Improving Well-Being in the United States
Life is quite good in the United States compared to other OECD countries, thanks to strong economic growth and technological progress having lifted average income to high levels. Nonetheless, there is evidence that the benefits from growth have not been sufficiently broad based. Self-reported happiness increases with income, an issue particularly resonant in a country with among the highest levels of income inequality in the OECD and a pattern of inequality that appears to be moving toward even more concentration at the very top at the expense of the middle class and the poor. Working hours that remain among the longest in the OECD are also creating challenges for work-life balances, child education, personal care and leisure. These pressures are contributing to higher job strain and work-related stress with unhealthy consequences, including for mental health, and a detrimental impact on employability and medical costs. While these trends cannot be easily reversed, a number of policy options are being usefully rolled out and other initiatives are being considered: federal-level policies improving access to health care and early-childhood education, state-level initiatives favouring workplace flexibility, firm-level investments in job quality and greater attention to the health consequences of job-stress. If successfully adopted, they would go a long way toward improving the well-being of American working families.
WHO Statement on the Meeting of the International Health Regulations Emergency Committee Regarding the 2014 Ebola Outbreak in West Africa
The current EVD outbreak began in Guinea in December 2013. This outbreak now involves transmission in Guinea, Liberia, Nigeria, and Sierra Leone. As of 4 August 2014, countries have reported 1 711 cases (1 070 confirmed, 436 probable, 205 suspect), including 932 deaths. This is currently the largest EVD outbreak ever recorded. In response to the outbreak, a number of unaffected countries have made a range of travel related advice or recommendations.
In light of States Parties’ presentations and subsequent Committee discussions, several challenges were noted for the affected countries:
- their health systems are fragile with significant deficits in human, financial and material resources, resulting in compromised ability to mount an adequate Ebola outbreak control response;
- inexperience in dealing with Ebola outbreaks; misperceptions of the disease, including how the disease is transmitted, are common and continue to be a major challenge in some communities;
- high mobility of populations and several instances of cross-border movement of travellers with infection;
several generations of transmission have occurred in the three capital cities of Conakry (Guinea); Monrovia (Liberia); and Freetown (Sierra Leone); and
- a high number of infections have been identified among health-care workers, highlighting inadequate infection control practices in many facilities.
Middle East Transitions: A Long, Hard Road
Source: International Monetary Fund
Since the onset of the Arab Spring, economic uncertainty in Egypt, Jordan, Libya, Morocco, Tunisia, and Yemen (Arab Countries in Transition, ACTs) has slowed already sluggish growth; worsened unemployment, particularly of youth; undermined business confidence, affected tourist arrivals, and depressed domestic and foreign direct investment. Furthermore, political and social tensions have constrained reform efforts. Assessing policy options as presented in the voluminous literature on the Arab Spring and based on cross-country experience, this paper concludes that sustainable and inclusive growth calls for a two pronged approach: short term measures that revive growth momentum and partially allay popular concerns; complemented with efforts to adjust the public’s expectations and prepare the ground for structural reforms that will deliver the desired longer tem performance.
Despite relative affluence, workplace stress is a prominent feature of the US labour market. To the extent that job stress causes poor health outcomes – either directly through increased blood pressure, fatigue, muscle pain, etc. or indirectly through increased rates of cigarette smoking – policy to lessen job stress may be appropriate. Focusing predominantly on the United States, this report reviews the literature on a variety of economic concerns related to job stress and health. Areas in which economists may provide valuable insights regarding job stress include empirical selection concerns in identifying the effect of stress on health; measurement error with respect to stress; the existence and magnitude of compensating differentials for stress; and the unique “job lock” effect in the United States created by a system of employer-provided health insurance. This report concludes with a brief discussion of US policies related to job stress.
Since around 2007, the country has been enjoying an “energy renaissance” thanks to its abundant stocks of shale oil and gas. The resurgence in oil and gas production is beginning to create discernible economic impacts and has changed the landscape for natural gas prices in the United States, boosting competitiveness. In order to reap the benefits fully, significant investment is needed. Federal and state governments capture some of the resource rents, but there are potential opportunities to increase taxation and use the revenues to support future well-being. Taxing natural resource rents with profit taxes can be less distortionary than other forms of taxation, though only one state uses this form of tax. Production of shale resources, like other forms of resource extraction, poses a number of challenges for the environment. Respecting demands on water resources requires adequate water rights are in place while state and federal regulators need to monitor the environmental impact of hydraulic fracturing closely and strengthen regulations as needed. Natural gas is a potential “bridge fuel” towards a lower carbon economy, helping to reduce emissions by leading to a substitution away from coal. Flanking measures are desirable to counter natural gas hindering renewables and low prices stymieing innovation.
The IMF crisis and how to solve it
Source: Oxford Economics
As the IMF approaches its 70th birthday, this extract from our July UK Economic Outlook investigates the Fund’s Greek programme, one of the most credibility-sapping in its history. We trace the IMF’s role in the programme from its stormy launch to misfiring implementation; the Fund’s half-hearted apology; and its early (and ongoing) attempts to draw lessons and revise its sovereign debt restructuring framework, which appear destined to deliver insufficient meaningful change. A transparency revolution is both necessary and feasible. It worked for central banks in the 1990s. Why not the Fund?
Overcoming Skills Shortages in Canada
Skills shortages have developed in certain fields and regions in recent years. Earnings premiums for people in some professions, notably health, engineering and skilled trades have increased. And vacancy rates have risen for skilled trades, with the increase being particularly large in Alberta and Saskatchewan. While reforms have been implemented to strengthen adjustment so as to overcome these shortages, there is still room to go further by improving labour market information, increasing responsiveness of the education and training system to labour market demand, making the immigration system more reactive to current labour market conditions and reducing regulatory barriers to inter-provincial labour mobility. This Working Paper relates to the 2014 OECD Economic Review of Canada (http://www.oecd.org/eco/surveys/economic-survey-canada.htm).
Debt, Growth and Natural Disasters: A Caribbean Trilogy
Source: International Monetary Fund
This paper seeks to determine the effects that natural disasters have on per capita GDP and on the debt to GDP ratio in the Caribbean. Two types of natural disasters are studied –storms and floods– given their prevalence in the region, while considering the effects of both moderate and severe disasters. I use a vector autoregressive model with exogenous natural disasters shocks, in a panel of 12 Caribbean countries over a period of 40 years. The results show that both storms and floods have a negative effect on growth, and that debt increases with floods but not with storms. However, in a subsample I find that storms significantly increase debt in the short and long run. I also find weak evidence that debt relief contributes to ease the negative effects of storms on debt.
Economists have traditionally been very cautious when studying the interaction between employment and health because of the two-way causal relationship between these two variables: health status influences the probability of being employed and, at the same time, working affects the health status. Because these two variables are determined simultaneously, researchers control endogeneity bias (e.g., reverse causality, omitted variables) when conducting empirical analysis. With these caveats in mind, the literature finds that a favourable work environment and high job security lead to better health conditions. Being employed with appropriate working conditions plays a protective role on physical health and psychiatric disorders. By contrast, non-employment and retirement are generally worse for mental health than employment, and overemployment has a negative effect on health. These findings stress the importance of employment and of adequate working conditions for the health of workers. In this context, it is a concern that a significant proportion of European workers (29%) would like to work fewer hours because unwanted long hours are likely to signal a poor level of job satisfaction and inadequate working conditions, with detrimental effects on health. Thus, in Europe, labour-market policy has increasingly paid attention to job sustainability and job satisfaction. The literature clearly invites employers to take better account of the worker preferences when setting the number of hours worked. Overall, a specific “flexicurity” (combination of high employment protection, job satisfaction and active labour-market policies) is likely to have a positive effect on health. This Working Paper relates to the 2014 OECD Economic Survey of the United States (www.oecd.org/eco/surveys/United States ).
House prices have increased significantly in Canada over the past decade, driving household debt and residential construction activity to historical highs. Although macro-prudential tightening has slowed the pace of household borrowing in the last few years, house prices have continued to trend higher, and affordability remains a major challenge in urban centres. First-time home buyers must therefore spend more of their incomes to purchase a house and are vulnerable to future interest rate hikes. Overbuilding in the condominium sectors of some cities appears to be a source of risk, especially if a major price correction in these segments spills over into other markets. The country benefits from a sound and effective housing finance system, which performed well throughout the global financial crisis thanks to strong regulatory oversight and explicit government backing of the mortgage market. Nonetheless, the dominance of the crown corporation CMHC in the mortgage insurance market concentrates a significant amount of risk in public finances. Improving competitive conditions in the mortgage insurance market could help diversify these risks and reduce taxpayer contingent liabilities, while introducing coverage limits on loan losses would better align private and social interests. There may be a shortage of rental housing in several cities, especially in the range that low-income households can afford. Urban planning policies have resulted in low-density residential development which contributes to relatively high transport-related carbon emissions. Addressing these externalities requires stronger pricing signals for land development, road use, congestion and parking, combined with better integration of public transit planning. To prevent the marginalisation of low-income households, planning policies should support social mix and increase incentives for private-sector development of affordable housing.
Around one in seven students in the 13 OECD countries and economies that took part in the first OECD PISA international assessment of financial literacy are unable to make even simple decisions about everyday spending, and only one in ten can solve complex financial tasks.
Some 29 000 15 year-olds in 18 countries and economies* took part in the test, which assessed the knowledge and skills of teenagers in dealing with financial issues, such as understanding a bank statement, the long-term cost of a loan or knowing how insurance works.
Shanghai-China had the highest average score in financial literacy, followed by the Flemish Community of Belgium, Estonia, Australia, New Zealand, the Czech Republic and Poland.
The gender gap in financial literacy was much smaller than in OECD PISA tests in maths or reading, with there being no significant difference between the performance of boys and girls, except in Italy.
But the inequality gap mirrors that in key school subjects: more socio-economically advantaged students scored much higher than less-advantaged students on average across participating OECD countries and economies. Non-immigrant students also performed slightly better than immigrant students from a similar socio-economic status. The gap between the two groups is larger than the OECD average in the Flemish Community of Belgium, Estonia, France, Slovenia and Spain.
The survey also revealed that skills in mathematics and reading are very closely related to financial literacy. However, high proficiency in one of these subjects does not always signal strong performance in financial literacy.
Taking an important step towards greater transparency and putting an end to banking secrecy in tax matters, the OECD today released the full version of a new global standard for the exchange of information between jurisdictions.
The Standard for Automatic Exchange of Financial Account Information in Tax Matters calls on governments to obtain detailed account information from their financial institutions and exchange that information automatically with other jurisdictions on an annual basis. The Standard, developed at the OECD under a mandate from the G20, endorsed by G20 Finance Ministers in February 2014, and approved by the OECD Council.
The Standard provides for annual automatic exchange between governments of financial account information, including balances, interest, dividends, and sales proceeds from financial assets, reported to governments by financial institutions and covering accounts held by individuals and entities, including trusts and foundations. The new consolidated version includes commentary and guidance for implementation by governments and financial institutions, detailed model agreements, as well as standards for harmonised technical and information technology solutions, notably a standard format and requirements for secure transmission of data.
State of the World’s Forests 2014
Source: Food and Agricultural Organization of the United Nations
Across the world, forests, trees on farms, and agroforestry systems play a crucial role in the livelihoods of rural people by providing employment, energy, nutritious foods and a wide range of other goods and ecosystem services. They have tremendous potential to contribute to sustainable development and to a greener economy. Yet, clear evidence of this has been lacking. This evidence is critical to inform policies on forest management and use, and to ensure that the benefits from forests are recognized in the post-2015 development agenda, not only with respect to the environment, but also for their contributions to broader social issues. This edition of State of the World’s Forests addresses this knowledge gap by systematically gathering and analysing available data on forests’ contributions to people’s livelihoods, food, health, shelter and energy needs. Crucially, the report also suggests how information might be improved and policies adjusted, so that the socioeconomic benefits from forests can be enhanced in the future.
Impact of Fed Tapering Announcements on Emerging Markets
Source: International Monetary Fund
This paper analyzes market reactions to the 2013–14 Fed announcements relating to tapering of asset purchases and their relationship to macroeconomic fundamentals and country economic and financial structures. The study uses daily data on exchange rates, government bond yields, and stock prices for 21 emerging markets. It finds evidence of markets differentiating across countries around volatile episodes. Countries with stronger macroeconomic fundamentals, deeper financial markets, and a tighter macroprudential policy stance in the run-up to the tapering announcements experienced smaller currency depreciations and smaller increases in government bond yields. At the same time, there was less differentiation in the behavior of stock prices based on fundamentals.
International Migration: The Relationship with Economic and Policy Factors in the Home and Destination Country
Unfavourable demographic trends in many OECD countries threaten the sustainability of potential labour resources, GDP growth and fiscal positions. One factor that is expected to mitigate these trends is continued inflows of migrant workers from low income economies. However, a rapid catch-up in productivity and wages in these traditional source countries vis-à-vis the OECD may weaken economic incentives for migration and imply a transition away from current migration patterns. This paper uses data of the high-skilled and low-skilled migrant stock between 92 origin and 44 destination countries to highlight the relationship between economic factors and migration. The paper also attempts to uncover links with policy and demographic factors prevailing in the origin and destination countries. The analysis suggests that higher skill-specific wages in the destination country are associated with more migration. This relationship appears to be particularly strong for migrants from middle-income countries, supporting theories of an inverted-U relationship between origin country economic development and the propensity to migrate. Policy differences between the destination and origin also appear important, for example in terms of regulations on businesses and labour markets, along with the relative quality of institutions. In some instances, the effects on high-skilled and low-skilled migrants differ markedly. Combining the estimated coefficients from the model with the skill-specific wage profile from the OECD long-term growth projections highlights the potential for weaker future migrant flows to OECD countries than implied by past trends and embedded in official projections.
Oversight Issues in Mobile Payments
Source: International Monetary Fund
This paper examines oversight issues that underlie the potential growth and risks in mobile payments. International experience suggests that financial authorities can develop effective oversight frameworks for new payment methods to safeguard public confidence and financial stability by establishing: (i) a clear legal regime; (ii) proportionate AML/CFT measures to prevent financial integrity risks; (iii) fund safeguarding measures such as insurance, similar guarantee schemes, or “pass through” deposit insurance; (iv) contingency plans for operational disruptions; and (v) risk controls and access criteria in payment systems. Such measures are particularly important for low-income countries where diffusion is becoming more widespread.