The paper examines the evolution and drivers of labor force participation in European regions, focusing on the effects of trade and technology. As in the United States, rural regions within European countries saw more pronounced declines (or smaller increases) in participation than urban regions. Unlike in the United States, however, trade and technology, captured here using novel measures of initial exposures to routinization and offshoring, did not result in detachment from the workforce in European regions. Instead, regions with high initial exposures to routinization and offshoring experienced so-far larger increases in participation, likely driven by an added second worker effect.
also statistically and economically meaningful effects of trade and technology. Metropolitan areas with higher initial exposures to automation and offshoringdue to their occupational employment compositions see larger subsequent declines in participation rates. 10 This suggests that automation and offshoring may have permanently displaced some workers, even if their effects on the economy as a whole were beneficial, through the creation of job opportunities in other sectors or productivity gains. 11
Figure 10 illustrates the fit of these regressions, and
variable is change in labor force participation rate. * p < 0.1; ** p < 0.05; *** p < 0.01.
In contrast to the findings of the literature on the United States and in line with the bivariate correlations above, the effects of trade and technology are positive: regions with higher initial exposures to automation and offshoringdue their occupational employment compositions saw larger subsequent increases in participation rates, even controlling for other factors. This effect is robust to controlling for population density and the inclusion of country
The United States stands out among advanced economies with marked declines in labor force participation. National averages furthermore conceal considerable within-country heterogeneity. This paper explores regional differences to shed light on drivers of participation rates at the state and metropolitan area levels. It documents a broad-based decline, especially pronounced outside metropolitan areas. Using novel measures of local vulnerability to trade and technology it finds that metropolitan areas with higher exposures to routinization and offshoring experienced larger drops in participation in 2000-2016. Thus, areas with different occupational mixes can experience divergent labor market trajectories as a result of trade and technology.
This Selected Issues paper on Australia highlights the IMF’s new Global Integrated Monetary and Fiscal Model (GIMF), which is used to examine the macroeconomic implications of alternative fiscal responses to higher revenue. Lower labor and capital income taxes, along with higher public investment, will generate the largest economic gains in the long term. The model shows that saving a portion of the additional revenue in the short term can help alleviate demand pressures and increase overall domestic savings.
Ms. Era Dabla-Norris, Carlo Pizzinelli, and Jay Rappaport
During recent decades, labor markets in many advanced economies have become increasingly polarized as the share of employment in middle-wage occupations has declined. This “hollowing out” of the middle of the wage distribution has been linked to the disappearance of routine occupations—jobs with a higher share of tasks performable through a set of easily codified rules. Potential causes include progress in automation technologies that substitute for labor ( Autor et al., 2003 ; Goos and Manning, 2007 ) and offshoringdue to globalization
Ms. Era Dabla-Norris, Carlo Pizzinelli, and Jay Rappaport
This paper uses a life-cycle framework to document new stylized facts about the nexus between job polarization and earnings inequality. Using quarterly labor force data for the UK over the period 2000-2018, we find clear life-cycle profiles in the probability of being employed within each occupation type and wages earned therein. Cohort plots and econometric analysis suggest that labor market outcomes and prospects have gradually worsened for the young. These adverse trends are particularly significant for low-skill women: estimated cohort effects point to a fall in wages within each occupation as well as a lower propensity of being employed in abstract-task occupations. We also find evidence of general occupational downgrading in the UK, with more educated workers taking up fewer high-skill occupations than they did in the past. Our analysis informs the policy debate over appropriate measures needed to reduce skill mismatches and alleviate labor market transitions.
Source: IMF staff calculations.
Note: Standard errors are in parentheses. The dependent variable is change in labor force participation rate.
* p < 0.1; ** p < 0.05; *** p < 0.01.
Furthermore, metropolitan areas with higher initial exposures to automation and offshoringdue to their occupational employment compositions saw larger subsequent declines in participation rates. 10 This suggests that
as incurred in future years subject to the same limitation. Like the transfer pricing rules, this earning stripping rule is primarily targeted at interest paid offshore. Due to this targeted nature, it is not clear whether this rule will apply in a tax treaty scenario if the loan and interest are otherwise at arm’s length.
218. SA has made recent amendments to the ITA to provide a full range of withholding taxes at a consistent rate of 15 percent. The dividend withholding tax became effective in 2012 (replacing the secondary tax on companies), but the increase
This Technical Assistance report reviews South Africa’s tax system and also examines the fiscal regime with a view to generating a sustainable revenue contribution from mining and petroleum in future. Mining has historically been the mainstay of the South African economy. Mineral exports remain the principal contributor to foreign exchange earnings on the current account. South Africa is not yet a significant producer of crude oil or natural gas. Oil and gas exploration nevertheless shows promise. Taxation is far from top of the list in current challenges facing the development of extractive industries in South Africa. The national goal of economic and social transformation in favor of Historically Disadvantaged South Africans has major impact on the mining sector.