Union Retreat and Regional Economic Performance: the UK in the 1990s

This paper uses a panel of regional data to investigate the impact that the well-documented decline in trade unionism in the UK had on the economic performance of its regions. The analysis employed here departs from the traditional firm-level and cross-sectional analyses and looks at the economy-wide effects of unionism. Our findings provide evidence in line with theory that predicts unions to increase wages and reduce labour demand, leading to higher unemployment, but they also indicate that unionism is positively related to productivity and incomes, although in all cases the effects are non-linear. We conclude that unionism is not necessarily a burden for the economy, so long that the beneficial wage/productivity effects overbalance the negative effects on employment.trade unions, regional economic performance, panel data

Macro-determinants of UK regional unemployment and the role of employment flexibility

This paper explores the macroeconomic determinants of UK regional unemployment and their relation to the influences on unemployment exerted by the levels and types of employment flexibility in the country. Theoretically the paper draws on Keynesian and monetarist explanations of unemployment and elaborates on how the two main theoretical approaches perceive the role of price stability, accumulation, macroeconomic shocks and labour market rigidities for unemployment. Empirically, the analysis relies on a novel set of flexibility indicators and examines their impact on regional unemployment, unemployment persistence, and adjustment to economic shocks. The results provide useful insights into the explored relationships and highlight the areas and conditions under which employment flexibility helps achieve favourable employment outcomes. The implications of the findings are discussed in the concluding section.Employment flexibility; regional unemployment; persistence; NAIRU and Keynesian explanations of unemployment

Without purpose and strategy?: a spatio-functional analysis of the regional allocation of public investment in Greece

We utilise a large database on public investment at the prefecture (NUTS-3) level in Greece for the period 1976-2008 to examine the spatial and functional allocation of public investment in the country. We investigate the extent to which expenditures in different types of public investment are complementary across space and over time and examine their redistributive character. We also analyse regional specialisations and the geographical concentration of public investments and complementarily use an exploratory spatial data analysis to examine the extent of clustering of public investment and identify possible patterns in the geography of clusters and hotspots. Although our analysis uses predominantly descriptive tools, our results have confirmatory power, as they reveal a surprisingly random pattern for the spatial and functional allocation of public investment in Greece, thus raising important questions about the rationale for these allocations and, by implication, about the geographical, political and economic dynamics that underlie them. These questions obtain an additional salience in light of the administrative and fiscal reforms pursued currently by the Greek government under the pressure of the country’s sovereign debt crisis

The Role of EU Integration in Accelerating Structural Reforms in the Western Balkans: Evidence, Theory and Policy. LEQS Paper No. 140/2019 January 2019

Integration with the European Union has been an important driver of economic, political and social transformation in the Western Balkans. In recent years, however, the pace of structural reforms in the region has decelerated and the trend of economic catch-up seen in the 2000s has not resumed after the slowdown of the global economic crisis. This has coincided – at least temporally, if not causally – with a ‘temporary freeze’ in the EU’s enlargement towards the region. Against this backdrop, this paper seeks to investigate the role of EU conditionality on economic reforms and convergence in the Western Balkans. To do so, it provides original, albeit descriptive, empirical evidence showing a strong link between EU-related structural reforms (towards the Copenhagen Criteria) and economic growth; and subsequently presents an analytical model demonstrating the mechanisms of policy decisions for reforms under EU conditionality. The model assumes away sectoral interests, policy uncertainty and coordination problems, allowing the analysis to focus specifically on the tension between two objectives: the pursuit of EU accession, through the implementation of jointly agreed reforms, and the accommodation of domestic policy concerns (maintaining policy stability and public support). Our results unveil a policy dilemma for the EU, having to choose between maximising the reform effort and minimising non-compliance. Drawing on this model, we discuss extensively the policy options that the EU faces in trying to enhance the reform performance, growth trajectories and, ultimately, European perspective of the countries in the region

What do unions do at the large scale? Macro-economic evidence from a panel of OECD countries

This paper investigates the long-run relationship between trade unionism and productivity using a panel data set comprising of 18 OECD economies. Much of the existing evidence on this issue derives from micro-economic studies, with limited attention paid to long-run dynamics and economy-wide effects. Using the mean group and pooled mean group estimation techniques on cross-country panel data, the paper offers support to the "productivity-increasing face of unionism" hypothesis, revealing a positive relationship between trade union density and per worker output.Trade unions, productivity growth, panel data econometrics

London burning, stock markets melting… time for structural change!

The events of the last few days stand as a reminder of how ‘small’ episodes, from the – always unlawful – killing of a young man in London to the – otherwise unimpressive – downgrading of the credit-worthiness of USA government bonds, can trigger huge and uncontrollable chains of events. The (anticipation of and eventual) downgrading of the USA led to a mini stock market crash that wiped out in the space of two weeks asset values equal to the annual GDP of Germany. And the shooting of Mark Duggan in London led to a British “Athens December 2008” moment that left within 72 hours hundreds of shops looted, dozens of homes burned down and, reportedly, more people dead

The benign somersault

In the few days since the formation of the new government in Greece, a lot of water has flown under the political bridge of the Greek-Eurozone relations. Much has happened, however, also in relation to the policy announcements coming out from the Greek government. As the policies are being specified more clearly, they also seem to be changing – and a few ‘policy shifts’ emerge. A few examples

The going gets tough…

ECB’s decision, to suspend the waiver for the acceptance of Greek bonds as loan collaterals, came as a shock to Greece but was rather expected by the markets (although this does not preclude a strong ‘market reaction’). The decision per se does not have immediately dire consequences for the Greek economy. It raises the cost of borrowing for Greek banks (from 0.05% to 1.5%) but it doesn’t stop their access to liquidity, as this will continue to be provided by the Bank of Greece through the ELA mechanism. The decision is moreover rather sensible from the point of view of Central Bank finance, as Greece indeed cannot be assumed to be in an adjustment programme given the recent pronouncements of the Greek government (recall that the ECB accepted Greek bonds as collaterals, which are not credit-worthy in a market-rating sense, solely on the basis of the implicit guarantee by the Eurogroup that Greece’s solvency is guaranteed as long as the country remains in an adjustment programme)