Policy change needed to accelerate investment in structural transformation

a column by Laurence Boone and Debora Revoltella for VOX: CEPR’s Policy Portal

For the past two years, global growth outcomes and prospects have steadily deteriorated, while investment growth has collapsed. This is particularly the case in Europe.

This column argues that reducing policy uncertainty, rethinking fiscal policy, and acting vigorously to address the challenges raised by digitalisation, climate change, and persistent inequalities all have the potential to reverse the current slippery trend and lift investment and living standards.

Figure 4 Geographical distribution of 2018 R&D spending, by sector and among new global leading firms (%)

Source: EIB calculations based on EU Industrial R&D Investment Scoreboard.

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Downward trend in the share of persons at risk of poverty or social exclusion in the EU

Eurostat News Release 158/2019

But still around 109 million people in this situation
In 2018, 109.2 million people, or 21.7% of the population, in the European Union (EU) were at risk of poverty or social exclusion. This means that they were in at least one of the following three conditions: at risk of poverty after social transfers (income poverty), severely materially deprived or living in households with very low work intensity. After three consecutive increases between 2009 and 2012 to reach almost 25%, the proportion of persons at risk of poverty or social exclusion in the EU has since continuously decreased to 21.7% last year, 2 percentage points below its 2008 reference-point and 0.7 percentage points below the 2017 level.

Despite this fall from the peak in 2012 (123.8 million people), only 8.2 million people (including Croatia) were lifted out of the risk of poverty or social exclusion compared to the 2008 baseline (116.1 million excluding Croatia). This number remains at a distance from the Europe 2020 target: lifting at least 20 million people out of the risk of poverty and social exclusion compared to the baseline. The reduction of the number of persons at risk of poverty or social exclusion in the EU is one of the key targets of the Europe 2020 strategy.

These figures are published by Eurostat, the statistical office of the European Union, on the International Day for the Eradication of Poverty. An infographic is also available on the Eurostat website.

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Gender inequality and the gender-job satisfaction paradox in Europe

an article by Cristiano Perugini (University of Perugia, Italy) and Marko Vladisav ljević (Institute of Economic Sciences, Belgrade, Serbia) published in Labour Economics Volume 60 (October 2019)

Highlights

• Female workers, on average, have higher levels of job satisfaction than men.
• Exposure to gender equality in early life reduces gender-job satisfaction gap.
• Robust support to Clark's (1997) explanation of gender-job satisfaction gap.
• Extensive empirical analysis for 32 European countries.
• Employment in typically male jobs, unlike high education, also reduces the gap.

Abstract

Despite being paid less than men and facing worse working conditions, lower promotion opportunities and work-place discrimination, women typically report higher levels of job satisfaction.

Twenty years ago Andrew Clark (Clark, 1997) suggested that this might be due to their lower expectations, driven by a number of factors related to current and past positions in the labour market. Although this hypothesis is one of the leading explanations of gender differences in job satisfaction, cross-country research on the relationship between gender inequality and the gender-job satisfaction gap is rare and only descriptive.

In this paper, we use the data from EU-SILC module on subjective well-being from 2013 to analyse adjusted gender-job satisfaction gaps in 32 European countries and we relate them to country differences in gender inequalities.

Our results provide extensive and robust evidence of a relationship between exposure to more gender equal settings in the early stages of life and smaller gender gaps in job satisfaction. This corroborates the hypothesis that women who grew up in contexts with higher gender equality have expectations increasingly aligned to those of their male counterparts.

Our results also show that being employed in typically male occupations enables this alignment too, whereas higher levels of education do not play a similar effect.

JEL Classification: J16, J28, O52

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Refugee skills and labour market needs: How matching can support lawful adult refugee mobility

Information about a cedefop project



Most refugees live in developing countries of asylum, struggling to prove themselves in economies which are unable to absorb and make full use of their labour market potential. As a result, their skills often remain unused and become obsolete over time. Key challenges for Europe include sharing the global responsibility for refugees fairly with major countries of asylum and meeting existing and future skill gaps and labour market needs.

The project seeks to contribute to these challenges by identifying and piloting a skills-based complementary pathway that allows lawful and safe pathways to protection of adult refugees by drawing on their human capital potential and labour market needs. The central element of this pathway is matching refugees’ skills and qualifications to the labour market needs of a potential host country; this will allow refugees to move from a major country of asylum to a new destination country based.

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Refugee skills and labour market needs

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The economic geography of sovereignist Europe

a column by Gianmarco Ottaviano for VOX: CEPR’s Policy Portal

Economic geography strikes back. After a couple of decades of easy talk about the ‘death of distance’ in the age of globalisation, the promise of a world of rising living standards for all is increasingly challenged by the resilience of regional disparities within countries. As long as many people and firms are not geographically mobile – and those who are tend to be the most skilled and productive – easier distant interactions can actually strengthen rather than weaken agglomeration economies. Recent electoral trends in Europe can be understood to a surprisingly large extent from this angle.

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Patterns of transnational trade union cooperation in Europe: The effect of regimes, sectors and resources

an article by Patrik Vulkan and Bengt Larsson (Göteborgs Universitet, Sweden) published in European Journal of Industrial Relations Volume 25 Issue 2 (June 2019)

Abstract

How far, in what ways and on what issues do trade unions in Europe cooperate cross-nationally?

Three important structural factors may explain differences in cooperation:

• national industrial relations contexts,
• sectoral contexts and
• unions’ organizational resources.

We examine transnational union cooperation at sectoral level, and test the explanatory value of these three factors. We address cooperation in five broad sectors, using a Europe-wide questionnaire-based survey of trade union activities.

We find that sectoral differences explain more of the variation in levels of transnational cooperation than do industrial relations regimes when controlling for resources, whereas both sectors and regimes influence which issues are seen as important for current and future cooperation.

In addition, small trade unions engage in much less transnational cooperation than large ones.

Full text (PDF 16pp)

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Populism: Roots, consequences, and counter strategy

a column by Karl Aiginger for VOX: CEPR’s Policy Portal

Populism represents a challenge to liberal democracy, pluralism, human rights, and the exchange of ideas.

This column examines the features and drivers of populism, as well as the potential strategic response by the EU and its member states. This includes a vision for Europe to become the role model for high-income societies providing well-being, lower unemployment, and less inequality, and a leader in decarbonisation and public sector management.

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Transnational solidarity, the refugees and open societies in Europe

Magdalena Nowicka and Dennis Ohm (Humboldt-Universität zu Berlin, Germany) and Łukasz Krzyżowski (Humboldt-Universität zu Berlin, Germany; AGH University of Science and Technology, Poland) published in Current Sociology Volume 67 Issue 5 (May 2019)

Abstract

The recent massive arrival of war refugees has challenged Europe’s political unity and fanned the flames of anti-Muslim populism.

Both discourses have been framed in terms of ‘shifting solidarity’ between the European Union member states, their citizens and the refugees. At stake, the article argues, is the delineation of the collectivity linked by the obligation of solidarity.

Drawing on insights from research conducted among Polish-born migrants in Germany about their practices and attitudes towards helping the refugees, and critically engaging with social theory, this article offers a new understanding of transnational solidarity.

Transnational solidarity, it argues, needs to embrace the tension between cosmopolitan and particularistic ideas around belonging. The article suggests defining transnational solidarity as an outcome of socio-culturally and spatio-temporally specific interpretations of the norm of solidarity.

As a heuristic device, transnational solidarity helps us to understand the shifting alliances for and against refugees in Europe.

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Immigration and preferences for redistribution in Europe

a column by Alberto Alesina, Elie Murard and Hillel Rapoport for VOX: CEPR’s Policy Portal

A large literature shows that generosity, both public and private, is more freely extended within the same group rather than across groups.

This column examines how immigration affects natives’ attitudes towards redistribution and the implications for welfare states in Europe. The main finding is that in regions which have received a larger share of immigrants, natives are in general less favourable towards redistribution. Some European countries face the dilemma of natives favouring generous welfare policies for themselves but opposing them for immigrants.

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Anxious Europe

an article by Florian Bieber published in Eurozine


Mostar bridge Bosnia and Herzegovina (2017). Photo source: Photo by Faruk Kaymak on Unsplash

The perpetual transition in eastern Europe has led to the spread of an angst-ridden politics. While the derailing of imported western institutions calls into question the project of Europeanization, transnational solidarity remains possible and necessary.

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The changing nature and role of vocational education and training in Europe. Volume 6

This publication is the sixth in a series produced as part of the Cedefop project The changing nature and role of VET (2016-18).

Based on analysis of developments over the past two decades (1995-2015), the report provides important insights into developments and change processes related to vocationally oriented education and training at higher levels (levels 5 to 8 of the European qualifications framework).

Building on detailed national case studies, the report demonstrates the expansion and diversification of vocationally oriented education and training offered at higher levels in European countries and the variations in how countries use the higher levels: there is evidence for strengthening vocational principles at higher levels in various ways as well as for strengthening academic principles.

It also covers current debates and potential future challenges, including juggling labour market demands and wider societal values, finding the right balance between academic and vocational principles, and achieving parity of esteem between academically oriented and vocationally oriented qualifications at higher levels, by improving awareness and visibility of the latter.

Full text (PDF 162pp)

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‘Women’s work penalty’ in access to flexible working arrangements across Europe

an article by Heejung Chung (University of Kent, UK) published in European Journal of Industrial Relations Volume 25 Issue 1 (March 2019)

Abstract

Many assume that women and workers in female-dominated workplaces will have better access to flexible working arrangements. Some use this as justification for the low wages found in these workplaces. Yet, empirical results are mixed.

I explore this question by examining workers’ access to schedule control across 27 European countries, and find no discernible gender differences in access to schedule control when individual and company-level characteristics are taken into account. However, working in female-dominated jobs and/or sectors significantly reduces access to schedule control for both men and women.

This ‘women’s work penalty’ in female-dominated sectors varies across Europe but nowhere was the access better compared to sectors where both genders are equally represented. This raises concerns regarding the lack of favourable working conditions, in addition to low pay found in female-dominated workplaces.

Full text (PDF 18pp)

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Migration route length and intent to migrate: The case of post-Gaddafi Libya

a column by Guido Friebel, Miriam Manchin, Mariapia Mendola and Giovanni Prarolo for VOX: CEPR’s Policy Portal

There is a general understanding that illegal migration only exists because of the smuggling industry. However, there is no reliable information on how migrants’ intent to leave their home country and come to Europe, for example, depends on the availability of smuggling services.

This column uses data on migrant flows arriving at European borders after the effective opening to Libyan refugees of the central Mediterranean migration route, following the 2011 fall of the Gaddafi regime, to estimate the supply elasticity of the lucrative smuggling industry. Findings indicate that when the smuggling distance between country-pairs gets shorter, there is an increase in individual intentions to migrate.

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UK tax on offshore intangibles: 'serious' compliance issues

a post on the Out-Law.com blog

The new UK tax charge on multinationals using intangibles held in low tax jurisdictions to generate UK revenue could give rise to "serious" compliance issues for non-UK companies as well as their UK affiliates, according to Jason Collins, a tax disputes expert at Pinsent Masons, the law firm behind Out-law.com.16 Jan 2019

…

"It is also disturbing that – probably in acknowledgement that the current legislation is defective - the Treasury will have incredibly wide powers to amend the provisions by statutory instrument. The government should delay the measure and not rush it through without proper consideration," he said.

The Continue reading fits in between the two above paragraphs

Hmmmmmmmmm

Statutory Instruments are not the way to go. I try to keep an eye on them via The Inner Temple Library service but there is only so much I can monitor.

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Testing the resilience of Europe's inclusive growth model

a column by Jacques Bughin and Christopher Pissarides for VOX: CEPR’s Policy Portal

Europe’s social contracts to protect their citizens from socioeconomic risks are based on an inclusive growth model characterised by a more egalitarian view of revenue generation and distribution. But this model is under strain, with various global trends placing upward pressure on inequality that could intensify.

This column suggests that keeping the essence of Europe’s current inclusive growth model does not preclude it from adapting its current social contracts to protect its citizens, whatever the disruptions that lie ahead.

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The multiple effects of borders on metropolitan functions in Europe

an article by Christophe Sohn and Julien Licheron (Luxembourg Institute of Socio-Economic Research, Esch-sur-Alzette, Luxembourg) published in Regional Studies Volume 52 Issue 11 (2018)

Abstract

This paper examines the effects of borders on the performance of metropolitan areas in Europe. An innovative multidimensional conceptualization of border effects into four factors (separation, contact, differentiation and affirmation) is elaborated on and empirically tested.

Estimation results confirm the ambivalent effects of the differentiation factor: economic differentials display positive effects, while cultural differences have negative effects on metropolitan performance.

For the other factors, the estimations are of the expected sign, but their signal is weak and calls for further research.

Ultimately, this exploratory analysis represents a promising attempt to disentangle the intrinsic dimensions of borders and consider their ambivalent effects.

JEL Classification: O18, R10, R11, R12

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The ‘Great Recession’ and low pay in Europe

an article by Carlos Vacas-Soriano (European Foundation for the Improvement of Living and Working Conditions (Eurofound), Ireland) published in European Journal of Industrial Relations Volume 24 Issue 3 (September 2018)

Abstract

This article contributes to the literature on low-paid work by analysing the shares of low-paid employment in the period 2006–2014 and the underlying causes.

I use an inflation-adjusted low-pay threshold anchored at 60 percent of median wages to assess the impact of the Great Recession, which increased the share of low-paid employees in two-thirds of European countries and in the EU as a whole. This was driven by a general decline in real wages, which was particularly intense in European periphery countries and at the bottom of the wage distribution as well as among employees with shorter tenure.

However, compositional effects either prevented a larger expansion of low-pay shares by masking the real extent of the wage correction or were generally negligible in driving low-pay shares. Moreover, growing part-time employment emerges as a significant source of low-paid work from the onset of the crisis.

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Skills Mismatch: Concepts, Measurements and Policy Approaches

an article by Seamus McGuinness (Trinity College, Dublin; IZA) Konstantinos Pouliakas (The European Centre for the Development of Vocational Education (CEDEFOP); The University of Aberdeen; IZA) and Paul Redmond (Trinity College Dublin) published in Journal of Economic Surveys Volume 32 Issue 4 (September 2018)


Abstract

The term skills mismatch is very broad and can relate to many forms of labour market friction, including vertical mismatch, skill gaps, skill shortages, field of study (horizontal) mismatch and skill obsolescence.

In this paper, we provide a clear overview of each concept and discuss the measurement and inter‐relatedness of different forms of mismatch.

We present a comprehensive analysis of the current position of the literature on skills mismatch and highlight areas which are relatively underdeveloped and may warrant further research. Using data from the European Skills and Jobs Survey, we assess the incidence of various combinations of skills mismatch across the EU.

Finally, we review the European Commission's country‐specific recommendations and find that skills mismatch, when referring to underutilized human capital in the form of overeducation and skills underutilization, receives little policy attention. In cases where skills mismatch forms part of policy recommendations, the policy advice is either vague or addresses the areas of mismatch for which there is the least available evidence.

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The changing nature and role of vocational education and training in Europe

This publication is the third in a series produced as part of the Cedefop project The changing nature and role of VET (2016-18).



Based on analysis of developments during the past two decades (1995-2015), the report provides important insights into the responsiveness of national VET systems, notably in relation to changes in demography, technology and the economy. Building on detailed national case studies, the report demonstrates how ‘big shocks’ (the fall of the Berlin wall, the economic crisis of 2008), national policy reforms and incremental developments over time have changed the character of this crucial part of the European education and training landscape.

Various downloads are available here

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The populism backlash: An economically driven backlash

a column by Luigi Guiso, Helios Herrera, Massimo Morelli and Tommaso Sonno for VOX: CEPR’s Policy Portal

There has been some disagreement over the roots of the recent rise of populism in Europe. This column examines variations in exposure to economic shocks and in ability to react to them in different regions of Europe to show that the cultural backlash against globalisation has been driven by economic woes.

In regions where globalisation was present but that have benefited economically, there has been no such backlash and the populist message has retreated. The message is clear: if one wants to defeat populism, one must defeat first economic insecurity.

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I now understand a lot better what populism is and how it works or not as the case might be. I like my information visually so the charts and graphs from VOX please me and make the meaning of the words clearer.

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