Overview publications

How does migration impact the labour market, public finance and the political landscape? In EconPol’s latest policy report network members Anthony Edo, Lionel Ragot, Hillel Rapoport, Sulin Sardoschau and Andreas Steinmayr, CEPII, show that immigration can create winners and losers in the host country’s native workforce by affecting the skill composition of receiving economies and changing wage dispersion. But cultural concerns emerge as the key driver of scepticism towards immigration. A deeper understanding of these concerns is a precondition for designing policies that foster a positive atmosphere and combat negative attitudes towards immigrants and extreme voting.

How can the European Union tackle its aging populations? Network member Thomas Avoine, IHS, investigates international spillovers due to capital market integration when populations age and the cross-country redistribution that this generates. Using a multi-country overlapping-generations model, he finds that labour supply drops more in rapidly aging countries, pushing up the capital-labour ratio, lowering returns on investment and generating capital flows towards countries with younger populations. The author looks at how governments can reform tax and pension policy to influence redistribution patterns and how rapidly aging countries can promote immigration to mitigate the negative redistributive effects of capital market integration.

What are the potential advantages and drawbacks of proposals to create a Capital Market Union in the EU? This Policy Brief discusses the long-term implications of perfectly integrated capital markets, ignoring crises but taking population aging into account. Recent research shows that redistribution would take place, from fast aging to slow aging countries, because investors seek access to the largest labour markets that deliver the highest returns on their investments. In some countries like Austria social security reforms like raising the retirement age would play a crucial role in maximizing the benefits of CMU, or minimizing related losses.

What will be the impact of the latest US tax reform adopted on 1 January 2018? In this EconPol Working Paper Jack Mintz, President’s Fellow, School of Public Policy, University of Calgary, looks at the key features of the US Tax Cuts and Jobs Act, assesses its implications for global growth and speculates on how other countries are likely to respond to this ground-breaking reform.

The debate over the next EU budget is already heating up. In early May the European Commission will publish its proposal for the Multiannual Financial Framework (MFF) for the years 2021-2027. Agricultural subsidies and regional transfers are likely to continue to swallow a large share of the EU budget. In view of the acute legitimacy crisis facing the EU, this spending structure calls for reform. The Commission has recommended using “European added value” (EAV) as a reform criterion. This policy brief considers whether allocating competences more effectively between the EU and its member states could boost the EU’s performance.

As the EU attempts to progress along its path of ever closer union and bold enlargement, the European Economic Advisory Group (EEAG) report 2018 focuses on the symptoms of and possible cures for the current integration malaise. It highlights the role of trust in allowing national and supranational organisations to function; reviews the role of admission criteria and governance rules, and considers economic convergences and public policies across EU states.

Dynamic scoring, or the evaluation of tax reform effects, is common practice in the US, but has never been applied to the EU’s fiscal governance framework. Adopting a novel approach, the authors analyse hypothetical reforms of the social insurance contributions system in Belgium. They find that the self-financing effect of a reduction in employers’ social insurance contributions is far greater than that of a comparable reduction in employees’ social insurance contributions.

On December 5, 2017, the European institutions - Commission, Council, and Parliament - reached political agreement on reforming the EU’s trade defense instruments. This “modernization” of anti-dumping legislation is, in fact, an attempt to provide the EU with stronger tools to tackle the allegedly “unfair” practices of its trade partners. On its website, the Commission advertises that the deal will enable the EU to impose higher duties on dumped products. Does Germany’s position signal a new and worrying stance toward free trade?

In view of loud complaints over alleged austerity policy in Europe, the call for tougher debt ceilings seems untimely. It is claimed that the current rules are too restrictive and will hamper public investment. The next German federal government's position on reforming European Monetary Union is one of the main issues on the table in the coalition negotiations and it is highly controversial. ifo President Clemens Fuest is convinced that a serious application of the existing concepts for ensuring sustainable fiscal policy would call for stricter, not softer debt rules. This Opinion explains why Europe needs stricter debt rules and should not follow in Japan’s footsteps.

A key remaining issue for the completion of the Banking Union is the concentrated exposure of banks in many countries to their own sovereign. This paper examines the belief that banks should be allowed to buy large amounts of their own sovereign so that they can stabilise the market in a crisis and argues that it is mistaken for two reasons. In the first instance, banks are only intermediaries for private savings, and secondly, banks have a higher cost of funding than do their sovereign. The overall conclusion is that governments should make it more attractive for households (and other real money investors) to hold government debt directly.