The 2022 Fall Economic Outlook Magazine is available online

I was Editor in Chief Journal of Economic Perspectives since its first release in the summer of 1987.. JEP is published by the American Economic Association, which, to my delight, decided about ten years ago that the journal would be freely available on the Internet, from the current issue to the first. You can download individual articles or entire issues, and it’s also available in a variety of e-book reader formats. Here I will start with a table of contents for just released fall 2022 an issue that is known in the Taylor family as issue #142. Below are abstracts and direct links to all papers. Perhaps in a few weeks I will also blog more specifically about some newspapers.

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Symposium on Labor Market Institutions

“Does the US labor movement have a future?» Suresh Naidu

The recent upsurge in labor movement activity has been fueled by younger workers, a tighter job market, and a sympathetic federal government. Nevertheless, union density in the US remains low, although unions remain popular. This is because employer opposition and US labor law together imply that workers must overcome serious problems with collective action at work in order to achieve union recognition and collective bargaining. These barriers make tight social networks and high levels of social capital at work a precondition for unionization. The labor organization can create this social capital, but it faces an uphill battle without policy changes that spread collective bargaining between employers and up the value chain and facilitate unionization. In partnership with trade unions, researchers can explore the theoretical problems of collective action as well as gain insight into what strategies for a revitalized labor movement might work.

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“Facts and Fantasies about Wage Setting and Collective Bargaining”.”, Manudip Bhuller, Carl Ove Moen, Magne Mogstad and Ola L. Westad

In this article, we document and discuss the salient features of collective bargaining systems in OECD countries in order to debunk some of the misconceptions and myths and revive general interest in wage setting and collective bargaining. We hope that this interest can help close the gap between how economists typically model wage setting and how wages are actually set. The canonical models of competitive labor markets, monopsony, and search and matching assume a decentralized wage system in which individual firms and workers determine wages. However, in most advanced economies, it is common for firms or employers’ associations to negotiate wages with trade unions through collective bargaining systems. We show that the characteristics of these systems differ significantly across advanced economies with respect to both the scope and structure of collective bargaining.

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“The German model of industrial relations: balance between flexibility and collective actionby Simon Yager, Shaked Noah and Benjamin Schaefer

We give an overview of the “German model” of industrial relations. We organize our review by focusing on the two pillars of the model: sectoral collective bargaining and firm-level collaborative determination. Compared to the United States, collective bargaining has been devolved to the industry level in Germany, which ensures greater coverage and avoids distribution conflicts at the firm level. Compared to other European countries, it is easier for employers in Germany to avoid insurance coverage or use flexibilities to deviate from collective bargaining agreements. Greater flexibility in the German system could reduce unemployment, but could also dampen bargaining power and increase inequality. Meanwhile, co-determination at the firm level through representation on workers’ councils and workers’ councils creates a dialogue of cooperation between employers and employees. Council representation has little direct influence due to the minority votes of workers’ representatives, but workers’ councils, which have a number of core powers, can have more influence. In general, the German model emphasizes the tension between efficiency-enhancing flexibility and equity-enhancing collective action.

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Danish Flexicurity: rights and obligations”, Klaus Tustrup Kreiner and Michael Swarer

Denmark is one of the richest countries in the world and achieves this in combination with low inequality, low unemployment and high income levels. These figures are often associated with the Danish labor market model, which is characterized by what has come to be known as flexibility. This essay describes and evaluates the flexibility of the Danish language. The Danish experience shows that flexibility alone, that is, flexible hiring and firing rules for firms combined with high income security for workers, is not sufficient to achieve successful outcomes. Flexibility policies should also include comprehensive Active Labor Market Programs (ALMPs) with mandatory participation of unemployment benefit recipients. Denmark spends more on active labor market programs than any other OECD country. We review a theory showing how ALMPs can mitigate adverse selection and moral hazard issues associated with high income security and analyze the empirical evidence for the effectiveness of ALMPs from the ongoing Danish policy evaluation, which includes the systematic use of randomized experiments. We also discuss the ability of flexible protection to address the challenges of globalization, automation, and immigration, as well as the trade-offs that the US (or other countries) will face in adopting a flexible protection policy.

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Symposium on Public Debt

“Debt Revenue and Public Debt Sustainability”, Ricardo Reis

While public debt has risen over the past two decades, the return it offers investors has fallen, especially when compared to return on private investment. This generates revenue for the government as a provider of the special services offered by government bonds, which include storage of value, security, liquidity, and respite from reprisals. The present value of this debt income is large relative to the stock of government debt, making it sustainable even if the present value of primary balance sheets is zero or negative. It leads to different policy trade-offs than the traditional analysis of primary balance sheets and makes different recommendations about the impact of austerity measures, optimal debt levels, or spillovers between monetary and fiscal policies.

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financial stories”, John H. Cochrane

Fiscal theory states that inflation is adjusted so that the real value of government debt equals the present value of real primary surpluses. Monetary policy remains important. The central bank may set an interest rate target that determines the path of expected inflation, while news of the present value of the surplus triggers unexpected inflation. I use fiscal theory to interpret historical episodes, including the rise and fall of inflation in the 1970s and 1980s, the long quiet zero-bound of the 2010s and the resumption of inflation in 2021, as well as to analyze the gold standard, currency pegs . , the end of hyperinflation, currency crashes and the achievement of inflation targets. Going forward, fiscal theory warns that inflation will have to be tamed through coordinated monetary and fiscal policy.

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“Emerging Market Sovereign Debt Post-PandemicKenneth Rogoff

For emerging market economies, fiscal space is a very real constraint that can manifest itself under a variety of circumstances, including rising global interest rates, falling commodity prices, or a global recession. Some emerging market countries and most low-income developing countries are already in debt distress or default. In the short term, it is important to make sure distressed debtor countries are aware of the full menu of options, including unorthodox strategies such as default. In the longer term, rethinking the Bretton Woods financial institutions with a focus on direct grants instead of loans makes more sense than ever.

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Articles and features

Popular personal financial advice vs. professorsJames J. Choi

I review the advice given in fifty of the most popular personal finance books and compare it to the prescriptions of normative academic economic models. Popular advice often diverges from normative principles emerging from economic theory, which should motivate new hypotheses about why households make certain financial choices, as well as what financial choices households should make. Popular advice is sometimes based on misconceptions, but they attempt to take into account the limited willpower that people have to stick to a financial plan, and its recommended actions are often easily calculated by ordinary people. I talk about savings rates, the feasibility of being a rich hand-to-hand buyer, asset allocation, managing non-mortgage debt, holding high-interest debt and low-interest savings, and choosing a mortgage.

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“Linear panel model with non-uniform coefficients and exposure variation.”, Liyang Sun and Jesse M. Shapiro

Linear panel models with unit and time fixed effects are emerging in many areas of empirical economics. An active literature is investigating the interpretation of conventional least-squares model estimation, commonly referred to as two-sided fixed effects estimation (TWFE), in the presence of unmodeled coefficient heterogeneity. We will illustrate some of the implications for the case where study design uses differences between units (say, US states) when exposed to some treatment (say, a policy change). In this case, the TWFE may not estimate the average (or even the weighted average) of the unit coefficients. Under some conditions, there is no estimator that is guaranteed to estimate even the weighted average. Based on the literature, we note that when there is a unit completely unaffected by treatment, it is possible to estimate the mean effect by replacing TWFE with the mean of the difference-of-difference estimates.

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“Sadie TM Alexander: Black Women and the Taste of Freedom in the Economic World” Nina Banks

The employment history of African American women is notable in that their labor force participation rate is higher than that of other women in the US. This essay discusses the analysis of black women and the work of Sadie T.M. Alexander, based on her speeches and writings in the 1930s. Alexander assessed the contribution of black women workers to the standard of living of black Americans and the national income. A proponent of women’s paid employment and economic independence, Alexander’s views on the benefits of industrial employment for women and family life contrasted sharply with white welfare reformers who discouraged maternal employment in favor of households with male breadwinners. Alexander criticized the unequal treatment of black and white women under protective labor laws, especially regarding the exclusion of domestic workers from the New Deal minimum wage and the protection of the maximum hour. The legacy of discriminatory policies continues to affect the economic status of African American women today due to racial disparities in welfare provisions and worker benefits.

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“Recommendations for Further ReadingTimothy Taylor

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