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Five critical concerns facing modern economics

Due to the nature of globalization and the interconnectedness of modern human society, the discipline of economics touches on other areas of study such as politics, environmentalism, and international relations. This is especially true for the tumultuous times in which we live. From the role of women in leadership positions to the uncertainty surrounding a higher minimum wage to the growth of populism in the Western world, we’ve excerpted five thought-provoking chapters that address central problems facing the field of economics today.

Have women made gains in the makeup of corporate leadership?

Although the highest ranks of corporate hierarchies remain dominated by men, the growth rate in female representation among corporate leaders in recent decades has been stunning, especially when considered as a proportion of the baseline levels. Between 1997 and 2009, the share of S&P 1500 board seats held by women nearly doubled (from 7.6 percent), the share of top executive positions held by women increased by 86 percent (from 3.2 percent), and the female share of CEOs increased by a factor of six (from less than 1 percent). And these gains immediately followed a near tripling of the female share among top executives over the preceding five-year period. These remarkable recent gains for women in corporate leadership are part of a broader set of female gains in the labor market that has spanned the past sixty or more years; they are particularly related to women’s increasing entry into nontraditional occupations since the 1970s. According to the Bureau of Labor Statistics, women made up 39.2 percent of workers in the occupational category for “managers” in 2015; this rate is lower than their overall participation in the labor market, but substantially higher than their share of top positions. – Amalia R. Miller

What are the employment effects of minimum wage?

Perhaps the economic factor of most importance in thinking about the effects of much higher minimum wages, and one that may inform the literature more generally, is the question of how the “bite” of the minimum wage—that is, how much the minimum wage binds—affects the estimated employment effects of the minimum wage. This question has received a bit of attention, but there is considerable scope for progress. One indirect approach to this question is a 1992 study, which estimated the effects of the minimum wage in Puerto Rico, a US territory that is bound by the US federal minimum wage but has much lower wage levels, and hence where the minimum wage has much more bite. The study reported very large aggregate employment effects and particularly adverse effects on low-wage industries, consistent with stronger disemployment effects where the minimum wage binds strongly. This evidence was revisited in another study in 1995, which concluded that evidence of disemployment effects was fragile. – David Neumark

President Bill Clinton signing the North American Free Trade Agreement into Law, November 1993. Executive Office of the President of the United States, Public Domain via Wikimedia Commons.

How important is free trade to the global economy?

The most highly developed examples of regional trade agreements are the treaties establishing the European Union, the only regional trade area that is itself a member of the World Trade Organization (WTO). Regional trade agreements vary greatly. Some are free trade areas, which eliminate tariffs and import quotas between participating members. Other regional trade areas are more integrated and are referred to as customs unions because they combine a free trade area with a common external tariff and trade policy. Several significant regional trade areas include the free trade areas established by the North American Free Trade Agreement (NAFTA), the Caribbean Community (CARICOM and the nineteen states that comprise the Common Market for Eastern and Southern Africa (COMESA), among others. – Aoife O’Donoghue

Is economic populism a result of austerity or globalization?

Global capitalism faces turbulent times. Advanced capitalist countries have lived through a harsh transition from the financial crash of 2008 to a period of secular stagnation in the context of rising inequality and social divides. This shift in macro regimes was largely unexpected by policymakers and the influential “economics profession”—the latter being in urgent need of conceptual renewal, realism, and more enlightened social policy concerns. The last three decades have been characterized by recurrent financial crises, complex cycles of economic activity, rising concentration of incomes and wealth, and systematic attacks against the welfare state and social protection policies. The political consequences of this state of affairs in countries with stable, mature democracies are still unfolding but look worrisome. Political parties and social movements with xenophobic, anti-migrant, anti-labor, and nationalist agendas are making strides in several European countries, and in the United States, a similar rhetoric has been adopted by billionaire-cum-politician Donald Trump that has resonated with groups of the American population in the 2016 presidential election and beyond. – Andres Solimano

A black plastic flag with a fleur-de-lis and the words “Refusons l’austérité” in French (“Refuse Austerity”, in English) commonly used in 2015-2016 at anti-austerity demonstrations in Quebec is planted in the snow near the Square-Victoria metro station in Montreal on 3 February 2016. Exile on Ontario St, CC BY-SA 2.0 via Wikimedia Commons.

How will the changing environment affect economic growth?

Widespread recognition that human actions are a driving force in planetary geological systems has ignited interest across the discipline in the social, political, and economic dimensions of global change. For economic geography, the onset of the Anthropocene raises foundational questions about drivers of regional growth, spatial differences in regional economic performance, and regional responses to stresses and shocks. There is a need to come to new theoretical understandings of the role of the changing material environment for the economy. How will gradual deterioration of environmental baselines affect regional economic growth and development trajectories? In what ways will adaptation responses to climatic and environmental stresses, such as out-migration from inundated or drought-prone areas, affect wages and housing markets? There remains a pressing need for attention to regional impacts and vulnerabilities in non-coastal contexts, areas that depend on climate-sensitive ecosystem services, high-value manufacturing and service sectors, and informal economies. There is also a need for further investigation of climate impacts on regional labour markets and spatial inequalities, of intersectional and relational dimensions of economic vulnerability, and of the production and performance of vulnerability in a variety of regional contexts. – Robin Leichenko

Featured Image credit: Container ship. CC0 via pixabay.

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