nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2008‒03‒25
three papers chosen by
Maximo Rossi
University of the Republic

  1. Work at Older Ages: Is Raising the Early Retirement Age an Option for Social Security Reform? By John A. Turner
  2. The impact of CAFTA on poverty, distribution, and growth in El Salvador: By Morley, Samuel; Nakasone, Eduardo; Pineiro, Valeria
  3. Regional Wage Differentiation and Wage Bargaining Systems in the EU By Athanasios Vamvakidis

  1. By: John A. Turner (Center for Retirement Research, Boston College)
    Abstract: This report examines how changes in worker capabilities and job requirements over the past few decades affect the ability of older workers to work past the Social Security Early Retirement Age of 62. This issue arises because a possible reform of Social Security could raise the early retirement age. This change might be made in conjunction with raising the Normal Retirement Age in order to offset the reduction in annual benefits that workers would receive when retiring at the Early Retirement Age. Fairness is one aspect of the issue of raising Social Security’s Early Retirement Age. Would such a change be fair to demographic groups with relatively short life expectancy, to people with physically demanding jobs, or to people at older ages unable to work or to find work? The issue of fairness can be addressed in terms of cross-sectional equity or intergenerational equity. Because workers worked to older ages early in the history of Social Security, the past becomes a natural comparison. This paper focuses on intergenerational equity, comparing different demographic groups over time. The intergenerational question has two parts. First, have older workers’ capabilities changed over the past few decades in ways that would affect continued employment? Second, have job requirements changed in ways that would affect continued employment for older workers?
    Date: 2007–06
  2. By: Morley, Samuel; Nakasone, Eduardo; Pineiro, Valeria
    Abstract: "In this paper we develop a dynamic CGE model to examine the impact of CAFTA on production, employment and poverty in El Salvador. We model four aspects of the agreement: tariff reductions, quotas, changes in the rules of origin for maquila and more generous treatment of foreign investment. The model shows that CAFTA has a small positive effect on growth, employment and poverty. Tariff reduction under CAFTA adds about .2% to the growth rate of output up to 2020. Liberalizing the rules of origin for maquila has a bigger positive effect on growth and poverty mainly because it raises the demand for exportables produced by unskilled labor. We model the foreign investment effect by assuming that capital inflows go directly to capital formation. This raises the growth rate of output by over 1% per year and lowers poverty incidence in 2020 by over 25% relative to what it would be in the baseline scenario. These simulations say something important about the growth process in a country like El Salvador in which it seems reasonable to assume that there is idle unskilled labor willing and able to work at a fixed real wage. In such an economy, growth can be increased in one of three ways. First, already employed resources can be moved to sectors where they are more productive. That is what the tariff reductions under CAFTA do, and the result is positive but small. Second, the structure of demand can be changed in such a way as to increase the demand for previously unemployed unskilled labor. That is what the maquila simulation does, because maquila uses a lot of unskilled labor relative to skilled labor and capital. Finally the supply of capital can be increased by increasing the rate of capital formation. That is what happens in the FDI simulation." from Authors' Abstract
    Keywords: CAFTA, Trade agreements, Growth, Poverty, CGE model,
    Date: 2007
  3. By: Athanasios Vamvakidis
    Abstract: The theoretical literature has argued that a centralized wage bargaining system may result in low regional wage differentiation and high regional unemployment differentials. The empirical literature has found that centralized wage bargaining leads to lower wage inequality for different skills, industries and population groups, but has not investigated its impact on regional wage differentiation. Empirical evidence in this paper for EU regions for the period 1980-2000 suggests that countries with more coordinated wage bargaining systems have lower regional wage differentials, after controlling for regional productivity and unemployment differentials.
    Keywords: Wage bargaining , European Union , Unemployment , Productivity ,
    Date: 2008–02–20

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