Global Employment Model

1. Global Employment Model Garry Jacobs Chair, WAAS Global Employment Program

2. Factors Impacting Employment • Demography: population growth and increasing life expectancy * • Transformation of work: from agriculture to manufacturing to services * • Mechanization and automation * • Globalization of trade and outsourcing * • Rates of economic growth * • Income distribution * • Patterns of investment – speculative vs. productive * • Increase in quality of jobs * • Higher educational requirements * • International labor mobility * • Labor policies * • Public policies and regulation • Entrepreneurship • Self-employment • Vocational training • Virtualization of work

3. Pop & Employment 1950-2007

4. Demography • Trends • Employment growth relative to population and labor market growth • Impact of rising population on global economic demand • Labor market growth in developing countries increases labor supply • Aging of the population in OECD • Greater longevity will push retirement ages higher • Labor shortages are projected in some economically advanced countries • Urbanization • Migration of workers from developing to developed nations • Potential impact of international labor policies such as minimum wage • Issues • What will be the impact of aging on labor markets? • Where will it create shortages and to what extent? • How are shortages likely to be filled? • What will be the impact of aging on retirement age? • How will society harness the capabilities of more experienced older workers who wish to continue working? • What will be the economic impact on a declining percentage of working age population on pension and welfare systems? • How will worker sex ratios change? What factors will most affect them?

5. Economic Growth • Trends • Projected national and global economic growth rates and their impact on total employment • Rising living standards in emerging markets will create enormous demand in future • “Job Exports” –jobs created overseas from domestic growth • Impact of growth of tourism, medical tourism generate jobs in all regions • Issues • What will be the relative contribution of financial capital, technology and human capital to future economic growth? • Income and Employment Multiplier Effects • Impact of tradeoffs between technology and labor, e.g. farm employment • Relationship between economic growth and domestic and international job creation

6. Globalization of Markets • Trends • Growth of manufacturing trade since 1990 shifts jobs internationally • Outsourcing of services shifts jobs to developing countries • Globalization of Labor Markets/Flows/Labor mobility • Effects of the unification of the EU market on employment may be obscured by other factors • Issues • To what extent can global markets be regulated nationally or internationally? • What are the crucial regulatory decisions that would have maximum impact on employment?

7. Finance • Trends • Globalization of financial markets • Growing divorce between finance and economy • Rising unutilized international financial reserves • International capital investment flows • Interest rates • Currency stability and valuation • Issues • The role of money and capital and its impact on employment • What is the public good impact of financial markets • The huge cost of global financial instability is not being priced – the public is paying for instability and the right to speculate • Bailouts • Instability reduces long term productive investments • Need for huge unproductive foreign exchange reserves • Potential impact of policies to reduce non-productive investment and incentivize productive investments, e.g. Tobin Tax • Impact of incestuous relationship between major corporations and investment funds on corporate decisions, including employment

8. Human Capital Formation • Trends • Multiplier effect of human capital formation on economic growth and employment • Impact of underemployment and unemployment on Human Capital • Financial capital vs. human capital • Investment in human capital formation

9. Education • Trends • Levels of education are rising dramatically worldwide, e.g. Korea, China • Impact if education on employability • Relationship between education, employment and unemployment. • Relationship between education and income • Labor market educational requirements • Rising levels of education on aspirations, consumption patterns and effective demand • Educated unemployment in developing and industrialized countries • Life-long learning • Issues • Educational curriculum and employability • Firewall between universities and labor market in Europe • Why MBAs are more employable? • Accountability of universities • Education and immigration

10. Skills shortage • Trends • Emerging skill shortages and skill mismatches in industrialized and developing countries • Projecting future skill needs • Trends in vocational education and training • Issues • Alternative training delivery systems • Education, apprenticeship, employment programs

11. Business Strategy • Trends • Globalization of sourcing and distribution systems • Globalization of business ownership • Globalization of MNC employment strategies • Shift of capital investment to growth markets and low wage producers • Shift of production to low wage countries • Shift of production to fast developing markets • Outsourcing of services • Issues • Reduced effectiveness of national level policies on business

12. Technology • Trends • Dissemination of new products and technologies at all time high • Rate of process and product innovation more rapid than before • Impact of process and new product development on employment in manufacturing and services • Factors influencing the substitution of capital and technology for labor • Issues • Attitudes, policies and business strategies impacting investment in technology

13. Ecology • Trends • Energy prices and their impact on employment vs. capital investment • Pressure to change technological base from fossil fuels creates problems and opportunities • Pressure to improve energy consumption at a time of rapid economic growth

14. Getting prices right • Pricing labor and capital • Are we pricing capital correctly? • Pricing to reflect the actual cost of unemployment • Policies to get prices aligned • Pricing of resources • Distinguish between extracting cost and ecological value of different resources • Assigning ecological cost of water will dramatically change agricultural and other prices

15. Social Costs of Unemployment & Underemployment • Impact on human capital • Impact on social capital – neighborhoods, community • Impact on social unrest, crime, violence, peace and stability

16. Emerging economic opportunities • Historical analysis of the impact of new needs, products and services on employment • Project future profile of new services and job requirements in developing and developed countries • Factors influencing new business development • Scope for less developed nations to adopt services prevalent in economically advanced nations • High Potential Industries • Insurance as a driver – positive causal impact on economic growth

17. Evolution of Social Organization • Impact of social organization on new business opportunities • Future impact of the Internet on the way work is carried out • Social Development and Macro psychology • Impact of changing social attitudes on growth and employment • Trust deficits – their causes and remedies • Impact of trust on social development, economic growth and employment • Potential role of new types of insurance to promote trust, security and development

18. Law, Human Rights & employment • Law and Human rights • Property rights vs. the right to work • The value of human security • The challenge of food security is really about ensuring access to employment opportunities. • Social attitudes toward unemployment

19. Public Policy • Trends • Public Sector as a major part of the economy • Policies regulating new job creation • Policies restricting entrepreneurial activity and employment • Public investment in stimulus • Welfare and social security • Employer of last resort programs • Guaranteed basic income – 4 Pillars • Issues • Need for political economic theory that reflects the large role of government in economy • Reconciling free markets with public good • Vested interests of financial markets and investors impacting employment policies • Public investment to crowd in private insurance, e.g. New Orleans • Reliance on classical macroeconomic strategies to address employment

21. India – China GDP Growth (PPP)

22. India – China GDP Growth (Market)