Minimum Wages in Britain

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Is government involvement in the functioning of the economy beneficial or damaging for society? This endlessly debated question is as relevant now as it has ever been with the enormous packages of 'fiscal stimulus' that have been implemented to ward off a deep recession, plus the likelihood of stronger regulation of financial markets in the hope of preventing future crises. This CentrePiece features research findings from the Centre for Economic Performance (CEP) that provide support for both sides of the argument. For example, proponents of reduced intervention may appreciate studies of 'occupational licensing' - work that requires government permission. These find that it has few benefits and major costs for users of the services provided by the occupations, which include dentistry, accountancy and the law. Supporting domestic industries against foreign competition is a form of government intervention more widely agreed to be damaging.

At a time when trade has declined dramatically, there is a real danger that countries will respond with protectionist measures, such as the 'Buy in America' provisions of the US fiscal stimulus. Frédéric Robert-Nicoud and Richard Baldwin explain why industrial policy tends to pick 'losers', a finding that is particularly topical in light of the bailout of the US car industry. But governments can also have positive effects on people's lives. Our cover story and 'big ideas' article in this issue describe the evolution and impact of minimum wages in Britain - from the first enactment of trade boards exactly one hundred years ago through to the establishment of the National Minimum Wage in the late 1990s. The consensus view across the political spectrum is that the policy has been a success, benefiting 12 million low paid workers and reducing wage inequality.

This policy is also indicative of the potential benefits of government support for research. The Economic and Social Research Council (ESRC), which recently awarded CEP £6.08 million over a five-year period, commissioned a consultancy report aimed at measuring the impact of its funding. Focusing on the Centre's contribution to the implementation and evaluation of the National Minimum Wage, the report tried to assess the value of CEP research, concluding that: 'Of course, it is impossible to attribute with any precision the value generated, but if we start with a gross benefit of £1.2 billion attributed to the policy then even if only 2 per cent of that gross benefit is attributable to CEP that equates to £24 million in 2008 prices.'

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Mostly Harmless Econometrics: An Empiricist's Companion

Mostly Harmless Econometrics: An Empiricist's Companion
Joshua D. Angrist and Jörn-Steffen Pischke
Princeton University Press (4 Jan 2009)
ISBN-10: 0691120358
ISBN-13: 978-0691120355
£54.00 and £24.95

The core methods in today's econometric toolkit are linear regression for statistical control, instrumental variables methods for the analysis of natural experiments, and differences-in-differences methods that exploit policy changes. In the modern experimentalist paradigm, these techniques address clear causal questions such as: Do smaller classes increase learning? Should wife batterers be arrested? How much does education raise wages? Mostly Harmless Econometrics shows how the basic tools of applied econometrics allow the data to speak. In addition to econometric essentials, Mostly Harmless Econometrics covers important new extensions - regression-discontinuity designs and quantile regression - as well as how to get standard errors right. Joshua Angrist and Jörn-Steffen Pischke explain why fancier econometric techniques are typically unnecessary and even dangerous. The applied econometric methods emphasized in this book are easy to use and relevant for many areas of contemporary social science. This book features: an irreverent review of econometric essentials; focus on tools that applied researchers use most; chapters on regression-discontinuity designs, quantile regression, and standard errors; many empirical examples; and, a clear and concise resource with wide applications.

A Good Childhood: Searching for Values in a Competitive Age

A Good Childhood: Searching for Values in a Competitive Age
Richard Layard and Judy Dunn
Penguin (5 Feb 2009)
ISBN-10: 0141039434
ISBN-13: 978-0141039435
£9.99

Every day the newspapers lament the problems facing our children - broken homes, pressures to eat and drink, the stress of exams. The same issues are discussed in every pub and at every dinner party. But is life really more difficult for children than it was, and if so why? And how can we make it better? This book, which is a result of a two year investigation by the Children's Society and draws upon the work of the UK's leading experts in many fields, explores the main stresses and influences to which every child is exposed - family, friends, youth culture, values, and schooling, and will make recommendations as to how we can improve the upbringing of our children. It tackles issues which affect every child, whatever their background, and questions and provides solutions to the belief that life has become so extraordinarily difficult for children in general. The experts make 30 specific recommendations, written not from the point of view of academics, but for the general reader - above all for parents and teachers. We expect publication to be a major event and the centre of widespread media attention.

Richard Layard is Emeritus Professor of Economics at the London School of Economics, and author of the best-selling Happiness (Penguin, 2005). He was founder-director of the Centre for Economic Performance at the London School of Economics and now heads its programme on well-being. He is also a member of the House of Lords.

Judy Dunn is Professor of Developmental Psychology at the Institute of Psychiatry, King's College London. Her research interests are in children's social, emotional and communicative development, studied in their families and with their friends. She is Chair of the Good Childhood Inquiry.

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