nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2014‒06‒22
four papers chosen by
Karl Petrick
Western New England University

  1. Industrial Policy for a Sustainable Growth Path By Karl Aiginger
  2. Rationality and Beyond: A Critique of the Nature and Task of Economics By Li, Cheng
  3. What Happens to the Careers of European Workers when Immigrants "Take their Jobs"? By Cristina Cattaneo; Carlo V. Fiorio; Giovanni Peri
  4. The long-awaited rise of the middle class in Latin America is finally happening By Bussolo, Maurizio; Maliszewska, Maryla; Murard, Elie

  1. By: Karl Aiginger (WIFO)
    Abstract: Industrial policy is back on the agenda and the consensus is that it must be different "this time" from the past. We redefine industrial policy for industrialised countries as a strategy to promote "high-road competitiveness", understood as the ability of an economy to achieve "Beyond-GDP"' Goals. High-road strategies are based on advanced skills, innovation, supporting institutions, ecological ambition and an activating social policy. This "new industrial policy" is systemic, working in alignment with other policy strands and supporting social and environmental goals; it affects the structure of the economy as the whole not only the manufacturing sector. Short-term actions, such as protecting employment in unviable companies, low prices for fossil fuels, or reducing wages in high-income economies are counterproductive. To pursue an industrial policy that targets society''s ultimate goals without public micromanagement will be challenging. It could be achieved 1. by setting incentives, particularly those impacting on technical progress (e.g., to make it less labour-saving and more energy-saving), 2. by the use of the important role governments play in the education and research sectors, 3. by greater public awareness and 4. if consumer preferences will call for socio-ecological transition.
    Keywords: New industrial policy, climate change, competitiveness, innovation strategy
    Date: 2014–06–10
  2. By: Li, Cheng
    Abstract: This paper shows that the means-end rationality principle, as an ‘ultimate given’ of economics, delimits the faculty of economists to observe, describe and understand the manifold human behavior. Given such epistemological limitations, as a descriptive science, the main task of economics is to incorporate appropriate empirical content into the a priori analytical framework with the aim of better explaining and predicting some aspect of human behavior. As a normative science, economists should draw on their persuasion and communication skills whereby changing the means and end of the decision makers to the extent that the real world decision-making can be improved.
    Keywords: Rationality; Constrained maximization model; Methodology; Epistemology
    JEL: A11 A12 B41
    Date: 2014–06–18
  3. By: Cristina Cattaneo (FEEM); Carlo V. Fiorio (University of Milano and Econpubblica); Giovanni Peri (University of California, Davis and NBER)
    Abstract: Following a representative longitudinal sample of native European residents, over the period 1995-2001, we identify the effect of the inflows of immigrants on their career, employment and wages. We use the 1991 distribution of immigrants by nationality across European labor markets to construct an imputed inflow of the foreign-born population that is exogenous to local demand shocks. We also control for .fixed effects that absorb individual, country-year, occupation group-year and occupation group-country heterogeneity and shocks. We find that native European workers are more likely to move to occupations associated with higher skills and status when a larger number of immigrants enter their labor market. As a consequence of this upward mobility their wage income also increases with a 1-2 years lag. We find no evidence of an increase in their probability of becoming unemployed.
    Keywords: Immigrants, Job Upgrading, Mobility, Self-employment, Europe
    JEL: J61 O15
    Date: 2014–05
  4. By: Bussolo, Maurizio; Maliszewska, Maryla; Murard, Elie
    Abstract: In many developing countries, the supply of skilled workers is likely to continue to be stronger than demand, and this should drive down the skill premium and reduce inequality. Within the limitations of any exercise based on simulations, this paper finds that the recently observed reduction in inequality in Latin America may continue. Building on counterfactual scenarios projecting economic and demographic (including age and education) growth, the paper also highlights that by 2030 the long-awaited rise of the middle class in Latin America will be in full swing, as its share will be 43 percent of the total population, twice the value in 2005. This achievement is not guaranteed, as countries with large initial inequalities will have to achieve very high rates of inclusive growth. At the same time, a larger middle class is likely to exert a stronger influence on international and domestic policy making.
    Keywords: Inequality,Achieving Shared Growth,Economic Theory&Research,Population Policies,Emerging Markets
    Date: 2014–06–01

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