takes into account the selection bias resulting from workers self-selecting into the public or private sector. Third, these results are used to decompose wage differentials using the standard Oaxaca-Blinder approach. The results show that the compensation differentials are not significant except for the sub-sample of employees that achieved a postgraduate degree.Labor Markets,Public Sector Economics,Inequality,Public Sector Management and Reform,Education and Digital Divide

Unexpected lessons from Spain’s economic rise

Much of the debate about the Spanish economy in recent decades has focused on problems such as persistent unemployment. Drawing on a new book, Oscar Calvo-Gonzalez argues that setting these failures to one side and taking a fresh look at the country’s economic successes can provide some surprising insights

The political economy of conditional foreign aid to Spain, 1950-1963: relief of input bottlenecks, economic policy change and political credibility

This thesis advances our understanding of the effects of foreign aid programmes in the Spanish economy during the 1950s. It does so by concentrating on three aspects. First, it considers the contribution to economic growth of aid-financed goods by relieving input bottlenecks. Results from an input-output analysis downplay the alleged importance of aid in increasing Spanish output by providing raw materials and other inputs. Second, it discusses the extent to which foreign donors influenced Spanish economic policy-making. Based on original archival sources from both recipient and donors, it is argued here that the United States was particularly ineffective at imposing its economic policy agenda. Surprisingly, the best way to increase the likelihood of the adoption of economic policy reform was not to exercise outright leverage but to provide further unconditional aid disbursements. The analysis of the involvement of the International Monetary Fund and Organisation for European Economic Co-operation to underwrite the 1959 Spanish Stabilisation Plan suggests that the multilateral organisations were acutely aware of the overriding importance of a true commitment to the reforms by the local policy-makers. Rather than relying on formal conditionality, they ascertained such commitment by monitoring the internal support for the reform programme whilst carefully avoiding any instance that may jeopardise the cohesion of the domestic pro-reform coalition. Third, the dissertation motivates a 'credibility hypothesis' under which the American aid-for-bases programme improved the political credibility of the regime and with it private businesses' expectations. A range of both qualitative and quantitative evidence, of which the use of financial market data is paramount, supports the hypothesis. This result contributes to solving the puzzle of Spanish economic history during a period that sees the resumption of economic growth after a stagnant first decade under Franco's rule despite very limited policy change

Financial dollarization: the role of banks and interest rates

This paper develops a model to explain the determinants of financial dollarization. Expanding on the existing literature, our framework allows interest rate differentials to play a role in explaining financial dollarization. It also accounts for the increasing presence of foreign banks in the local financial sector. Using a newly compiled data set on transition economies we find that increasing access to foreign funds leads to higher credit dollarization, while it decreases deposit dollarization. Interest rate differentials matter for the dollarization of both loans and deposits. Overall, the empirical results lend support to the predictions of our theoretical model. JEL Classification:Financial Dollarization, Foreign Banks, Interest Rate Differentials, Transition Economies

The EU budget – how much scope for institutional reform?

This paper reviews current discussions on reforming the European Union (EU) budgetary procedure and assesses the main reform proposals that have been suggested thus far. It argues that prospects for reforms are presently hampered by the complex interplay between supranational and intergovernmental decision modes and the requirement of any budgetary procedure to strike a balance between efficiency and legitimacy. The paper reviews the main criticisms of the present budgetary procedure and the related reform proposals, which are assessed on the basis of relevant theoretical literature as well as brief comparisons with the federal budget of the United States. The paper argues that the current EU budgetary procedure matches by-and-large the current equilibrium between all actors involved, given the present state of political integration in the EU. Significant modifications to the budgetary procedure would depart from that equilibrium.European Union, EU budget, budget process

The EU budget – how much scope for institutional reform?

This paper reviews current discussions on reforming the European Union (EU) budgetary procedure and assesses the main reform proposals that have been suggested thus far. It argues that prospects for reforms are presently hampered by the complex interplay between supranational and intergovernmental decision modes and the requirement of any budgetary procedure to strike a balance between efficiency and legitimacy. The paper reviews the main criticisms of the present budgetary procedure and the related reform proposals, which are assessed on the basis of relevant theoretical literature as well as brief comparisons with the federal budget of the United States. The paper argues that the current EU budgetary procedure maximises efficiency and legitimacy, given the present state of political integration in the EU. Significant modifications to the budgetary procedure would depart from that equilibrium.

Financial dollarization: the role of banks and interest rates

This paper develops a model to explain the determinants of financial dollarization. Expanding on the existing literature, our framework allows interest rate differentials to play a role in explaining financial dollarization. It also accounts for the increasing presence of foreign banks in the local financial sector. Using a newly compiled data set on transition economies we find that increasing access to foreign funds leads to higher credit dollarization, while it decreases deposit dollarization. Interest rate differentials matter for the dollarization of both loans and deposits. Overall, the empirical results lend support to the predictions of our theoretical model

The acceding countries’ strategies towards ERM II and the adoption of the euro - an analytical review

This paper reviews the strategies announced by the ten countries joining the European Union in May 2004 with regard to their intentions for participation in ERM II and the adoption of the euro. The paper examines the economic rationale of the monetary integration strategies declared by most acceding countries with a view to identifying also their potential risks. It does so by making use of several different approaches, including a short review of nominal convergence and a more extensive discussion from an optimum currency area perspective. An important part of the analysis is devoted to the implications of real convergence – i.e. catching-up growth in income and adjustment of the real economic structures towards those prevailing in the euro area – on the patterns of economic dynamics in acceding countries. Other aspects covered are the risks for external competitiveness in the convergence process and the appropriate pace of fiscal consolidation.

Inactivation of nuclear factor-Y inhibits vascular smooth muscle cell proliferation and neointima formation

OBJECTIVE: Atherosclerosis and restenosis are multifactorial diseases associated with abnormal vascular smooth muscle cell (VSMC) proliferation. Nuclear factor-Y (NF-Y) plays a major role in transcriptional activation of the CYCLIN B1 gene (CCNB1), a key positive regulator of cell proliferation and neointimal thickening. Here, we investigated the role of NF-Y in occlusive vascular disease. APPROACH AND RESULTS: We performed molecular and expression studies in cultured cells, animal models, and human tissues. We find upregulation of NF-Y and cyclin B1 expression in proliferative regions of murine atherosclerotic plaques and mechanically induced lesions, which correlates with higher binding of NF-Y to target sequences in the CCNB1 promoter. NF-YA expression in neointimal lesions is detected in VSMCs, macrophages, and endothelial cells. Platelet-derived growth factor-BB, a main inductor of VSMC growth and neointima development, induces the recruitment of NF-Y to the CCNB1 promoter and augments both CCNB1 mRNA expression and cell proliferation through extracellular signal-regulated kinase 1/2 and Akt activation in rat and human VSMCs. Moreover, adenovirus-mediated overexpression of a NF-YA-dominant negative mutant inhibits platelet-derived growth factor-BB-induced CCNB1 expression and VSMC proliferation in vitro and neointimal lesion formation in a mouse model of femoral artery injury. We also detect NF-Y expression and DNA-binding activity in human neointimal lesions. CONCLUSIONS: Our results identify NF-Y as a key downstream effector of the platelet-derived growth factor-BB-dependent mitogenic pathway that is activated in experimental and human vasculoproliferative diseases. They also identify NF-Y inhibition as a novel and attractive strategy for the local treatment of neointimal formation induced by vessel denudation.This study was funded by the Spanish Ministry of Economy and Competiveness (MINECO; grants SAF2010-16044, SAF200911949), Instituto de Salud Carlos III (ISCIII; grants RD12/0042/0021, RD12/0042/0028, RD12/0042/0053), and the Dr Léon Dumont Prize 2010 by the Belgian Society of Cardiology (to Vicente Andrés). Patricia Fernández received salary support from ISCIII and Carlos Silvestre-Roig from Fundación Mario Losantos del Campo and Fundación Ferrer para la Investigación. Óscar M. Pello and Ricardo Rodríguez-Calvo hold a Juan de la Cierva contract from MINECO. Vanesa Esteban is an investigator of the Sara Borell program from ISCIII (CD06/00232). The Centro Nacional de Investigaciones Cardiovasculares (CNIC) is supported by MINECO and Pro-CNIC Foundation.S