Dismal Employment Growth in EU Countries: The Role of Corporate Balance Sheet Repair and Dual Labor Markets

Author:Bas B. Bakker - Li Zeng
Pages:1-7
SUMMARY

Large differences among European Union countries in postcrisis employment growth to a large extent were driven by the need to adjust corporate balance sheets, which had greatly deteriorated during the boom years in some countries but not in others. To close the large gaps between saving and investment, firms reduced investment and cut costs to boost profits. With much of the cost adjustment... (see full summary)

 
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IMF
Volume 15, Number 1 March 2014
www.imf.org/researchbulletin
B U L L E T I N
1
Dismal Employment Growth in EU Countries:
The Role of Corporate Balance Sheet Repair
and Dual Labor Markets
Bas B. Bakker and Li Zeng
Large differences among European Union coun-
tries in postcrisis employment growth to a large
extent were driven by the need to adjust corpo-
rate balance sheets, which had greatly deterio-
rated during the boom years in some countries
but not in others. To close the large gaps between saving and investment, firms reduced
investment and cut costs to boost profits. With much of the cost adjustment falling on
firms’ wage bills, employment losses were largest in countries under the most intense
pressures to improve corporate profitability and with limited wage flexibility due to
labor market duality.
Since the onset of the globa l nancial crisis, there have been st riking dierences
in labor market developments among European Union (EU) countr ies. Between
2008 and 2011, employment dropped by 14 percent in Ireland, but increased by
Waste Not, Want Not: Understanding the
Efficiency of Health Expenditure
Francesco Grigoli and Javier Kapsoli
Public health spending is low in emerging and
developing economies relative to advanced
economies, and health outputs and outcomes
need to be substantially improved. Simply
increasing public expenditure in the health
sector, however, may not significantly affect
health outcomes if the efficiency of this spending is low. In a recent paper, we
quantify the potential gains in life expectancy from reducing the inefficiency of
public health expenditure compared with improvements in other determinants of
health, such as increasing public spending in health, raising education outcomes,
and reducing tuberculosis and HIV diffusion. The results suggest that African
economies have the lowest efficiency of public health spending. At current spend-
ing levels, they could boost life expectancy up to about five years if they followed
best practices; by comparison, a 10 percent increase in public health spending per
capita would raise life expectancy by only two months.
(continued on page 5)
In This Issue
1 Waste Not, Want Not:
Understanding the
Efciency of Health
Expenditure
1 Dismal Employment
Growth in EU Countries:
The Role of Corporate
Balance Sheet Repair and
Dual Labor Markets
8 Recommended Readings
from the IMF Bookstore
9 Q& A: Seven Questions on
Financial Interconnectedness
12 IMF Working Pape rs
15 Staff Discussion Notes
15 IMF Econom ic Review
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(continued on page 2)
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