This study re-examines the issue of causality between investment shares and economic growth. A methodology is applied based on Arellano and Bond (1991), and Holtz-Eakin, Newey and Rosen (1988) to quinquennial panel data on growth and investment shares for the post war period and shows that, contrary to previous results in the literature, causality between fixed investment and growth runs in both directions. Investment shares Granger-cause growth rates and growth rates Granger-cause investment shares. Granger causality from investment shares to growth rates is found to be negative. The result is in contrast with a capital fundamentalist view which sees fixed investment as the key to long run growth, but is fully consistent with the predictions of Solow-type growth models.

No abstract

The main channel through which labour market institutions are supposed to work in affecting unemployment is through their effects on the key parameters of the wage curve. In particular, labour market institutions may have both a direct wage push (or level) effect, i.e. change the level of the real wage for any given level of the unemployment rate and productivity, and an indirect slope effect, i.e. change the responsiveness of the real wage to the unemployment rate. The question this article addresses is whether there is any evidence that these transmission mechanisms were at work in a group of 20 OECD countries over the period 1960 to 1999. The analysis is accomplished in two steps. Pooled Mean Group (PMG) estimates of a wage equation including unemployment, productivity and a set of wage push institutions are first obtained, allowing only a subset of institutional coefficient to be homogeneous, while leaving\ud the unemployment and other coefficients free to differ across countries. The country specific estimates of the unemployment coefficients are then used to investigate whether and to what extent cross-country heterogeneity in the estimated wage response to unemployment is related to institutional\ud differences. The results support the existence of significant wage push effects of union density and benefit replacement rates, and of significant slope effects of benefit replacement rates, benefit duration and employment protection. A more generous unemployment benefit structure is found to lower the wage responsiveness to unemployment, while higher employment\ud protection, contrary to what one expects, is found to enhance it.\ud No significant level and slope effects are found for the tax wedge and bargaining coordination

This paper analyzes the joint influence of migration inflows and outward foreign direct investment (FDI) on wage bargaining. Labor migration and offshoring supported by FDI affect wage deals by changing the outside options of workers and firms. Unemployed workers may find alternative jobs either in the legal or in the illegal labor markets. Wages in this latter case are highly affected by migrants crowding this segment more than any other market. Firms may have the option of moving production partly or entirely to foreign low-cost countries. A wage curve is designed theoretically, reflecting cross-border labor and capital mobility, and estimated on panel data for 13 European countries over the period 1995–2013. The theoretical predictions of a joint negative effect on wages of FDI outflows and labor migration inflows are confirmed with some novel results

This paper uses a novel micro econometric approach to analyze the impact of social benefits on the individual probabilities of poverty exit and entry in Italy, and their relative importance with respect to other socio-economic determinants of poverty transitions. Year to year transitions are defined as dichotomous variables capturing the changes of the individual poverty status, and are analyzed using random effects probit models estimated on pooled Italian data from 9 longitudinal components of IT-SILC covering the period 2004–2015. Our results show that social benefits strongly counteract the adverse effects of individual characteristics like unemployment, work intensity, inactivity, household size (and composition) and past poverty experience on the individual probabilities of poverty exit and entry. Despite their important effects on the individual probabilities of transitions, however, social benefits have a limited coverage among the vulnerable groups of the population, which strongly limits their aggregate impact on transition rates and poverty rates.