Rapid Employment Growth Research Articles

Can the Federal Reserve Effectively Target Main Street? Evidence from the 1970s Recession

Modern central bankers confront a challenge of providing economic stimulus even when the policy rate is constrained by a lower bound. This challenge has led to substantial innovation by policymakers and a proliferation of new policy tools. In this paper, I offer evidence on the efficacy of a new tool known as funding for lending, which provides banks with subsidized funding to make additional loans. I focus on a historical episode from the United States in which the Federal Reserve provided banks with steeply subsidized loans to promote the expansion of credit within their local communities. I show that the cheap funding succeeded in generating more lending by countering banks' excessive liquidity preference. The additional credit benefited the real economy. Local areas enjoyed higher rates of small business formation and more rapid employment growth. Finally, I show that the cost of the subsidy provided by the government was more than offset by the additional payroll taxes paid out of higher wages and salaries. These results suggest that funding for lending programs deserve consideration for the modern central banker's toolkit and demonstrate that certain unconventional tools can offer monetary policymakers the means to pursue more targeted objectives.

THE IMPACT OF DIGITALIZATION ON EMPLOYMENT TRANSFORMATION IN COUNTRIES WITH DIFFERENT INCOME LEVELS

Abstract. It has been substantiated that digitalization is a driver of the transformation of employment in different countries.The degree of formation of the digitalized labor market by groups of countries with different levels of per capita income has been studied. It is proved that the use of digital technologies by the vast majority of companies and the economically active population simplifies the procedure of job creation, giving the opportunity to work via the Internet within the so-called “on-demand economy”. With the high degree of implementation of digital, information and communication technologies, the share of employees in the service sector is growing in the majority of countries. It is stated that the degree of digitalization of the labor market is uneven in the world. The introduction of modern technologies in high-income countries allows the population to fully realize the intellectual and creative potential, finding a job in the most efficient sector of the economy – the high-tech and knowledge-intensive services. Despite the rapid spread of digital technologies and the rapid growth of employment in the service sector in the upper-middle-income countries, the level of digital transformation of the labor market is much lower than in the high-income countries. Nowadays, there is a digital divide between these groups of countries, although, with the effective policies of governments in the upper-middle-income countries, there is a high probability of achievement of indicators of countries that are digital leaders. The trend of gradual digitalization of the services sector is also observed in the lower-middle-income countries. It is noted that the low prevalence of information and communication technologies in low-income countries makes it impossible for the population of these countries to join the global digitalized labor market. A set of measures has been systematized to harmonize the policies of governments of different countries in the field of labor relations, which are being transformed under the influence of global digitalization. Keywords: digital technologies, digitalization, employment, global digitalized labor market, high-income countries, lower-middle-income countries, low-income countries, upper-middle-income countries. JEL Classification F66, J24, J40, О33 Formulas: 5; fig.: 4, table.: 0; bibl.: 26.

The effects of polycentric evolution on commute times in a polycentric compact city: A case of the Seoul Metropolitan Area

This study attempts to investigate the dynamics of polycentric evolution and the changing roles of existing and new employment centers in determining commuting patterns. For this purpose, we analyze temporal changes in urban form and individual commuting behavior between 2000 and 2015 for the Seoul Metropolitan Area (SMA)—an area that has experienced rapid employment growth and changes in urban form over the last half-century. Results reveal both positive and negative effects on commuting efficiency. On the positive side, inner-city subcenter commuters have significantly reduced commute times over the last 15 years, possibly due to locational adjustment (i.e., the reduction of commute distance), improvement in public transit accessibility, and the emergence of new suburban subcenters that attract workers who previously traveled to inner-city subcenters. On the negative side, these new suburban subcenters have also attracted more workers from a wider job market, resulting in longer commute times for suburban subcenter commuters. The evidence suggests that mixed land use for development and improvements in public transit accessibility are important drivers of commuting efficiency, while improving public transport directly leads to shorter commute times in high-density urban areas.

Can the Federal Reserve Effectively Target Main Street? Evidence from the 1970s Recession

Modern central bankers confront a challenge of providing economic stimulus even when the policy rate is constrained by a lower bound. This challenge has led to substantial innovation by policymakers and a proliferation of new policy tools. In this paper, I offer evidence on the efficacy of a new tool known as funding for lending, which provides banks with subsidized funding to make additional loans. I focus on a historical episode from the United States in which the Federal Reserve provided banks with steeply subsidized loans to promote the expansion of credit within their local communities. I show that the cheap funding succeeded in generating more lending by countering banks' excessive liquidity preference. The additional credit benefited the real economy. Local areas enjoyed higher rates of small business formation and more rapid employment growth. Finally, I show that the cost of the subsidy provided by the government was more than offset by the additional payroll taxes paid out of higher wages and salaries. These results suggest that funding for lending programs deserve consideration for the modern central banker's toolkit and demonstrate that certain unconventional tools can offer monetary policymakers the means to pursue more targeted objectives.

Productive entrepreneurship and the effectiveness of insolvency legislation: a cross-country study

This paper studies the association between the effectiveness of insolvency regulations and entrepreneurship using multilevel modeling of about 300,000 individuals in 27 countries over the 2005–2010 period. We investigate the relationship between three different measures of “resolving insolvency” (time, cost, and recovery rate) from the World Bank and four different measures of entrepreneurship from the Global Entrepreneurship Monitor, controlling for relevant individual- and country-level facets. We find that opportunity-driven and innovation-oriented entrepreneurs are more severely affected by onerous insolvency regulations than necessity-motivated entrepreneurs. However, entrepreneurs envisioning rapid employment growth are not affected by onerous insolvency regulations. We discuss contributions to comparative entrepreneurship research and public policy.

Does employment growth increase travel time to work?: An empirical analysis using military troop movements

Employment growth is a common public policy goal, but it can lead to a number of unwanted environmental, social, and economic costs – particularly in high growth communities – due to its impact on peak-hour traffic. This paper examines the short-run impacts of rapid employment growth on travel time to work. We exploit exogenous variation in employment levels resulting from movements of military troops during the 2005 Base Realignment and Closure (BRAC) in order to identify the effect of employment growth on travel time using difference-in-difference-in-differences and instrumental variable methods. Our results show that for each additional 10 workers added per square kilometer, travel time increases by 0.171 to 0.244min per one-way commute trip per commuter in the short run, which equates to $0.07 to $0.20 in travel time cost per commuter per day. Our estimates imply that the annualized short-run congestion costs of the 2005 BRAC were $79 to $761 million per year (in constant 2005 dollars) for military commuters and $3.15 to $6.3 billion per year (in constant 2005 dollars) for civilian commuters in BRAC-affected areas.

Comment

Comment

Inclusion of Risk in Public Works Projects

Often public works are made with little if any concern for risk. Analysis of public works investments especially during the 1990s and 2000s assumed rapid employment growth would continue into the future. However, with the “Great Recession,” the assumption of continued high employment growth, and the absence of risk considerations in public works investments, a number of local government bankruptcies occurred. Public works decision makers must aim to identify public works investments that not only have the highest positive net returns under average conditions but also yield highest net returns under unfavorable conditions. This article discusses the incorporation of risk into public works investments and the use of Monte Carlo simulation to complete a standard investment or public works appraisal. The article completes an investment appraisal of a material recovery facility (MRF) system and discusses how risk could be addressed and analyzed by public decision makers.

Turbokapitalizm – szanse i zagrożenia rozwoju w warunkach gospodarki wysoko rozwiniętej

This paper acquainted readers with the concept of turbo-capitalism as a form of capitalism. The person who precisely defi ne this is Edward Luttwak, term of turbo-capitalism through free markets, privatization, globalization and deregulation. The paper set the basic differences between capitalism and turbo-capitalism. Economic stability and job security is for the individual “better tomorrow”. The development of technology and faster flow of information should promote economic development and economic progress of modern states. I would like to draw. the attention on the fact that turbo-capitalism is focused on maximizing profits, which does not solve social problems. National governments are losing economic strenght and, consequently, reduces social welfare and does not prevent crime and terrorism. Multiplication of turbo-capitalism profits leads to the increase of unemployment and therefore social pathology. This paper shows that the wellbeing, which is the main objective of turbo-capitalism, could not be the main goal of politics and society as it improves the material status of a few individuals, while it does not bring happiness to the majority. My work in this area is a “voice” of the wise limitations of turbo-capitalism, because this process uncontrolled can lead to the destruction of mankind. I tried to show that turbo-capitalism is the greatest threat to democracy. Capitalism could not focus on the individual, because it leads to “loneliness” of people in a wide range. In my work I have acquainted the reader with the situation created in Bhutan, during the inventions of civilization. I had presented in this work opportunities for Third World countries through the free movement of capital, modern technologies and investments. The reader has to understand, however, that the information revolution brings very big threat to humanity. The Industrial Revolution leads t o rapid growth in employment and decline of information technology indicators at one time. The reader should learn from the negative effects of the American turbo-capitalism and help to develop positive qualities.

Predicting impacts of major projects on housing prices in resource based towns with a case study application to Gladstone, Australia

The resources sector in Australia makes a major contribution to the national economy, and underpins employment and population in the mining and mineral processing towns. For those towns, rapid growth in employment can generate particular pressures in local housing markets because of the relatively large size of the industry and the small housing stocks involved. Through a case study of Gladstone, the study provides a dynamic five-step population and housing model, to estimate short to medium term mining impacts of major resource developments. The model includes both the direct and indirect labour force generated by new resource sector developments and their flow-on effects on population increases. Sensitivity testing has allowed for different levels of resource development, employment multipliers and labour inflows. Three different approaches have then been applied to predict the housing price impacts of the expected population growth.The results of the study show that the model can efficiently predict population and housing market dynamics where there is a resource boom and bust cycle, and can potentially be applied to other resource regions in Australia and elsewhere.

Assessing the Determinants of High-Growth Manufacturing Firms in Italy

Few firms grow rapidly, but their contribution to employment growth is often impressive. The main purpose of this paper is to analyse both the external and internal factors that can affect the probability of being a high-growth firm (HGF) in Italy. We found that HGFs are, on average, young firms and are present in different industries, but the role of demand is important to understanding their performance at the sectoral level. Moreover, our findings show that financial constraints and profitability are not associated with the probability of being a HGF. HGFs, on average, are characterised by high productivity, but only when growth is measured in terms of sales. The most original results of this study concern the endogenous determinants of rapid growth, which have yet to be adequately examined in the literature. First, we found that the concentration of ownership is important for HGFs that experienced rapid growth in their sales. Second, the quality of human capital is a strong point for firms experiencing rapid employment growth.

Heroes Today - But What about Tomorrow? Gazelles and Their Long-term Performance

Young high-growth firms, or gazelles, have been investigated predominantly with respect to their outstanding short-term performance. The paper at hand adopts a different approach by analyzing the long-term performance of such firms to shed light on the sustainability of these job-creating machines. Using the Danish Integrated Database for Labour Market Research, we find that former gazelles are not able to sustain their headstart in terms of performance in the long run. We demonstrate that gazelles are often outperformed by initially slower growing competitors, as high initial growth negatively affects a firm’s long-term survival. We also find that high-growth start-ups ultimately achieve lower employment growth and higher employee turnover. We explain these counterintuitive findings by arguing that an initial period of rapid employment growth impedes the emergence of a stable and efficient routine structure within the newly founded venture if expansion is undertaken too hastily. In turn, this impediment decreases these firms’ long-term performance, as the initial set of structures and routines or the lack thereof has a long-lasting effect on the organization’s development.

The Roundup

The Roundup

Company Births, Deaths and Marriages: Flaws in Age Fields in Business Microdata

In identifying gazelles (generally defined in the literature as young, fast growing businesses) researchers traditionally rely on commercially available databases not designed for scholarly work, to identify a pool of suitable study participants. This paper discusses systemic biases in the most commonly-deployed databased used in gazelle studies, the Dun and Bradstreet database, with a focus on the Australian market.

Assimilation to a Welfare State: Labor Market Performance and Use of Social Benefits by Immigrants to Finland*

AbstractThis paper documents the economic performance of immigrants in a country characterized by an extensive welfare state and a short immigration history. Upon arrival, immigrants to Finland have substantially lower employment rates than comparable natives. While they experience rapid employment growth, only men from OECD countries catch up with natives. Despite the persisting employment and earnings differences between non‐OECD immigrants and natives, the differences in income transfers disappear in roughly 20 years. The immigrant–native employment gaps are larger in Finland than in Australia, Canada, or the US.

Changes in Workplace Segregation in the United States between 1990 and 2000: Evidence from Matched Employer-Employee Data

We present evidence on changes in workplace segregation by education, race, ethnicity, and sex, from 1990 to 2000. The evidence indicates that racial and ethnic segregation at the workplace level remained quite pervasive in 2000. At the same time, there was fairly substantial segregation by skill, as measured by education. Putting together the 1990 and 2000 data, we find no evidence of declines in workplace segregation by race and ethnicity; indeed, black-white segregation increased. Over this decade, segregation by education also increased. In contrast, workplace segregation by sex fell over the decade, and would have fallen by more had the services industry - a heavily female industry in which sex segregation is relatively high - not experienced rapid employment growth.

Can Garment Exports from Cambodia, Laos and Burma be Sustained?

This paper examines institutional and firm-level technological capabilities to assess the capacity of Cambodia, Laos and Burma to sustain garment exports over the long term. Although the preferential access enjoyed by products from these countries in the developed markets has helped attract strong foreign direct investment inflows that have supported rapid growth in employment and exports, the empirical evidence shows that institutional support needs to be upgraded if garment exports from the three countries are to be sustained. Burma and Laos show the least potential to benefit among the three countries from this opportunity, with the former experiencing severe political instability and trade sanctions by the USA and the latter landlocked and endowed with a small labour force. The paper argues that unless the institutional and firm-level technological capabilities are developed further, all three countries will find it difficult to retain a significant presence of garment firms once the trade privileges are withdrawn.

Small Business Establishment Profiles and Rapid Population Growth in Sunbelt Metropolitan Areas, 1995-2005

This study investigates a linkage between rapid population growth in the Sunbelt's metropolitan areas (MSAs) and characteristics of small-scale businesses. Many Sunbelt MSAs are experiencing relatively rapid employment growth that also fuels population growth, and such linkages could well be related to especially potent employment multiplier effects associated with small firms. Using data from the North American Industry Classification System (NAICS) for 2000, relative concentrations of small-scale establishments in rapidly growing Sunbelt MSAs are described and classified by type. Size of MSA appears to be an important factor in supporting higher- and/or lower-order activities, as proposed by the basic principles of central place theory. In contrast, some of the slowest growing Snowbelt MSAs show a lack of small businesses in key economic sectors, particularly quaternary activities, and their economies continue to be dominated by location-specific industries, such as mining.

Commuting time stability: A test of a co-location hypothesis

During the past few decades, the populations of many US and European cities have shown the same residence and workplace mobility patterns: Annually, approximately 10% of the population changed residences and approximately 20% of employed workers changed workplaces within the same metropolitan area. Even though the Seattle metropolitan region experienced a substantial amount of residential and workplace mobility and a boom in employment and population in the 1990s, the morning commute time and distance was roughly constant. To explain this situation, researchers have proposed a co-location hypothesis, that is, residents and workers will change their residence or workplace or both adapt to worsening congestion. This research attempted to shed light on the mechanism of the co-location hypothesis using the Puget Sound Transportation Panel data consisting of seven waves of two consecutive years between 1989 and 1997 conducted by the Puget Sound Regional Council. Because most studies used cross-sectional work trip data to study location and commuting, the underlying relationship between location and commuting was limited. This study attempted to understand commuting patterns by residential and workplace changers. The study found that the commuting patterns of residence and workplace location changers were the same and this was reinforced by existing gravity model. Particularly, when workers change their locations, they prefer similar commuting zone (i.e., time and distance) compared to their previous commuting zone. These behaviors caused the average commute time and distance to be stable, regardless of high residence and workplace mobility, and the rapid growth of employment and population.

Capital Deepening and Non-Balanced Economic Growth

This paper constructs a model of economic growth. The main economic force is the combination of differences in factor proportions and capital deepening. Capital deepening tends to increase the relative output of the sector with a greater capital share, but simultaneously induces a reallocation of capital and labor away from that sector. We first illustrate this force using a general two-sector model. We then investigate it further using a class of models with constant elasticity of substitution between two sectors and Cobb-Douglas production functions in each sector. In this class of models, growth is shown to be consistent with an asymptotic equilibrium with constant interest rate and capital share in national income. We also show that for realistic parameter values, the model generates dynamics that are broadly consistent with US data. In particular, the model generates more rapid growth of employment in less capital-intensive sectors, more rapid growth of real output in more capital-intensive sectors and aggregate behavior in line with the Kaldor facts. Finally, we construct and analyze a model of non-balanced endogenous growth, which extends the main results of the paper to an economy with endogenous anddirected technical change. This model shows that equilibrium will typically involve endogenous technological progress.