Total Pageviews

Monday 22 May 2017

Technology and the future of the labour market

Speaker: Daniel Susskind, Balliol College, Oxford
Chair: Adam Bennett, St Antony’s College, Oxford

These days, it is hard to imagine a topic with more significant implications for the future than the impact of technology on the labour market. It is also hard to find people who have combined policy work with research on this topic, such as Daniel Susskind. In this seminar, he presented his insights, particularly regarding the role of ‘advanced’ capital in overturning traditional understandings of the relationship between technology and labour market skills.

Susskind begins by looking at historical data on the labour market. Thus, in the 20th century a ‘skills wage premium’ emerged based on increasing returns to college education. Strikingly, this premium remained even as more and more people were graduating from college due to the skill-biased nature of technological change, which meant demand for skilled labour to operate this new technology outpaced increasing supply. By contrast, in the 19th century, the industrial revolution appeared to have a bias toward increasing the demand for unskilled workers, displacing skilled workers (such as the luddites) with machines that could be operated by unskilled workers. Initial data from the 21st century suggest that today both things are happening at the same time, leading to more employment at the bottom and the very top of the skill distribution, but also to the ‘hollowing out’ the semi-skilled middle classes, which have thereby seen their wages stagnate.

Monday 15 May 2017

Public debt in advanced countries: problems and solutions

Speaker: Carlo Cottarelli, IMF Executive Director for Italy
Chair: Charles Enoch, St Antony’s College

Following the global financial crisis, public debt spiked in many advanced countries. However, according to Carlo Cottarelli, the risks, which accompany living with high debt-to-GDP ratios, are not often discussed publicly. This has prompted him to write a book, What We Owe – Truths, Myths, and Lies about Public Debt, which forms the basis of his PEFM talk.

Cottarelli began with a striking chart demonstrating the level of public debt in advanced economies. As was clearly visible, after World War II there was an unprecedented build-up of debt in peacetime. Notably, these ratios do not include the hidden liabilities in terms of pension and healthcare entitlements, which are likely to rise, but are outside the focus of Cottarelli’s work.

Tuesday 2 May 2017

Facing the pensions challenge: Lessons from Australia

Speaker: Nicholas Morris, University of New South Wales, Sydney
Chair: David Vines, Balliol College

It is hard to imagine a bigger long-term challenge for advanced economies than funding their pension systems going forward. To address this, many countries have introduced ‘defined contribution’ schemes through private pension funds. However, as Nicholas Morris highlights drawing on his research on Australia, such funds could also face complex management problems that lead them to underperform.

Prof. Morris begins by setting the context for his talk. Pension funds in Australia have accumulated assets worth over 100% of national GDP that are expected to grow to 7 trillion Australian dollars by 2035. As a result, complex industries have emerged to manage the funds, charging relatively high fees in comparison to international benchmarks. However, such funds have still underperformed for several key reasons despite no lack of scrutiny and reports. First, while they look diverse on the surface, they tend to only have limited competition in practice leading to oligopolistic behaviour. Second, splitting the regulator into five different agencies overseeing pensions has meant that nobody takes overall responsibility. Third, legal changes have weakened trust law protection, particularly by not forcing unregulated entities to report costs, which has often led to the outsourcing of management.