The Roles of Openness and Labor Market Institutions for Employment Dynamics during Economic Crises

Employment effects of the recent global economic crisis have differed significantly across countries. An active public debate currently focuses on external shocks and the role of labor market policies as a driver of those differences. In this note, we analyze the roles of integration into the global economy and different labor market institutions during different phases of past global economic downturns and domestic banking and debt crises. We find that domestic debt and banking crises were much more severe in their impact on employment than were global economic downturns. On average, the reduction in employment growth was more than twice as strong. We also find that openness to trade has both deepened the contractionary effects on employment and allowed for a faster recovery. High severance pay dampened the employment effect in both domestic crises and global economic downturns, whereas very high unemployment benefits were associated with stronger reductions in employment growth.openness, labor, labor market, employment, crisis, integration, debt, banking, unemployment, recovery, severance pay

What explains the low survival rate of developing country export flows ?

Successful export growth and diversification require not only entry into new export products and markets, but also the survival and growth of export flows. This paper uses a detailed, cross-country dataset of product level bilateral export flows to illustrate that exporting is an extremely perilous activity and especially so in low-income countries. The authors find that unobserved individual heterogeneity in product-level export flow data prevails despite controlling for a wide range of observed country and product characteristics. This questions previous studies that have used the Cox proportional hazards model to model export survival. The authors estimate a Prentice-Gloeckler model, amended with a gamma mixture distribution summarizing unobserved individual heterogeneity. The empirical results confirm the significance of a range of products as well as country-specific factors in determining the survival of export flows. From a policy perspective, an interesting finding is the importance of learning-by-doing for export survival: experience with exporting the same product to other markets or different products to the same market are found to strongly increase the chance of export survival. A better understanding of such learning effects could substantially improve the effectiveness of export promotion strategies.Economic Theory&Research,Free Trade,Trade Policy,Emerging Markets,Markets and Market Access

Assessing the adjustment implications of trade policy changes using TRIST (tariff reform impact simulation tool)

TRIST is a simple, easy to use tool to assess the adjustment implications of trade reform. It improves on existing tools. First, it is an improvement in terms of accuracy because projections are based on revenues actually collected at the tariff line level rather than simply applying statutory rates. Second, it is transparent and open; runs in Excel, with formulas and calculation steps visible to the user; and is open-source and users are free to change, extend, or improve according to their needs. Third, TRIST has greater policy relevance because it projects the impact of tariff reform on total fiscal revenue (including VAT and excise) and results are broken down to the product level so that sensitive products or sectors can be identified. And fourth, the tool is flexible and can incorporate tariff liberalization scenarios involving any group of trading partners and any schedules of products. This paper describes the TRIST tool and provides a range of examples that demonstrate the insights that the tool can provide to policy makers on the adjustment impacts of reducing tariffs.Trade Policy,Free Trade,Debt Markets,International Trade and Trade Rules,Economic Theory&Research

Assessing the economic impacts of an economic partnership agreement on Nigeria

This study discusses potential economic implications for Nigeria of an Economic Partnership Agreement with the European Union. It uses the World Bank’s Tariff Reform Impact Simulation Tool to assess the effects of preferential tariff liberalization with respect to the European Union. The results suggest that the impact of an Economic Partnership Agreement on total imports into Nigeria will be slight. This is in part because the Agreement will likely allow the most protected sectors to be excluded from liberalization, and also because where substantial tariffs are involved much of the increase in imports from the European Union will occur at the expense of other suppliers of imports. It is this trade diversion, arising from the discriminatory nature of the EPA, which generates a negative welfare impact of the tariff reforms. One way for Nigeria to limit these losses is to pursue non-preferential trade liberalization before implementing an EPA. The paper looks at the large number of import bans in Nigeria and argues that the positive impact on welfare of removing these import bans is likely to be substantial. Their removal would undermine a major reason for cross border smuggling and pave the way for a return to normal regional trade flows. The paper shows how an Economic Partnership Agreement presents an opportunity for accelerating the reforms that are needed to support a strategy to increase regional and global trade integration. Such an agreement is more likely to have positive and significant impacts when integrated into a comprehensive strategy toward competitiveness and alleviation of the supply constraints that have stifled the impact of previous trade agreements. Key issues that should be addressed include liberalization and regulatory strengthening of services sectors to ensure that all firms in Nigeria have access to efficiently produced backbone services and initiatives to address the country’s poor trade logistics performance.Free Trade,Trade Policy,Currencies and Exchange Rates,Debt Markets,Trade Law

Trade contraction in the global crisis: Employment and inequality effects in India and South Africa

The paper estimates the effects of the 2008-09 trade contraction on employment and incomes in India and South Africa, using social accounting matrices (SAMs) in a Leontief multiplier model. Employment results are presented at aggregate and industry levels and examine gender and skills biases. Income results examine inequality at the level of rural and urban household income quintiles. The most notable finding is that India and South Africa experienced substantial employment and income declines as a result of trade contraction with the EU and the US. A large share of these declines occurred in the non-tradeable sector and resulted from income-induced effects, illustrating how a shock originated in the tradeable goods sector had strong ripple effects throughout India and South Africa.trade / employment / household income / income distribution / economic recession / India / South Africa

The Role of Openness and Labour Market Institutions for Employment Dynamics during Economic Crises

Employment effects of the 2008/9 global economic crisis have differed significantly across countries. As a consequence, an active public debate has emerged on the impact of external shocks and the role of public institutions and policies in mitigating them. We contribute to this debate by analyzing the role of integration into the global economy and different labour market institutions during past phases of global economic downturns as well as domestic banking and debt crises. We find that domestic debt and banking crises were much more severe in terms of their impact on employment than global economic downturns. On average, the reduction in employment growth was more than twice as strong. Openness to trade is found to have initially deepened the contractionary effects on employment, but also allowed for a faster recovery. High severance pay dampened the employment effects of both domestic crises and global economic downturns. High unemployment benefits were associated with stronger reductions in employment growth, but the effect seems to be non-linear and driven mainly by countries in the highest 20th percentile of unemployment benefits.labour market / employment / economic recession / economic implication

Excitation of Oscillations in the Magnetic Network on the Sun

We examine the excitation of oscillations in the magnetic network of the Sun through the footpoint motion of photospheric magnetic flux tubes located in intergranular lanes. The motion is derived from a time series of high-resolution G band and continuum filtergrams using an object-tracking technique. We model the response of the flux tube to the footpoint motion in terms of the Klein-Gordon equation, which is solved analytically as an initial value problem for transverse (kink) waves. We compute the wave energy flux in upward propagating transverse waves. In general we find that the injection of energy into the chromosphere occurs in short-duration pulses, which would lead to a time variability in chromospheric emission that is incompatible with observations. Therefore, we consider the effects of turbulent convective flows on flux tubes in intergranular lanes. The turbulent flows are simulated by adding high-frequency motions (periods 5-50 s) with an amplitude of 1 km s^{-1}. The latter are simulated by adding random velocity fluctuations to the observationally determined velocities. In this case we find that the energy flux is much less intermittent and can in principle carry adequate energy for chromospheric heating.Comment: 11 pages, 5 figures, figure 1 is in color, all files gzippe

The Case Against Cold, Dark Chromospheres

Is the solar chromosphere always hot, with relatively small temperature variations ($\delta T/T\sim0.1$); or is it cold most of the time, with temperature fluctuations that reach $\delta T/T\sim 10$ at the top of the chromosphere? Or, equivalently: Is the chromosphere heated continually, or only for a few seconds once every three minutes? Two types of empirical model, one essentially time independent and always hot, the other highly time dependent and mostly cold, come to fundamentally different conclusions. This paper analyzes the time-dependent model of the quiet, nonmagnetic chromosphere by Carlsson & Stein (1994: CS94) and shows that it predicts deep absorption lines, none of which is observed; intensity fluctuations in the Lyman continuum that are much larger than observed; and time-averaged emission that falls far short of the observed emission. The paper concludes that the solar chromosphere, while time dependent, is never cold and dark. The same conclusion applies for stellar chromospheres. A complete, time-dependent model of the nonmagnetic chromosphere must describe two phenomena: (1) dynamics, like that modeled by CS94 for chromospheric bright points but corrected for the geometrical properties of shocks propagating in an upward-expanding channel; and (2) the energetically more important general, sustained heating of the chromosphere, as described by current time-independent empirical models, but modified in the upper photosphere for the formation of molecular absorption lines of CO in a dynamical medium. This model is always hot and, except for absorption features caused by departures from local thermodynamic equilibrium, shows chromospheric lines only in emission.Comment: 22 pages, 5 figures (in 6 files

Skills Policies for Economic Diversification in the Former Yugoslav Republic of Macedonia- Enhancing local skills policies for the food and tourism sectors

This report presents an application of the ILO’s Skills for Trade and Economic Diversification (STED) methodology to two sectors – tourism and food industries – of the economy of the former Yugoslav Republic of Macedonia. The STED methodology provides strategic guidance for the integration of skills development in sectoral policies. It is designed to support growth and decent employment creation in sectors that have the potential to increase exports and to contribute to economic diversification. It has been developed in recognition of the fact that having the right skills among workers is crucial for firms or industries to succeed in trade, and because understanding trade is important to providing workers with the right skills. Availability of skilled workers contributes to higher and more diversified exports, more FDI, higher absorption of technology, and more sustainable growth and productive employment creation. At the same time, skills are the key determinant for a worker’s success in finding a good job and making a living. Employment promotion and defining the priority sectors for future economic development in terms of skills is still a challenging task for many of the institutions and stakeholders in the former Yugoslav Republic of Macedonia. In this context, investment in human resources is central and formulating up-to-date policy advice on how to increase economic diversification through strengthening the business enabling environment with a focus on skill endowments and export orientation is key to fostering employment generation. While analysis at the national level can give useful directions for sustainable growth and employment creation, an in-depth analysis of individual sectors is useful – and indeed necessary – in order to design concrete policy proposals. It is for these reasons that two sectors - Tourism and Food Industries - were analysed in some detail. The analysis describes the obstacles to enhanced economic diversification and sustainable growth in terms of the business environment, the availability of skills, and the situation of global markets for Macedonian exports. A particular emphasis was put on identification of skill needs at regional and local level through the creation of two working groups representing trend-setting companies from each selected sector, employers’ organizations, workers’ organizations, practitioners and teachers. The results of the analysis have been incorporated in local action plans for employment, using the LED approach, for the regions of Krushevo, Prilep and Resen

Skills Policies for Economic Diversification in the Former Yugoslav Republic of Macedonia- Enhancing local skills policies for the food and tourism sectors

This report presents an application of the ILO’s Skills for Trade and Economic Diversification (STED) methodology to two sectors – tourism and food industries – of the economy of the former Yugoslav Republic of Macedonia. The STED methodology provides strategic guidance for the integration of skills development in sectoral policies. It is designed to support growth and decent employment creation in sectors that have the potential to increase exports and to contribute to economic diversification. It has been developed in recognition of the fact that having the right skills among workers is crucial for firms or industries to succeed in trade, and because understanding trade is important to providing workers with the right skills. Availability of skilled workers contributes to higher and more diversified exports, more FDI, higher absorption of technology, and more sustainable growth and productive employment creation. At the same time, skills are the key determinant for a worker’s success in finding a good job and making a living. Employment promotion and defining the priority sectors for future economic development in terms of skills is still a challenging task for many of the institutions and stakeholders in the former Yugoslav Republic of Macedonia. In this context, investment in human resources is central and formulating up-to-date policy advice on how to increase economic diversification through strengthening the business enabling environment with a focus on skill endowments and export orientation is key to fostering employment generation. While analysis at the national level can give useful directions for sustainable growth and employment creation, an in-depth analysis of individual sectors is useful – and indeed necessary – in order to design concrete policy proposals. It is for these reasons that two sectors - Tourism and Food Industries - were analysed in some detail. The analysis describes the obstacles to enhanced economic diversification and sustainable growth in terms of the business environment, the availability of skills, and the situation of global markets for Macedonian exports. A particular emphasis was put on identification of skill needs at regional and local level through the creation of two working groups representing trend-setting companies from each selected sector, employers’ organizations, workers’ organizations, practitioners and teachers. The results of the analysis have been incorporated in local action plans for employment, using the LED approach, for the regions of Krushevo, Prilep and Resen