Does the productivity of your firm affect your pay? Standard microeconomic theory says no. Firms have no power over setting wages when markets are perfectly competitive. All they can do is hire as many workers as they need for each type of labor at their respective market wages. Clearly, this view runs contrary to popular perception. Some firms pay higher wages than others. In … [Read more...] about Firms’ Productivity and Workers’ Wages
Macroeconomics and Finance
Can New Methods Sharpen Targeting in Programs for the Poor?
In recent years, developing countries have struggled to make social welfare programs for the poor and vulnerable more efficient. The distribution of preventative health products is an important example. Such products can help the poor stave off malnutrition and disease and improve overall productivity. But they have traditionally been distributed using subsidized pricing, and … [Read more...] about Can New Methods Sharpen Targeting in Programs for the Poor?
Confronting the Risks of Corporate Debt in Latin America
Beginning in the early 2000s, corporations in emerging economies began to massively increase their borrowing in international capital markets. The reasons why this occurred are not completely clear though they most likely involve low interest rates globally and the search for higher yields by international investors. In any case, the surge was dramatic: between 2004 and 2014, … [Read more...] about Confronting the Risks of Corporate Debt in Latin America
Is Being ‘Smart’ About Taxes Contagious?
In recent weeks, the issue of tax avoidance has surged into the United States presidential election. It gained momentum Sept. 26 during the first presidential debate when Republican candidate Donald Trump said that not paying federal income taxes made him “smart.” It moved to the forefront Oct. 1 with the revelation by the New York Times that Trump had declared a $916 million … [Read more...] about Is Being ‘Smart’ About Taxes Contagious?
How to Adjust: 10 Priorities for Emerging Economies
Many emerging economies, particularly in Latin America and the Caribbean, are facing growing debt, fiscal deficits and low growth. Given the direction of debt-to-GDP ratios, many countries are choosing “adjustment” to maintain sustainability. In this blog, I offer 10 priorities that might guide a period of Considerate Consolidation. Priority 1: Speed. If output is at potential … [Read more...] about How to Adjust: 10 Priorities for Emerging Economies