The phenomenon of populism is widespread in the 21st century. In this paper, we analyze the correlation between the World Bank’s six worldwide governance indicators and populism, which is proxied by ...the populist rhetoric of government representatives. The panel data includes 40 developing and developed countries and covers the period from 2000 to 2018. The results suggest that good governance may help to reduce populist rhetoric. However, we show that a certain threshold of governance quality must be met to mitigate populist rhetoric. Refugee immigration and one-party dominance, on the other hand, increase populist rhetoric. Despite frequent claims, we do not find robust evidence that merchandise trade or a high unemployment rate strengthens populism.
•We examine the impact of governance indicators on populism using various models to address endogeneity.•We find that effective governance reduces populist rhetoric, particularly in countries with medium to high governance quality.•Refugee immigration and one-party dominance, on the other hand, increase populist rhetoric.•We conclude that improved governance transparency and citizen participation can reduce the appeal of populism.
The distribution of unemployment duration in our equilibrium matching model with spell-dependent unemployment benefits displays time-varying exit rates. Building on semi-Markov processes, we ...translate these rates into an expression for the aggregate unemployment rate. Structural estimation using German microdata allows us to discuss the effects of an unemployment benefit reform (Hartz IV). The reform reduced unemployment by less than 0.1 percentage points. Contrary to general beliefs, the net wage for most skill and regional groups increased. Taking the insurance effect of unemployment benefits into account, however, the reform is welfare reducing for 76% of workers.
In this work we develop an agent-based model that offers an alternative to standard, computable general equilibrium integrated assessment models (IAMs). The Dystopian Schumpeter meeting Keynes (DSK) ...model is composed of heterogeneous firms belonging to capital-good, consumption-good and energy sectors. Production and energy generation lead to greenhouse gas emissions, which affect temperature dynamics. Climate damages are modelled at the individual level as stochastic shocks hitting workers' labour productivity, energy efficiency, capital stock and inventories of firms. In that, aggregate damages emerge from the aggregation of losses suffered by heterogeneous, interacting and boundedly rational agents. The model is run focusing on a business-as-usual carbon-intensive scenario consistent with a Representative Concentration Pathway 8.5. We find that the DSK model is able to account for a wide ensemble of micro- and macro-empirical regularities concerning both economic and climate dynamics. Simulation experiments show a substantial lack of isomorphism between the effects of micro- and macro-level shocks, as it is typical in complex system models. In particular, different types of shocks have heterogeneous impact on output growth, unemployment rate, and the likelihood of economic crises, pointing to the importance of the different economic channel affected by the shock. Overall, we report much larger climate damages than those projected by standard IAMs under comparable scenarios, suggesting possible shifts in the growth dynamics, from a self-sustained pattern to stagnation and high volatility, and the need of urgent policy interventions.
In the late 1990s and into the early 2000s, Germany was often called “the sick man of Europe.” Indeed, Germany's economic growth averaged only about 1.2 percent per year from 1998 to 2005, including ...a recession in 2003, and unemployment rates rose from 9.2 percent in 1998 to 11.1 percent in 2005. Today, after the Great Recession, Germany is described as an “economic superstar.” In contrast to most of its European neighbors and the United States, Germany experienced almost no increase in unemployment during the Great Recession, despite a sharp decline in GDP in 2008 and 2009. Germany's exports reached an all-time record of $1.738 trillion in 2011, which is roughly equal to half of Germany's GDP, or 7.7 percent of world exports. Even the euro crisis seems not to have been able to stop Germany's strengthening economy and employment. How did Germany, with the fourth-largest GDP in the world transform itself from “the sick man of Europe” to an “economic superstar” in less than a decade? We present evidence that the specific governance structure of the German labor market institutions allowed them to react flexibly in a time of extraordinary economic circumstances, and that this distinctive characteristic of its labor market institutions has been the main reason for Germany's economic success over the last decade.
The standard New Keynesian model with staggered wage setting is shown to imply a simple dynamic relation between wage inflation and unemployment. Under some assumptions, that relation takes a form ...similar to that found in empirical wage equations—starting from Phillips' (1958) original work—and may thus be viewed as providing some theoretical foundations to the latter. The structural wage equation derived here is shown to account reasonably well for the comovement of wage inflation and the unemployment rate in the US economy, even under the strong assumption of a constant natural rate of unemployment.
The U.S. unemployment rate has remained stubbornly high since the 2007-2009 recession, leading some observers to conclude that structural rather than cyclical factors are to blame. Relying on a ...standard job search and matching framework and empirical evidence from a wide array of labor market indicators, we examine whether the natural rate of unemployment has increased since the recession began, and if so, whether the underlying causes are transitory or persistent. Our preferred estimate indicates an increase in the natural rate of unemployment of about one percentage point during the recession and its immediate aftermath, putting the current natural rate at around 6 percent. An assessment of the underlying factors responsible for this increase, including labor market mismatch, extended unemployment benefits, and uncertainty about overall economic conditions, implies that only a small fraction is likely to be persistent. PUBLICATION ABSTRACT
•GI and real-time seasonal adjustment affect nowcasting of US unemployment rate.•There is no consistent tendency regarding the direction of such effects.•The GI model predicts more accurately than ...the simple AR when data period is short.•There is a limit to achieving high prediction accuracy using a single-keyword GI.
This study examines whether and how the search intensity data obtained from Google Trends contributes to nowcasting of the U.S. unemployment rate compared to the conventional AR model. Our assessment is motivated by two issues that may affect the validity of the forecast model using the Google search intensity. The first issue is the change in Google Trends specification that limits the period during which the search intensity data can be retrieved on weekly basis. The second issue is the potential change in the endpoint value of seasonally-adjusted series based on the timing of seasonal adjustment, which may generate a problem when running a real-time forecast. Our results show that the usage of Google Trends doesn't necessarily contribute to improving the accuracy of forecasts under some preconditions, suggesting that there is a limit to the method of adding the search intensity of single keyword to the forecast model.
The literature has warned against the risk that expanding temporary contracts might lead to segmented labour markets while failing to reduce unemployment. This article reports stylised facts ...suggesting that in most European countries temporary workers enjoy high rates of transition into permanent employment and presents empirical evidence showing that temporary contracts significantly decrease the unemployment rate. A matching model in which firms use temporary contracts to screen workers for permanent positions can successfully account for these facts. If separations are driven by learning about match quality, temporary contracts can revert part of the negative welfare effects generated by employment protection.
When evaluating climate policy, previous researchers tend to exaggerate positive employment benefits at aggregate level. Nevertheless, distributional employment at sectoral level is usually ...neglected, and consequently policy implementation may be impeded by the sectors with severe employment loss. Hence, distributional employment impacts of climate policy should be comprehensively studied. To achieve this target, in this paper, a Computable General Equilibrium (CGE) model is employed to simulate the Chinese nationwide Emission Trading Scheme (ETS). The CGE model results show that the ETS decreased total labor employment by approximately 3% in 2021, and then this negative impact will diminish to zero in 2024; the ETS will positively affect total labor employment in 2025–2030. The ETS increases labor employment in the electricity sectors and also agriculture, water, heat, and gas production sectors, as these sectors are complementary to the electricity sectors or do not have intensive use of electricity. In contrast, the ETS decreases labor employment in the sectors with intensive use of electricity, including the coal and petrol production, manufacturing, mining, construction, transport, and service sectors. Overall, a climate policy, which covers electricity generation only and is time-invariant, tends to have time-decreasing employment impacts. Because this policy increases labor employment in electricity generation from nonrenewable energy, it cannot help achieve low-carbon transition.
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•This paper focuses on employment impacts of climate policy at sectoral level rather than aggregate level.•Emission Trading Scheme decreases employment in short term but increases employment in medium or long term.•Emission Trading Scheme increases employment in sectors complementary to electricity sectors.•Emission Trading Scheme decreases employment in sectors with intensive use of electricity.•A time-invariant climate policy, targeted at electricity sectors only, cannot help achieve low-carbon transition.
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