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The post-pandemic surge in inflation was accompanied by a surge in the corporate share of profits. As a result, several economists and policy makers have given to it names such as "profit-led inflation" or "sellers' inflation." The present paper discusses the extent to which profit-led inflation, as an explanation for the recent surge in inflation, is compatible with what we know about the price-setting behavior of firms, income distribution, and inflation. We do that in juxtaposition to two recent critiques: that the increase in the profit share is the result of cyclical factors and that the increase in import prices leads to higher profit shares even under constant markups. We show that there is little evidence that the recent surge in profitability is cyclical in nature. Moreover, after outlining the Structuralist/Kaleckian theories of prices and inflation, we argue that profit-led inflation does not require an increase in the markup of the firms and is consistent with these theories. In the face of large import and other price shocks even under constant markups, firms are able to pass the burden of adjustment to real wages. Thus, the term profit-led emphasizes the distributional source and consequences of inflation. We also provide an empirical examination of the markups in the post-pandemic period using data from the Compustat database. We show that, on average, firms were able to increase or maintain their markups, although there is significant heterogeneity across sectors or the position of the firms in the distribution of markups. [ABSTRACT FROM AUTHOR]

The 2009 and 2012 earthquakes in Italy occurred in a close-knit region and time horizon but differed substantially on both the initial shock to the stock and the subsequent flow of resources. This paper considers the short run impact on the dynamic response of labor market outcomes. Both earthquakes lowered employment and labor force participation by more than 0.5%. With its negative effect on the resources available, the 2009 shock led to a drop in real wages of 1.3% and a sharp—but short-lived—widening of the wage gap generated by the skill premium. The 2012 earthquake, which led firms to upgrade their technology, increased wages by 2.2% and led to a more balanced—but persistent—widening of the wage gap. The predictions of a model developed in this paper are consistent with these results. [ABSTRACT FROM AUTHOR]

Developing country inflation is in the headlines again. Mainstream macroeconomics typically ignores the role of conflict while non‐mainstream work tends to ignore macroeconomic constraints. This paper revisits the issue employing a dependent economy framework with eclectic characteristics. Specifically, I explore the mechanisms that propagate both real and monetary sources of inflation in the presence of real wage resistance and distributional conflict. The analysis shows that the inability to pay for subsidies with taxes or bond issuance in a stylized developing economy could create a situation where a relatively small shock leads to sustained and accelerating inflation and a wage‐price spiral, thanks to conflicting claims on income. Subsidies to protect consumers from external price shocks could, similarly, leave a country vulnerable to accelerating wage‐price spirals as the stabilizing relative price effects of a declining foreign asset position are dampened. Distributional conflict thus plays the role of sustainer rather than the primum mobile. Price controls could, in theory, better enable inflation management if these do not result in redistribution toward spenders. Such controls, however, create other trade‐offs for countries facing balance‐of‐payments fragility. [ABSTRACT FROM AUTHOR]

This paper examines two distinct representations of production processes: circular production, where commodities function as both inputs and outputs, and one-way production, which starts with factors of production and ends with finished goods. These frameworks offer different views on profits. In circular systems, profits arise from surplus production, while in one-way systems, they appear to emerge from price differences between final goods and inputs. Using Sraffa’s price equations, we analyse the properties of both systems. We demonstrate that while one-way systems seem to allow for profit increases by raising prices, this is an illusion as it ultimately reduces real wages, the true source of profits. Additionally, we show that one-way systems become circular when real wages are fixed. Finally, the paper discusses how this distinction is important in understanding the shift from Walras’ general equilibrium theory to neo-Walrasian formulations. This study highlights the importance of circularity in the functioning of capitalist economies and its implications for the theory of distribution. [ABSTRACT FROM AUTHOR]

The article is focused on what it terms a conflictual distributional approach to inflation and economic activity. It presents a brief discussion of the relationships between conflictual approaches and the mainstream approaches. It then makes some remarks on the macro-economic and micro-economic aspects of the analysis of inflation and the role of money. Analyses of price setting and wage determination are brought together to provide employment and real wage levels whereby claims on income are mutually consistent. The framework is utilised to discuss sources of inflationary pressure and the roles of capacity and demand. [ABSTRACT FROM AUTHOR]

The recent post-Keynesian debate on conflict inflation revolves around plausible magnitudes of the parameters of the standard model. We assess this debate by examining the economic meaning of the 'bargaining' and 'indexation' parameters, and proposing a reinterpretation in which the bargaining power is reflected in the relative frequency of wage and price increases in a period. Inflation then depends on the size of the inconsistent distributive claims and the absolute frequency of wage and price increases. Distribution depends on the relative frequency of such increases. From the latter we derive the real wage and profit resistance parameters, which determine the structural degree of inflation inertia. By adding the employment rate as a determinant of the desired real wage, we get a conflict-augmented Phillips curve. We show how different assumptions on the real resistance parameters affect the shape of the Phillips curve and the distributive outcomes in different conflict inflation models. A NAIRU occurs only when there is both full real wage and real profit resistance. Conflict generates inflation (not acceleration) with less extreme assumptions. The old-type conflict-augmented Phillips curve, with income distribution depending on the relative frequency of wage and price adjustments, is the most plausible case. [ABSTRACT FROM AUTHOR]

Relying upon the Pasinettian notion of vertical integration (Pasinetti, L. 1981. Structural Change, and Economic Growth: A Theoretical Essay on the Dynamics of the Wealth of Nations. Cambridge: Cambridge University Press), we develop a disaggregated version of the post-Kaleckian (Bhaduri, A. and S. Marglin. 1990. 'Unemployment and the Real Wage: The Economic Basis for Contesting Political Ideologies.' Cambridge Journal of Economics 14 (4): 375–393) approach to economic growth. With this analysis, the structural changes are conditioned not only to patterns of evolving demand but also to the distributive features of the economy. Considering oligopolist power and under-capacity utilization within the structural economic dynamic framework allows for heterogeneous final demand and mark-ups, with the profit margins of the consumption sector depending on the mark-up of the corresponding investment sector. Besides, in this set-up, it emerges the possibility vnthat each sector in the economy exhibits either a profit-led or a wage-led growth regime. [ABSTRACT FROM AUTHOR]

The article "UK forecast in detail" from the Economic Outlook journal discusses the current fiscal policy, monetary policy, prices, wages, activity, consumer demand, housing market, company sector, labor market, trade, and sectoral balances in the UK. It highlights the challenges faced by the government in managing borrowing, spending, and investment, as well as the impact of factors like inflation, interest rates, and consumer behavior on the economy. The article provides forecasts and analysis based on data from Oxford Economics, offering insights into the economic outlook for the UK in the coming years. [Extracted from the article]

The article discusses the economic outlook for the UK, predicting a slowdown in growth over the next few years due to fiscal policy tightening. Despite a strong recovery in the first half of 2024, consumer spending is expected to play a larger role in the future. Real wage growth is anticipated to remain strong, supporting household spending power. The government's fiscal policy decisions and monetary policy adjustments will significantly influence economic growth in the coming years. [Extracted from the article]

The article "World Economic Prospects Monthly | Global" examines the impact of heightened tensions in the Middle East on global growth forecasts. The US has seen positive data surprises, leading to an increase in GDP growth forecasts, while China's economic slowdown has prompted bold policy support with uncertain effectiveness. The oil price surge from Middle East tensions poses short-term risks, but the long-term outlook remains stable. The text also delves into economic forecasts for various regions, including the Eurozone, Japan, the UK, Emerging Markets, India, Latin America, Central Eastern Europe, and Romania, highlighting key changes and policy outlooks. [Extracted from the article]

How common are wage–price spirals, and what has happened in their aftermath? We construct a new historical database of wage–price spirals—identified as episodes with consumer price inflation and average nominal wage growth rising jointly for at least a year—going back to the 1960s for a large sample of advanced economies. We find that only about a quarter of such episodes were followed by sustained accelerations in wages and prices. Instead, nominal wage growth and inflation tended to stabilize at a higher level on average, and then gradually revert, with real wage growth broadly unchanged. A decomposition of average wage dynamics during wage–price spiral episodes using a wage Phillips curve suggests that nominal wage growth normally stabilizes at levels consistent with observed inflation and labour market tightness. After historical episodes exhibiting rising inflation, falling real wages, and tightening labour markets—similar to what was observed in the early post‐COVID‐19 recovery in 2021—inflation tended to decline and nominal wage growth to rise, allowing real wages to gradually catch up. Our findings suggest that an acceleration of nominal wages against a backdrop of rising inflation does not necessarily signal that a persistent wage–price spiral dynamic is taking hold. [ABSTRACT FROM AUTHOR]

Spatial error parametric panel model is one of the most popularly used analytical tools in spatial econometrics. Although this model takes into account the possible spatial correlation of errors, it ignores the potential serial correlation of errors and commonly existed nonlinearity between variables. These may lead to inefficient estimators and model misspecification. Therefore, this paper establishes a fixed effects semiparametric single-index panel model (SPSIPM) with spatio-temporal correlated errors. Firstly, we apply B-spline to approximate the single-index function and incorporate the information of initial period observations into quasi-likelihood function of the model to construct its profile quasi-maximum likelihood estimators (PQMLEs). Secondly, it is proved that PQMLEs of both parameters and single-index function are consistent and asymptotically normal under some mild conditions. Thirdly, we propose a nonparametric bootstrap test for examining the nonlinearity of model. Fourthly, numerical simulations reveal the estimates and test statistic have good finite sample performance. Finally, the model estimation methodology is employed to analyze the driving factors of Chinese resident real wage level. [ABSTRACT FROM AUTHOR]

Interaction between public and private sector real wages in the U.S. are examined over the periods 1952–2019, 1952–1972, and 1973–2019. Industries considered include all private industries and five broad industry subcategories. Measures of U.S. state & local governments and federal government are considered, and their changing contributions to total employment across periods provides context for wage leadership. Private sector wages caused federal wages as federal employment's share of total employment decreased throughout the periods. In contrast, state & local government's share of total employment grew substantially in the early period, with their wages causing private sector wages. In the later period, state & local government's share of total employment stabilized and their wages cause those in half of the private sectors to be considered, with feedback in the remaining industries. [ABSTRACT FROM AUTHOR]

Neoliberal capitalism, characterized by freer movement of goods and services and capital, including finance, across country borders, keeps down real wages everywhere even as labor productivity increases. This raises income inequalities, creating an ex ante tendency toward overproduction, which underlies the current stagnation and growing unemployment in the world economy. This crisis cannot be overcome within neoliberalism, since globalized finance opposes larger state expenditure financed through heavier taxation of the rich or a larger fiscal deficit. This underlies the current pervasive tendency toward neofascism. Overcoming neofascism requires transcending neoliberalism by mobilizing working people around a rights-based welfare state. [ABSTRACT FROM AUTHOR]

Job creation has become an urgent agenda for policymakers of many sub-Saharan African nations who are struggling with unemployment. Thus, this study has attempted to examine the determinants of labour demand in the manufacturing sector in Ethiopia using industry-level panel data containing 37,555 firms grouped into 100 industries with 919 observations over the period of 2002–2020. By using a two-step system generalised method of moments estimator, the study reveals that the real wage and product market competition difficulty impact the labour demand of manufacturing industries significantly and negatively, while the value of energy, locally sourced and imported raw material used as well as the output, fixed capital stock and labour demand first lag has a positive and significant effect, holding other factors constant. In addition to the lags of the endogenous variables, the pension of the worker contributed by the industries and the percentage of firms facing a high raw material shortage in the industries were used as external instruments to treat the endogeneity of real wage and output, respectively. The consistence of the results was checked by using the robust form of ordinary least square and fixed effect model estimations. In order to address the problem of raw materials shortage, it is suggested to provide incentives for agricultural production driven by industry needs. Policy interventions aimed at lowering the proportion of raw material imports are recommended due to the severe shortage of foreign currency. In addition, industries' labour demand will rise as a result of fixed capital formation, improved energy provision and efficient consumption, and smoothing competition in the product market. [ABSTRACT FROM AUTHOR]

Coopetition has been a common practice, especially among emerging markets. The coopetition relationship between a ride-sharing platform and a car-rental firm is distinct in that they operate under two different business models. Although the platform controls both its demand and supply by setting rider prices and driver wages, the car-rental firm operates under the traditional model with a fixed supply and cost structure. Both the platform and car-rental firm compete for riders seeking transportation. If the two cooperate, a driver is allowed to rent from the rental firm and drive for the platform; otherwise, only those owning personal vehicles are allowed to drive for the platform. We show that such supply-side cooperation intensifies demand-side price competition and decreases total revenue. Therefore, coopetition is mutually beneficial only when it leads to a significant decrease in supply costs. We find that the two firms are likely to form a coopetition relationship when the total rider market size is not high, the degree of rider substitutability between the two firms is low, and the platform has a significant market-size advantage over the rental firm. Coopetition between the platform and the rental firm benefits riders and hurts drivers, but it benefits society overall. We examine the coopetition relationship between a ride-sharing platform and a car-rental firm. A distinctive aspect of this coopetition relationship is that they operate under two different business models. The platform, exploiting information technology (IT) capabilities, controls its demand and supply sides by setting rider price and driver wage in real time based on demand and supply conditions. In contrast, the car-rental firm operates under the traditional model with a fixed supply and cost structure. Both the IT-driven platform and the car-rental firm compete for riders seeking for transportation. If the two engage in coopetition, they cooperate to allow a (secondary) driver to rent from the rental firm and drive for the platform. In the absence of coopetition, only those with their own vehicles (i.e., primary drivers) are allowed to drive for the platform. We show that such supply-side (i.e., driver-side) cooperation intensifies the demand-side (i.e., rider-side) price competition and decreases total revenue. Therefore, coopetition is mutually beneficial only when it leads to a significant decrease in the supply, or driver, cost. Moreover, when coopetition is mutually beneficial, the benefit arises solely because of the improved profit margin from riders who switch from the rental firm to the platform and from those who are switched from primary to secondary drivers. We find that the platform and the rental firm are likely to form a coopetition relationship when the total rider market size is not high, the degree of rider substitutability between the platform and the rental firm is low, or the platform has a significant market-size advantage over the rental firm. Coopetition between the platform and the rental firm benefits riders and hurts drivers, but benefits society overall. The incentive to form the coopetition relationship is enhanced if cross-side network effects are present on the platform or if each player serves a loyal rider segment in addition to the competitive rider segment that considers the two as substitutes. History: Ram Gopal, Senior Editor; Hong Guo, Associate Editor. Supplemental Material: The online appendix is available at https://doi.org/10.1287/isre.2022.0011. [ABSTRACT FROM AUTHOR]

Worktime has been falling slowly though real wages have risen dramatically. We show that in a general equilibrium model with CES utility and production functions, worktime falls with real wages if and only if the elasticity of substitution between consumption and leisure is less than that between capital and labour, but always rises with labour's income share and concerns with relative income. While a falling labour share may not reduce worktime due to market inflexibility, stronger income comparison increases inefficient overwork. Hence, more flexibility, higher income taxes and a basic income are needed to reduce working hours and raise social welfare. [ABSTRACT FROM AUTHOR]

We study the effects of expected initial wages, expected wage growth, and observed and unobserved heterogeneity in the choice of college major in a sample of American college graduates. We propose a three-stage empirical model that relates future earnings to individual choices. In the first stage, starting from revealed choices, observed wages, and life-cycle wage profiles, we estimate the expectation on initial wages and wage growth from the individual point of view, where the panel structure of the data allows us to produce estimates corrected for self-selection bias. We find substantial differences in expected real wages and expected real wage growth between majors and that both characteristics of life cycle earnings influence major choice. Our parametric models show a strong correlation between salary trends and major choice, whereas semiparametric models yield less reliable results. We interpret our results as being consistent with agents being rational and as a validation for our estimation strategy based on counterfactual imputation. [ABSTRACT FROM AUTHOR]

The aim of the study is to examine the impact of society's economic well-being determinants - above and beyond the firm-specific and macroeconomic determinants - on firm profitability in Poland. Based on stakeholder theory we hypothesized that the economic well-being of society can influence firm performance. Therefore, we included real wage and salary growth, internal migration, international migration, and natural increase variables in the regression models. We applied four models with different sets of variables using pooled ordinary least square regression, as well as fixed and random effects regressions with robust standard errors clustered at the firm level. The dataset covers the period from 2004 to 2021, comprising 5400 firm-year observations from Poland in the wholesale and retail trade sector. We found that firm profitability generally increases with higher inflation and exchange rate depreciation. Moreover, in models including society's economic well-being variables, GDP growth is no longer a significant determinant of firm profitability. Most importantly, the study demonstrates a positive relationship between real wage and salary growth and firm profitability. We also found that international migration is negatively associated with firm profitability. Regarding natural increase, the study suggests that it has a positive effect on return on equity, but not on return on assets. [ABSTRACT FROM AUTHOR]

The ultra-Orthodox population in Israel demonstrates a higher natural growth rate compared to the general population, yet the employment rate among ultra-Orthodox men remains significantly lower. This phenomenon can be attributed to the concept of the religious club model (Berman, 2000), which posits that strict requirements and club goods foster a strong commitment to the religious community. By utilizing individual-level data collected from 256 ultra-Orthodox men and employing K-Means clustering analysis, we identified two distinct types based on their demonstrated levels of voluntary sacrifice which only partially overlapped the club's formal admission criteria. Our findings illustrate the ultra-Orthodox religious club as inherently limited in its ability to enforce religious norms and prohibitions and as a result it is variably effective in filtering out 'free riders' and may not reward nonmembers despite their demonstrably consistently high adherence ('wannabes'). Our findings also reveal a positive association between wage expectations and the likelihood of ultra-Orthodox men entering the labor market, implying a potential trade-off between earning potential and the extent of social fines. Interestingly, our results also offer insight into the increased adherence to Halacha (Jewish religious law), despite the rise in real wages. Furthermore, our simulation offers policymakers a tool to evaluate the necessary incentives to encourage greater participation of ultra-Orthodox men in the labor market. This has implications for both enhancing economic outcomes and understanding the intricate interplay between religion, social norms, and employment decisions. [ABSTRACT FROM AUTHOR]

The UK relationship between nominal wage inflation and the unemployment rate is unstable. Over sub‐periods of the last 160 years of turbulent data, Phillips curve slopes range from strongly negative, slightly negative, flat, slightly positive and strongly positive. Our constant‐parameter congruent model of real wages explains these instabilities, yet also implies a constant negative relationship between nominal wage inflation and the unemployment rate when corrected by its regressors. Disentangling these effects reveals that structural breaks in the real‐wage model's variables do not explain the instabilities, which instead occur during sub‐periods when some of its explanatory variables are insignificant. [ABSTRACT FROM AUTHOR]

Environmental pollution destroys the sustainable development of industries worldwide, and its effect on structural changes is the focus of discussion. This paper constructs a model of the structural change of environmental pollution impacts and then, empirically estimates using panel data of Chinese cities from 2003 to 2020. The paper found that the more manufacturing pollutants are discharged, the more serious the manufacturing cost disease(MCD). Compared with low-productivity manufacturing, environmental pollution in high-productivity industries increases sector costs more. Then, this paper verifies that MCD and real wages are two key channels through which pollution emissions affect the share of the manufacturing sector. [ABSTRACT FROM AUTHOR]

Foreign price shocks have significant effects on functional income distribution and on inflation inequality. By increasing prices in domestic currency that are linked to foreign prices, they increase the profit share in some sectors and reduce real wages, in particular of workers whose consumption basket is more sensitive to the price of certain goods (e.g., food prices for low-wage workers). We propose a new extension to the conflicting-claims inflation model by incorporating workers heterogeneity (in terms of nominal income and consumption patterns) in an open economy model following an inflation-targeting regime. Then, we investigate the impacts of foreign price shocks on income and inflation inequality by increasing the foreign inflation rate and analyze how monetary policy influences these outcomes. Our simulation results indicate that a positive foreign price shock increases the profit share and the within-workers inequality (in real terms), since low-wage workers are more affected by these shocks. Yet, such effects are mediated by the strength of the monetary policy's transmission channels (domestic economic activity or nominal exchange rate), indicating that the monetary authority response may exacerbate or attenuate these distributive effects. [ABSTRACT FROM AUTHOR]

Self-employment support can be analysed in the context of labour market or self-employment sustainability. However, it is also useful to see how regional factors can affect the share of the supported self-employed in all new self-employed at the time of the start of selfemployment. The aim of this paper is to investigate the impact of selected regional indicators at the start of business on the share of the supported self-employed in all new self-employed during the period 2013–2015 in districts of Slovakia. We analysed our data using linear regression with some of the independent variables in logarithms. Our results show that higher average district population density (2013–2015) has a positive impact on the proportion of the supported self-employed (2 to 3 years of self-employment since signing the support agreement) in the total number of the new self-employed and logarithm of the average nominal wage has a negative effect. [ABSTRACT FROM AUTHOR]

This paper explores the intricate relationship between macroeconomic indicators and imperfect competition in Sierra Leone, employing a prototype of an imperfect competition structural model within the New Keynesian framework. The model incorporates nominal and real rigidities, as well as market failures. Results indicate that Sierra Leone's imperfectly competitive market introduces inefficiencies, leading to a muted initial impact of productivity shocks on macroeconomic variables. Wages and real interest rates exhibit moderated adjustments due to deviations from perfect competition ideals, dampening the effects on investment, consumption, and output. Policy and transition functions reveal a lasting influence of past capital accumulation and external shocks on aggregate output. The analysis exposes inertia in investment decisions and strategic actions of dominant firms. Steady-state results affirm a stable equilibrium in Sierra Leone, and eigenvalues exceeding unity underscore the model's ability to capture anticipatory behavior in imperfect market competition. The correlation matrix highlights profound connections between economic activity, wages, and capital's role in growth. Theoretical moments demonstrate economic indicator variability, emphasizing dominant firms' influence on capital allocation and policy measures' role in stabilizing interest rates and labor markets. The covariance matrix of exogenous shocks underscores external influences' persistence and correlated impacts on Sierra Leone's economy. These findings stress the importance of tailored policy responses to address market imperfections, advocating for measures to promote competition, labor market flexibility, dynamic investment, and stabilization of interest rates and labor markets. [ABSTRACT FROM AUTHOR]

This paper deals with the role of foreign trade liberalization in the changes occurring on the labor market in Tunisia. A two-equation model for employment and wages was estimated relying on a two-dimensional approach, time and sector. The main results firstly revealed that imports and exports are the least significant variables because of their marginal effect on labor demand, whereas production and delayed employment are the most explanatory variables, without being sector specific. Secondly, the real wage level determination depends on imports and exports which have different short- or long-run effects that are sector dependent (exportable or importable). Moreover, skilled and unskilled workers employment and productivity were found to be explanatory variables that may have a sectoral specification. As for production, it operates differently, depending on the sector. [ABSTRACT FROM AUTHOR]

The US economy is going through a challenging transition, with a lowered GDP growth forecast of 2.3% for 2024. Some sectors, such as housing and manufacturing, are struggling, but this does not necessarily indicate a broader economic downturn. The rise in the unemployment rate is concentrated among younger workers, reducing the risk of a negative cycle. Inflation is expected to remain low, and the Federal Reserve is predicted to cut interest rates. Overall, the short-term growth outlook is moderate, with factors such as household balance sheets and equipment spending supporting the economy. Consumer spending has slowed due to inflation, but this is expected to moderate in the coming months. The job market remains strong, although job gains have slowed, and the unemployment rate may inch higher. The Federal Reserve is considering cutting interest rates, and fiscal policy is expected to remain stable. [Extracted from the article]

This article features an interview with Ken Kobayashi, Chairman of the Japan Chamber of Commerce and Industry, who discusses the future growth of small and medium-sized enterprises (SMEs) in Japan. Kobayashi emphasizes the importance of SMEs, which make up 99.7% of all companies in Japan and support the livelihoods of millions of people. He highlights the need for SMEs to increase productivity, add value, and pay wages from their profits to foster growth. The article also addresses the importance of innovation and restructuring for SMEs in rural areas, as well as the need for increased labor mobility and adaptation of employment practices. It suggests that boosting domestic investment, creating new demand, and stabilizing overseas activities are crucial for revitalizing the Japanese economy. The article also mentions the challenges of depopulation and suggests considering the acceptance of overseas labor while addressing language barriers and human rights concerns. [Extracted from the article]

This document is a correction to a previously published article titled "The U.K. as a Technological Follower: Higher Education Expansion and the College Wage Premium." The correction addresses a coding error that affected some of the descriptive trends in the article. The error specifically impacted Figure 2 and Figure 3 in the published paper, as well as 5 additional descriptive figures in the online appendix. The correction shows that the trend of the graduate wage premium is still flat over most of the sample period, with a small decline near the end of the period, particularly in the private sector. The error did not affect any regression tables or the main findings and conclusions of the article. [Extracted from the article]

Copyright of Wirtschafts- und Sozialwissenschaftliches Institut Mitteilungen is the property of Nomos Verlagsgesellschaft mbH & Co. KG and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

The paper aims to identify the key determinants of labour productivity in the organised textile sector of India using the Panel Autoregressive Distributed Lag model. Panel data from the Annual Survey of Industries for 17 states for the period 1991–1992 to 2018–2019 was used for the study. Based on the results of the Hausman Test, the pool-mean-group model was consistently more efficient and reliable than mean-group or dynamic-fixed-effect models. Labour productivity is affected by skill intensity, wages, capital intensity, capacity utilisation, and welfare expenditure in both the short and long run. Skill intensity and capital intensity have smaller effects on labour productivity in the short run, but play a larger role in the long run. On the other hand, the importance of wages decreases in the long run compared to the short run in determining labour productivity. Further, the coefficient of error correction term is negative and significant, indicating that all the variables in the model were cointegrated in the long run. Any deviation from the equilibrium between labour productivity and its determinants, in the long run, will be adjusted by 28 per cent and states will be able to regain equilibrium after five years. The error correction term for each state shows that all the states will converge to equilibrium position at a different speed, but Tamil Nadu has the fastest speed of convergence while Uttar Pradesh shows slow adjustment towards equilibrium. [ABSTRACT FROM AUTHOR]

A mandate framework is proposed for delegating monetary policy to an instrument-independent, but goal-dependent central bank that emphasizes simplicity in both the objectives entering the welfare criterion and those in the instrument rule. It consists of: (i) a simple quadratic loss function penalizing deviations from target variables; (ii) a welfare-optimized, Taylor-type log-linear nominal interest-rate rule with targets that match those in the loss function; (iii) a zero-lower-bound (ZLB) constraint on the nominal interest rate imposing a low unconditional probability of ZLB episodes; and (iv) a long-run inflation target. In an estimated New Keynesian model with these features, we find that for a quarterly probability of 5%, an optimal annual inflation target is close to 2%, weights for real variables in the loss function are small compared with inflation except for the real wage growth mandate and the optimized rules mimic a price-level rule. [ABSTRACT FROM AUTHOR]

The study assesses the stress level in real incomes of population (in terms of wages) and real financial results of enterprises and organizations in the regions of the Russian Federation during the period of impact of the pandemic and sanctions shocks of 2018–2023. The study used a number of deflation techniques, as well as methods for eliminating seasonal and random components in the dynamics of the indicators. The level of stress in real incomes was evaluated using the author's previously developed stress index, which is a moving (in increments of one month) difference between the standard deviation and the average annual growth rate of each indicator studied, and the method of its decomposition by sources was applied. The integral real income stress index was calculated as the sum of two partial stress indices normalized by the method of equivalent variances across the entire spatiotemporal sample. The study revealed the similarities and differences in the response of real incomes in regions and federal districts to the impact of prepandemic, pandemic, and new sanctions shocks, determined the stress levels of real wages and real financial results of enterprises and organizations, and identified spatial effects of stress distribution. It has been established that a decrease in the level of real income stress on a national scale occurred due to greater stability in the growth rates of the studied indicators in high-income regions, while the positive effect of interregional diversification of real income growth rates on the reduction of the all-Russian real income stress has not been empirically confirmed. [ABSTRACT FROM AUTHOR]

Some studies have shown that inequality increased in pre-1930 Latin America as the economy and foreign trade grew. Others have shown that there was no clear relationship between economic growth and inequality. The information on nineteenth-century Peru is useful to estimate income inequality during a period of rapid economic growth. This article estimates the distribution of profits in Lima between 1838 and 1859 using information from tax reports. Mobility across social classes was possible for some guild members. However, financiers and large merchants experienced higher growth in profits than artisans and small traders. In addition, a comparison of profits and wages shows that the richest entrepreneurs experienced a rapid increase in profits during a period of declining real wages. Thus, the income gap between the richest and poorest residents of Lima widened during this period. [ABSTRACT FROM AUTHOR]

In Indonesia, the negative health impact of COVID‐19 and the initial, direct loss of employment have been largest in urban, not rural areas. But the second‐round effects on labor markets have been very different. They have included a huge, empirically documented migration of newly unemployed urban workers from urban to rural areas, in urgent search of employment, food, and safety from the pandemic. We call this "de‐urbanization." It placed the migrating workers in economic competition with the least skilled agricultural workers, expanding their numbers by almost 8%. By increasing the supply of unskilled farm labor, de‐urbanization depressed farm workers' real wages. Because the demand for farm labor is inelastic, the total wage income of these workers, aggregated across all unskilled farm laborers, declined. The households relying on this source of income are by far Indonesia's poorest. Similar outcomes may occur in other pandemic‐affected developing countries with large agricultural sectors. [ABSTRACT FROM AUTHOR]

The article discusses Japan's economic outlook, forecasting a 0.2% GDP growth for 2024 and a 1.1% growth for 2025. Real income gains are expected to drive consumption-led recovery, while exports may remain stagnant due to weak demand from the EU. The Bank of Japan is anticipated to deliver an additional rate hike in December, influenced by political and currency factors. Former defense minister Shigeru Ishiba's election as the Liberal Democratic Party leader is expected to focus on economic growth in the near term, with plans for a national election in late October. [Extracted from the article]

The UK's economic outlook has been revised downwards due to recent national accounts revisions, with GDP growth forecasts lowered to 1% for 2024 and 1.5% for 2025. Chancellor Rachel Reeves's speech at the Labour party conference suggests potential changes to fiscal rules to increase government investment. The Bank of England is expected to gradually cut interest rates to 4.75% by the end of 2024 and 3.75% by the end of 2025, with fiscal policy decisions influencing monetary policy. The forecast also anticipates a gradual housing market recovery and solid real wage gains in the coming year. [Extracted from the article]

Copyright of Estudios Internacionales is the property of Instituto de Estudios Internacionales de la Universidad de Chile and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

This article provides a new interpretation of Brazil's independence that relates the process of political emancipation to the Portuguese empire's fiscal crisis at the beginning of the nineteenth century. We discuss the origins and impact of the fiscal crisis that followed the Napoleonic invasion of Portugal in 1807 and the transfer of the government to Rio de Janeiro. Quantitative evidence shows that expenditures with the palace and the army in Brazil were higher than those discussed in the previous literature. Moreover, the government was only able to finance itself by increasing loans via paper money issuances from the Bank of Brazil. Real wages show that the inflationary policy in the 1810s led to a rapid decline in living standards, fuelling dissatisfaction with the government. Our findings are consistent with views expressed in contemporary official correspondence and parliamentary debates. [ABSTRACT FROM AUTHOR]

In finance, the economic evaluation of an intertemporal flow of investments may lead to opposite conclusions according as the present value criterion or the internal rate of return (IRR) criterion is retained. However, when the lifetime of the project results from an economic choice, the criteria are reconciled for the competitive sequence. When the flows are expressed in physical terms, a generalization of the notion of IRR allows us to show that multisector fixed‐capital models with a given real wage behave like single‐product systems. The competitive rate of return has a maximality property. The paper revises the logical and chronological relationships between neo‐Austrian and Sraffian fixed‐capital models. [ABSTRACT FROM AUTHOR]

In economies with fixed exchange rates, the adjustment to government-spending shocks is asymmetric. Expansionary shocks are absorbed by the real exchange rate, contractionary shocks by output. This result emerges in a small open-economy model with downward nominal wage rigidity and is supported by new empirical evidence based on panel data from different exchange-rate regimes. The exchange-rate regime, economic slack, inflation, and how spending is financed all matter for the fiscal transmission mechanism in the way predicted by the model. Estimates that fail to distinguish between the effects of positive and negative shocks are subject to a "depreciation bias." [ABSTRACT FROM AUTHOR]

Copyright of International Economics / Economia Internazionale is the property of Camera di Commercio di Genova and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

This article investigates patterns in real wage growth in 2022 to determine whether wages have kept up with rising price levels and how this differs among labor market participants. Using the consumer price index for wages and imputing expenditure data from the Consumer Expenditure Survey, we separately measure nominal wage growth and inflation rates at the micro level. We find that there is more heterogeneity in the former, meaning that when we combine them, an individual's real wage growth is primarily driven by their nominal wage growth. In 2022, 57 percent of individuals experienced negative real wage growth, with older and less-educated workers, as well as job stayers, being hit the hardest. Conversely, younger and highly educated workers, as well as job switchers, had higher real wage growth. [ABSTRACT FROM AUTHOR]

Most economists maintain that the labour market in the USA (and elsewhere) is 'tight' because unemployment rates are low, and the Beveridge curve (the vacancies‐to‐unemployment ratio) is high. They infer from this that there is potential for wage‐push inflation. However, real wages fell rapidly in 2022, and prior to that, real wages had been stagnant for some time. We show that unemployment is not key to understanding wage formation in the USA, and has not been since the Great Recession. Instead, we show that rates of underemployment (the percentage of workers with part‐time hours who would prefer more hours) and the rate of inactivity (the percentage of the civilian adult population who are out of the labour force) reduce wage pressure in the USA. This finding holds in panel data with state and year fixed effects in both annual and quarterly data for the period 1980–2022, and is supportive of a wage curve that fits the data much better than a Phillips curve. The unemployment rate no longer enters significantly negative in wage equations, however specified, in the years since 2008. This paper is part of the Economica 100 Series. Economica, the LSE "house journal" is now 100 years old. To commemorate this achievement, we are publishing 100 papers by former students, as well as current and former faculty. Alex Bryson obtained his MSc from the LSE. [ABSTRACT FROM AUTHOR]

This paper presents a model of inflation and distribution that examines the relationship between the employment of labor and the utilization of capital. It features a structural difference between the wage Phillips curve and the price Phillips curve that gives rise to persistent changes in the real wage whenever the inflation-neutral level of activity fails to utilize the existing capital stock at its normal level. Assuming an inflation-targeting central bank that is obliged to run the system around its inflation-neutral level, these changes will reduce the gap between the inflation-neutral level and normal utilization by moving the system along a stable wage curve. In the end this implies that the inflation-neutral level of employment and full or normal utilization of capital will tendentially coincide, lending some support to the Duménil-Lévy thesis that monetary policy makes normal utilization a long-run center of gravity. [ABSTRACT FROM AUTHOR]

In the medium- and long-run, prices rather than interest rates are thought to have an effect on exchange rates, and the purchasing power parity (PPP) theory, which posits as a determining factor in exchange rates, has been used not only in academic fields but also in practice. This study considers that exchange rates are determined by the mixture of past exchange rates and the PPP theory. On the other hand, it is often pointed out that the actual exchange rate diverges significantly from the exchange rate derived from the PPP theory. Moreover, this study hypothesizes that when the deviation becomes large, there will be a movement to correct the deviation. The empirical estimations show that when the deviation is large, such movement cannot be found and when the deviation is small, there is a movement toward correction. [ABSTRACT FROM AUTHOR]

In this paper, we provide empirical evidence that real wage rigidity is not a major cause of unemployment volatility. We argue that there is a disconnect between the theoretical and empirical literatures on this topic. While theoretical studies define real wage rigidity as the response of wages to changes in unemployment following productivity shocks, the empirical literature measures real wage rigidity as the estimated semi‐elasticity of wages with respect to unemployment, averaged over all shocks. We show that averaging over shocks gives a biased measure of real wage rigidity, as the impact of other shocks confounds the response to productivity shocks. Our results indicate that the estimated semi‐elasticity with respect to productivity shocks is twice as large as the estimated semi‐elasticity averaged over all shocks. This implies that one cannot attribute unemployment volatility to real wage rigidity. [ABSTRACT FROM AUTHOR]