Labour market flexibilization and income distribution in Europe

This paper analyses the role played by the flexibilization of labour markets on functional income distribution. Specifically, we analyse whether employment protection legislation affects the evolution of labour income share, measured by the size of compensation of employees as a percentage of GDP, the sum of wages and salaries as a percentage of GDP and the size of the adjusted wage share, in twenty European economies. Our study?s results show that the evolution of labour income share is explained by the economic growth, the growth of employment and unemployment rates, and the growth of real wages. Regarding the role played by the flexibility of the labour market, and specifically of the employment protection legislation, only employment protection for temporary workers has a significant impact on the evolution of labour shares. Our results show that stricter provisions on the use of fixed-term and temporary agency contracts have a positive impact on the growth of labour shares.

Erratum to: Shocks, financial constraints and households’ consumption amid the great recession

After publication of the original article, it came to the authors? attention that during the editing process a mathematical operator is missing in the text on pages 5 and 12. <br><br><font color="red"><b> Link to the corrected article <u><a href="http://dx.doi.org/10.2298/PAN2101001A">10.2298/PAN2101001A</a></b></u>

The efficiency of emerging markets: Evidence from nonlinear panel unit tests

In this study, we investigate market efficiency considering nonlinearities by testing the weak-form market efficiency of the stock markets of Brazil, China, Russia, Turkey, and South Africa using recently proposed nonlinear panel unit root tests. The stock markets of these emerging countries are deliberately selected for their market capitalization to form a homogenous panel. The results of nonlinear models indicate that the stock market indexes are stationary and weak-form inefficient. This finding contributes to the contradictory results of the prior research using linear and nonlinear models about the efficiency of emerging stock markets in favor of nonlinear ones. Furthermore, we propose that studies using financial variables consider such nonlinearity in order to achieve more accuracy in findings related to such studies.

Shocks, financial constraints and households’ consumption amid the great recession

Overall, there is now considerable evidence that financial constraints are at the root of the lack of consumption smoothing during the Great Recession. We push this evidence forward and show that in the presence of credit constraints, a job loss leads to larger drops in households? consumption. We build a set of testable hypotheses from our theoretical model and employ microdata taken from the second round of the Life in Transition Survey (LiTS II) (European Bank for Reconstruction and Development 2010). We specifically assess the role of financial constraints in explaining households? consumption coping strategies after the crisis shocks. Economic hardship is more likely to be observed if households experience difficulties in meeting outstanding debt obligations or in obtaining new credit lines because of financial constraints. The impact of job and wage shocks on households? consumption is much attenuated, by around a half, when we control for sample selection bias in accessing the formal credit markets. In the context of increasing impoverishment across Europe, the paper shows that a careful analysis of the main determinants of households? economic and financial hardship is crucial to formulate targeted measures at the regional and local level.

Tax reforms and income inequality in former Yugoslav countries: Escaping the avant-garde neoliberalism in the income tax policy

After the breakup of former Yugoslavia Croatia, Serbia and Slovenia followed different income tax reform trajectories that could explain currently different levels of income inequality in these countries. Our paper analyzes redistributive effects of introducing progressive tax systems, like the ones currently implemented in Slovenia and Croatia, in the Serbian context. Using microsimulation modeling and Survey on Income and Living Conditions data for 2017 our results suggest that implementation of both Croatian and Slovenian tax system would yield lower levels of income inequality and poverty if applied in Serbia. Slovenian system achieves larger decrease in inequality due to higher tax burden on the top incomes and brings significant increase in tax revenues. Croatian tax schedule achieves stronger decrease in poverty as more generous personal allowance exempt higher portions of low incomes from labour taxes.

Economic growth, regional convergence, human capital, research and development, turkey

This study analyzes convergence among regions of Turkey from an endogenous growth perspective. The results show that human capital, which is represented with R&D personnel, has a negative impact on economic growth in the regions based on its percentage in total employment. Moreover, we find that there is an estimated U-shaped relationship, which implies that if the percentage of R&D personnel in total employment increases after a certain level, the effect has a tendency of turning positive; the west region is especially closer to having a positive effect. However, regarding convergence, the relatively high-income west is closer to experiencing the positive effect of R&D personnel. Moreover, due to the relatively low percentage of R&D personnel in the east region, the economic growth of the east region is more negatively affected by R&D personnel. Therefore, using a strategy that is based on increasing the percentage of R&D personnel cannot help the east region to close the differences in income.

Keynes: The second coming?

This article outlines principles of a modernised macroeconomic framework, drawing on John Maynard Keynes. It explores the historical context in which Keynes? economic theory arose, and the history of its application and subsequent replacement by neoclassical economics. The article argues that any updated Keynesian programme must address three new problems: globalization, wealth inequality and climate change. It sketches out the ways in which these might be addressed.

Does innovation co-move with FDI? Evidence from OECD countries

In this study, the panel co-integration test combined with structural breaks was used to explore the long-term co-movement between FDI and patent and trademark applications? in accordance with 33 OECD countries from 1999 to 2018. The robust results demonstrate that both innovation variables including patent and trademark comove with FDI in the OECD sample. Furthermore, this long-term co-movement of FDI and innovation experiences some structural breaks during the period 2003-2010. Finally, there is a long-term co-movement between FDI inflows and innovation activity in OECD countries.

The impact of obesity and income on happiness: Evidence from EU countries

: The World Happiness Report 2018 ranks 156 countries by their happiness levels, and revealed a link between happiness and obesity. Despite the importance of this link, few studies have analyzed this relationship. Moreover, it may be the case that the relationship between happiness and obesity is non-linear. The relationship between happiness and income, however, has been studied by several researchers, particularly after the publication of Easterlin (1974). In his famous paradox, Easterlin found that after reaching a certain level, the further increase of material wealth no longer promotes happiness. Here, we investigate whether there is a quadratic relationship between happiness & obesity and happiness & income, for a panel of EU countries for the period 2005-2016, using the system GMM method. The empirical results suggest an inverse U-shaped relationship between happiness & obesity and happiness & income, implying that as obesity (income), represented by body mass index, increases, happiness first increases then stabilizes and finally decreases. Hence, the existence of an inverted U-shaped relationship between happiness and income supports the validity of the Kuznets curve hypothesis. Some control variables were also included in the regressions in order to solve omitted variable bias problems. The results indicate that income inequality and unemployment have a significantly negative impact on happiness.

Validity of Okun’s Law in a spatially dependent and cyclical asymmetric context

The current article analyzes the validity of Okun?s Law and sizable distortions that can occur in the estimation when spatial dependence and cyclical asymmetric impacts are not considered, which is a concern commonly ignored by the existing literature. Primarily spatial panel regressions (SDM, SAR, and SEM) and nonparametric regressions along with specification tests are adopted in terms of the methodology (such as panel unit root tests, panel cointegration, Moran?s I and Geary?s C tests of global spatial dependence, spatial LM, and Hausman tests). Additionally, spatial heterogeneity and cross-regional variation in Okun?s Law are investigated by adopting geographically weighted regression, LISA (local indicators for spatial association), and local Geary?s C analysis. A panel of 26 Turkish NUTS-2 regions from 2004 to 2018 was analyzed. The results clearly revealed that failing to incorporate spatial proximity and asymmetric cycle impacts leads to the biased estimation of Okun?s coefficient, such that during the downswing years of the national economy, Okun?s Law holds robustly: unemployment increases quickly in response to a decline in output. In contrast, during upswing years, the size of Okun?s coefficient is relatively much lower. Moreover, spatial dependence and heterogeneity are sizably evident. Okun?s coefficient is demonstrated to vary significantly across regions that have different industrial and labor market characteristics. As a policy implication, it has been understood that the reduction of unemployment is more difficult than initially understood, as economic growth itself does not provide a solution during upswing periods. The necessary special and region-specific policies are discussed throughout the text.