Real Wage Trends, 1979 to 2017

Real Wage Trends, 1979 to 2017. Congressional Research Service, Library of Congress. Sarah A. Donovan,  David H. Bradley. March 15, 2018

 Wage earnings are the largest source of income for many workers, and wage gains are a primary lever for raising living standards. Reports of stagnant median wages have therefore raised concerns among some that economic growth over the last several decades has not translated into gains for all worker groups. To shed light on recent patterns, this report estimates real (inflation adjusted) wage trends at the 10th, 50th (median), and 90th percentiles of the wage distributions for the workforce as a whole and for several demographic groups, and it explores changes in educational attainment and occupation for these groups over the 1979 to 2017 period. 

 [PDF format, 36 pages].

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The Future of the United States and Europe: An Irreplaceable Partnership

The Future of the United States and Europe: An Irreplaceable Partnership. Center for Strategic & International Studies. Jeffrey Rathke et al. April 13, 2018

 The partnership between the United States and Europe has been an anchor of the world’s economic, political and security order for more than seven decades. The U.S. relationship with the European Union is the deepest in the world – but we should not take it for granted. Transatlantic relations are at a critical point in their history, and it is necessary to reassess their trajectory, as well as the prospects for EU-U.S. cooperation. In a new publication, CSIS, in partnership with Chatham House, assesses the top policy priorities on both sides of the Atlantic, identifying areas of potential cooperation as well as growing divergences to be managed. United States cooperation with Europe is essential to meeting global challenges – this is a conclusion that every U.S. administration has reached in the past 70 years. Our recommendations seek to strengthen that relationship and promote that community of democratic values that upholds the international order. [Note: contains copyrighted material].

 [PDF format, 51 pages].

The Search for a Euro Area Safe Asset

The Search for a Euro Area Safe Asset. Peterson Institute for International Economics. Álvaro Leandro and Jeromin Zettelmeyer.  Working Paper 18-3. March 2018

 This paper evaluates four approaches to creating “safe assets” or asset portfolios for the euro area: (1) a diversified portfolio of senior tranches of sovereign debt (“national tranching”); (2) a senior security backed by a diversified pool of national sovereign debt (“ESBies”); (3) debt issued by a senior financial intermediary, backed by a diversified pool of national debt (“E-bonds”); and (4) debt issued by a euro area budget or a leveraged wealth fund, based on member state contributions or dedicated direct revenue sources. None of these approaches envisages explicit guarantees by member states, and all could potentially produce safe assets in sufficient quantities to replace euro area sovereign bond holdings in euro area banks. At the same time, the four approaches differ across several important dimensions. A euro area budget or wealth fund could create the largest volume of safe assets, followed by ESBies, E-bonds, and national tranching. A euro area budget or wealth fund is also likely to have the lowest impact on the structure and liquidity of national bond markets, while national tranching would have the largest impact. ESBies and E-bonds occupy an intermediate position. ESBies and potentially bonds issued by a euro area budget would offer their holders greater protection from deep national defaults than the other two proposals. Both ESBies and national tranching would avoid cross-country redistribution by construction, whereas E-bonds and a euro area budget could have significant distributional consequences, depending on their design. E-bonds are unique in that they would raise the marginal cost of sovereign debt issuance at higher levels of debt, thereby exerting fiscal discipline, without necessarily raising average debt costs for lower-rated borrowers. [Note: contains copyrighted material].

 [PDF format, 68 pages].

Is Automation Labor-Displacing? Productivity Growth, Employment, and the Labor Share

Is Automation Labor-Displacing? Productivity Growth, Employment, and the Labor Share. Brookings Institution. David Autor and Anna Salomons. March 8, 2018

 Is automation a labor-displacing force? This possibility is both an age-old concern and at the heart of a new theoretical literature considering how labor immiseration may result from a wave of “brilliant machines,” which is in part motivated by declining labor shares in many developed countries. Comprehensive evidence on this labor-displacing channel is at present limited. Harnessing a model from Acemoglu and Restrepo (2018), the authors first outline the various channels through which automation impacts labor’s share of output. They then turn to empirically estimating the employment and labor share impacts of productivity growth—an omnibus measure of technological change—using data on 28 industries for 18 OECD countries since 1970. Their main findings are that although automation has not been employment-displacing, it has reduced labor’s share in value added. They disentangle the channels through which these impacts come about by considering both the effects occurring within the advancing industry and spillovers onto the industry’s suppliers and customers, and by separately estimating the wage, output, and price responses to automation. Their estimates highlight that the labor share-displacing effects of productivity growth, which were absent in the 1970s, have become more pronounced over time, largely because of a weakening wage response. This finding is consistent with automation having become less labor-augmenting over time. [Note: contains copyrighted material].

 [PDF format, 75 pages].

Economic Impact of Cybercrime – No Slowing Down

Economic Impact of Cybercrime – No Slowing Down. Center for Strategic & International Studies. James Andrew Lewis. February 21, 2018

 The Center for Strategic and International Studies (CSIS), in partnership with McAfee, present Economic Impact of Cybercrime – No Slowing Down, a global report that focuses on the significant impact that cybercrime has on economies worldwide. The report concludes that close to $600 billion, nearly one percent of global GDP, is lost to cybercrime each year, which is up from a 2014 study that put global losses at about $445 billion. The report attributes the growth over three years to cybercriminals quickly adopting new technologies and the ease of cybercrime growing as actors leverage black markets and digital currencies. [Note: contains copyrighted material].

 [PDF format, 28 pages].

What Is the U.S. Trade and Development Agency?

What Is the U.S. Trade and Development Agency? Center for Strategic & International Studies. Daniel F. Runde et al. January 30, 2018

 The U.S. Trade and Development Agency (USTDA) is a small independent federal agency whose mission is to help American “companies create U.S. jobs through the export of U.S. goods and services for priority development projects in emerging economies.” USTDA links American businesses to export opportunities in emerging markets by funding activities such as project preparation and partnership building in sectors including transportation, energy, and telecommunications. Since it was established 25 years ago, the agency has generated a total of $61 billion in U.S. exports and supported over 500,000 American jobs. In connecting American business to such opportunities, USTDA also links American technology’s best practices and ingenuity with U.S. trade and development policy priorities.

 USTDA is an instrument to enable American-led infrastructure development in emerging economies and, therefore, frequently sees increasing competition from government-backed Chinese firms and the challenge they can pose to American commercial engagement under the flag of One Belt, One Road (OBOR). OBOR is paving the way for Chinese engineering, procurement, and construction companies to prepare and develop infrastructure projects in OBOR countries in a way that favors Chinese standards, thereby exerting significant pressure to select Chinese suppliers. This creates a potentially vicious cycle—the more China builds, the faster their standards become the international norm, and, ultimately, this cycle could foreclose export opportunities for U.S. businesses and harm American competitiveness in global infrastructure development. U.S. exporters are increasingly requesting USTDA intervention at the pivotal, early stages of a project’s development, to compete in markets, such as the OBOR countries, where they frequently face Chinese competition. Of note, 40 percent of USTDA’s activities in 2016 were in OBOR countries across South and Southeast Asia, Central Asia, the Middle East, and Africa.

 Although there are other agencies that may seem to do work similar to USTDA, there are various aspects that make it a unique agency. This paper provides a brief description of USTDA, its origin and evolution, the impact on the U.S. economy and its proactive collaboration across U.S agencies. Finally, it offers a set of recommendations for USTDA on how to improve its operations and strengthen its role in the developing world. [Note: contains copyrighted material].

 [PDF format, 9 pages].

Tax and Development: New Frontiers of Research and Action

Tax and Development: New Frontiers of Research and Action. Center for Global Development. Maya Forstater. February 8, 2018.

 This paper looks at estimates of the potential gains from taxing across borders, alongside largely domestic measures such as property tax, personal income tax, VAT, and tobacco taxes. It finds that while action on cross-border taxation could yield additional tax take in the region of one percent of GDP, in many countries measures targeting the domestic tax base might deliver something in the region of nine percent. The main enabler is political commitment. [Note: contains copyrighted material].

 [PDF format, 51 pages].