Itinera Institute

Luncheon Lecture: Temporary agency work as a transition for a more efficient labour market?

Wed, 17 Sep 2008 12:00:00 +0100

Itinera Institute Luncheon Lecture

Temporary agency work in Belgium is traditionally considered as important in the transition from school to work and from inactivity to work. Jan Denys (Randstad) argues that temporary agency work is also crucial in the work-work transition, and expresses clear recommendations towards a better policy for an efficient labour market. Fons Leroy, (VDAB) concludes the lecture with an objective reflection.

Family attention pays

Fri, 05 Sep 2008 12:00:00 +0100

Inequality between young Americans is increasing. While the lucky ones get a college degree, the less fortunate ones, whose intellectual and socio-emotional capabilities aren’t equally developed, fight against inequality, in a part due to a lesser productivity on the labour market. For James J. Heckman (Chicago University) the environment in which these kids grow up is in part responsible for these social differences, which is why they need to be tackled right there. Today policies tend to focus on the intellectual capabilities of teenagers, while the focus should be on the young children because economically more profitable. Therefore, family plays a crucial part in the development of a child, and this is true not only for the U.S. but for every country in the world.

Patients want more voice

Fri, 05 Sep 2008 12:00:00 +0100

This publication from the Roi Baudoin foundation is the result of a consultation which analysed the possibility for patients to be more actively involved in the Belgian health policy decision making. Foremost, patients want all patient groups to be represented in an integrated – and not fragmented – way. According to the questioned citizens, this representation would also have to be backed with extra financial means. We can only guess whether this can truly improve the quality of our healthcare system.

The Danish Employment Miracle

Fri, 05 Sep 2008 12:00:00 +0100

Flexible hiring and firing rules, generous unemployment insurance and an active monitoring and assistance of the unemployed; those are the main elements of the Danish Flexicurity model that several Belgian politicians cite as a solution for our high unemployment rate. Many researchers stress the importance of the activation policy towards the unemployed. Others on the contrary, can not find a direct positive effect of specific assistance programs on employment. This paper builds a bridge between both views by showing that the motivation of the unemployed to find a job, ultimately comes from the threat to have to attend such an assistance program.

Trouble in paradise

Fri, 05 Sep 2008 12:00:00 +0100

From the start of the Euro zone, the great danger of instability that threatens a single currency area was pointed out, if no explicit transfers were possible when an asymmetric shock occurs, that hits one country more than the rest of the members. The crisis in which the European project has been involved for years (like the rejection of the European Constitution) makes the further development of its economic structure politically impossible. But like a boomerang, this could turn itself against us in the coming years.

Trouble in paradise

Fri, 05 Sep 2008 12:00:00 +0100

Employment assimilation of immigrants in the Netherlands: Catching up and the irrelevance of education

Mon, 01 Sep 2008 12:00:00 +0100

This Iza study examines employment assimilation of immigrants in The Netherland. The authors observe marked differences between immigrants by source country: Predictably, non-western immigrants never reach parity with native Dutch, but even the second generation immigrants never fully catch-up. On the contrary, the western, immigrants seem to face no considerable difficulties in the Dutch labour market. The most striking result is however that education is irrelevant for socio-economic position of immigrants once the country of origin has been controlled for, suggesting that immigrants are still subject to discrimination.

Health Policy makes a difference on the labour market

Mon, 01 Sep 2008 12:00:00 +0100

Children from disadvantaged families lag behind their classmates in terms of general development. This decreases their chances of finding a decent job and may cause a vicious cycle to emerge. The traditional focus for narrowing this gap is on better schooling and closer monitoring. This paper on the other hand, shows that health policy can also be a powerful lever. Health problems occur more frequently with children from poorer families and have, when they arise, a more negative impact on the development of the child. One relevant policy issue surfaces in the mean time: in frameworks such as the valuable Marshall plan for Wallonia, it is probably better to foresee, in addition to fiscal and more general economic measures, a chapter on the health problems of disadvantaged children.

Poorly Educated Europe

Mon, 01 Sep 2008 12:00:00 +0100

Europe – not to mention Belgium – doesn’t have universities that are absolute world class. The immediate result is that Europe, in comparison to the United States, Australia and even China, is falling behind in the increased international competition for talented academics and students. On the longer term, however, this means that the goal of the Lisbon strategy – to make Europe the most competitive knowledge-based economy – is being jeopardized. As universities are key actors in a knowledge-based economy. This paper identifies the problems and proposes reforms that are needed to turn the tide. Bologna has put the issue on the political agenda, now the time has come to undertake action.

Europe vs. America

Tue, 26 Aug 2008 12:00:00 +0100

Many of the recent economic problems have their origin in the United States: this does not mean, however, that unemployment and inflation will hit harder there. Most likely, it will be the other way around.

Europe vs. America

Tue, 26 Aug 2008 12:00:00 +0100

German reforms pay off

Fri, 22 Aug 2008 12:00:00 +0100

A recent OECD study found that only Italy and Turkey do worse than Belgium regarding the participation of elder employees on the labour market. So, if Belgium wants to control the costs of the ageing population, activating these employees will be one of the most important challenges. We can learn something from our German neighbours in this respect, as Germany has succeeded in raising the participation of elder employees with 15% in seven years (up to 52%). On top of that, German unemployment fell with 1.2 million between 2005 and 2007. The authors of this paper conclude that these excellent results stem from reforms that made the labour market more flexible – and not solely from the upswing of the economy in the recent years – and point to a number of good practices. A must read for Belgian policy makers in other words.

Immigrants do not squeeze natives out of labour market

Fri, 22 Aug 2008 12:00:00 +0100

As much as we used to think that squeezing out the older workers out of the labour market (lump of labour fallacy) would translate in to jobs for young people, believing immigrants on the labour market have the same effect on native employment is naïve. This is what follows from this NBER paper by Ottaviano and Peri who pone that immigrants and native jobs can be complementary which means the natives’ wages could go up thanks to immigration.

Ireland and its war on poverty

Fri, 22 Aug 2008 12:00:00 +0100

Despite strong economic growth during the last years, Ireland still counts an important number of people who live in poverty, or who are at risk of poverty. This paper provides a detailed overview of the available options to eradicate poverty by 2016. In this regard, this paper provides an important benchmark for everyone who is concerned with the fate of approximately 1.5 million Belgians.

The U.S., land of economic liberalism, and sportive dirigisme

Fri, 22 Aug 2008 12:00:00 +0100

The Olympic Games are a true triumph for China: an incredible organisation and a sportive success measured by the number of medals wan. Economic research shows that authoritarian regimes are more capable to succeed in top-class sports. America’s dirigisme in sports, on the other hand, is less well-known.

The U.S., land of economic liberalism, and sportive dirigisme

Fri, 22 Aug 2008 12:00:00 +0100

A common framework for blue collar and white collar workers implies new labour market policies

Wed, 20 Aug 2008 12:00:00 +0100

A common framework for blue collar and white collar workers implies new labour market policies

Wed, 20 Aug 2008 12:00:00 +0100

Marc De Vos calls for a common legal framework but stresses that it involves fundamental questions for better labour market performance. The impasse on the common framework hides a deficit of vision on labour market policy.

Europe’s immigration priorities

Tue, 12 Aug 2008 12:00:00 +0100

According to this Bruegel policy brief, purely national migration policies are increasingly ineffective in addressing the EU’s urgent migration challenges. The author identifies high-skilled migration, irregular migration and asylum policy as the key areas for common action, while mid- and low-skilled legal migration and the integration challenge should continue to be dealt with at the national level. Regarding high-skilled immigration, he claims that the European blue card directive needs to be revised so that it genuinely offers access to the entire EU labour market, and that developing countries concerned about brain drain should be offered an opt-out clause.

How consumption taxes can influence income distribution?

Tue, 12 Aug 2008 12:00:00 +0100

This OECD article highlights that consumption taxes increase the difference between the highest and the lowest incomes. There are, however, important differences between countries. Surprisingly enough, it appears that Belgium is one of the countries where increasing consumption taxes would favour the rich the least. However, a more recent study of the Catholic University Leuven has shown that a decrease in direct taxes (on income or wealth for instance) and an increase in indirect taxes (like the VAT) would significantly raise inequality.

Social fraud in social security

Tue, 12 Aug 2008 12:00:00 +0100

Belgium is accumulating victories in its battle against social fraud. This is good for the state, and good for our social system.

Social fraud in social security

Tue, 12 Aug 2008 12:00:00 +0100

Why do Europeans work part-time?

Tue, 12 Aug 2008 12:00:00 +0100

This paper of the ECB analyses the relative contribution of the business cycle and structural factors to the development of part-time employment in the EU. It comes out that, in the short-run, the business cycle affects negatively the development of part-time employment. In the long run, however, institutions and other structural factors are found to be the key drivers of the rate of part-time employment. In Belgium for instance, the relaxation of the legislation on part-time jobs had a positive effect on recent part-time employment development. Despite some drawbacks, part-time work may increase the labour choices open to individuals and may allow employers to adjust hours worked to cyclical conditions more easily. In the ageing context, it may also allow senior workers to opt for a smooth retirement and positively affect their employment rates.

There comes the recession?

Mon, 11 Aug 2008 12:00:00 +0100

According to Ivan van de Cloot, it’s important to distinguish the virtual losses of the stock exchange and housing market from the real economic activity. The financial crisis can slow the US and thus also the Belgian economy down, but will not necessarily lead to a recession. The pessimistic reporting of the press for the past few months, on the contrary, will certainly have its price.

There comes the recession?

Mon, 11 Aug 2008 12:00:00 +0100

With kind regards to the Immigrant

Mon, 11 Aug 2008 12:00:00 +0100

The reasoning sounds compelling: the more immigrants, the larger the number of potential workers and the more the wage of the native worker is threatened. However, for this argument to hold economically, other additional assumptions have to hold. One is, for example, the conjecture that both workers are competing for the same job. This study on the other hand – Ottaviano and Peri (NBER, 2007) – shows that this wasn't true for the United States in the period 1990-2004, so that the average wage of the American employee benefited both in the long and in the short run from immigration. European and Belgian policymakers therefore have to keep this result in mind when imposing continuously stricter immigration laws.

Young Children are the Future

Mon, 11 Aug 2008 12:00:00 +0100

What if there was a silver bullet to lower both crime and teen pregnancy rates and to make society both more productive and more equal, all at the same time? According to this paper, a policy that addresses the noncognitive skills of young children (perseverance, motivation, risk aversion, etc.), by focusing on family ties, could tackle all these problems in the most efficient way. With jam-packed prisons, growing number of poor people and the necessity to raise productivity to meet the demands of the ageing population and globalization, Belgian policy makers can probably not afford not even taking a look at this paper.

The olympic choice

Wed, 06 Aug 2008 12:00:00 +0100

Marc De Vos analyses the failure of the Doha-round and warns for the creeping malaise in economic globalisation. Will the world community continue on the path of an international legal order and common wealth creation?

The olympic choice

Wed, 06 Aug 2008 12:00:00 +0100

Dismissal regulations dampen productivity

Mon, 04 Aug 2008 12:00:00 +0100

Financing the growing non active population assumes a rise in the productivity of the active population. This IZA paper shows that mandatory dismissal regulations can have a negative impact on productivity. The main reasons behind this result are the higher dismissal costs and reduced worker effort. Making it easier for the employer to hire temporary workers, on the other hand, enhances productivity. Hence, this paper provides grounds to re-evaluate the future of our dismissal regulation and suggests to think more along the lines of securing lifelong working than a particular lifelong job.

The Maximuminvoice works, but could be improved

Mon, 04 Aug 2008 12:00:00 +0100

This KCE report shows that the maximuminvoice (MAF), according to which health care costs paid by patients are limited, still hasn’t realized its objective. The number of Belgian households who still allocate more than the proposed benchmark – i.e. 5% of the household income – to the non-refundable part of medical expenses, amounts to an important 3%. This number even goes up to 10% when supplements are taken into account. The KCE report consequently studies the background of these households, the revisions that can be made to align the results of the maximuminvoice with its initial intention and the consequences for the budget.

How to improve social mobility?

Fri, 01 Aug 2008 12:00:00 +0100

In this article, social mobility is not handled from the classical economic perspective of income groups but from the labour market participation perspective. The social hierarchy is thus based on the quality and sustainability of the job. The authors underline that by supporting people in their labour market achievements, policy makers will help to break up the walls to intergenerational and intragenerational social mobility.

Pension system reform: Belgium lags behind most other OECD countries

Fri, 01 Aug 2008 12:00:00 +0100

In response to population ageing, pension spending effort is set to increase significantly over the coming decades in OECD countries. But, as this IZA paper recalls, pension policy is challenging and controversial, since it involves long-term decisions in the face of numerous short-term political pressures. Nevertheless, in many OECD countries, much has been done since the early 1990s to make pension systems fit for the future. Belgium appears as an exception: it has not led any major pension reform and still offers many routes for early exit from the labor market. With the baby-boomer generation reaching retirement soon and the perspective of a squeezing labour force, wouldn’t it be high time to act?

The price of non-globalisation

Fri, 01 Aug 2008 12:00:00 +0100

Globalisation has been accused of stealing jobs and depressing wages in the developed part of the world. According to this ECIPE paper, these fears are however based on erroneous facts and wild exaggerations. The authors analyse what some goods would have costed if globalization had been freezed at its level in 1970 and 1980 and claim that the remarkable period of disinflation between 1980 and today has fed into higher real income.

Oil through the roof

Thu, 31 Jul 2008 12:00:00 +0100

Many hope a barrel of petrol will go back to a 100 dollar before the end of the year. Their argument is, of course, that the price of 135 dollars per barrel does not reflect the market price triggered by supply and demand but has been caused by financial speculation. In the United States the presidential candidates are trying to surpass one another by cursing the speculators. It is, however, not that simple to estimate the role of speculation on the current oil price. Ivan van de Cloot argues that its role should not be overestimated.

Public investments and the economy

Thu, 31 Jul 2008 12:00:00 +0100

Often, public investments are not based upon economic arguments but turn out to be a real horse trading. Economists, on the other hand, always plead in favour of weighing social benefits against societal costs (including potential pernicious effects on health and environment). Public authorities oblige everybody to financially support their projects. It is only normal they should manage that money well.

Public investments and the economy

Thu, 31 Jul 2008 12:00:00 +0100

Oil through the roof

Wed, 30 Jul 2008 12:00:00 +0100

Should public authorities subsidise external beauty?

Mon, 28 Jul 2008 12:00:00 +0100

Should public authorities subsidise external beauty?

Mon, 28 Jul 2008 12:00:00 +0100

Figures that have recently been published by the Belgian Health Care Knowledge Centre show that health insurance spending for plastic surgery has more than doubled in only 11 years. This example serves to introduce a debate on the desirability of health expenses in general.

Employment risks and opportunities for an ageing workforce

Fri, 25 Jul 2008 12:00:00 +0100

This WZB article provides a detailed analysis of the employment situation of older workers (55-64 years) in the EU member states. Highlighting country differences, the authors draw the conclusions that this labour market challenge can be characterised to a large extent as a gender problem, that labour market policy for an ageing workforce must start much earlier than just with older people and that their employment situation can to a great extent be sought in the general economic parameters and especially in the degree of employment growth in the service sector. With a senior employment rate of 34,4%, Belgium is in the bottom league by European standards and needs to react quickly to strive towards the Stockholm targets of 50% by 2010.

European energy markets lack integration

Fri, 25 Jul 2008 12:00:00 +0100

Ten years after the process started, the full liberalization of the European energy market is still far from being achieved. And this is not only due to technical difficulties, but also because of the weak political support to the process of integration. This Bruegel report underlines that the new energy policy developments should consider how to bypass national incentives to guarantee domestic energy supply, to protect access to domestic sources of energy and to protect national industry from the impact of stricter environmental regulation. It stresses that the effective fight against climate change requires common action and that a single market for energy is the basis for a common approach to EU climate policy.

How to improve the performances of European universities?

Fri, 25 Jul 2008 12:00:00 +0100

This report of Bruegel looks at the factors explaining the under-performance of the European universities in the ranking of Shanghai and identifies the priority reforms for higher education on the old continent. It brings to light a lack of student mobility, an insufficient flexibility of the first cycle programs and a severe underdevelopment of research. The authors plead in favour of a gradual increase of the annual spending in the higher education in the next decade, for more autonomy for institutions and for an intensification of the mobility of the students and the teachers-researchers.

The silver lining

Thu, 24 Jul 2008 12:00:00 +0100

Marc De Vos hopes that the ongoing political troubles in Belgium will lead to a workable state and efficient government. He points out that the Flemish consensus for more devolution hides great differences on policy views. Policy reform, not devolution per se, is the only silver lining of the current institutional crisis.

The silver lining

Thu, 24 Jul 2008 12:00:00 +0100

Disadvantaged children: an effective intervention is an early one

Fri, 18 Jul 2008 12:00:00 +0100

This IZA discussion paper pones that, if society intervenes early enough, it can improve cognitive and socio-emotional abilities and the health of disadvantaged children. These interventions are estimated to have high benefit-cost ratios and rates of return. As programs are currently configured, interventions early in the lifecycle of disadvantaged children have much higher economic returns than later interventions such as reduced pupil-teacher ratios, public job training, convict rehabilitation programs, adult literacy programs, tuition subsidies or expenditure on police.

SMEs and the tax system: What so different about them?

Fri, 18 Jul 2008 12:00:00 +0100

This article discusses some key tax policy issues relating to SMEs. It argues that most common claims on the role of SMEs do not provide a solid basis for a different treatment of SMEs as compared to larger taxpayers. However, he recognizes the existence of fixed costs related to tax compliance and administration, and emphasises the need for simple tax procedures in order to reduce them.

The economic returns to a second language

Fri, 18 Jul 2008 12:00:00 +0100

Knowledge of an additional language may be associated with enhanced earnings because it may reflect what might generically be called ‘ability’ bias or because it may actually be useful at the workplace (and therefore demand of bilinguals is higher). Using Canadian data, this IZA publication found very substantial, statistically significant rewards to second official language use in Quebec, but not for the rest of Canada, which is Anglophone. This suggests that smaller language communities have larger incentives to learn other languages, well.

The inflation-health multiplier

Fri, 18 Jul 2008 12:00:00 +0100

This IZA paper investigates the possibility of intergenerational transmission of unhealthy eating habits from parents to adult children. It is found that only maternal history influences negatively the eating behaviour of their daughters. Even more preoccupying is the fact that eating intergenerational transmission appears to be more intense amongst lower household income individuals. With the rising food prices, lower income families are very likely to shift to an unhealthier diet which will be transmitted to the following generation(s) – and thus worsening the harm. Inflation has a health component too.

To “flexirationalise” the public sector

Fri, 18 Jul 2008 12:00:00 +0100

The age average in the public sector is generally higher than in the private one. So, according to this OECD report, to attract and to retain capacities in the public service could indeed represent a severe challenge in the years to come. To increase its attractiveness, the report favours the flexibility in employment rather than the increase of the public pensions that it considers as an expensive and insufficiently targeted approach. If Belgium still has progress to make in comparison with it’s neighbours, it should neither lose sight that the retirement of numerous civil servants also represents a tremendous opportunity to rationalize public employment.

Oil prices: risk and opportunities

Thu, 17 Jul 2008 12:00:00 +0100

Based on US data, this paper explores the roles of oil demand and supply shocks in industrial production. It shows that if oil shocks of both types lead to a higher price and have in this regard negative effects, demand shocks also have the positive effect of increasing the demand for goods and services by emerging economies. It suggests that the emergence of new players in the global economy may increase the cost of resources, but it also offers trade opportunities. It is the ability – or lack thereof – to innovate and produce goods that are not easily substitutable that determines whether the new challengers represent a risk or an opportunity for industrialised countries like Belgium.

For an effective adaptation to climate change.

Thu, 10 Jul 2008 12:00:00 +0100

Addressing climate change requires mitigation as well as adaptation strategies. Humans have adapted to climatic changes for millennia, but effective adaptation starts with appropriate incentives and adequate information. This OECD report provides a critical assessment of adaptation costs and benefits for key climate sensitive sectors at the national and global level. Special emphasis is on insurance and risk sharing, environmental markets and pricing, and public private partnerships.

The determinants of a high employment rate.

Thu, 10 Jul 2008 12:00:00 +0100

This paper compares labor market policies, institutions and outcomes for the EU member states, for the period 2000-2005. It focuses on indicators of generosity (expenditures relative to GDP) and relates these and other policy indicators to indicators of labor market outcome and performance. The results show that, on a cross-country basis, higher rates of employment are in general associated with higher expenditures on labor market policies, a lower degree of rigidity in labor market institutions and in product market regulation. With one of the lowest employment rate in the EU-15, Belgium should definitely act. It performs quite well regarding labor market policies, but there is considerable room for improvement regarding labour market flexibility and product market regulation.

The impact of EU migration on native workers.

Thu, 10 Jul 2008 12:00:00 +0100

This DWP paper found no statistically significant impact of migration from the new EU Member States on claimant unemployment, either overall of for any identifiable subgroup. In particular the authors found no adverse impacts on the young or low-skilled, nor on wages, either on average or at any point in the wage distribution. Thus, the impact of EU migration on the labour market is not negative now, and given the changing demography, could become a real asset.

Too Young to Leave the Nest? The Effects of School Starting Age

Thu, 10 Jul 2008 12:00:00 +0100

This IZA paper uses data on the population of Norway to examine the role of school starting age on longer-run outcomes. They find evidence that starting school younger has a small positive effect on IQ scores at 18, a large positive effect at tests, a significant positive effect on the probability of teenage pregnancy, but has little effect on educational attainment of boys or girls. Overall, there is not much evidence to suggest that there are strong reasons for parents to hold their children out of school or to time the births of their children to influence school starting age.

Will Soaring Transport Costs Reverse Globalisation?

Thu, 10 Jul 2008 12:00:00 +0100

This paper of CIBC World Markets Inc. discusses the impact of higher energy prices on transport cost and on globalization. It emphasizes that nowadays, the cost of moving goods, not the cost of tariffs, is the largest barrier to global trade. As an example, In 2000, when oil prices were $20 per barrel, transport costs were the equivalent of a 3% tariff rate. Currently, transport costs are equivalent to an average tariff rate of more than 9%. With the perspectives of a barrel at 200 dollars, this suggests not only a potential major slowdown in the growth of world trade, but also a fundamental realignment in trade patterns in the future.

Break the budgetary deadlock on ageing

Wed, 09 Jul 2008 12:00:00 +0100

Marc De Vos argues for a policy strategy for new wealth creation and new social protection. Belgium is missing its appointment with demographic history and needs to do more than a minimalist budgetary policy.

Break the budgetary deadlock on ageing

Wed, 09 Jul 2008 12:00:00 +0100

Private spending: the magic bullet for the healthcare funding challenge?

Fri, 04 Jul 2008 12:00:00 +0100

Total healthcare is likely to rise in the future. According to this IPPR report, collective, public funding will remain the most efficient and equitable way of financing healthcare. Private spending plays a valid role in the health economy though but will not provide an efficient means of increasing resources for health. Policymakers should thus reform the public system first, whilst considering the contribution and efficiency of the diverse types of private healthcare spending as integral to health system strategies.

Specific-training worse than general training for the senior employment rate

Fri, 04 Jul 2008 12:00:00 +0100

Many studies have shown that employees with firm-specific skills are more likely to be covered by employer-sponsored pension schemes than workers with general skills. Following this, this IZA paper tests the effect of trainings on retirement, and finds that workers who participated in firm-specific training in their early careers retire earlier than workers with a general training background. This indicates that shared investments in firm-specific training are embedded in implicit contracts that induce early retirement and suggests that training participation should be encouraged at a broader level than at the firm one.

Wealth and income: what relationship?

Fri, 04 Jul 2008 12:00:00 +0100

This OECD report examines the correlation between family wealth and disposable income. More precise information on wealth will enable policies to be better targeted, especially knowing that the correlation between the two is not perfect, even if positive and strong.

What we can learn from return migration?

Fri, 04 Jul 2008 12:00:00 +0100

According to this EUI paper, a large part of the return migrants from the Maghreb positively evaluate their migration experience. Migrants that left as students or employees, for instance, often go back to occupy high-quality jobs, become self-employed or even employer. But returnees do not form a homogenous group. The high value that returnees may attach to human capital transfer and skill acquisition abroad will determine whether they will consider their migration experience as a success – or not.

It’s the economy, stupid!

Tue, 01 Jul 2008 12:00:00 +0100

High oil prices; the government should adapt as well

Tue, 01 Jul 2008 12:00:00 +0100

High oil prices; the government should adapt as well

Tue, 01 Jul 2008 12:00:00 +0100

The government cannot control escalating energy prices but should strongly support the adaptive capacity of our economy.

Languages and Economy

Tue, 01 Jul 2008 12:00:00 +0100

As 59% and 53% of Flemish people master French and English, only 19% and 17% of the Walloon speak Dutch and English. The economic impact of this is not to be underestimated.

Languages and Economy

Tue, 01 Jul 2008 12:00:00 +0100

A global production cap: the only way to climate success?

Fri, 27 Jun 2008 12:00:00 +0100

This Stockholm Network report describes 3 plausible futures resulting from 3 different approaches to climate policy at the international level. More specifically, they examine the various climatic, economic and social costs – and consequences – of international policy. Worryingly, only one scenario achieves climate change success as defined by the EU. This ‘step change’ scenario looks at the possibility that policy may take a radically different course in response to a step change in concern about climate change, which lead to the adoption of an entirely new policy framework – a global production cap.

Do poor children become poor adults?

Fri, 27 Jun 2008 12:00:00 +0100

In this IZA paper, Dr. Corak suggests that income transfer is important for the protective purposes IN THE SHORT RUN but appears to have little impact on the future mobility of children. Instead, the focus should be on social investments across the life stages of child and youth life with a particular focus on post-secondary attendance and achievement. Canada has performed well in comparison to countries like Finland or Sweden and is far advanced in relation to the US and the UK. It is high time our understanding of social mobility in Belgium would be based on facts and research than the current unsubstantiated belief in the superiority of our system.

Ethnic background matters on labour market

Fri, 27 Jun 2008 12:00:00 +0100

More evidence from the Netherlands shows that non-western immigrants never reach parity with native Dutch on the labour market, says this IZA working paper. Ethnic background thus seems to matter in explaining the underperformances of immigrants. Labour market integration therefore requires policies on various fronts such as unemployment, job quality and relation to education and upward mobility. Belgium is only just starting with unemployment….

How to combine intensification of the work and population ageing?

Fri, 27 Jun 2008 12:00:00 +0100

In industrialised nations, the current trend is an intensification of the work, by accumulation of diverse temporal constraints. At the same time, the population is ageing and the age structure of the working population is changing. This article of the “centre d’étude de l’emploi” underlines the challenge that the combination of these two tendencies represents. The authors approach the fact that the senior workers are less resistant to temporal pressure at work. They insist on the necessity of guaranteeing to seniors a suited working environment if one wants to promote longer professional careers.

No more trade-off between government size and output volatility

Fri, 27 Jun 2008 12:00:00 +0100

This Bruegel Working Paper sheds light on the fact that the negative relationship between government size and output volatility was strong prior to 1990 but vanished afterwards. According to the results of the authors, a one percentage point increase in the size of government is now unlikely to yield a reduction in output volatility exceeding 0.1 percentage point, once public expenditures reaches around 40% of GDP. They conclude that the impact of a marginal change in the size of government is bound to be very small for most countries in the euro area. Looking at government expenditure as a stabilizing force in the economy seems less relevant today.

School improvement and economic development

Fri, 27 Jun 2008 12:00:00 +0100

The role of improved schooling, a central part of most development strategies, has become controversial because expansion of school attainment has not guaranteed improved economic conditions. This NBER working paper reviews the role of education in promoting economic well-being, with a particular focus on the role of educational quality. It concludes that there is strong evidence that the cognitive skills of the population - rather than mere school attainment - are powerfully related to individual earnings, to the distribution of income, and to economic growth.

It’s the economy, stupid!

Wed, 25 Jun 2008 12:00:00 +0100

Marc De Vos sees insufficient economic growth as the root cause of the problems of purchasing power and low pensions. He notices a new Belgian paradox of insufficient means for our needs and too much expenditure for our capacity. Real policy reform is indispensable to stop further relative decline.

Luncheon Lecture Erik Jones on his new book: Economic Adjustment & Political Transformation in Small States

Tue, 24 Jun 2008 12:00:00 +0100

Political crisis is no longer 'news' in Belgium or the Netherlands. Less well understood is the toll that this controversy is taking on patterns of economic policymaking. Belgium and the Netherlands used to rely on consensus to stabilize welfare state institutions and to underwrite national competitiveness. This is no longer possible in times of political crisis. As a result, both countries are less flexible and more vulnerable than ever since the end of the second world war. Worse, they may never recover the ability to foster economic consensus.

The price of political crisis:Economic Adjustment and Political Transformation in Belgium and the Netherlands

Tue, 24 Jun 2008 12:00:00 +0100

The Price of Political Crisis: Economic Adjustment and Political Transformation in Belgium and the Netherlands

Mon, 23 Jun 2008 12:00:00 +0100

Belgium is badly ranked to attract investments

Fri, 20 Jun 2008 12:00:00 +0100

This study of Price Waterhouse Coopers seeks to compare the ease of paying taxes in 178 countries around the world. The Maldives is the country which makes paying tax the easiest and Panama is the one which makes it the most difficult. With a ranking of 154, Belgium remains towards the bottom of the league and is behind almost all European countries, with the exception of France and Italy. As testified by the notional interest deduction system or the drop in personal income tax, Belgian fiscal policy has clearly improved over recent years. But we have to continue to adapt our system if we want to be competitive in attracting investments.

For more and better interactions between universities and the business sector

Fri, 20 Jun 2008 12:00:00 +0100

This Policy brief of “The Knowledge for Growth” Expert Group emphasizes the importance of the interactions between universities and the business sector. It stresses however that it is necessary to take into account the diversity in models of modern universities and that interaction with the business sector do not conform to “one-size-fits-all” prescriptions. Following this, the authors invite public authorities to develop a combination of incentives and liberalized regulations that permit differentiated institutions to adopt different modes of governance that will enable them to compete for varied source of funding. Also in Belgium there is room for improvement as universities could reach out more to the business sector.

Migration flows do not only react to economic incentives

Fri, 20 Jun 2008 12:00:00 +0100

This study of the Catholic University of Leuven offers a structural explanation of migration patterns to European countries between 1980 and 2004. The authors demonstrate that migration flow react to economic incentives, mainly with regard to the labor market, but also to cultural and colonial linkage. They show that the response of migration patterns to shortages in the labor market is highly efficient, while immigrants are not foremost attracted by high levels of social expenditure.

More satisfied workers, but only in the North

Fri, 20 Jun 2008 12:00:00 +0100

This study led by ZebraZone brings to light that the global satisfaction of the Belgian workers increased last year. Among the explanatory factors, it notably cites a bigger confidence of the workers in the organisation, more autonomy, better interpersonal contacts and a reduction of the stress. It underlines however that the increase of satisfaction is only noticed in Flanders, where it is significantly higher than in the two other regions of the country. The authors invite companies to invest first and foremost in a better policy of change, in career’s opportunities and working conditions.

To revise the financing of the health insurance

Fri, 20 Jun 2008 12:00:00 +0100

The budget of numerous European countries is not well, especially since the recent economic slowdown. The increasing health spending does not improve things. This working document of the Montaigne Institute suggests shifting over the national insurance contributions, very high in France but also in Belgium, towards other sources of financing – the income tax or the VAT for example. And this to assure the efficiency of the system – through a decrease of the labour costs notably – but above all its sustainability. Unfortunately, the weakest of our society risk losing there, and it is indeed for that that the authors defend a cautious estimation before shifting everything.

European Blue Cards: What are the main stakes

Wed, 18 Jun 2008 12:00:00 +0100

Frédéric Docquier analyses the Belgian and European migration policies in the context of an ageing society that looses some of its qualified workforce to the rest of the world. He concludes that a selective migration policy that respects certain crucial principles is not neccesarily pernicious for the countries of origin. The question should rather be: what's in it for the host countries?

European Blue Cards: What are the main stakes

Wed, 18 Jun 2008 12:00:00 +0100

Ivan Van de Cloot joins Itinera Institute as Chief Economist

Wed, 18 Jun 2008 12:00:00 +0100

Ivan Van de Cloot, the famous economist who comments regularly on the socioeconomic developments of Belgium, in the press and in diverse publications, has joined the Itinera Institute as chief economist.

Renewable energy; what the Germany success story can teach us

Wed, 18 Jun 2008 12:00:00 +0100

Renewable energy; what the Germany success story can teach us

Wed, 18 Jun 2008 12:00:00 +0100

In a short time, the renewable energies have become a big business in Germany. Johan Albrecht describes how a stimulating policy has created in 10 years not less than 180.000 jobs. The German experience also illustrates the relevance of an annual and critical policy evaluation."

Red, orange and green lights for end-of-career policies

Mon, 16 Jun 2008 12:00:00 +0100

According to the 2001 Stockholm objectives, 50% of the 55- to 64-year olds should be working by 2010. To monitor in- and output incentives, a performance measurement system is required, a scorecard for example, pretty much as this WSE Steunpunt publication. The authors notice very little structural progress, and with a mere 31% of the 55- to 64-year olds working in Belgium, more drastic measures are becoming inevitable. A lot of work needs to be done.

The creative economy

Mon, 16 Jun 2008 12:00:00 +0100

A new development paradigm is emerging that links the economy and culture, embracing economic, cultural, technological and social aspects of development at both the macro and micro levels. Central to the new paradigm, called the creative economy, is the fact that creativity, knowledge and access to information are increasingly recognized as powerful engines driving economic growth and promoting development in a globalizing world. This UN report looks deeper into the concept of creative economy, its dimensions, measurement and (policy) implications. A must-learn concept for every economy that highly depends on innovation and seeks to be sustainable – like ours in fact.

Age and the labour market