Incomes Policy Research Articles

The growth, equity, and risk implications of different retirement income policies

This paper evaluates four retirement income policies that could be adopted in response to increasing longevity in terms of their marginal effects on economic performance, equity, and risk. Compared to three alternative save-as-you-go funded retirement income policies (voluntary saving, a prefunded government superannuation scheme, or a supplementary mandatory saving scheme), a pay-as-you-go funded expansion of New Zealand Superannuation has disadvantages for all generations except currently middle-aged people. The other schemes provide different trade-offs between risk, economic growth, and equity. This paper considers arguments for the use of structured savings schemes in addition to New Zealand Superannuation.

A Crisis Not Wasted Institutional and Structural Reforms Behind Norway's Strong Macroeconomic Performance.

This paper draws the line between the Norwegian boom-bust cycle and crises in the late 1980s and early 1990s, the succeeding institutional and structural reforms and the strong macroeconomic performance and stability of the last two decades. The systemic banking crisis and speculative attack on the Norwegian krone in the early 1990s were the last in a series of blows to Norway’s macroeconomic policy regime. In addition to the recession after 1988, the underlying growth potential of the Mainland economy was also weak, despite financial deregulation and the gains in competitiveness. The large oil price fall in the mid-1980s had demonstrated the risk of uncertain oil revenues as an important source of income to the government. The political awareness of an economic crisis paved the way for a series of structural reforms and changes in the macroeconomic policy regime. Some of these reforms were implemented quickly, such as a tax reform, an energy market reform and a new incomes policy framework. In 2001 a new framework for monetary and fiscal policy was put in place, involving a flexible exchange rate and inflation targeting, as well as a new fiscal policy rule designed to facilitate consumption smoothing and a build-up of a sovereign wealth fund. We discuss possible reasons why Norway’s political system has been able to learn from previous policy failures and reach the necessary consensus, and determination, to implement institutional and structural reforms in economic policy.

Study of the relationship between the development level and degree of income inequality in the Russian regions

The subject of this article is the types of relationship between economic development and degree of income inequality in the regions of the Russian Federation. Research methods: testing the modified Kuznets hypothesis; relative deflating of regional parameters; calculating the differentiation and localization coefficients; constructing the Lorentz curves; correlation and regression analysis. Obtained results: 1) for Russian regions author discovered significant direct statistical relationship between the Gini and funds coefficients and the level of real per capita income with increasing returns, as well as less strong direct relationship between coefficients of differentiation mentioned above and the real GDP per capita with diminishing returns; 2) the “social wellbeing†coefficient is proposed and calculated for the regions, which based on localization index of real per capita income relative to the differentiation coefficient, and 3) the degree of interregional disparities in the Russian Federation is evaluated on the basis of the Gini coefficient, coefficient of variation and relative entropy for the nominal and real income and GRP per capita, and Lorenz curves for them are constructed. In this paper, author concluded: 1) presently the level of economic development of the Russian Federation regions negatively affects their income equality due to most of them are on the ascending branch of the S. Kuznets curve, 2) “social welfare†coefficient changes the positions of the middle-income regions more, than that of other regions, and 3) two factors have a positive impact on reducing the regional disparities: more ratio of total personal income to GRP in poor regions relative to rich ones (i.e. greater “social orientation†of poor regions), and positive correlation between income and the cost of living in the regions. The obtained results can be used by researchers in further testing the modified Kuznets hypothesis, as well as by local authorities in the income policy optimization at the regional level.

Senior Poverty in Canada: A Decomposition Analysis

Using 1977–79, 1994–96, and 2006–08 data from the Survey of Consumer Finances (SCF) and Survey of Labour and Income Dynamics (SLID), I conduct a decomposition analysis of senior poverty rates to determine whether changes in seniors’ characteristics can help explain historical changes in senior poverty rates. I find that increases in the educational attainment of seniors significantly reduced senior poverty, but can only explain a small portion of the reduction in poverty rates between 1977–79 and 1994–96. I find that reductions in the extent to which age and independent living place seniors at risk of poverty significantly and substantially reduced senior poverty rates. Overall, the results support the assertion that retirement income policy is an important determinant of senior poverty in Canada.

THE QUEST FOR A NEW WELFARE SAFETY NET IN LATIN AMERICA

In two decades, a process of democratization occurred in Latin America, leading to new public policies that have helped reduce inequality and poverty. Government programs had been set up for that purpose, in a first stage through conditional cash transfer programs, and in a second stage through income policies to wage adjustment. Not all the countries followed these policies, therefore, the paper explores in a counterfactual analysis, the trends that have emerged from these reforms and how they have reshaped the welfare systems of Brazil, Argentina, Chile, Colombia and Mexico.

Bedrock in the money wage - money supply inflation controversy

The article reviews the different views on the causes of inflation between the two leading macroeconomic paradigms - the Monetarist and the post Keynesian. By analysing the explicit and implicit assumptions underlying the two approaches, the author concludes that a full employment policy compatible with stable prices requires the synchronisation of both monetary and income policy

Effective Demand in the Recent Evolution of the US Economy

We present strong empirical evidence favoring the role of effective demand in the US economy, in the spirit of Keynes and Kalecki. Our inference comes from a statistically well-specified VAR model constructed on a quarterly basis from 1980 to 2008. US output is our variable of interest, and it depends (in our specification) on (1) the wage share, (2) OECD GDP, (3) taxes on corporate income, (4) other budget revenues, (5) credit, and the (6) interest rate. The first variable was included in order to know whether the economy under study is wage led or profit led. The second represents demand from abroad. The third and fourth make up total government expenditure and our arguments regarding these are based on Kalecki’s analysis of fiscal policy. The last two variables are analyzed in the context of Keynes’s monetary economics. Our results indicate that expansionary monetary, fiscal, and income policies favor higher aggregate demand in the United States.

The future costs of retirement income policy and ways of addressing them

New Zealand Superannuation (NZS) is a universal pension paid at a flat rate. It is effective at poverty prevention among the elderly, relatively inexpensive and simple to administer. However, with the proportion of the population aged over 65 years set to increase rapidly over the next 50 years, there is expected to be a steep rise in the costs of the scheme. The future cost of NZS is therefore a major driver of New Zealand’s Longer-term Fiscal Challenge. The Treasury’s statement on New Zealand’s long-term fiscal position (Treasury, 2013a) examines ways of addressing this cost, as well as other possible responses to the broader fiscal challenge such as higher taxation or reductions in other areas of public spending.

Il problema è il controllo dell'inflazione, non il contenimento della spesa

The problem of mounting public debt should be attributed to the inability to control inflation instead of restricting public expenditures as many economists would suggest. The use of inappropriate monetary and fiscal tools to control inflation have aggravated the problem. In light of new findings, it is suggested that tax-based incomes policies and Lerner's market anti-inflation plan, among others, should be tried out. JEL Codes: E31, E52 Keywords: Analysis, Management, Inflation (Finance), Expenditures, Public, Public expenditures, National debt, Public debts, Inflation (Economics)

The role of foreign direct investment in a globalising economy

The problem of mounting public debt should be attributed to the inability to control inflation instead of restricting public expenditures as many economists would suggest. The use of inappropriate monetary and fiscal tools to control inflation have aggravated the problem. In light of new findings, it is suggested that tax-based incomes policies and Lerner's market anti-inflation plan, among others, should be tried out. JEL Codes: Keywords:

The problem is inflation-control, not spending-control

The problem of mounting public debt should be attributed to the inability to control inflation instead of restricting public expenditures as many economists would suggest. The use of inappropriate monetary and fiscal tools to control inflation have aggravated the problem. In light of new findings, it is suggested that tax-based incomes policies and Lerner's market anti-inflation plan, among others, should be tried out. JEL Codes: E31, E52 Keywords: Analysis, Management, Inflation, Public expenditures, Public debt

Economic theory and policy: a coherent post-Keynesian approach

This contribution focuses on a coherent new way of thinking about the macroeconomy in terms of both economic theory and economic policies. The central bank should focus on financial stability; for fiscal policy in the short term and in the long term to address demand issues is very important. Interest rate policy should be such that the real rate of interest is in line with trend rate of growth in the economy. Fiscal and monetary policies, though, should be coordinated closely. Major central bank cooperation and intervention in the foreign exchange market is necessary to control the exchange rate. Regional and industrial policies to create the required capacity are important, along with incomes policies, to contain inflationary/deflationary pressures. Distribution of income and wealth is another important policy dimension in view of its importance in terms of the great recession.

The Economic Interpretation of Property Structure about Rural

At present, the most important thing is how to solve the contrary between rural land institution and economical environment. According the logic of property which has the different structure have no the difference of which is good or which is bad, Then we test the land property structure according the facts of the peasant's income and land policies in 30 years of reform, the conclusion is that the land property structure need not changed, we should optimize it. The emphasis is optimizing the land use right the optimum, the optimum way is the circulation of contractual operation.

The Characteristics of Broadcasting Media Uses and Complaints of Lower Income Class and Policy Suggestions-Focusing on the Secondary Poor

The Characteristics of Broadcasting Media Uses and Complaints of Lower Income Class and Policy Suggestions-Focusing on the Secondary Poor

Rationalizing Incomes Policy in Britain, 1948-1979

Prices and incomes policies, aimed at directly controlling the rate of growth of prices, wages and profits, were a central element in British macroeconomic policy making from the Second World War until 1979. This paper revisits the operation of such policies and the rationales offered during this period. The only argument that makes sense in terms of modern orthodox theory, that an incomes policy can lower expectations of inflation, was very rare. The rationales more often suggested related closely to the institutional details of wage bargaining in oligopolistic labour markets. Virtually no one perceived labour markets as competitive with the wage determined by the marginal product of labour. But this argument gave the policy a significant and later forgotten rationale.

What Do Wages Add to the Health-Employment Nexus? Evidence from Older European Workers

This paper adds to the empirical literature on health as an important determinant of employment at older ages by exploring the role in the health-employment nexus of the wage rates of 50 to 64-year-old workers. To do so, we use individual-level panel data from the Survey of Health, Ageing and Retirement in Europe to estimate a system of equations for health, wages and employment. Our model also takes into account both the potential for measurement error in the health variable and selectivity issues related to the wage equation. We find that for men (women) a one-unit (one standard deviation) increase in health yields, on average, a 7 (8) percentage higher hourly wage rate, resulting in a 2 (4) percentage point higher employment probability. We also show a direct impact of health on employment: a similar increase in health raises the employment probability of men (women) by 16 (13) percentage points. As regards differences between European countries, our findings suggest that for all country groups, the mediating role of wages in the health-employment nexus is relatively small while the direct impact of health on employment is relatively large and rather similar. Overall, our findings indicate only a minor role for disability income policies likes wage subsidies to encourage the employment of (older) workers with health limitations, but an instrumental role for policy aimed at helping employers accommodate these workers on the job and keep them employed at older ages.

노인의 노후소득보장의 현황과 법적 개선과제

우리나라도 대부분의 국가와 마찬가지로 직접적인 소득보장정책의 일환으로 사회보험방식에 의한 국민연금제도를 시행하고 있다. 그럼에도 불구하고 제도의 미비 또는 공적연금의 본질적 한계로 인하여, 고령자에게 실질적인 "인간의 존엄성을 유지하기 위한 최저생활의 보장"에는 미흡한 실정이고, 노인의 빈곤율은 OECD 국가들 중 1위이고, 공적연금의 사각지대도 매우 크다. 향후 저출산과 고령화가 더욱 진전될 경우 고령 저소득층의 문제는 심각한 사회문제로 폭발할 우려가 있다. 이 연구에서는 우리나라 노인의 노후소득보장에 관한 실태와 현황 분석과 현행 노인소득보장 법체계를 검토하고, 그 문제점을 도출해 개선방안을 마련하고자 한다. Korea, like most of other countries, is enforcing the national pension as social insurance which is a kind of the income policy. Despite the fundamental limitation on public pension or the imperfect policy, the guarantee of the minimum living standard for maintaining dignity of human being is not being reached for the standard. Poverty rate of the elderly in Korea is the first among the OECD countries and public pension dead zone is very large. The elderly low income class could become a serious social problem if low fertility and aging keep getting worse. In this study, I will analyze the present condition of the retirement security for the elderly in South Korea. Also, I will look into the present situation of old-age income security and determine problems, and propose the improvement devices for related laws.

Basic Income and Labour Supply: The German Case

This paper deals with labour supply side effects of implementing an unconditional basic income scheme. Specifically, the German welfare as well as tax and social contributions system are investigated. The results clarify that the abolishment of the so-called unemployment trap due to a basic income policy is a decisive advantage of this approach. In order to demonstrate possible labour supply side reactions to a basic income policy, we use the neoclassical labour supply model and adapt it to our purposes. We compare the effects of implementing a basic income on different types of employees concerning their consumption preferences. We show that, even in the neoclassical labour supply model without intrinsic work motivation, an unconditional basic income increases the participation rate in the labour market. Furthermore, current employees are given only partial incentives to increase their labour supply. Therefore, a basic income not only would reduce unemployment but also could expand the magnitude of employment

Republic of Latvia: Ex Post Evaluation of Exceptional Access Under the 2008 Stand-By Arrangement; Public Information Notice on the Executive Board Discussion; and Statement by the Executive Director for the Republic of Latvia

The IMF has approved an exceptional access Stand-By Arrangement for Latvia. The program is part of a coordinated international effort that has improved financial and economic stability. By early 2008, the fast growth has leveled off but severe vulnerabilities turned the slowdown into a crisis. Immediate steps to stabilize the financial sector and help stem reserve losses has focused on resolving the systemic Parex Bank, which is experiencing a deposit run. Measures to ensure long-term external viability has focused on fiscal and income policies.

Moving from inflation targeting to prices and incomes policy

This paper focuses on the future of economic policies with regard to inflation. The dominant approach to inflation over the past two decades or so has been inflation targeting. The global environment of the decade circa 1995 to 2005 with the ?China effect? pushing down prices of manufactured goods and with primary commodity prices being subdued was conducive to low inflation. It is argued that inflation targeting has not been a great success story and is unable to address inflation arising from global forces or from struggles over the distribution of income. It is argued that a more sophisticated analysis than that contained in the Phillips curve is required. Further, and from our analysis, counter inflation policies should include the achievement of an inflation barrier consistent with full employment without inflationary pressures. This can be addressed by ensuring that there is sufficient productive capacity to underpin full employment, where sufficient is to be interpreted in terms of quantity, quality and geographical distribution. Further, we argue that this should be complemented by some form of incomes policy, to enable inflation to be contained without resorting to demand deflation.