RESEARCH

• Outline
• Publications
• Working Papers
• Research Seminar
• Reports

PARTICIPANTS

• Members
• Students

ORGANIZATION

• University
• WU-Research Programs
• Economics
• Environmental Economics
• European Affairs
• Regional Development
• Socialand Economic History
• Sociology
• Statistics

• pdf-reader

Vienna University of Economics & B.A. Working Paper in Growth and Employment in Europe: Sustainability and Competitiveness, No. 1, February 1999.

Nowotny E., The Role of Macroeconomic Policy in Overcoming Slow Economic Growth

A fundamental point of this paper is, that - given existing structures (!) - the persistent problem of high unemployment in Europe cannot be attributed to tendencies in "jobless-growth" but is mainly caused by the fact that GDP-growth has been - and is still too low. This argument is first based on the pronounced cyclical reagibility of employment and unemployment. A first glance at Figure 1 immediately reveals this cyclical reagibility of European labour-markets - which is, however combined with "hysteresis-effects", thus creating a tendency of increasing long-term unemployment. In the next section the question as to why growth-rates in the 80s and 90s were much lower than compared to the 60s and 70s will be studied. The connections between employment and economic growth will be discussed in more detail in section 3 of this paper. 

Walther H., Ökonomische Funktionen der österreichischen Abfertigungsregelung - im Lichte von Theorie und Empirie

Die folgende Arbeit verfolgt - vor dem Hintergrund der wieder auflebenden Reformdebatte rund um die österreichische Abfertigungsregelung - drei Ziele: (1) Es soll ein knapper, analytisch fundierter Überblick über ökonomische Funktionen der österreichischen Abfertigungsregelung aus der Sicht der modernen Arbeits- und Organisationsökonomik gegeben werden. Neben den unmittelbaren Anreizwirkungen sollen auch jene Probleme betrachtet werden, die sich aufgrund strategischer Verhaltensweisen der Arbeitsvertragspartner ergeben können. (2). Vor dem Hintergrund neuerer empirischer Daten, welche ein überraschend hohes Maß an Mobilität im Sinne eines häufigen Arbeitgeberwechsels anzuzeigen scheinen (Pichelmann, K. , Hofer, H. und Rosner, P. , 1998), soll eine plausible Abschätzung der durch Abfertigungsansprüche induzierten Arbeitskosteneffekte durchgeführt werden. (3) Unter Beachtung der in (1) und (2) präsentierten Zusammenhänge soll eine vorsichtige Evaluation möglicher Reformen des derzeitigen Systems vorgenommen werden. 

Maier G., Externalities, Growth, and Regional Stagnation

This paper discusses the impact of externalities on economic growth and the long term distribution of economic activities in a system of two regions. We use a standard neoclassical growth model of the Solow-type and augment it with a random process of innovation allocation. The long term behavior of this model is analyzed. As it turns out, the dynamic behavior of our model differs fundamentally from that of the standard neoclassical growth model. In the long run always one of the regions attracts all the future innovation and growth while the other region stagnates. We show that this outcome results from an externality in the process of innovation allocation and discuss its significance and sensitivity to changes in the model structure.

Tondl G., What Determined the Uneven Growth of Europe´s Southern Regions? An Empirical Study with Panel Data

Since 1975, the extent of catching-up has been very different across Southern regions. Starting from the common arguments of growth theory, the paper wishes to show whether differences in regional income and growth can be attributed to different endowment in human capital, differences in private or public investment level, to structural imbalances, and labour force participation. The investigated panel consists of regional time series for the period 1975 to 1994 and includes NUTS II level regions of Greece, Spain, and the Italian South. Estimation of the impact of the variables on regional income is effected in a dynamic panel data model applying a GMM estimation procedure. The results indicate that the income level of Southern EU regions is largely determined by employment/educational levels and past public investment, while the impact of private investment is not significant. One may follow that EU regional policies should predominately focus on the human factor. Assistance to member countries to upgrade public infrastructures may be continued, but private investment incentives should be curbed.

Ragacs Ch., Zagler M., Ansätze für die österreichsiche Wachstumspolitik

Ausgehend von den konventionellen Ansätzen der Wachstumstheorie, von keynesianischen Ansätzen (Harrod 1939 und Domar 1946) über die neoklassische Modelle (Solow 1956) bis zur endogenen Wachstumstheorie (Romer 1986 und 1990) fußen wachstumspolitische Vorschläge einerseits auf Formen der Investitionsförderung, und andererseits auf der Unterstützung von Bildungs-, Forschungs- und Entwicklungsaktivitäten. Im internationalen Vergleich sind die entsprechenden empirischen Indikatoren allerdings auffallend gering. Somit stellt sich die Frage, worauf die durchaus beachtlichen Wachstumserfolge Österreichs beruhen. In diesem Aufsatz wird in einem theoretischen Ansatz argumentiert, daß die Vertiefung der Arbeitsteilung, die hohe Qualifikation der Facharbeiter/inn/en, die Rolle der aktiven Nachfragesteuerung und die institutionellen Rahmenbedingungen in Österreich hierzu wesentlich beigetragen haben. Aufbauend auf diesen theoretischen Überlegungen wurden - spezifisch für Österreich - wachstumspolitische Reformvorschläge entwickelt, die ausgaben-, vor allem aber nachfrageseitige Orientierung aufweisen. Insbesondere sollten Maßnahmen wie die Förderung der Lehrlingsausbildung und der beruflichen Weiterbildung, der Ausbau des dualen Bildungssystems und aktive Fiskalpolitik basierend auf progressiver Einkommensbesteuerung Erfolge bei der Belebung des Wirtschaftswachstums erzielen. 

Stagl S., Delinking Economic Growth from Environmental Degradation? A Literature Survey on the Environmental Kuznets Curve Hypothesis

The effect of economic growth on environmental quality is much under dispute. A number of empirical studies have made the claim that there exist in some income ranges a positive relation between per capita income and some measure of environmental quality. According to this inverted U-shaped pattern of different pollutants relative to per capita incomes in different countries which is also called the ”Environmental Kuznets Curve” (EKC), environmental pressure increases up to a point as income goes up; after the turning point environmental quality improves as income keeps rising. Possible explanations for this pattern are seen in the progression of economic development, from clean agrarian economies to polluting industrial economies to clean service economies. This trend is enhanced through the transfer of cleaner technology from high-income countries to low-income countries and the tendency of people with higher income having a higher preference for environmental quality. Since this relationship is so fundamental to questions of economic development and sustainability it has provoked a vast load of research over the last seven years supporting but also heavily criticizing the results and conclusions. This paper gives an overview of the literature published on this topic to date and the conceptual, methodological and fundamental critique put forward.

Grandner Th., Unions in Oligopolistic, Vertically Connected Industries; forthcoming European Economic Review. 

A model of two unionized, vertically connected oligopolistic industries is analyzed. Economic performance, measured by consumer prices, depends on the institutional setting of wage bargaining. Two externalities may occur, namely an integration and a competition externality, which have contrary effects. With decentralized bargaining no externalities can be internalized resulting in low consumer prices. With bargaining at the industry level only the competition externality is internalized resulting in high prices. With centralized bargaining both externalities can be internalized resulting again in low prices. With at least two firms in each industry, the decentralized setting performs best. Performance improves with an increase in the competition of the product markets.

Stockhammer E., The Slowdown of Accumulation and the Rise of European Unemployment

The paper aims at testing empirically two Keynesian hypotheses. First that increasing financial investment is one of the major causes for the slowdown in capital accumulation and, second, that this slowdown is one of major factors for rising unemployment rates. After presenting evidence from the National Accounts for the rising importance of dividend and interest income, econometric tests are performed for Germany, France, UK and the USA, and for the employment regressions, additionally for Italy. The choice of countries being determined by the interest in European unemployment and limited data availability. Overall, the findings are supportive of both hypotheses.

Altzinger W., Bellak Ch., Direct Versus Indirect FDI: Impact On Domestic Exports And Employment, 
 

One of the specific characteristics of Austrian Foreign Direct Investment (FDI) abroad is that a large part is carried out by firms, which themselves are affiliates of foreign Multinational Enterprises (MNEs). Such investment is termed indirect FDI in order to distinguish it from direct FDI, made by Austrian-owned firms. The objective of this paper is to analyse, whether the relatively better domestic employment performance of domestic firms (direct FDI) compared to foreign-owned firms (indirect FDI) can be linked to FDI abroad. Based on an analysis of the sales and trade structure of a sample of Austrian investors in Central and East European Countries (CEECs), this paper tests the hypothesis that these two groups of investors have different motives to invest in CEECs and therefore their activities in CEECs differ by type (sales affiliate, production abroad) and consequently the employment effects at home. Regression results confirm that direct FDI are more strongly determined by labour costs and exhibit an employment pattern related to a deeper international division of labour (including production), while indirect FDI is based relatively more on market seeking investment. Empirical results also confirm that employment effects at home differ. The positive (negative) effect of one additional unit of parent (affiliate) sales on domestic employment for indirect FDI compared to direct FDI is larger (smaller). The - despite this empirical fact - relatively better domestic employment performance of direct FDI is explained by their superior sales performance, resulting from restructuring their international division of labour.

Stockhammer E., Is There an Equilibrium Rate of Unemployment in the Long Run?

Distinguishing between profit led and growth led demand regimes, we analyze the conditions of existence and stability of long run equilibrium of unemployment. The model we employ has at its center the relation between growth and distribution. Growth can be either wage led or profit led. Distribution itself is a function of the unemployment rate, with higher unemployment leading to a higher profit share. We use Okun's Law to close the model, making the change of the rate of unemployment a function of growth. The interesting result of our analysis is that in profit led demand regime the short run and long run equilibrium are stable. However, if the demand regime is wage led, the same conditions that guarantee stability of the goods market equilibrium in the short run render impossible the existence of a long run equilibrium rate of unemployment, and vice versa. Thus, if Kalecki's proposition that higher wages lead to higher growth is true, there will be no equilibrium rate of unemployment in the long run that serves as an anchor for the economic system.This paper is a first attempt to empirically evaluate some competing hypotheses 

Zagler M.,  The Austrian Miracle - Revisited: Testing eight Explanations for High Growth and maybe a ninth

This paper is a first attempt to empirically evaluate some competing hypotheses  for the Austrian growth performance. We find that the real appreciations, gross investment, a low duration of unemployment and high youth employment exhibit a significant influence on economic growth. This validates the hard currency policy hypothesis, the macroeconomic management hypothesis, and  the microinstitutions hypothesis, whilst all other fail according to this exercise. In particular, we find the Schulmeister-thesis of loose money and the deficit spending hypothesis are even counterfactual. Summarizing, we find that economic policy had its share in promoting growth in the Austrian economy. As a byproduct from our analysis, we find that low levels of unemployment have a significant and positive impact on the growth rate of real GDP, which calls for further theoretical research in this direction.

Hölzl W., and Reinstaller A.,  The Adoption and Enforcement of a Technological Regime: The Case of the first IT Regime

In this paper we explore the process of adoption and enforcement of a number of new information processing technologies, such as the typewriter, calculators, tabulation gears and book-keeping machines, starting from the 1880s in the United States. We show that their innovation and diffusion was inexorably coupled to the economic development in the USA in the late 19th century. It is a complex and contradictory consequence of underlying socio-economic processes that led to the formation of modern organisational structures in large scale manufacturing which required systematic and efficient information processing. The typewriter and all the complementary office automation devices that entered the scene shortly after were part of a socio-technical regime that started being established: the office work regime or as we prefer to call it the first IT regime, as for the first time a technology was set up to process information on large scale.
The logic of large scale manufacturing  to produce standardised products in large series and to apply labour saving techniques was cast into the organisation of administration. This required a convergence of technical practices. The lock-in to the inferior QWERTY-keyboard is hence the outcome of the diffusion and hardening of the First IT Regime. 

Stiassny, A. and Sögner, L.  A Cross-Country Study on Okun's Law 

Okun's Law postulates an inverse relationship between movements of the unemployment rate and the real gross domestic product (GDP). In this article we investigate Okun's law for 15 OECD countries and check for its structural stability. By using data on employment and the labor force we infer whether structural instability is caused either from the the demand side or the supply side.

Stockhammer E.,  Financialization and the Slowdown of Accumulation

Over the past decades financial investment of non-financial businesses has been rising and accumulation of capital goods has been declining. The first part of the paper offers a novel theory to explain this phenomenon. Financialization, the shareholder revolution and the development of a market for corporate control have shifted power to shareholders and thus changed management priorities, leading to a reduction in the desired growth rate. In the second part the link between accumulation and financialization is tested econometrically by means of a time series analysis of aggregate business investment for USA, UK, France, and Germany. Extensive test of robustness are performed. For the first three countries evidence that confirms the negative effect of financialization on accumulation is found.

Reinstaller A. and Hölzl W.,  The creative response in economic development: the case of information processing technologies in US manufacturing, 1870-1930

This paper presents a theoretical framework along “Classical” lines in which Schumpeter’s concept of “Creative Response” is linked to a theory of induced innovation and the concept of technological regimes. We devote particular attention to the role of indivisibilities between factors of production. On the basis of this framework, we study the adoption of early information technologies, such as typewriters, calculators or Hollerith machines in US manufacturing in the period between 1870 and 1930. We show how the presence of a distinct bias in technical change in US manufacturing led to the opening of a window of opportunity for early information technologies, and how the presence of this bias influenced the technological search and adoption process of firms and how this found its final reflection in the rules and heuristics of the new regime.

Bellak C., Hofer R. und Tschmuck P.,  Wettbewerbs- und Strukturpolitik Österreichs

Dieser Beitrag gibt einen selektiven Überblick zu theoretischen Konzeptionen von Wettbewerbs- und Strukturpolitik. Anschließend wird die Wettbewerbs- und Strukturpolitik Österreichs vor und seit dem EU-Beitritt anhand eines „Ziele-Mittel-Träger“ Konzeptes dargestellt. Eine Fallstudie zum Mediensektor sowie die Einbettung in den internationalen Kontext ergänzen die Ausführungen.

Hölzl W., Hofer R. and Schenk A., Three stages of net entry into Austrian manufacturing: entrepreneurial experimentation and actual entry

In this paper we explore the determinants of changes in the industrial populations rates in Austrian manufac-turing. The research questions whether or not the nature and causes of the net entry of firms across three dif-ferent stages of entry-exit decision and firm growth are different. Our econometric analysis suggests that the-re are differences in leading to the determination of the entry and exit at different stages of the entry-exit de-cision, and that aggregate growth and disaggregate growth (measured in employment terms) play a major role.

Bellak C. Multinational Enterprises and Their Domestic Counterparts: Past Research, Current Issues and Future Directions

This paper reviews and summarises the results of selected empirical studies on performance gaps between multinational enterprises and their domestic counterparts. Performance gaps arise in such fields as productivity, profitability, wages, skills, factor intensity and growth. Of central interest is the question to what extent is foreign ownership an explanatory factor of performance gaps? Empirical evidence supports the existence of performance gaps between foreign and domestic firms, yet foreign ownership is a much less important explanatory factor than normally assumed. Structural factors like industry, size and multi-nationality per se are more important. It is argued that such results are broadly consistent with those derived in the literatures on ownership change, on foreign entry and on spillovers. The concluding section discusses the normative issue whether there is a case for investment promotion policies to discriminate between firms on the basis of performance gaps by ownership.