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We examine the extent to which declining manufacturing employment may have contributed to increasing inequality in advanced economies. This contribution is typically small, except in the United States. We explore two possible explanations: the high initial manufacturing wage premium and the high level of income inequality. The manufacturing wage premium declined between the 1980s and the 2000s in the United States, but it does not explain the contemporaneous rise in inequality. Instead, high income inequality played a large role. This is because manufacturing job loss typically implies a move to the service sector, for which the worker is not skilled at first and accepts a low-skill wage. On average, the associated wage cut increases with the overall level of income inequality in the country, conditional on moving down in the wage distribution. Based on a stylized scenario, we calculate that the movement of workers to low-skill service sector jobs can account for about a quarter of the increase in inequality between the 1980s and the 2000s in the United States. Had the U.S. income distribution been more equal, only about one tenth of the actual increase in inequality could have been attributed to the loss of manufacturing jobs, according to our simulations.

Labor --- Macroeconomics --- Industries: Manufacturing --- Industries: Service --- Aggregate Factor Income Distribution --- Industry Studies: Manufacturing: General --- Wages, Compensation, and Labor Costs: General --- Industry Studies: Services: General --- Personal Income, Wealth, and Their Distributions --- Manufacturing industries --- Labour --- income economics --- Income inequality --- Manufacturing --- Wages --- Services sector --- Personal income --- National accounts --- Economic sectors --- Income distribution --- Service industries --- Income --- United States --- Income economics

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In this paper, we assess whether recent economic developments in Russia are symptomatic of Dutch Disease. We first provide a brief review of the literature on Dutch Disease and the natural resource curse. We then discuss the symptoms of Dutch Disease, which include (1) real exchange rate appreciation; (2) slower manufacturing growth; (3) faster service sector growth; and (4) higher overall wages. We test these predictions for Russia while carefully controlling for other factors that could have led to similar symptoms. We conclude that, while Russia has all of the symptoms, the diagnosis of Dutch Disease remains to be confirmed.

Foreign Exchange --- Macroeconomics --- Economic Theory --- Industries: Manufacturing --- Industries: Service --- Energy: Demand and Supply --- Prices --- Industry Studies: Manufacturing: General --- Industry Studies: Services: General --- Resource Booms --- Manufacturing industries --- Currency --- Foreign exchange --- Economic theory & philosophy --- Oil prices --- Manufacturing --- Real exchange rates --- Services sector --- Dutch disease --- Service industries --- Economic forecasting --- Russian Federation --- Foreign exchange rates --- Economic development

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Ensuring stable growth in the postcrisis world economy will require a rebalancing of economic activity in several countries. In Asia’s export-dependent economies, this entails relying more on private domestic demand as a driver of growth. While some countries need to raise consumption, several need to raise investment or reorient it from tradable to nontradable sectors. These changes in investment could be facilitated by financial reforms that enhance domestically oriented firms’ access to credit, stronger incentives for corporate restructuring, policies to bolster the business climate and reduce uncertainty, and by improvements in infrastructure that raise the returns to private investment.

Investments --- Economic development --- Development, Economic --- Economic growth --- Growth, Economic --- Economic policy --- Economics --- Statics and dynamics (Social sciences) --- Development economics --- Resource curse --- Infrastructure --- Investments: General --- Industries: Service --- Investment --- Capital --- Intangible Capital --- Capacity --- Industry Studies: Services: General --- Macroeconomics --- Private investment --- Services sector --- Return on investment --- Gross fixed investment --- Saving and investment --- Service industries --- Japan

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To live up to its growth potential and secure its inclusive social model, the euro area must make better use of its available labor. In the aftermath of the crisis, boosting growth is essential to prevent unemployment from becoming a long-term problem and to facilitate the return to fiscal sustainability. Labor utilization in the euro area has been lagging considerably behind its best performing peers. While fewer hours worked may, to some extent, reflect a social choice, higher unemployment rates and lower participation rates, on the other hand, cannot easily be attributed to individual preferences. Here, policies and institutions matter more. And there is little excuse for relatively low labor productivity, a particular bane in southern Europe and an increasing challenge everywhere. Kick-starting growth requires a comprehensive approach to labor and service market reforms. Different circumstances call for different approaches across countries. Countries in southern Europe need to focus on regaining competitiveness, while some in the core should promote higher labor force participation or more open service sector markets. Improving access to the labor market should be high on the priority list everywhere—including through some harmonization of key features of the labor market, which will help deal with intra-euro area imbalances. Differences in labor taxation, unemployment benefit systems, and employment protection will need to be reduced. Improving regulation and reforming taxes and social benefits will be essential to make inroads. For the longer term, focus should be on innovation, education, and on continuing financial sector reforms.

Labor --- Macroeconomics --- Industries: Service --- Labor Economics Policies --- Demand and Supply of Labor: General --- Institutions and the Macroeconomy --- Industry Studies: Services: General --- Labour --- income economics --- Labor markets --- Labor market reforms --- Structural reforms --- Services sector --- Labor policy --- Economic sectors --- Macrostructural analysis --- Labor market --- Manpower policy --- Service industries --- United States --- Income economics

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This paper gauges the key determinants of China's private consumption in relation to GDP using data on the Chinese economy and evidence from other countries' experiences. The results suggest there is nothing "special" about consumption in China. Rather, the challenge is to explain why the conditioning variables-notably a low level of service sector employment, the level of financial sector development, and low real interest rates-are so different in China relative to other countries' historical experience. The results suggest, in particular, that efforts to further raise household income and the share of employment in the services sector, as well as to develop capital markets, including liberalizing interest rates and creating alternative savings instruments are likely to have the biggest impact on consumption. Other mechanisms to raise household income and mitigate household-specific risk (such as by improving the healthcare and pension systems) also have a role to play.

Consumption (Economics) --- China --- Economic conditions --- Macroeconomics --- Industries: Service --- Macroeconomics: Consumption --- Saving --- Wealth --- Aggregate Factor Income Distribution --- Industry Studies: Services: General --- Personal Income, Wealth, and Their Distributions --- Private consumption --- Income --- Consumption --- Services sector --- Disposable income --- Economics --- Service industries --- National income --- China, People's Republic of