18 March 2011

16 March 2011

Lord Woolf’s Inquiry into the LSE and Libya

On March 3rd,  the London School of Economics and Political Science asked Lord Woolf to conduct an independent external inquiry into the School’s relationship with Libya and with Saif Gaddafi. Here is the website where you can make submissions.

The State of the British economy

Employment rates show no sign of picking up, while unemployment rates remain high at about 8% and long term unemployment well over 500,000. On the positive side, redundancies are falling and output per worker seem to have starting to rise again.

Why are public wages higher?

 
Abstract:
Many political scientists and economists have addressed the implications of the public Sector’s sheltered status on their unions’ wage strategies vis-a-vis the government. Since the public sector is a monopoly provider of necessary and price inelastic services, conventional wisdom suggests that public sector unions’ push for wage increases which their productivity does not merit, exacerbating inflation and fiscal deficits. The argument in this paper challenges this conventional view, and maintains that the recent, puzzling rise in public sector wage inflation, relative to that in manufacturing, in Euro-zone countries is an unintended result of the institutional shift towards European Economic and Monetary Union (EMU). 

During the 1980s and 1990s, differences in wage inflation between the manufacturing and public sector within most EMU candidate-countries were low. After 1999, these differences significantly worsened; wage moderation continued in the manufacturing sector while wage inflation arose in the public sector. It is argued here that monetary unions predecessors, the European Monetary System and Maastricht regimes, imposed two important constraints on public employers, which enhanced their ability to enforce wage moderation: the commitment to a hard currency policy via participation in the Exchange Rate Mechanism, adopted by some earlier than others and, the Maastricht criteria. Monetary union’s removal of these two constraints weakened public employers capability to deny inflationary wage settlements to public sector unions. Panel regressions results outline a statistically significant relationship between monetary union and higher levels of wage inflation in the public sector, relative to manufacturing. The paper concludes with a brief discussion of the implications of monetary union for inter-sectoral dynamics.

Brad Delong on Japan and the causes of the crisis

03 March 2011

Director of the LSE Howard Davies resigns

According to the LSE website "The issues the Council will suggest he investigates include, but are not limited to, the following:
- The agreement to accept a £1.5 million donation from the Gaddafi International Charity and Development Foundation (GICDF) in 2009 to LSE Global Governance, £300,000 of which has been received to date
- The acceptance of $50,000 paid to the university in return for Sir Howard’s advice to Libya’s sovereign wealth fund in 2007
- The academic authenticity of Saif Gaddafi’s PhD thesis, awarded in 2008
- The agreement of a £2.2 million contract between LSE Enterprise and Libya’s Economic Development Board to train Libyan civil servants and professionals, £1.5 million of which has been received to date and payment of £20,000 for tuition of the head of the Libyan Investment Authority
- The acceptance of an award from GICDF of £22,857 to support travel costs, mainly airfares, for academic speakers to travel to Libya"

Will be presenting a paper in Network H: Markets, Firms & Institutions

02 March 2011

The problem with national averages

I was amazed to see how low the employment rates of the French overseas regions are, 45.3% for "La Reunion", 41.2% for Guadeloupe and 39.8% for Guyane!  Then again the employment rate for 55-64 is about 42% at the national level...