School is work; work is school Paul Romer Sept. 26, 2011
School is work; work is school
Paul Romer Sept. 26, 2011
Cost per student
Enrollment
Schooling
Wage
Employment
D - Demand for labor
Competitive Industry
- Cyclical vs. structural?
- Policy responses?
Stipulate
Cost of employment matters
Claim
www.cde.org.za
Singapore’s use of wage subsidies
Prof Hian Teck HoonSingapore Management University
Cyclical?
Wage
Employment
D - Demand for labor
Competitive Industry
Wage
Employment
D
Resource rents, restrictions on
firing
W W
MiningE1
D
Garments
Zero Elasticity
W W
MiningE1
D
Zero Elasticity
Garments
W W
MiningE1 E2
D
Infinite elasticity
Garments
“South African policy advisers were also keen to find an alternative to the perceived ‘low wage’ industrial strategy of fast-growing Asian economies.”
- Andrew Donaldson
Relative urbanization
W
Better infrastructure =>
higher wages
Manufacturing Exports
E2
Income net of transport costs
}Worker’s Transport cost
Manufacturing Exports
... and higher real income
Relative inclusion
W W
MiningE1 E2
S2S2 }Gov’t
}Firms
Manufacturing Exports
Universal wage subsidy
W
MiningE1 E2
S3
Wage floor in garments
Manufacturing Exports
Targeted Wage Subsidy
Cost of employment matters
Claim
Cost of employment matters
Claim
“ILO, UNDP JOIN FORCES TO PROMOTE GROWTH FOR DECENT
JOBS”
Relative inclusion