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Author's Name: Leonora Risse
Date: Tue 04 May 2021

Leonora Risse

Dr Leonora Risse

Dr Leonora Risse is a Lecturer in Economics at RMIT University, a Research Fellow with the Women and Public Policy Program at Harvard University, and a Research Fellow with the Women's Leadership Institute Australia.

She holds a PhD in Economics from the University of Queensland and has previously served as a Senior Research Economist for the Australian Government Productivity Commission.

Dr Risse is a co-founder of the Women in Economics Network (WEN) in Australia and currently serves as the National Chair of WEN. She is a member of the Central Council of the Economic Society of Australia. She is an affiliate of the Life Course Centre, the Global Labor Organization, the National Foundation for Australia Women, and Gender Equity Victoria. In 2021 she was named among Apolitical's 100 Most Influential People on Gender Policy.

Subject area expertise

Labour economics; behavioural economics; gender equality; disadvantage and wellbeing; diversity and inclusion; demographic economics; public policy

Website

https://leonorarisse.com/


Responses (4)


Promoting vaccination uptake in Australia

Poll 49

"What measures should Australian governments adopt to promote demand for vaccination once supply is no longer a constraint?"

Photo credit "Wes Mountain/The Conversation, CC BY-ND"

 

National advertising campaigns;Vaccine passports for higher-risk settings (eg. flights, restaurants, major events)

Behavioural economics shows us that the design of the decision-making environment ("choice architecture") can steer people towards choices that would be best for society overall (in this case, having a vaccination), with necessarily resorting to mandates or overt enticements like cash incentives. Lotteries and cash incentives have appeal, but can come with potential costs. For a start, an element of good public policy is that you shouldn't be paying people for something they were planning to do anyway. Secondly, lotteries and cash incentives are a popular feature of US culture, but it's not clear that this resonates well in Australian culture. Unlike in the US, we don't pay people for their blood or organ donations. Instead, we have nurtured a culture where such acts are done out of goodwill, altruism, moral duty and other intrinsic values. There is a risk that attaching a financial payoff to a vaccination will distort this sense of intrinsic value and potentially deter this innately-motivated cohort. Activating intrinsic motivation is important long-term sustainability for the vaccination program ? cash rewards will condition people to keep expecting a payment each time we need to roll out booster shots. Also the concept of lotteries is also precariously linked to the issue of gambling, and could be considered insensitive to the harm and suffering that gambling causes many Australian households. Moreover, there is weak evidence that financial incentives will change the minds of Australians who are vaccine hesitant/resistant. Research by the Melbourne Institute found that, at most, 16% of people who were currently unwilling or unsure about getting vaccinated could be swayed by a cash payment (https://findanexpert.unimelb.edu.au/news/25780-our-survey-results-show-incentives-aren't-enough-to-reach-a-80-vaccination-rate) Vaccination passports could conceivably work as an incentive as well as an information device. However, the Melbourne Institute research also found that placing social restrictions of non-vaccinated people (such as banning attendance at large events and travel) would still not be enough to sway up to 56% of those who were unwilling or unsure about getting vaccinated. There is also an equity issue here. Vaccination passports can't come into effect until all members of the community have been offered their opportunity to be fully vaccinated, otherwise we are unfairly allowing freedoms to some while denying them to others. Nevertheless, vaccination passports could have their strongest impact by setting the "social norm" - the default behaviour that is expected for a well-functioning society, which might incentivise people to shift their behaviour over time once they see this as the norm. The 'No Jab, No Play' vaccination scheme for children is an example of a successful vaccination program that has helped set childhood vaccinations as the norm. Mandatory vaccinations for high risk occupations is an important factor for consideration, but it should not be used for the purpose of boosting demand for vaccinations. If mandates are enacted, it should be for genuine public health and safety reasons. National advertising campaigns have the potential to activate intrinsic motivations, such as a patriotic spirit. However, this government's track record on advertising campaigns is not convincing (especially after the tacos and milkshakes debacle). Outsourcing the advertising mission to community groups, who have greater capacity to tailor the messaging to their particular demographic, cultural, industry or geographical cohort, is likely be more effective. Research shows that the interventions that have been found to be successful in shifting people's intrinsic attitudes and behaviours are those where the message is delivered by someone that they genuinely trust, admire, respect and relate to. A tailored advertising approach can make better use of the power of local role models, ambassadors, leaders of the local communities and social peers to convey the vaccination message in a more meaningful way across different cohorts of society. Behavioural economics tells us that, to nudge people's choices, policy needs to be designed in a way that makes it easier to opt-in, and more onerous to opt-out. Once a sufficient supply of vaccines is secured, vaccination take-up can be improved by making "opting in" the default. This means that everyone is automatically registered for a vaccination, saving people the time and effort of chasing information. While we keep hearing that "vaccinations are our ticket out of the pandemic", we must not lose sight of the other critical investments that are needed to contain the spread of the virus, namely the construction, operation and staffing of purpose-built quarantine facilities. If your tap is dripping, you don't just let it keep dripping and mop up the puddles - the more efficient solution is go to the source of the leakage and tighten the tap. Proper quarantine facilities targets the source of the virus upstream.


Policies to deliver higher wage growth

Poll 48

Our panellists were asked

"Higher wages growth is now a top priority of the RBA in its efforts to sustain stronger economic growth. Please identify the three of these government policies you think would best help deliver higher wages growth".  

Photo credit "Wes Mountain/The Conversation, CC BY-ND"

 

.

Reforming industrial relations to support higher wage decisions by state and federal industrial rela

One key reason for low wage growth is the weakening link between productivity and wages that we have observed over time. The OECD describes this as a "decoupling" of wages from productivity (https://www.oecd.org/economy/decoupling-of-wages-from-productivity/) It is reflected in labour's decreasing share of total income over time. An increasing share of income is going to the owners of capital in the form of profits. This has been reported on by the RBA (https://www.rba.gov.au/publications/bulletin/2019/mar/the-labour-and-capital-shares-of-income-in-australia.html) It's not clear that any of the policies on this menu would adequately target this issue, but it implies that the solution is more complex than simply trying to manipulate labour demand or labour supply. It's about refining the mechanism through which workers' output is valued and imparted to them. Even though our focus here is on aggregate wage growth, our insights on gender gaps in earnings highlights the way that the society-wide value of particular jobs (healthcare, childcare, aged care, community services, cleaning) is not reflected in the wage paid to the worker. Mechanisms for improving wage growth will need to encompass a more accurate assessment of the society-wide value of a job. This is especially relevant as our workforce composition becomes increasingly oriented towards human services. It's not guaranteed that IR reforms will be able to steer improvements along these lines, but it probably has the best chance of doing so, out of all the policies on this menu. Economists generally would advocate for investment in productivity (via investment in skills, technology, innovation etc) as a driver of wage growth, but there is no point in pushing for productivity improvements if the mechanism for converting productivity improvements into wage growth is not working. The RBA has attributed labour low wage growth to excess capacity in the labour market, indicated by unemployment and under-employment. The paradox is that this excess supply of worker capability exists alongside job vacancies, which indicates that it is a job-matching, re-skilling and mobility issue. Policy attempts to boost AD won't necessarily help and could instead exacerbate skill shortages. It's shameful and disillusioning that some of the policy options suggested on this list - "Holding back growth in female and older worker labour force participation" - are outright discrimination and a contravention of UN human rights (UN Convention on the Elimination of All Forms of Discrimination against Women) and Australian legislation (Sex Discrimination Act 1984; Age Discrimination Act 2004). Proposing that migration numbers should be manipulated for the purpose of domestic wage growth is also insensitive to the rich evidence on the economic, cultural and society-wide gains of migration (https://www.pc.gov.au/inquiries/completed/migrant-intake/report).


Transition to electric cars

Poll 47

This month, our panellists were asked whether Australia should take action to speed the transition to electric cars.

"As part of efforts to reduce carbon emissions, Australian governments should take action to accelerate the take up, or take no action to accelerate the take up of electric cars"

Photo credit "Wes Mountain/The Conversation, CC BY-ND"

 

Subsidise only the purchase of non-luxury all-electric cars, Subsidise public charging points for electric cars, Make charging points compulsory in new homes and new carparks

9

The government can play a role in incentivising the uptake of electric vehicles by reducing the relative costs for a consumer to purchase and operate an EV, relative to a non-electric vehicle. The justification for allocating public funding towards such policies would be on the grounds of public interest: encouraging the use of EVs contributes to a reduction in carbon emissions, which is for the benefit of society and wellbeing overall. However, it would not be an efficient use of public funding to subsidise consumer behaviours that are likely to occur anyway. Subsidising the EV purchases of wealthier consumers, for instance, is likely to have less payoff compared to subsidising purchases among lower- and mid-income consumers, for whom cost is likely to be an actual barrier to their capacity to opt for cleaner energy choices. Targeting support for consumers at the lower end of the income/wealth spectrum could also be regarded as an equitable approach, reflective of individual capacity to pay. This list of potential government interventions is largely focused on end-user, private household activity. There is scope for public policy to do more to incentivise a shift in behaviour among businesses and in the provision of government services, including facilitating the uptake of EV in public transport service and government vehicle fleets. There is also scope for governments to support and incentivise investments in the technological innovations, R&D and manufacturing activity that would support the development of EV infrastructure, such as global battery supply chains, which the World Economic Forum has identified as a critical component of the global shift towards cleaner energies.


The Federal Budget May 2021

Poll 46

"On May 11, the government delivered a budget designed, in the Treasurer's words, to 'secure Australia's economic recovery and build for the future'.  What grade would you give the budget given that objective, A, B, C, D, E, F?"

Photo credit Wes Mountain/The Conversation, CC BY-ND

 

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C

The budget fulfils the need to spend big as the way to keep the economy on the road to recovery. Where there is scope for improvement is in terms of how this money is spent. The government is mainly relying on conventional sources of growth (eg. physical infrastructure and manufacturing) and could do more to adopt a more strategic, forward-thinking approach, better tailored to the pandemic environment. Building a strong, inclusive, sustainable economic future for Australia requires more attention on long-run drivers of growth: (1) investment in the university sector as generator of productivity-enhancing skills, knowledge and research (2) incentives for R&D and innovation across all industries (3) investment in the workforce capabilities, resourcing, and wages and working conditions of high-need, high-growth sectors (eg. aged care, mental health services)4) strategies to combat the fact that closed borders have currently turned the tap off two key sources of economic growth ? migration and export-oriented services. (4) strategies to combat the fact that closed borders have currently turned the tap off two key sources of economic growth ? migration and export-oriented services $17.7 billion for aged care is aimed at lifting the quality of a sub-standard system. While a critical mission in its own right, the budget misses the opportunity to transform the aged care sector into a driver of growth. Along with childcare, disability care and mental health services, investments in care infrastructure facilitate stronger workforce involvement and the more efficient use of skills among those who currently give their time towards unpaid care (predominantly women). Plus these are labour-intensive industries which - with adequate resourcing - generate jobs. A more comprehensive budget response would make stronger provisions for not just expanding places, but also supporting the workforces responsible for delivering these care services. Modelling commissioned by the National Foundation for Australian Women quantifies the clear growth dividend, and shows that this form of public investment (which includes lifting the wages of care workers) largely pays for itself by activating higher workforce participation and hence tax revenue (See: https://nfaw.org/wp-content/uploads/2020/10/Appendix-A.pdf). Assessment by the Grattan Institute suggests that the 33,800 aged care training places earmarked in the budget is in sufficient to secure a pipeline of qualified staff (See: https://theconversation.com/budget-package-doesnt-guarantee-aged-care-residents-will-get-better-care-160611). Similarly, while the budget trims the cost of childcare for some families, it does not contribute to expanding the childcare workforce's capacity to respond to this higher demand. Federal leadership is missing in construction of quarantine stations to host returning citizens, skilled migrants, international students, business travellers, and others whose contributions matter for long-term economic growth, as well as enabling Australians to reconnect with family members as a matter of wellbeing. Besides generating jobs, this seemingly essential component of our plan towards economic recovery - and re-integration with the global economy - was a missed opportunity.