As discussed in the IMF’s G20 Note, and a blog last week by IMF Managing Director Christine Lagarde, a forthcoming chapter of the World Economic Outlook seeks to understand the decline in the labor share of income (that is, the share of national income paid in wages, including benefits, to workers) in many countries around the world. These downward trends can have potentially large and complex social implications, including a rise in income inequality. (more…)
Basic economic theory tells us that capital should flow from slow-growing rich countries to faster-growing poor ones in search of higher returns. A decade ago, our former Research Department colleagues Eswar Prasad, Raghuram Rajan, and Arvind Subramanian examined why the reverse had been true—capital generally flowed “uphill” from poorer to richer countries. Building on the seminal work of Robert Lucas, they argued that certain characteristics of poorer countries, such as weaker institutions and lower levels of education, may reduce the risk-adjusted returns to investing there. (more…)
Did you know that while many people in advanced economies have multiple bank accounts, there are barely two bank accounts for every ten people in low-income economies? Access to financial services is essential to spread the fruits of economic growth to all, not just to the fortunate few. (more…)
An accumulation of recent data suggests that the global economic landscape started to shift in the second half of 2016. Developments since last summer indicate somewhat greater growth momentum coming into the new year in a number of important economies. Our earlier projection, that world growth will pick up from last year’s lackluster pace in 2017 and 2018, therefore looks increasingly likely to be realized. At the same time, we see a wider dispersion of risks to this short-term forecast, with those risks still tilted to the downside. Uncertainty has risen. (more…)
During 2007-08, house prices in several countries collapsed, marking the onset of a global financial crisis. The IMF’s Global House Price Index, a simple average of real house prices for 57 countries, is now almost back to its level before the crisis (Chart 1). Is it time to worry again about a global fall in house prices? (more…)
The link between jobs and economic growth is not always a straight line for countries, but that doesn’t mean it’s broken.
Economists track the relationship between jobs and growth using Okun’s Law, which says that higher growth leads to lower unemployment.
New research from the IMF looks at Okun’s Law and asks, based on the evidence, will growth create jobs? The findings show a striking variation across countries in how employment responds to GDP growth over the course of a year. (more…)
Migration of sub-Saharan Africans is growing rapidly. Just like the region’s population, the number of migrants doubled since 1990 to reach about 20 million in 2013. In the coming decades, migration will expand given the demographic boom in the working-age population—the group that typically feeds migration. We studied these trends in a recent paper because both receiving and sending countries need the right policies so all can benefit.