SINGLE-PUBBLICAZIONE

Special Covid-19 Series, Issue #37

Autore : Action Institute

Data: 07-06-2021

Tipo: Other

Tematica: Action Institute

Hello, Action Institute Community!

While the COVID-19 pandemic is hurting the global economy, we at Action Institute aim at delivering a whole-rounded perspective, cutting through the noise.
Our weekly Special series approaches the effects of the virus from different perspectives: from medical facts to health policy, from economic policy to macroeconomic issues, from politics to financial markets, from technology to the impact on businesses, and more. We encourage our esteemed readers to provide us with feedback and suggestions.

This weekly issue proposes a selection of papers and articles focused on (i) Social Impact and (ii) Macroeconomic Issues.

 

 

 

SOCIAL IMPACT
“Society is unity in diversity.”, George Herbert Mead

 

 “The Color of COVID After Biden’s First 100 Days” (Cfr, Catherine Powell, May 13th, 2021). During the pandemic women and people of colour have been the categories mostly affected in terms of job losses. The American Jobs Plan and the American Family Plan can tackle this issue. The first one may reskill women and people of colour, while it invests $400 billion towards home- or community-based caregiving services. Instead, the second plan will provide billion of dollars to expand access and improve child care; create national comprehensive paid family and medical leave for the first time ever; and expand access to education. 

 “To “build back better,” we must connect young people to jobs and education” (Brookings, Martha Ross, Alicia Sasser Modestino, Sarah Soroui, and Rashad Cope, May 20th, 2021). In the US, summer youth employment programs (SYEPs) stand out as some of the largest and most high-profile youth workforce development initiatives around; but the onset of stay-at-home orders and the drastically reduced business activity made a normal SYEP impossible. From the Boston case, policy-makers can draw two lessons to reconnect young people to jobs and education: virtual internships build skills similar to in-person jobs while increasing flexibility; and associating the earn of credits with SYEPs increase the access to postsecondary education.

 “The coronavirus generation graduates into uncertainty” (Politico, Paola Tamma, June 2nd, 2021). After more than a year of interrupted studies, disrupted social lives and postponed work opportunities, the next generation of Europeans is entering a labor market still reeling from the effects of the pandemic. In fact, being young today means being twice as likely to be unemployed, according to the OECD. The following article will analyse the long-term effects of this situation, as economists warn of so-called scarring effects – lingering damage to career prospects and lifetime earnings that can occur after an economic shock. 

 

 

MACROECONOMIC ISSUES
“Economics has never been a science – and it is even less now than a few years ago.”, Paul Samuelson

 “The ECB needs political guidance on secondary objectives” (Bruegel, Pervenche Béres et al., April 22nd, 2021). While EU Treaties clearly stipulate that the ECB “shall support the general objectives of the European Union”, the following article states that it is not appropriate to simply stand by, wishing that the ECB will use its discretionary power to act on them. While the ordering is clear between the ECB’s primary price-stability mandate and its supervisory duties, whether and how the ECB should act on its secondary objectives is much more blurred and subject to difficult trade-offs. According to the article, political institutions of the EU should prioritise the secondary goals to legitimise the ECB’s action. 

 “Eurozone shows signs of bouncing back from double-dip recession” (FT, Valentina Romei, May 19th, 2021). The article examines the uneven and hard-to-predict labor market recovery by closely focusing on labor force participation rates to see if constraints holding back labor supply continue to ebb. It provides circumstantial evidence that the increase in the outflow of employment represents a transition from a pandemic labor force to a post-pandemic labor force. To be sure, the portion of the pre-pandemic labor force comprised of mothers with elementary-school aged children is small enough that these relatively large declines do not account for much of the weakness in labor force participation and employment in aggregate. Another effect could be better and ultimately more productive labor market matches, particularly in states where the labor market recovery has been slower.

 “Economic growth as the ultimate constraint: EU fiscal policies in 2020” (Vox.eu, Christian Bayer, Benjamin Born and Ralph Luetticke, May 20th, 2021). In 2020, EU member states launched massive fiscal measures to mitigate the economic and social fallout of the Covid pandemic. The activation of the severe economic downturn clause of the Stability and Growth Pact, coupled with a decisive intervention of the ECB, offered member states the flexibility to stage their fiscal response. A closer look highlights important cross-country differences reflecting deeper issues. Countries with very high debt and/or high sustainability risks are bound by their meagre growth prospects. If unaddressed, future reviews of the EU fiscal rules may buy time, but not solve the underlying issues.

 “Examining the uneven and hard-to-predict labor market recovery” (Brookings, Lauren Bauer, Arindrajit Dube, Wendy Edelberg, and Aaron Sojourner, June 3rd, 2021). The article shows how the eurozone economy has begun to recover from the coronavirus pandemic according to high-frequency data indicators which offer early evidence that it will log a strong second-quarter rebound from its double-dip recession. The eurozone dropped into a double-dip recession in the first quarter of this year, its GDP contracting by 0.6 per cent. There is still a long road to recovery: hotel occupancy for the next 90 days is below 10 per cent in many eurozone countries, according to hotel consultancy STR. Overall, the OECD’s weekly economic tracker has recorded recent upticks in economic performance for several eurozone countries.

Credit

Let me remind you that credit is the lifeblood of business, the lifeblood of prices and jobs.

Herbert Hoover […]

Health

Good health is essential to social and economical development and it empowers all of the public sectors.

World Health Organization […]

Innovation

Innovation is the specific instrument of entrepreneurship. The act that endows resources with a new capacity to create wealth.

Peter Drucker […]

Human Capital

Talent is a source from which water flows constantly renewed. But this source loses its value unless it is properly used.

Ludwig Wittgenstein […]