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This paper examines the drivers, and reestimates the size of shadow economies in Europe, with a focus on the emerging economies, and recommends policies to increase formality. The size of shadow economies declined across Europe in recent years but remains significant, especially in Eastern Europe. In the emerging European economies, the key determinants of shadow economy size are regulatory quality, government effectiveness, and human capital. The paper argues that a comprehensive package of reforms, focused on country-specific drivers, is needed to successfully combat the shadow economy. The menu of policies most relevant for Europe’s emerging economies include: reducing regulatory and administrative burdens, promoting transparency and improving government effectiveness, as well as improving tax compliance, automating procedures, and promoting electronic payments.

Labor --- Economics: General --- Informal Economy --- Underground Econom --- Employment --- Unemployment --- Wages --- Intergenerational Income Distribution --- Aggregate Human Capital --- Aggregate Labor Productivity --- Human Capital --- Skills --- Occupational Choice --- Labor Productivity --- Labor Standards: Labor Force Composition --- Economics of specific sectors --- Labour --- income economics --- Informal economy --- Informal employment --- Human capital --- Public employment --- Labor force participation --- Informal sector --- Economics --- Economic theory --- Labor market

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This Selected Issues paper analyzes the regional labor markets for Belgium. The paper examines labor market performance, and argues that a number of factors—poor worker-job matching, a compressed wage structure, and low geographical mobility—contribute to economic disparities. The paper describes the divergences in local labor markets, and offers potential explanations for them, including an analysis of variations in the relationship between regional unemployment rates and regional vacancy rates. The paper also describes how labor markets adjust in Belgium and in its two main regions.

Labor --- Labor Standards: Labor Force Composition --- Employment --- Unemployment --- Wages --- Intergenerational Income Distribution --- Aggregate Human Capital --- Aggregate Labor Productivity --- Unemployment: Models, Duration, Incidence, and Job Search --- Demand and Supply of Labor: General --- Labor Force and Employment, Size, and Structure --- Labour --- income economics --- Labor force participation --- Unemployment rate --- Labor markets --- Labor force --- Labor market --- Economic theory --- Belgium

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This Selected Issues paper on Luxembourg reports that exemplary high growth rates and prudent fiscal policies provided the financial basis for the welfare system. Social expenditures in per capita terms, even adjusted for the large number of cross-border workers, rank highest among European Union countries, primarily driven by high replacement rates of public income support, including for unemployment benefits, the minimum guaranteed income, and pensions. Rapid social spending growth has funded substantial increases in unemployment and family benefits.

Labor --- Macroeconomics --- Public Finance --- Social Security and Public Pensions --- Aggregate Factor Income Distribution --- Nonwage Labor Costs and Benefits --- Private Pensions --- Labor Standards: Labor Force Composition --- Labor Force and Employment, Size, and Structure --- Pensions --- Labour --- income economics --- Pension spending --- Income --- Labor force participation --- Labor force --- Expenditure --- National accounts --- Labor market --- Luxembourg

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The gap between potential and actual output—the output gap—is a key variable for policymaking. This paper adapts the methodology developed in Blagrave and others (2015) to estimate the path of output gap in the U.S. economy. The results show that the output gap has considerably shrunk since the Great Recession, but still remains negative. While the results are more robust than other existing methodologies, there is still significant uncertainty surrounding the estimates.

Global Financial Crisis, 2008-2009. --- Supply and demand. --- United States -- Economic policy -- 2009-. --- Economic History --- Business & Economics --- Inflation --- Labor --- Production and Operations Management --- Price Level --- Deflation --- Monetary Policy --- Macroeconomics: Production --- Labor Standards: Labor Force Composition --- Macroeconomics --- Labour --- income economics --- Potential output --- Output gap --- Capacity utilization --- Labor force participation --- Production --- Prices --- Economic theory --- Industrial capacity --- Labor market --- United States

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This paper analyzes regional labor mobility in Finland using two complementary empirical approaches: a VAR proposed by Blanchard and Katz (1992) and a gravity model. The results point to a relatively limited regional labor mobility in Finland compared to the U.S. and to EU peers. The limited regional labor mobility is associated with persistent unemployment differentials across regions. Some impediments to regional labor mobility are exogenous, such as large geographical distances across regions and relatively sparse population density, and explain about 23 percent of the variation in labor mobility. Others can be influenced by policy, such as further increase in wage flexibiltiy and reduction of housing costs. These impediments explain about 60 percent of the variation in labor mobility. Greater regional labor mobility could help reduce regional unemployment differentials, improve job matching efficiency, and remove pressures from regional fiscal redistribution.

Labor mobility --- Mobility, Labor --- Migration, Internal --- Labor supply --- Labor turnover --- Econometric models. --- Labor --- Demography --- Wages, Compensation, and Labor Costs: General --- Geographic Labor Mobility --- Immigrant Workers --- Unemployment: Models, Duration, Incidence, and Job Search --- Labor Standards: Labor Force Composition --- Demographic Economics: General --- Labour --- income economics --- Population & demography --- Unemployment --- Labor force participation --- Unemployment rate --- Population and demographics --- Labor market --- Population --- Finland