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11851. The Future of EU Leadership in the Car Industry: Still Global

Author:
David Henig and Hosuk Lee-Makiyama
Publication Date:
12-2021
Content Type:
Policy Brief
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
Automotive is Europe’s key export industry, an important contributor to the EU economy, from balance of payments to employment, and a manufacturing base to global and European brands; Balancing the EU’s climate ambitions (and its implied economic transformation) with a successful EU car industry is therefore crucially important. The car industry is at the forefront of new initiatives to tackle the climate emergency, shaped by these new regulations its products and infrastructure will be radically different in just a few years; Proposals within EU frameworks such as Green Deal, Fit for 55, and Next Generation EU are about reducing emissions and reshaping industry. Yet, the policy mix also leans towards increased regulatory costs and loss of competitiveness that can only be partially offset by climate subsidies and import substitution; This cumulation of measures also carries significant risk of retaliation from our key export markets for the car industry. In particular, attempts to apply green regulation extraterritorially are seen as provocative by third countries and unlikely to be accepted without response; Since the EU is the world’s largest exporter of passenger cars, it has most to lose if the global economy regresses into protected markets. Open global supply chains also enable EU manufacturing to retain competitiveness, and has also helped to keep the component and services portion of the industry going despite a relative decline of demand in motor vehicles in the EU; Consumer support for Green Deal initiatives will be lost if there are no affordable and sustainable alternatives for personal mobility – which also requires open markets. Thus, cars play a significant role in sustaining both EU macroeconomic stability and support for the Green Deal; The Green Deal and an open economy must not become a binary choice for Europe. The automotive industry is today global, digitised and electrified by default. The EU cannot mass-produce locally unless it can also compete globally – which entails facilitating industry transition, minimising retaliatory risks and understanding the biggest transition the industry is facing since Henry Ford’s invention of the assembly line.
Topic:
Globalization, European Union, WTO, Green Deal, and Automotive Industry
Political Geography:
Europe and Global Focus

11852. Four Decades of Canadian Earnings Inequality and Dynamics across Workers and Firms

Author:
Audra J. Bowlus, Emilien Gouin-Bonenfant, Huju Liu, Lance Lochner, and Youngmin Park
Publication Date:
04-2021
Content Type:
Working Paper
Institution:
Centre for Human Capital and Productivity (CHCP), Western University
Abstract:
This paper studies the evolution of individual earnings inequality and dynamics in Canada from 1983 to 2016 using tax files and administrative records. Linking these individuals to their employers (and rich administrative records on firms) beginning in 2001, it also documents the relationship between the earnings dynamics of workers and the size and growth of their employers. It highlights three main patterns over this period: First, with a few exceptions (sharp increase in top 1% and declining gender gap), Canada has experienced relatively modest changes in overall earnings inequality, volatility, and mobility between 1983 and 2016. Second, there is considerable variability in earnings inequality and volatility over the business cycle. Third, the earnings dynamics of individuals are strongly related to the size and employment growth of their employers.
Topic:
Labor Issues, Employment, Income Inequality, Business, History, and Earnings
Political Geography:
Canada and North America

11853. Why Do Couples and Singles Save During Retirement?

Author:
Mariacristina De Nardi, Eric French, John Bailey Jones, and Rory McGee
Publication Date:
05-2021
Content Type:
Working Paper
Institution:
Centre for Human Capital and Productivity (CHCP), Western University
Abstract:
While the savings of retired singles tend to fall with age, those of retired couples tend to rise. We estimate a rich model of retired singles and couples with bequest motives and uncertain longevity and medical expenses. Our estimates imply that while medical expenses are an important driver of the savings of middle-income singles, bequest motives matter for couples and high-income singles, and generate transfers to non-spousal heirs whenever a household member dies. The interaction of medical expenses and bequest motives is a crucial determinant of savings for all retirees. Hence, to understand savings, it is important to model household structure, medical expenses, and bequest motives.
Topic:
Retirement, Savings, and Expenses
Political Geography:
Global Focus

11854. Wages, Skills, and Skill-Biased Technical Change: The Canonical Model Revisited

Author:
Audra J. Bowlus, Lance Lochner, Chris Robinson, and Edna Suleymanoglu
Publication Date:
03-2021
Content Type:
Working Paper
Institution:
Centre for Human Capital and Productivity (CHCP), Western University
Abstract:
The canonical supply–demand model of the wage returns to skill has been extremely influential; however, it has faced several important challenges. Several studies show that the standard approach sometimes produces theoretically wrong-signed elasticities of substitution, yields counterintuitive paths for skill-biased technical change (SBTC), and does not account for the observed deviations in college premia for younger vs. older workers. This paper shows that these failings can be explained by mis-measurement of relative skill prices and supplies (based on standard demographic composition-adjustments) and by inadequate ad hoc functional form assumptions about the path for SBTC. Improved estimates of skill prices and supplies that account for variation in skill across cohorts within narrowly defined groups help explain the observed deviation in the college premium for younger vs. older workers, even with perfect substitutability across age. Re-estimating the model with these prices and supplies produces a good fit with better out-of-sample prediction and robustly yields positive elasticities of substitution between high and low skill workers. The estimates suggest greater substitutability across skill and a more modest role for SBTC. We implement two new approaches to modelling SBTC. First, we study the extent to which recessions induce jumps or trend-adjustments in skill bias and find evidence that both features are important (but differ across recessions). Second, we link SBTC to direct measures of information technology investment expenditures and show that these measures explain the evolution of skill bias quite well. Together, these approaches suggest that the ad hoc assumptions for SBTC previously employed in the literature are too crude to fit the data well, leading to the incorrect conclusion that SBTC slowed during the early-1990s and under-estimates of the elasticity of substitution between high and low skill workers.
Topic:
Economics, Human Capital, Supply, Skills, and Wages
Political Geography:
Global Focus

11855. Innis Lecture: Return on Student Loans in Canada

Author:
Lance Lochner, Qian Liu, and Martin Gervais
Publication Date:
07-2021
Content Type:
Working Paper
Institution:
Centre for Human Capital and Productivity (CHCP), Western University
Abstract:
This paper uses new administrative data with detailed borrower information and lengthy repayment histories from the Canada Student Loans Program (CSLP) to measure rates of return on undergraduate student loans. We document substantial heterogeneity in returns based on information available at the time loans were disbursed, including province of residence, field of study, and institution of attendance. Field of study is a particularly important determinant of rates of return, explaining 22% of the variation in predicted returns across borrowers. We explore the implications of this variation for CSLP cross-subsidization across borrowers and potential risk-based loan limits. Given the variation in ex ante predicted returns across borrowers, using all available information at the time of loan disbursement, we study the implications of potential cream-skimming of high-return borrowers by private lenders.
Topic:
Debt, Economics, Investment, Higher Education, and Student Loans
Political Geography:
Canada and North America

11856. Starr Forum: The Future of US-Russian Relations: More of the Same or Something Different?

Publication Date:
11-2021
Content Type:
Video
Institution:
MIT Center for International Studies
Abstract:
Barry Posen is Ford International Professor of Political Science, MIT. His current research examines whether the diffusion of power away from the United States can best be understood as the emergence of a multipolar structure of power, and if so, how the United States should navigate this change. His most recent book is Restraint: A New Foundation for US Grand Strategy.
Topic:
Security, Diplomacy, Bilateral Relations, Conflict, and Rivalry
Political Geography:
Russia, Europe, North America, and United States of America

11857. Starr Forum: The Outlier: The Unfinished Presidency of Jimmy Carter

Publication Date:
11-2021
Content Type:
Video
Institution:
MIT Center for International Studies
Abstract:
Jimmy Carter’s one-term presidency is often labeled a failure; indeed, many Americans view Carter as the only ex-president to have used the White House as a stepping-stone to greater achievements. But in retrospect the Carter political odyssey is a rich and human story, marked by both formidable accomplishments and painful political adversity. In this deeply researched, brilliantly written account, Kai Bird expertly unfolds the Carter saga as a tragic tipping point in American history. Drawing on interviews with Carter and members of his administration and recently declassified documents on Israel, the Iranian revolution and the 1980 October Surprise, Bird delivers a profound, clear-eyed evaluation of a leader whose legacy has been deeply misunderstood.
Topic:
Foreign Policy, Governance, Leadership, and Conflict
Political Geography:
North America and United States of America

11858. Starr Forum: Navalny: Putin’s Nemesis, Russia’s Future?

Publication Date:
10-2021
Content Type:
Video
Institution:
MIT Center for International Studies
Abstract:
Navalny makes sense of this divisive character, revealing the contradictions of a man who is the second most important political figure in Russia—even when behind bars. In order to understand modern Russia, you need to understand Alexei Navalny.
Topic:
Authoritarianism, Domestic Politics, Political Prisoners, and Opposition
Political Geography:
Russia and Europe

11859. Starr Forum: US, Afghanistan, 9/11: Finished or Unfinished Business?

Publication Date:
09-2021
Content Type:
Video
Institution:
MIT Center for International Studies
Abstract:
Chair: Barry Posen, Ford International Professor of Political Science, MIT. He studies US grand strategy and national security policy. His most recent book is Restraint: A New Foundation for US Grand Strategy. Panelists: Juan Cole, Richard P Mitchell Collegiate Professor of History, University of Michigan. He is an expert on the modern Middle East, Muslim South Asia, and social and intellectual history. His most recent book is Muhammad: Prophet of Peace Amid the Clash of Empires. Carol Saivetz, Senior Advisor, MIT Security Studies Program. She is an expert on Soviet and now Russian foreign policy issues; and on topics ranging from energy politics in the Caspian and Black Sea regions, questions of stability in Central Asia, to Russian policy toward Iran. Vanda Felbab-Brown, Senior Fellow, Center for Security, Strategy, and Technology, Brookings. She is the director of the Initiative on Nonstate Armed Actors and the co-director of the Africa Security Initiative. She recently co-authored The fate of women’s rights in Afghanistan. She received her PhD from MIT.
Topic:
Defense Policy, Military Strategy, Counter-terrorism, State Building, and Intervention
Political Geography:
Afghanistan, Middle East, North America, and United States of America

11860. Responses to 9-11: The United States, Europe, and the Middle East

Publication Date:
09-2021
Content Type:
Video
Institution:
MIT Center for International Studies
Abstract:
Reflections on the One-Year Anniversary of 9/11
Topic:
Defense Policy, Terrorism, Military Strategy, and Counter-terrorism
Political Geography:
Europe, Middle East, North America, and United States of America