A hypothetical European Minimum Wage (MW) set at 60 percent of each country’s median wage would reduce in-work poverty but have limited effects on overall poverty, as many poor households do not earn a wage near MW and higher unemployment, higher prices, and a loss of social insurance benefits may erode direct benefits. Turning to competitiveness, since the MW increase to reach the European standard would be larger in euro area countries with excessive external surpluses, the associated real appreciation should help curb existing imbalances. However, a few countries with already weak external positions would experience an undesirable real appreciation.
This research investigates the impact of three equal cost alternative labour market policies on the economic well-being of low-income families and society in general at the turn of the 21st century. The principal focus is on how changes in the minimum wage, Earned Income Tax Credit (EITC), and payroll taxes influence the well-being of low-income American families. The methods we employ also reveal how much of the benefits from raising the minimum wage, increasing the EITC, and reducing payroll taxes of workers in low-income families accrue to families in the middle and upper ranges of the income distribution. Thus, we consider the entire distribution, but focus primary attention on families and persons at or near the bottom of the income distribution. The research reported in this book has three distinguishing features.First, it examines and compares changes in the minimum wage, the EITC, and payroll taxes using a common analytical framework. There is considerable discussion of the impacts of raising the minimum wage and increasing EITC payments. The research reported here places these two policies in an 'equivalent social cost' framework and analyses the distributional consequences of each policy. In addition, we use the same equivalent cost paradigm to investigate an alternative policy that rebates a portion of the payroll taxes paid by workers in low-income families. A second distinguishing feature of the research is that it incorporates important insights from the poverty and income distribution literature into the analysis of labour market policies and family well-being.This literature suggests that any evaluation of success or failure of poverty fighting policies that increase the minimum wage, expand the EITC, or reduce payroll taxes requires that the poor population be properly identified and poverty measured using distribution sensitive measures of poverty and not simple headcounts of the poor. Further, it is important to check for the sensitivity of any conclusions about the policy choices to alternative poverty lines. A third distinguishing feature of the research is that we use important developments in the applied welfare economics of income distribution to address the key question: Which policy alternative is best?
On 14 February 2012, the European Commission presented its first Alert Mechanism Report (AMR), prepared in accordance with Article 3 of Regulation (EU) No 1176/2011 on the prevention and correction of macroeconomic imbalances. The AMR serves as an initial screening device, helping to identify Member States that warrant further in-depth analysis to determine whether imbalances exist or risk emerging. According to Article 5 of Regulation No. 1176/2011, these country-specific ?in-depth reviews? should examine the nature, origin and severity of macroeconomic developments in the Member State concerned which constitute, or could lead to, imbalances. On the basis of this analysis, the Commission will establish whether it considers that an imbalance exists and what type of policy follow-up it will recommend to the Council. For Slovenia, the AMR noted that two indicators in the scoreboard exceeded their thresholds in 2010 and suggested the need to assess the development and drivers of potential imbalances. The AMR explained that in the years before the crisis, Slovenia enjoyed strong growth and domestic demand conditions, coupled with some losses in price competitiveness and a gradual widening of the current account deficit. It identified signs that overheating occurred, particularly as regards private sector credit growth, construction value added and property prices. The Slovenian economy was hit hard by the global crisis and the AMR noted that this has brought some, perhaps temporary, adjustment in the external balance but this is still at an early stage. Against this background, Section 2 examines the external and internal dimensions of imbalances including developments in competitiveness, private sector indebtedness and in asset markets. This is followed by a closer look at the implications of indebtedness of non-financial corporations for the banking sector in Section 3. Section 4 presents possible policy considerations.
This book collects selected articles addressing several currently debated issues in the field of international macroeconomics. They focus on the role of the central banks in the debate on how to come to terms with the long-term decline in productivity growth, insufficient aggregate demand, high economic uncertainty and growing inequalities following the global financial crisis. Central banks are of considerable importance in this debate since understanding the sluggishness of the recovery process as well as its implications for the natural interest rate are key to assessing output gaps and the monetary policy stance. The authors argue that a more dynamic domestic and external aggregate demand helps to raise the inflation rate, easing the constraint deriving from the zero lower bound and allowing monetary policy to depart from its current ultra-accommodative position. Beyond macroeconomic factors, the book also discusses a supportive financial environment as a precondition for the rebound of global economic activity, stressing that understanding capital flows is a prerequisite for economic-policy decisions.
This paper analyzes the extent of income inequality from a global perspective, its drivers, and what to do about it. The drivers of inequality vary widely amongst countries, with some common drivers being the skill premium associated with technical change and globalization, weakening protection for labor, and lack of financial inclusion in developing countries. We find that increasing the income share of the poor and the middle class actually increases growth while a rising income share of the top 20 percent results in lower growth—that is, when the rich get richer, benefits do not trickle down. This suggests that policies need to be country specific but should focus on raising the income share of the poor, and ensuring there is no hollowing out of the middle class. To tackle inequality, financial inclusion is imperative in emerging and developing countries while in advanced economies, policies should focus on raising human capital and skills and making tax systems more progressive.
This is the first book to provide a comprehensive and systematic assessment of the impact of the crisis and austerity policies on all elements of the European Social Model. This book assesses the situation in each individual EU member state on the basi
This paper examines the role of the labor market in the transmission process of adjustment policies in developing countries. It begins by reviewing the recent evidence regarding the functioning of these markets. It then studies the implications of wage inertia, nominal contracts, labor market segmentation, and impediments to labor mobility for stabilization policies. The effect of labor market reforms on economic flexibility and the channels through which labor market imperfections alter the effects of structural adjustment measures are discussed next. The last part of the paper identifies a variety of issues that may require further investigation, such as the link between changes in relative wages and the distributional effects of adjustment policies.
Are living wages an unaffordable and unwieldy aspiration or a key progressive reform? Demands for fair minimum incomes have dominated national debates amid the COVID-19 pandemic. This topical book addresses the rapidly shifting politics of minimum wages in US, the UK, New Zealand, Canada, Ireland and Australia, where workfare has compelled many to find low-income work and where neoliberal thinking about minimum wages has prevailed. Analysing minimum wage policies within a political-economy narrative, this innovative book offers an alternative to the Basic Income narrative and identifies the success of Living Wage campaigns as central to welfare state change.
This book provides an all-encompassing and timely analysis of the EU regulatory framework deriving from the enactment of Directive 2022/2041 on adequate minimum wages. In the first part, the book discusses the function of minimum wage policies in contemporary labour markets and the role of social partners and collective bargaining in governing minimum wage determinants and trends. The second part provides an article-by-article commentary of the Directive, including insights on crucial aspects such as the EU competence to intervene on wages, the concept of minimum wage adequacy, and the measurement and promotion of collective bargaining coverage. The third part assesses the impact of the Directive across the EU, focusing on the main systemic implications of the Directive as well as on the structural changes that Member States will need to implement. With contributions written by scholars and stakeholders from across Europe, the book sheds light on one of labour law's most fundamental objectives – to provide for adequate minimum wages. It is an invaluable resource for researchers, policy makers, trade unionists and employers' representatives.
Ending poverty and stabilizing climate change will be two unprecedented global achievements and two major steps toward sustainable development. But the two objectives cannot be considered in isolation: they need to be jointly tackled through an integrated strategy. This report brings together those two objectives and explores how they can more easily be achieved if considered together. It examines the potential impact of climate change and climate policies on poverty reduction. It also provides guidance on how to create a “win-win†? situation so that climate change policies contribute to poverty reduction and poverty-reduction policies contribute to climate change mitigation and resilience building. The key finding of the report is that climate change represents a significant obstacle to the sustained eradication of poverty, but future impacts on poverty are determined by policy choices: rapid, inclusive, and climate-informed development can prevent most short-term impacts whereas immediate pro-poor, emissions-reduction policies can drastically limit long-term ones.
