Migrants Bring Economic Benefits for Advanced Economies

By Florence Jaumotte, Ksenia Koloskova, and Sweta Saxena

Migration, no matter how controversial politically, makes sense economically. A new IMF study shows that, over the longer term, both high- and low-skilled workers who migrate bring benefits to their new home countries by increasing income per person and living standards. High-skilled migrants bring diverse talent and expertise, while low-skilled migrants fill essential occupations for which natives are in short supply and allow natives to be employed at higher-skilled jobs. Moreover, the gains are broadly shared by the population. It may therefore be well-worth shouldering the short-term costs to help integrate these new workers.

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Tariffs Do More Harm Than Good at Home

maurice-obstfeld2By Maurice Obstfeld

Versions in: عربي (Arabic), 中文 (Chinese), Français (French), 日本語(Japanese), Русский (Russian), Español (Spanish)

A longstanding challenge for the global economy is the possibility that some countries compete for export markets through artificially low prices. Political leaders and pundits sometimes propose import tariffs to offset the supposed price advantages and exert pressure for policy changes abroad. What proponents often fail to realize is that such tariff policies, while certainly hurting their targets, can also be very costly at home. And surprisingly, the self-inflicted harm can be substantial even when trade partners do not retaliate with tariffs of their own. Continue reading

The Euro Area Workforce is Aging, Costing Growth

By Shekhar Aiyar, Christian Ebeke, and Xiaobo Shao

Versions in Français (French), and Español (Spanish)

In parallel to the aging of the general population, the workforce in the euro area is also growing older. This could cause productivity growth to decline in the years ahead, raising another policy challenge for governments already dealing with legacies from the crisis such as high unemployment and debt.  Continue reading

Emigration Slows Eastern Europe’s Catch Up With the West

By Nadeem Ilahi, Anna Ilyina, and Daria Zakharova

(Versions in: Bulgarian, Czech, Estonian, Hungarian, Latvian, Lithuanian, Polish, Romanian, Russian, Serbian, and Slovenian)

The opening up of Eastern Europe to the rest of the world in the early 1990s brought about tremendous benefits. The inflow of capital and innovation has led to better institutions, better economic management, and higher efficiency. On the flip side, it has also led to sizable and persistent outflow of people.

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Growing Older: Germany Needs Reforms

By Enrica Detragiache, Jean-Marc Natal, and Joana Pereira

Version in Deutsch (German)

Germany, a champion of structural reform prescriptions within the European Union, needs a large dose of the same medicine at home, too. Beyond public investment in transport and telecommunications, and more competition in services, dealing with an aging population needs urgent attention. With the right policies, Germany can bring more people into the workforce—and for longer—to counter the demographic trend, argues a recent study accompanying the regular health check of the German economy by the International Monetary Fund.

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Japan: Time to Load a Fourth Arrow—Wage Increases

By Luc Everaert and Giovanni Ganelli

(Version in 日本語)

Everybody agrees: wages need to grow if Japan is to make a definite escape from deflation. Full- time wages have increased by a mere 0.3 percent since 1995! For example, despite its record profits, Toyota increased its base salary only by 1.1 percent last year. The average of 219 Keidanren firms managed just 0.44 percent. Clearly, an increase in base wages, colloquially referred to as “base up”, is long overdue.

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Population Pressures

Jeff HaydenBy Jeff Hayden

(Versions in عربي and Español)

Say “population growth” and many people immediately think of resources under stress. The mind jumps to 19th century scholar Thomas Malthus, who saw population outstripping the food supply, or to Paul Ehrlich, whose 1968 book The Population Bomb warned of global catastrophe from overpopulation.

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