Results

Journal article

Review of Economics and Statistics:

Trade, gravity and aggregation.

Gravity equations are an important tool in empirical international trade research. We study to what extent sector-level parameters can be recovered from aggregate gravity equations estimated via Poisson pseudo maximum li...Read more...

CEP discussion paper

Urban-biased structural change

Using firm-level data from France, we document that the shift of economic activity from manufacturing to services over the last few decades has been urban-biased: structural change has been more pronounced in areas with ...Read more...

CEP Covid-19 analysis

The self-employment trap?

The seventh LSE-CEP survey of the self-employed was undertaken in June 2023. The results revealed that the self-employed are still in the doldrums and their incomes and activity have not resumed to pre-pandemic levels. T...Read more...

Blog

Vox EU:

Firm inflation expectations in quantitative and text data

Inflation rates and short-term inflation expectations in the UK have increased significantly since 2021. This column uses quantitative and text data from the Decision Maker Panel to analyse the factors affecting inflatio...Read more...

Blog

Vox EU:

Communication costs, science, and innovation

It seems obvious that lowering the cost of communication among innovators would facilitate scientific and technological progress. Yet, few studies examine this relationship. This column explores the introduction of the f...Read more...

Journal article

The Economic Journal:

Gravity and heterogeneous trade cost elasticities

How do trade costs affect international trade? This paper offers a new approach. We rely on a flexible gravity equation that predicts variable trade cost elasticities, both across and within country pairs. We apply this ...Read more...

CEP discussion paper

Managing export complexity: The role of service outsourcing

As manufacturing firms expand globally, business services like advertising and legal support become essential for accessing new markets. This paper investigates how firms organize the provision of such market access serv...Read more...

Chapter

The backlash of globalization

in Handbook of International Economics

We review the literature on the globalization backlash, seen as the political shift of voters and parties in a protectionist and isolationist direction, with substantive implications on governments' leaning and enacted p...Read more...

Journal article

Review of Economics and Statistics:

The impact of contract enforcement costs on value chains and aggregate productivity

I study how supplier contracting frictions shape the patterns of intermediate input use and quantify the impact of these distortions on aggregate productivity. Using the frequency of litigation between US firms as a nove...Read more...

Journal article

International Economic Review:

Estimating border effects: the impact of spatial aggregation

Trade data are typically aggregated across space. In this article, we investigate the sensitivity of gravity estimation to spatial aggregation. We build a model in which micro regions are aggregated into macro regions. W...Read more...

CEP discussion paper

Trade, gravity and aggregation

Gravity regressions are a common tool in the empirical international trade literature and serve an important function for many policy purposes. We study to what extent micro-level parameters can be recovered from gravity...Read more...

Blog

VoxEU:

The impact of trade costs can be weak or strong - depending on how much countries trade

Many countries try to bring down trade costs by striking free trade agreements, forming currency unions or joining the WTO. But when trade costs fall, how much does trade increase? Natalie Chen and Dennis Novy explain th...Read more...

Journal article

Environmental Research Letters:

Induced innovation in energy technologies and systems: A review of evidence and potential implications for CO2 mitigation

We conduct a systematic and interdisciplinary review of empirical literature assessing evidence on induced innovation in energy and related technologies. We explore links between demand-drivers (both market-wide and targ...Read more...

CEP Brexit analysis

Disunited Kingdom? Brexit, trade and Scottish independence

Scotland is a small, open economy that mostly trades with the rest of the UK. There is around six times more trade between Scotland and the rest of the UK than predicted by a standard gravity trade model. Scottish indepe...Read more...

CEP discussion paper

All aboard: the effects of port development

Seaports facilitate the fast flow of goods across space, but ports also entail local costs borne by host cities. We use the introduction of containerized shipping to explore the effects of port development. At the local ...Read more...

Journal article

Economica:

'Trophy architects' and design as rent-seeking: quantifying deadweight losses in a tightly regulated office market

Britain tightly restricts the supply of office space, creating substantial economic rents, but its development restrictions are politically administered and therefore gameable, inducing rent-seeking activity. We find tha...Read more...

CEP discussion paper

Exchange rates and consumer prices: evidence from Brexit

This paper studies how the depreciation of sterling following the Brexit referendum affected consumer prices in the United Kingdom. Our identification strategy uses input-output linkages to account for heterogeneity in e...Read more...

Blog

LSE Business Review:

Brexit will leave the UK worse off economically in all scenarios

Since the UK voted to leave the European Union in June 2016, Brexit has dominated UK politics and economic policy. Three and a half years after the referendum, the UK is yet to leave the EU, there is no certainty over if...Read more...

Blog

LSE Brexit:

Economic consequences of Brexit are overwhelmingly negative

The economic consequences of Brexit are overwhelmingly negative, estimate Swati Dhingra and Thomas Sampson (LSE). The more the UK distances itself from the EU’s economic institutions and policies, the greater will be the...Read more...

CEP election analysis

Brexit economics

Since the UK voted to leave the European Union in June 2016, Brexit has dominated UK politics and economic policy. Three and a half years after the referendum, the UK is yet to leave the EU, there is no certainty over if...Read more...

Journal article

Journal of International Economics:

Market Potential and Global Growth over the Long Twentieth Century

We examine the evolution of market potential and its role in driving economic growth over the long twentieth century. Theoretically, we exploit a structural gravity model to derive a closed-form solution for a widely-use...Read more...

CEP discussion paper

Market potential and global growth over the long twentieth century

We examine the evolution of market potential and its role in driving economic growth over the long twentieth century. Theoretically, we exploit a structural gravity model to derive a closed-form solution for a widely-use...Read more...

Journal article

Review of Economics and Statistics:

Two-sided heterogeneity and trade

This paper develops a multicountry model of international trade that provides a simple microfoundation for buyer-seller relationships in trade. We explore a rich data set that identifies buyers and sellers in trade and e...Read more...

CEP discussion paper

Currency unions, trade and heterogeneity

How do trade costs affect international trade? This paper offers a new approach. We rely on a flexible gravity equation that predicts variable trade cost elasticities, both across and within country pairs. We apply this ...Read more...

CEP discussion paper

The billion pound drop: the blitz and agglomeration economies in London

This paper exploits locally exogenous variation in the location of bombs dropped during the Blitz to quantify the effect of density restrictions on agglomeration economies in London: an elite global city. Employing micro...Read more...

CentrePiece article

Stamp duty, mobility and the UK housing crisis

The UK’s stamp duty land tax raises substantial revenues for the government, but it also contributes to the UK’s housing crisis by preventing households from moving to more suitable homes. That is the central conclusion ...Read more...

Journal article

Journal of Urban Economics:

Transfer taxes and household mobility: Distortion on the housing or labor market?

We estimate the effect of the UK Stamp Duty Land Tax (SDLT) – a transfer tax on the purchase price of property or land – on different types of household mobility using micro data. Exploiting a discontinuity in the tax sc...Read more...

SERC/Urban and Spatial Programme Discussion Paper

Transfer Taxes and Household Mobility: Distortion on the Housing or Labor Market?

We estimate the effect of the UK Stamp Duty Land Tax (SDLT) – a transfer tax on the purchase price of property or land – on different types of household mobility using micro data. Exploiting a discontinuity in the tax sc...Read more...

CEP discussion paper

Estimating border effects: the impact of spatial aggregation

Trade data are typically reported at the level of regions or countries and are therefore aggregates across space. In this paper, we investigate the sensitivity of standard gravity estimation to spatial aggregation. We bu...Read more...

CEP discussion paper

Two-sided heterogeneity and trade

This paper develops a multi-country model of international trade that provides a simple micro-foundation for buyer-seller relationships in trade. We explore a rich dataset that identifies buyers and sellers in trade and ...Read more...

CEP discussion paper

The impact of contract enforcement costs on outsourcing and aggregate productivity

Legal institutions affect economic outcomes, but how much? This paper documents how costly supplier contract enforcement shapes firm boundaries, and quantifies the impact of this transaction cost on aggregate productivit...Read more...

SERC/Urban and Spatial Programme Discussion Paper

Transfer Taxes and Household Mobility: Distortion on the Housing or Labor Market?

We estimate the effect of the UK Stamp Duty Land Tax (SDLT) – a transfer tax on the purchase price of property or land – on different types of household mobility using micro data. Exploiting a discontinuity in the tax sc...Read more...

Journal article

The Review of Economics and Statistics:

Intermediaries in international trade: Products and destinations

This paper examines the factors that give rise to intermediaries in exporting and explores the implications for trade volumes. Export intermediaries such as wholesalers serve different markets and export different produc...Read more...

CentrePiece article

Trophy architects and the ‘dark matter' of London’s planning system

A quarter of London’s skyscrapers are designed by architects who have already won a lifetime achievement award and whose work thus has the imprimatur of ‘iconic design’; this compares with just 3% in Chicago. According t...Read more...

Journal article

American Economic Review:

Industry compensation under relocation risk: a firm-level analysis of the EU emissions trading scheme

When regulated firms are offered compensation to prevent them from relocating, efficiency requires that payments be distributed across firms so as to equalize marginal relocation probabilities, weighted by the damage cau...Read more...

CEP discussion paper

Because I'm worth it: a lab-field experiment on the spillover effects of incentives in health

We conduct a controlled lab-field experiment to directly test the short-run spillover effects of one-off financial incentives in health. We consider how incentives affect effort in a physical activity task ? and then how...Read more...

SERC/Urban and Spatial Programme Discussion Paper

'Iconic Design' as Deadweight Loss: Rent Acquisition by Design in the Constrained London Office Market

Britain’s land use regulation (planning) system imposes very tight restrictions on the supply of office space so creating substantial rents. An unmeasured part of the costs associated with these restrictions likely comes...Read more...

CEP discussion paper

Mental illness and unhappiness

This paper is a contribution to the second World Happiness Report. It makes five main points: 1. Mental health is the biggest single predictor of life-satisfaction. This is so in the UK, Germany and Australia even if men...Read more...

CEP discussion paper

Concentration versus re-matching? Evidence about the locational effects of commuting costs

Using administrative employer-employee data from Germany, I exploit two reductions of tax breaks for commuting in 2003/4 and 2006/7 to estimate commuting costs’ effect on the decision to switch job and move house. Standa...Read more...

CEP discussion paper

On the Measurement of Trade Costs: Direct vs. Indirect Approaches to Quantifying Standards and Technical Regulations

In this article, we review the literature on the measurement of trade costs in international trade with a special emphasis on nontariff measures and in particular on standards and technical regulations. We distinguish ‘d...Read more...

CEP discussion paper

Is the International Border Effect Larger than the Domestic Border Effect? Evidence from U.S. Trade

Many studies have found that international borders represent large barriers to trade. But how do international borders compare to domestic border barriers? We investigate international and domestic border barriers in a u...Read more...

SERC/Urban and Spatial Programme Discussion Paper

The Effect of the UK Stamp Duty Land Tax on Household Mobility

We estimate the effect of the UK Stamp Duty Land Tax on household mobility using micro data. Exploiting a discontinuity in the tax schedule as a quasi-experimental setting, we isolate the impact of the stamp duty from ot...Read more...

CEP discussion paper

Intermediaries in International Trade: Direct Versus Indirect Modes of Export

This paper examines the factors that give rise to intermediaries in exporting and explores the implications for trade volumes. Export intermediaries such as wholesalers serve different markets and export different produc...Read more...

CEP discussion paper

Gravity Redux: Measuring International Trade Costs with Panel Data

Barriers to international trade are known to be large but due to data limitations it is hard to measure them directly for a large number of countries over many years. To address this problem I derive a micro-founded meas...Read more...

CentrePiece article

Land use planning: the impact on retail productivity

The restrictions that planning policies impose on retail development have significantly reduced the productivity of supermarkets, according to Paul Cheshire and colleagues....Read more...

SERC/Urban and Spatial Programme Discussion Paper

Evaluating the Effects of Planning Policies on the Retail Sector: Or do Town Centre First Policies Deliver the Goods?

Few studies conceive of land as a productive factor but British land use policies may lower total factor productivity (TFP) in the retailing industry by (i) restricting the total availability of land for retail, thereby ...Read more...

CEP discussion paper

International Trade Without CES: Estimating Translog Gravity

This paper derives a micro-founded gravity equation in general equilibrium based on a translog demand system that allows for endogenous markups and substitution patterns across goods. In contrast to standard CES-based gr...Read more...

CEP discussion paper

Recovering the Sunk Costs of R&D: the Moulds Industry Case

Sunk costs for R&D are an important determinant of the level of innovation in the economy. In this paper I recover them using a Markov equilibrium framework. The contribution is twofold. First, a model of industry dynami...Read more...

CEP discussion paper

International Trade Integration: A Disaggregated Approach

This paper investigates the sources and size of trade barriers at the industry level. We derive a micro-founded measure of industry-specific bilateral trade integration that has an in-built control for time-varying multi...Read more...

CEP discussion paper

Was Germany Ever United? Evidence from Intra- and International Trade 1885-1933

This paper asks whether Germany was ever an economically integrated area. I explore the geography of trade costs in a new data set of about 40,000 observations on regional trade flows within and across the borders of Ger...Read more...

CEP discussion paper

Private Sector Employment Growth, 1998-2004: A Panel Analysis of British Workplaces

Using nationally representative panel data for British private sector workplaces this paper points to the importance of distinguishing between workplace and firm size when analysing employment growth, and finds that the ...Read more...

CEP discussion paper

Entry and Asymmetric Lobbying: Why Governments Pick Losers

Governments frequently intervene to support domestic industries, but a surprising amount of this support goes to ailing sectors. We explain this with a lobbying model that allows for entry and sunk costs. Specifically, p...Read more...

CEP discussion paper

Off-Shoring of Business Services and De-Industrialization: Threat or Opportunity - and for Whom?

This paper takes a new look at the issue of overseas sourcing of services. In framework in which comparative advantage is endogenous to agglomeration economies and factor mobility, the fragmentation of production made po...Read more...

CEP discussion paper

Rising Trade Costs? Agglomeration and Trade with Endogenous Transaction Costs

While transport costs have fallen, the empirical evidence also points at rising total trade costs. In a model of industry location with endogenous transaction costs, we show how and under which conditions a decline in tr...Read more...

CEP discussion paper

Comparative Advantage and Heterogeneous Firms

This paper presents a model of international trade that features heterogeneous firms, relative endowment differences across countries, and consumer taste for variety. The paper demonstrates that firm reactions to trade l...Read more...

CEP discussion paper

Threshold Effects and Firm Size: the Case of Firing Costs

We study the role of employment protection legislation (EPL) in determining firm size distribution. In many countries the provisions of EPL are more stringent for firms above certain size thresholds. We construct a simpl...Read more...

CEP discussion paper

Product Choice and Product Switching

This paper develops a model of endogenous product selection by firms. The theory is motivated by new evidence we present on the importance of product switching by U.S. manufacturers. Two-thirds of continuing firms change...Read more...

CEP discussion paper

Why Do Voice Regimes Differ?

In this paper we seek to explain the emergence of different voice regimes, and to do so by using approaches from institutional economics. In particular we analyse the emergence of different voice regimes as a contracting...Read more...

CEP discussion paper

Falling Trade Costs, Heterogeneous Firms and Industry Dynamics

This paper examines the response of industries and firms to changes in trade costs. Several new firm-level models of international trade with heterogeneous firms predict that industry productivity will rise as trade cost...Read more...

CEP discussion paper

Segmentation, Switching Costs and the Demand for Unionization in Britain

This paper explains why some employees who favor unionization fail to join, and why others who wish to abandon union membership continue paying dues. Our explanation is based on a model where employees incur switching (s...Read more...

CEP discussion paper

Labour Market Performance and Start-Up Costs: OECD Evidence

This paper is intended to make a contribution to the empirical literature explaining the rise of unemployment since the 1970s in western economies by means of interactions between shocks and institutions. The contributio...Read more...

CEP discussion paper

Company Start-Up Costs and Employment

I study the role of company start-up costs for employment performance. The model is search equilibrium with a new concept for firms. Agents have an innate managerial ability and make a career choice to become either mana...Read more...

CEP discussion paper

Employment Protection and Unemployment in an Efficiency Wage Model

Firing costs are often blamed for unemployment. This paper investigates this well spread belief. The main points are two. First, firing costs are modelled in an efficiency wage model to capture their effects on employmen...Read more...

CEP discussion paper

Fixed-Term Contracts and Unemployment: An Efficiency Wage Analysis

During the 1980s, many European countries introduced fixed-term contracts to fight high and persistent levels of unemployment. Although these contracts have been widely used, unemployment has remained about the same afte...Read more...

CEP discussion paper

Financial Super-Markets: Size Matters for Asset Trade

The paper presents a two-country macroeconomic model in which the number of financial assets is endogenous. Imperfect substitutability of assets and international transaction costs give a comparative advantage to large m...Read more...

CEP discussion paper

Financial Integration and Asset Returns

The paper investigates the impact of financial integration on asset return, risk diversification and breadth of financial markets. We analyse a three-country macroeconomic model in which (i) the number of financial asset...Read more...

CEP discussion paper

The Determinants Of Cross-Border Equity Flows

We apply a new approach to a new panel data set on bilateral gross cross-border equity flows between 14 countries, 1989-96. The remarkably good results have strong implications for theories of asset trade. We find that t...Read more...