This paper investigates how the evolution of local labour market structure enables or constrains workers as regards escaping low-wage jobs. Drawing on the network-based approach of evolutionary economic geography, we employ a detailed individual-level panel dataset to construct skill-relatedness networks for 72 functional labour market regions in Sweden. Subsequent fixed-effect panel regressions indicate that increasing density of skill-related high-income jobs within a region is conducive to low-wage workers moving to better-paid jobs, hence facilitating labour market upgrading through diversification. While metropolitan regions offer a premium for this relationship, it also holds for smaller regions, and across various worker characteristics.

This paper provides a summary of the latest advancements in generative artificial intelligence using large language models over the past six months. The impact of this breakthrough remains uncertain, but it is evident that GPT is a General-Purpose Technology (GPT) that will significantly alter various aspects of our economy and society in ways that are yet to be fully comprehended. While it is essential for the government to regulate GPT technology, it is inevitable that the technology will continue to expand and evolve at a rapid pace. There is no doubt that every corner of the new world if it exists at all, will be covered by millions of forms of artificial intelligence. The taming of AIs and successful social and personal cooperation with domesticated AIs could ensure our survival and prosperity in that world. Whether or not AIs are capable and willing to cooperate will populate the new world is neither an individual nor a national matter. But how a country and its people fare in the new world is more so.

This paper analyzes the dynamics of sectoral Real Gross Value Added (RGVA) around sudden stops in foreign capital inflows. We identify sudden stop episodes statistically from changes in gross capital inflows from the financial account, and use an event study methodology to compare RGVA before and after the start of sudden stops. In the baseline specification, we estimate changes in the growth rate of sectoral RGVA during sudden stops and in the few quarters following them. In an additional exercise, we analyze deviations from the sectors’ long-run growth path. Our findings indicate that: (i) tradable sectors, especially manufacturing, face larger damages during sudden stops than nontradable sectors, (ii) but they also lead the recovery after recessions that accompany sudden stops on impact, partly due to the fact that they benefit from the depreciation of the domestic currency that occurs during sudden stops, (iii) construction and professional services are the most seriously hurt nontradable sectors during sudden stops, while information and communication, and financial services grow slower even in the aftermath of the events than before their onset. However, this slowdown only constitutes a return to their long-run sectoral growth paths. Overall, our results suggest a prolonged reallocation of economic activity away from service sectors, towards the production of goods. This is consistent with a traditional view of the role of tradable and nontradable sectors in a sudden stop episode.

This paper studies the effect of ambient air pollution on the number of births in the European Union. We collect air pollution data with web scraping technique and utilize variations in wind, temperature, number of heating, and cooling days as instrumental variables. There are 657 NUTS 3 regions included in the regressions, each with 2 to 6 years of observations between 2015 and 2020. Our results show that an increase in the levels of PM_2.5 – PM₁₀ pollution concentration by 1 μg/m³ (appr. 5-10%) would result in a 9% drop in the number of births next year. CO pollution levels also have a significant although smaller effect. If CO pollution concentration increases by 1 mg/m³ (appr. 15%) the number of births next year will fall by about 1%. In the heterogeneity analysis, we find that air pollution is more harmful to fertility in countries with already high pollution levels and lower GDP. This latter suggests that healthcare spending and the general level of living standard could be factors that moderate the negative consequences of ambient air pollution. To our knowledge, this is the first article to study the fertility effects of air pollution using an extended number of countries and years and at the same time including more than one air pollutant. As a result, our results have strong external validity. A remarkable novelty of our study compared to the previous literature is that after taking into account the effect of PM_2.5 – PM₁₀ and CO, the rest of the pollutants have much less role in shaping fertility outcomes compared to the findings of the previous literature. This difference is a result of the new method of this study, which examines the pollutants simultaneously instead of examining only one or a few at a time. This result can be important for environmental policies, where the limited resources should target pollution types that have the most detrimental effect on human fertility and health.

Liquidity is a key consideration in financial markets, especially in times of financial crises.  For this reason, regulatory attention to and measures in this field have been on the rise for the past years. Based on practical experience, regulations aiming at ensuring funding liquidity or, in general, reducing certain risky positions have the side effect of reducing market liquidity. To understand this effect, we extend a standard general equilibrium model with transaction costs of trading, endogenous market liquidity, and the modeling of regulation. We prove that funding liquidity regulation or divesting bad ESG assets reduces market liquidity.

Public pensions are indexed to prices or wages or to their combinations; therefore, the impact of inflation on the real value of benefits can often be neglected, especially under indexation to prices. At high and accelerating/decelerating inflation like currently prevailing in Hungary, however, this is not the case. (i) With fast inflation of basic necessities, proportional indexation of benefits in progress devalues the lowest benefits, paying for above-the-average consumption share of these goods.  (ii) Annual, lumpy raises in these benefits imply too high  intra-year drop in the real value of benefits. (iii) With accelerating inflation, the declining real value of delayed initial benefits may incite immediate retirement. (iv) With unindexed parameter values (like progressivity bending points), the initial benefits’ structure unintentionally changes.

We estimate heterogeneous wage structure effects for country-pairs within the EU by the Causal Forest algorithm, then identify groups of workers with the highest and lowest discrepancies in terms of wage differentials. We find that, in the East-West comparison, age is the most consistently differentiating factor. People over 40 are most adversely treated in the East relative to the West, and especially those who have no tertiary education and work in small or medium-sized enterprises.

The gender earnings gap can be attributed either to the different distribution of males and females across jobs or to within job biases in favour of men. The latter is frequently called the wage structure effect, and it may be interpreted as wage discrimination against women. In this paper we focus on this second source of the gap. In particular, we study the heterogeneity of the wage structure effect by looking for the main drivers of it. On Hungarian matched employer-employee data we identify those firm-worker profiles that exhibit extremely high gender wage differentials We apply the Causal Forest methodology, borrowed from the conditional average treatment effect (CATE) literature, which has been utilized in several observational studies, recently. Our findings show that those firms that pay relatively high wages tend to discriminate against women most strongly, and especially with respect to women who have spent a longer time in the same firm. But this tendency is moderated by regional effects; where demand side competition is strong the wage structure effect tends to be smaller. These findings are, by and large, in accordance with the view that relative bargaining power is relevant for wage-setting, or, alternatively, firms practice third degree wage discrimination.

This paper studies the effects of employment shocks on births and induced abortions. We are the first to show that abortions play a role in fertility responses to job displacement. Furthermore, we document precautionary fertility behavior: the anticipatory response of women to expected labor market shocks. Using individual-level administrative data from Hungary, we look at firm closures and mass layoffs as conditionally exogenous employment shocks in an event study design. After establishing that both shocks have a similarly large and persistent negative effect on employment and wages, we show that women already react to the anticipation of these shocks, and their fertility responses differ substantially for firm closures and mass layoffs. We find that abortions increase by 88% in the year before firm closures, while the number of births is not affected. Mass layoffs have no significant effect on abortions in the preceding year but increase the number of births by 44%. Mass layoffs and firm closures differ in one crucial aspect: pregnant women cannot be laid off until the firm exists, but no such dismissal protection is available in the case of firm closures.  Thus, when dismissal protection is available, anticipated employment shocks increase the number of live births, whereas when it is not, they increase the number of abortions. These results suggest that dismissal protection has the potential to support women to keep pregnancies at times of economic shocks.

We consider financial networks where agents are linked to each other via mutual liabilities. In case of bankruptcy, there are potentially many bankruptcy rules, ways to distribute the assets of a bankrupt agent over the other agents. One common approach is to first apply pairwise netting of agents that have mutual liabilities and next use the proportional rule to determine the payments on the basis of the net liabilities. We refer to this as the pairwise netting proportional rule. The pairwise netting proportional rule satisfies the basic requirements of claims boundedness, limited liability, priority of creditors, and continuity. It also satisfies the desirable properties of net impartiality, an agent that has two creditors with the same net claims pays the same amount to both creditors on top of pairwise netting, and invariance to mitosis, an agent that splits into a number of identical agents is not affecting the payments of the other agents. We demonstrate that if net impartiality and invariance to mitosis, together with the basic requirements, are regarded as imperative properties, then payments should be determined by the pairwise netting proportional rule.

This study presents disparities in mortality rates of 38-41 European countires and attempts at giving explanations for these. Explanatory factors of premature (0-64 ages) and old age (above 65 years old) mortality rates are compared accordig to cause-specific diseases and genders for 2009. In addition, mortality disparities due to avoidable (preventable and treatable) diseases are analyzed on a narrower sample of countries for 2015.

The model applied in the investigations takes into account the living conditions and life-styles of the population in the given countries i.e. GDP per capita, geographical location, air-pollution, educational level, tobacco and spirit consumption habits, and health care expenditures.

The most astonishing result is connected with the effect of air pollution: this factor has a similarly big weight in increasing premature male mortality as the well-known factor, tobacco consumption. Moreover, in the case of old age male mortality air pollution even dominate the effect of smoking.

Initial public pensions are indexed to the economy-wide average wages, but pensions in progress are indexed to prices, average wages or their combinations––varying across countries and periods. We create a simple overlapping cohorts framework to study the properties of indexing pensions in progress––emphasizing a neglected issue: close wage paths should imply close benefit paths even at real wage shocks. This robustness criterion of an equitable pension system is only satisfied by wage indexing, which in turn requires the adjustment of the accrual rate. To minimize the redistribution from low-earning short-lived citizens to high-earning long-lived ones, progression should be introduced.