Patterns of Work Across the OECD

Market work per person of working age differs widely across the OECD countries and there have been some significant changes in the last forty years. How to explain this pattern? Taxes are part of the story but much remains to be explained. If we include all the elements of the social security systems like early retirement benefits, sickness and disability benefits and unemployment benefits, then we can capture some aspects of the overall pattern but still a lot remains unexplained. The story favoured by Alesina et al. (CEPR DP.5140, 2005) is that the nexus of strong unions, generous welfare and social democracy implies both high taxes and pressure in favour of work-sharing in response to adverse shocks. This story, however, falls foul of the simple fact that most Scandinavian countries now do much more work than the French and Germans despite having stronger unions, more generous welfare, higher taxes and more social democracy. Ultimately, we are forced into the position that there is no simple story. Some of the broad patterns can be explained but there remain country specific factors which are hard to identify but lead to substantial differences from one country to another.work, working hours, employment

Gross job flows and firm growth in transition countries : evidence using firm level data.

In this paper we analyse job flows in five transition countries, Poland, Estonia, Slovenia, Bulgaria and Romania. Using comparable firm level data over the years 1993-1997, we find that in early transition job destruction dominates job creation, while the latter is picking up as the country enters into a mature stage of transition. Gross job reallocation rates in the more advanced transition countries are comparable to those of Western economies. We show that the restructuring process is a very heterogeneous one in terms of job creation and destruction: Even in transition countries, hit by very large negative shocks, we find that within narrowly defined sectors, regions and firm types simultaneous creation and destruction of jobs occur. In addition, we find that most of the job reallocation occurs within sectors and regions, rather than across sectors and regions. We suggest that a measure for restructuring is the excess job reallocation rate and show that the excess job reallocation rate is positively correlated with the net employment growth rate at the sector and regional level. Finally, we find that ownership and firm size are the most relevant characteristics for understanding the dynamics of job flows. Foreign firms have higher job creation and higher excess job reallocation rates, while small businesses are the most dynamic in terms of job reallocation. We investigate the job reallocation process at the firm level and test for trade orientation, ownership and size effects. The results show that firm growth depends on ownership and initial size. Trade orientation effects are important for countries in early transition but not for countries in a more mature stage of the transition process.Job creation; Job destruction; transition economies;

Transport Infrastructure Investment and Demand Uncertainty

In this paper we analyse job flows in five transition countries, Poland, Estonia, Slovenia, Bulgaria and Romania. Using comparable firm level data over the years 1993-1997, we find that in early transition job destruction dominates job creation, while the latter is picking up as the country enters into a mature stage of transition. Gross job reallocation rates in the more advanced transition countries are comparable to those of Western economies. We show that the restructuring process is a very heterogeneous one in terms of job creation and destruction: Even in transition countries, hit by very large negative shocks, we find that within narrowly defined sectors, regions and firm types simultaneous creation and destruction of jobs occur. In addition, we find that most of the job reallocation occurs within sectors and regions, rather than across sectors and regions. We suggest that a measure for restructuring is the excess job reallocation rate and show that the excess job reallocation rate is positively correlated with the net employment growth rate at the sector and regional level. Finally, we find that ownership and firm size are the most relevant characteristics for understanding the dynamics of job flows. Foreign firms have higher job creation and higher excess job reallocation rates, while small businesses are the most dynamic in terms of job reallocation. We investigate the job reallocation process at the firm level and test for trade orientation, ownership and size effects. The results show that firm growth depends on ownership and initial size. Trade orientation effects are important for countries in early transition but not for countries in a more mature stage of the transition process.job creation, job destruction, transition economies;

The Evolution of Inequality in Productivity and Wages: Panel Data Evidence

There has been a remarkable increase in wage inequality in the US, UK and many other countries over the past three decades. A significant part of this appears to be within observable groups (such as age-gender-skill cells). A generally untested implication of many theories rationalizing the growth of within-group inequality is that firm-level productivity dispersion should also have increased. The relevant data for the US is problematic, so we utilize a UK panel dataset covering the manufacturing and non-manufacturing sectors since the early 1980s. We find evidence that productivity inequality has increased. Existing studies have underestimated this increased dispersion because they use data from the manufacturing sector which has been in rapid decline. Most of the increase in individual wage inequality has occurred because of an increase in inequality between firms (and within industries). Increased productivity dispersion appears to be linked with new technologies as suggested by models such as Caselli (1999) and is not primarily due to an increase in transitory shocks, greater sorting or entry/exit dynamics.

The evolution of inequality in productivity and wages: panel data evidence

There has been a remarkable increase in wage inequality in the US, UK and many other countries over the past three decades. A significant part of this appears to be within observable groups (such as age-gender-skill cells). A generally untested implication of many theories rationalizing the growth of within-group inequality is that firm-level productivity dispersion should also have increased. Since the relevant data do not exist in the US we utilize a UK longitudinal panel dataset covering the manufacturing and non-manufacturing sectors since the early 1980s. We find evidence that productivity inequality has increased. Existing studies have underestimated this increased dispersion because they use data from the manufacturing sector which has been in rapid decline. Most of the increase in individual wage inequality has occurred because of an increase in inequality between firms (and within industries). Increased productivity dispersion appears to be linked with new technologies as suggested by models such as Caselli (1999) and is not primarily due to an increase in transitory shocks, greater sorting or entry/exit dynamics

The Evolution of Inequality in Productivity and Wages: Panel Data Evidence

There has been a remarkable increase in wage inequality in the US, UK and many other countries over the past three decades. A significant part of this appears to be within observable groups (such as age-gender-skill cells). A generally untested implication of many theories rationalizing the growth of within-group inequality is that firm-level productivity dispersion should also have increased. Since the relevant data do not exist in the US we utilize a UK longitudinal panel dataset covering the manufacturing and non-manufacturing sectors since the early 1980s. We find evidence that productivity inequality has increased. Existing studies have underestimated this increased dispersion because they use data from the manufacturing sector which has been in rapid decline. Most of the increase in individual wage inequality has occurred because of an increase in inequality between firms (and within industries). Increased productivity dispersion appears to be linked with new technologies as suggested by models such as Caselli (1999) and is not primarily due to an increase in transitory shocks, greater sorting or entry/exit dynamics.wage inequality, productivity dispersion, technology

Inequality of individual wages and the dispersion of firm productivity.

Many blame globalisation for growing wage inequality in the UK. But according to research by Giulia Faggio, Kjell Salvanes and John Van Reenen, the rise in inequality is better explained by increasing dispersion in the productivity of firms related to their use of new technology. Their study finds that much of the rise in wage inequality is driven by increasing differences in wages among firms in the same industry. A major driver of such differences is firms’ varying ability to make use of new technology. This is particularly felt in the service sector.

Heterogeneous agglomeration

Many prior treatments of agglomeration either explicitly or implicitly suppose that all industries agglomerate for the same reasons, with traditional Marshallian (1890) factors affecting all industries similarly. An important instance of this approach is the extrapolation of the agglomeration experience of one key sector or cluster to the larger economy. Another is the pooling of data to look at common tendencies in agglomeration. This paper uses UK establishment level data on coagglomeration to document heterogeneity across industries in the microfoundations of agglomeration economies. The pattern of heterogeneity that we document is consistent with both traditional Marshallian theories and with alternative approaches that emphasize the adaptive and organizational aspects of agglomeration. *Disclaimer: This work was based on data from the Business Structure Database and the Quarterly UK Labour Force Survey, produced by the Office for National Statistics (ONS) and supplied by the Secure Data Service at the UK Data Archive. The data are Crown Copyright and reproduced with the permission of the controller of HMSO and Queen's Printer for Scotland. The use of the data in this work does not imply the endorsement of ONS or the Secure Data Service at the UK Data Archive in relation to the interpretation or analysis of the data. This work uses research datasets which may not exactly reproduce National Statistics aggregates

Heterogeneous Agglomeration

Many prior treatments of agglomeration explicitly or implicitly assume that all industries agglomerate for the same reasons. This paper uses U.K. establishment-level coagglomeration data to document substantial heterogeneity across industries in the microfoundations of agglomeration economies. It finds robust evidence of organizational and adaptive agglomeration forces as discussed by Chinitz (1961), Vernon (1960), and Jacobs (1969). These forces interact with the traditional Marshallian (1890) factors of input sharing, labor pooling, and knowledge spillovers, establishing a previously unrecognized complementarity between the approaches of Marshall and Jacobs, as well as others, to the analysis of agglomeration