Etla

At last: A brighter outlook for the euro area

admin — Wed, 11 Sep 2013 12:12:32 +0000

The outlook for the euro area economy has improved considerably in recent months. Not only did real GDP increase in the second quarter for the first time in two years, it will even accelerate during the second half of 2013. According to the September estimate of the Eurogrowth indicator, we should expect increases of 0.55 and 0.45 percent in the third and fourth quarter, respectively. So it seems that a recovery in the euro area is finally on its way. While there were some special factors at work driving up the growth rate for the second quarter, e.g. the catching up of construction spending in Germany after the cold winter, the recovery may become broader based and will include more and more also some of the crisis countries.

The improvement comes mainly from the sentiment indicators which have shown increasing strength in recent months. Especially firms in manufacturing have become more optimistic about the future. The positive swing of the household survey – here the confidence has now a smaller negative contribution to the growth estimate – was also substantial. It may be that the situation on the labor market will stabilize in the near future, even though unemployment will remain probably at a very high level for some time. Other factors such as the real exchange rate and the results of the construction survey only showed minor changes.

The results of the Eurogrowth indicator are somewhat more optimistic than the consensus forecast for this year. According to the indicator, real GDP may stagnate for the year as a whole, whereas many other forecasts still imply a small decline. However, some caution is warranted given the uncertainty of model estimates especially in period of a cyclical turnaround. In addition, the experience in recent years shows that a setback may occur should the crisis in the euro area escalate again. Nobody can know if and when this will happen or what the trigger may be. Since the crisis is far from over, we should not expect that the recovery is already on safe grounds. On top of that, the outlook for several emerging economies has become more uncertain recently, so there may even be a negative shock from abroad.

September 11, 2013
Joachim Scheide
Kiel Institute for the World Economy

Outsourcing, Occupational Restructuring, and Employee Well-Being: Is There a Silver Lining?

Mika Maliranta — Tue, 10 Sep 2013 10:49:23 +0000

Industrial Relations. A Journal of Economy and Society. Vol. 52:4, pp. 878-941, October 2013

Where do workers engaged in shrinking jobs end up – and why?

Pekka Vanhala — Mon, 09 Sep 2013 06:11:54 +0000

This project will identify shrinking job tasks in the Finnish private sector, describe the transition pathways into other jobs of those engaged in these shrinking tasks, and explore the potential influence on the observed pathways of a broad set of background factors and mechanisms (linked to the individual, the job, the employer, etc.). Doing so, the project will produce a multifaceted picture of typical trajectories out of different shrinking job tasks, as well as basic information on key underlying factors affecting the probability of following successful or unsuccessful pathways. Hence, the results will also shed light on which pathways are typical for individuals differing in their backgrounds, broadly defined.

Taken together, the results produced within the framework of this project will provide a comprehensive picture of which workers seem to be hardest hit by the intensified change (partly polarisation) of the private-sector job structure – and why. This information should be useful not least for the planning of active labour market policies. Also activities related to labour relations can be expected to gain from the project’s results as they provide neutral information about phenomenon that often arouse strong and conflicting opinions.

The project is financed by The Finnish Work Environment Fund. It will be finalised by the end of 2014.

Evaluation of the Academy of Finland

Terttu Luukkonen — Wed, 04 Sep 2013 07:50:24 +0000

Reports of the Ministry of Education and Culture, Finland 2013:14

Microsoft Acquires Nokia: Implications for the Two Companies and Finland

Jyrki Ali-Yrkkö — Tue, 03 Sep 2013 22:46:34 +0000

Microsoft’s acquisition of Nokia’s phone business has considerable implications for Nokia and potentially for Finland as a country, but little immediate effects on Microsoft and related industries. One might ask, couldn’t there have been better remedies for the challenges both Microsoft and Nokia were facing?

Industry restructuring in the ICT sector – What does labor mobility tell us about skill relatedness and knowledge spillovers?

Tuomo Nikulainen — Wed, 28 Aug 2013 07:09:52 +0000

Industries go through different phases of evolution where old skills become obsolete and new skills arecrucial for the industrial renewal process. Industry evolution is usually addressed from the perspectives of production and exports, leaving one factor largely unexplored: human capital. Industry restructuring isa dynamic process where skills developed in one industry move to other industries as individuals change employers. We argue that the labor flows between industries reveal skill relatedness because individuals move to industries that value their existing skills. We also argue that the labor flows differ between highand low-skill labor. By examining these flows, we can identify spillover effects between industries during restructuring. To address this argument, we analyze all individual-level labor flows originating from the Finnish ICT sector for 1989-2010. This industry sector-level study focuses on three ICT industries (manufacturing, services and software), and we address the differences in labor mobility between the individuals with different professional skill levels. We find several differences in the labor market dynamics over time for each ICT industry and for the different skill levels.

The Nordic Welfare Model after the financial crisis – Challenges and possible solutions (NORWELL)

Pekka Vanhala — Tue, 27 Aug 2013 09:53:21 +0000

The overall objective of the NORWELL project is to

scrutinize the current competitiveness of the Nordic Model,

identify key challenges,

recommend evidence-based policy solutions.

For more information, please visit the project homepage.

The Future of Internet Era Organizations – The Concept of Chief Complementary Officer

Timo Seppälä — Mon, 19 Aug 2013 11:41:46 +0000

Implications of Value Creation and Capture in Global Value Chains – Lessons from 39 Grassroots Cases

Jyrki Ali-Yrkkö — Mon, 19 Aug 2013 06:46:40 +0000

This report summarizes 39 detailed ETLA case studies of global value chains (GVCs). The findings suggest that the value added in global value chains is less tied to their tangible aspects than what conventional wisdom suggests. Intangible aspects of GVCs tend to be more important, but their poor measurement in available statistics misguides. With the raise of GVCs, interests of governments and multinational enterprises operating within national borders are increasingly at odds, e.g., when it comes to transfer pricing practices. The evidence from Finland shows that misinterpreted (or ignored) transfer pricing rules have significant impacts on GDP and other macroeconomic measures. Since multinational enterprises, and GVCs they operate, have grown to dominate international trade, the focus of national policymakers should shift from companies and industries to tasks and functions that are conducted within national borders.

Performance-related Pay and Gender Wage Differences

Antti Kauhanen — Thu, 15 Aug 2013 13:57:16 +0000

Applied Economics (2013), Vol. 45 (36): pp. 5131-5143