Results

CEP discussion paper

Business groups as knowledge-based hierarchies of firms

Hierarchical differentiation is a cornerstone of the organizing process. In this paper, we do three things. First, exploiting a newly assembled dataset, we provide the first worldwide overview of the patterns of hierarch...Read more...

Blog

LSE Blogs:

Inclusion in the workplace: how not to snatch defeat from the jaws of victory

Sitting at a focal point between east and west, Singapore has a nuanced and multi-layered cultural landscape that exemplify the importance of context for behavioural interventions to promote diversity and inclusion (D&I)...Read more...

CEP discussion paper

The backlash of globalization

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...

CEP discussion paper

What triggers stock market jumps?

We examine next-day newspaper accounts of large daily jumps in 16 national stock markets to assess their proximate cause, clarity as to cause, and the geographic source of the market-moving news. Our sample of 6,200 mark...Read more...

Blog

Economics Observatory:

School's in: are more of the young staying in education during the downturn?

With Covid-19's effect on the availability of part-time and weekend jobs, more young people are staying on at school. Jonathan Wadsworth examines the links between study and work in the youth labour market....Read more...

Blog

Economics Observatory:

Retraining: which are the best policies for getting people back to work?

Many people are expected to lose their jobs in the aftermath of the pandemic. Retraining will be one important way to get them back into work. Chiara Cavaglia, Sandra McNally, Jenifer Ruiz-Valenzuela show there is a good...Read more...

Journal article

Journal of the European Economic Association:

Organizing Global Supply Chains: Input-Output Linkages and Vertical Integration

We study how the technological importance of inputs—measured by cost shares—is related to the decision to “make” or “buy” that input. Using detailed French international trade data and an instrumental variable approach b...Read more...

CEP discussion paper

Formation of college plans: expected returns, preferences and adjustment process

We exploit a large exogenous shock to study the determinants of college attendance and the role played by one's environment. We analyze whether, and how quickly, adolescents' college plans are adapted, explore factors le...Read more...

CEP discussion paper

Data-intensive innovation and the State: evidence from AI firms in China

Artificial intelligence (AI) innovation is data-intensive. States have historically collected large amounts of data, which is now being used by AI firms. Gathering comprehensive information on firms and government procur...Read more...

Journal article

Journal of Economic Behavior and Organization:

Job quality and workplace gender diversity in Europe

We here consider the relationship between workplace gender measures and employees’ perceived job quality, where the former cover both the gender mix of workers with the same job title and the gender of the immediate boss...Read more...

CentrePiece article

in brief... The long shadow of slavery

The politics and economy of the antebellum American South were dominated by those who practiced forced enslavement. Research by Luna Bellani, Anselm Hager and Stephan Maurer, which examines a database of Texas legislator...Read more...

Blog

LSE Business Review:

To recover from Covid and Brexit, the UK must upskill its workforce

The twin forces of Covid-19 and Brexit are altering the skills that people require to succeed in work. Skill levels remain low in the UK, compared to other advanced nations. About 30% of adults have low skill levels in l...Read more...

Journal article

Health Economics (United Kingdom):

Childhood circumstances and young adulthood outcomes: The role of mothers' financial problems

We here consider the cognitive and noncognitive consequences on young adults of growing up with a mother who reported experiencing major financial problems. We use UK data from the Avon Longitudinal Study of Parents and ...Read more...

CEP discussion paper

Why have house prices risen so much more than rents in superstar cities?

In most countries – particularly in supply constrained superstar cities – house prices have risen much more strongly than rents over the last two decades. We provide an explanation that does not rely on falling interest ...Read more...

Journal article

Journal of Economic Geography:

Colonial legacies: Shaping African cities

Institutions persisting from colonial rule affect the spatial structure and conditions under which 100s of millions of people live in Sub-saharan African cities. In a sample of 318 cities, Francophone cities have more co...Read more...

Journal article

The Economic Journal:

Adjustment Costs and Factor Demand: New Evidence from Firms’ Real Estate

We study corporate real estate frictions and their effect on firm dynamics and labour demand. We build and simulate a general equilibrium model with heterogeneous firms that predicts the response of firms to a productivi...Read more...

Journal article

The Economic Journal:

Trapped Factors and China’s Impact on Global Growth

After a recent increase in Chinese import competition, European firms increased innovation. We present and rationalise these patterns using ‘trapped factors’ at the micro level within a stylised equilibrium model of prod...Read more...

CEP discussion paper

Quality of life in a dynamic spatial model

We develop a dynamic spatial model in which heterogeneous workers are imperfectly mobile and forward-looking and yet all structural fundamentals can be inverted without assuming that the economy is in a stationary spatia...Read more...

Journal article

Economic Policy: Forthcoming

School Choice During a Period of Radical School Reform. Evidence from Academy Conversion in England

We study how demand responds to the rebranding of existing state schools as autonomous ‘academies’ in the context of a radical and large-scale reform to the English education system. The academy programme encouraged scho...Read more...

CEP discussion paper

Does pricing carbon mitigate climate change? Firm-level evidence from the European Union emissions trading scheme

In theory, market-based regulatory instruments correct market failures at least cost. However, evidence on their efficacy remains scarce. We evaluate the European Union Emissions Trading Scheme (EU ETS) – the world’s fir...Read more...

Journal article

Quarterly Journal of Economics:

Misallocation in the market for inputs: Enforcement and the organization of production

The strength of contract enforcement determines how firms source inputs and organize production. Using microdata on Indian manufacturing plants, we show that production and sourcing decisions appear systematically distor...Read more...

Journal article

Quarterly Journal of Economics:

Quantifying the gap between equilibrium and optimum under monopolistic competition

Equilibria and optima generally differ in imperfectly competitive markets. Although this is well understood theoretically, it is unclear how large the welfare distortions are in the aggregate economy. Do they matter quan...Read more...

CEP discussion paper

Prime locations

We harness big data to detect prime locations - large clusters of knowledge-based tradable services - in 125 global cities and track changes in the within-city geography of prime service jobs over a century. Historically...Read more...

CEP discussion paper

The social determinants of choice quality: evidence from health insurance in the Netherlands

Market provision of impure public goods such as insurance, retirement savings and education is common and growing as policy makers seek to offer more choice and gain efficiencies. This approach induces an important trade...Read more...

Journal article

The Economic Journal:

The impact of terrorism on individual well-being: Evidence from the boston marathon bombing

A growing literature has concluded that terrorism affects the economy, yet less is known about its impact on individual welfare. This article estimates the impact of the 2013 Boston marathon bombing on well-being, exploi...Read more...

Journal article

Economic Policy:

School choice during a period of radical school reform. Evidence from academy conversion in England

We study how demand responds to the rebranding of existing state schools as autonomous 'academies' in the context of a radical and large-scale reform to the English education system. The academy programme encouraged scho...Read more...

Journal article

Gospodarka Narodowa:

Student Mobility and Sorting of Students

This study investigates whether improving student mobility leads to greater sorting of students between schools and classes. I isolate an exogenous change in student mobility using the two-stage design of the Polish comp...Read more...

Journal article

European Economic Review:

All these worlds are yours, except india: The effectiveness of cash subsidies to export in nepal

This paper studies the impact of a ‘textbook’ ad-valorem export subsidy on firm-level export performance. The Cash Incentive Scheme for Exports (CISE) program offered by the government of Nepal offers a cash subsidy to f...Read more...

External publication

Vulnerabilities of Supply Chains Post-Brexit

Arla Foods UK has commissioned LSE Consulting's Trade Policy Hub to deliver a study on the vulnerabilities of supply chains in the United Kingdom and the European Union after Brexit. This study provides a follow up to th...Read more...

Journal article

Oxford Review of Economic Policy:

What is the meaning of (statistical) life? Benefit-cost analysis in the time of COVID-19

Efforts to support public policy decisions need to be conducted carefully and thoughtfully. Recent efforts to estimate the social benefits of reductions in mortality risks associated with COVID-19 interventions are likel...Read more...

CEP discussion paper

The long shadow of slavery: the persistence of slave owners in Southern law-making

This paper documents the persistence of the Southern slave owning elite in political power after the end of the American Civil War. We draw on a database of Texan state legislators between 1860 and 1900 and link them to ...Read more...

Journal article

History of the Family: Forthcoming

Households and entrepreneurship in England and Wales, 1851–1911

This article uses the British Business Census of Entrepreneurs (BBCE) to examine the relationship between the household and entrepreneurship in England and Wales between 1851 and 1911. The BBCE allows three kinds of entr...Read more...

Journal article

History of the Family: Forthcoming

Households and entrepreneurship in England and Wales, 1851-1911

This article uses the British Business Census of Entrepreneurs (BBCE) to examine the relationship between the household and entrepreneurship in England and Wales between 1851 and 1911. The BBCE allows three kinds of entr...Read more...

Journal article

European Journal of Finance:

Is firm-level clean or dirty innovation valued more?

We examine how Tobin's Q is linked to 'clean' and 'dirty' innovation and innovation efficiency at the firm level. Clean innovation relates to patented technologies in areas such as renewable energy generation and electri...Read more...

CVER Research Paper

Where versus What: College Value-Added and Returns to Field of Study in Further Education

Enrolling in vocational education and training programs constitutes a natural response to the current dynamics of the labour market, which is being reshaped by routinisation, automation, and outsourcing. We estimate the ...Read more...

CEP discussion paper

Bank default risk propagation along supply chains: evidence from the UK

How does banks’ default risk affect the probability of default of non-financial businesses? The literature has addressed this question by focusing on the direct effects on the banks’ corporate customers – demonstrating t...Read more...

CEP discussion paper

Family background and the responses to higher SAT scores

Using discontinuities within the Swedish SAT system, we show that additional admission opportunities causally affect college choices. Students with high-educated parents change timing, colleges, and fields in ways that a...Read more...

Journal article

Journal of Economic Perspectives:

Place-based policies and spatial disparities across European cities

Spatial disparities in income and worklessness across areas of the European Union are profound and persistent. Concerns about these disparities and the appropriate policy response are longstanding. Two trends have re-ene...Read more...

CEP discussion paper

All these worlds are yours, except India: the effectiveness of cash subsidies to export in Nepal

This paper studies the impact of a `textbook' ad-valorem export subsidy on firm-level export performance. The Cash Incentive Scheme for Exports (CISE) program offered by the government of Nepal offers a cash subsidy to f...Read more...

CEP discussion paper

O brother, where start thou? Sibling spillovers on college and major choice in four countries

Family and social networks are widely believed to influence important life decisions but identifying their causal effects is notoriously difficult. Using admissions thresholds that directly affect older but not younger s...Read more...

Journal article

Heliyon:

Estimating the impact of the Internet of Things on productivity in Europe

The Internet of Things (IoT) refers to interconnected devices and objects that collect and transmit data via the Internet. The IoT is an evolving technology, promising to revolutionise industries, but also demanding far-...Read more...

Journal article

Journal of the European Economic Association:

Prices, Policing and Policy: The Dynamics of Crime Booms and Busts

In many historical episodes, the extent of criminal activity has displayed booms and busts. One very clear example is the case of metal crime, where in the face of big increases in value driven by world commodity prices,...Read more...

Blog

VoxEU:

Measuring the impact of malfunctioning credit markets on productivity

Since the Global Crisis, there has been a renewed awareness of how frictions in credit markets can damage economic efficiency due to a higher cost of capital and/or capital being misallocated away from its most productiv...Read more...

Journal article

Quarterly Journal of Economics:

Measuring Aggregate Price Indices with Taste Shocks: Theory and Evidence for CES Preferences

We develop an approach to measuring the cost of living for CES preferences that treats demand shocks as taste shocks that are equivalent to price shocks. In the presence of relative taste shocks, the Sato-Vartia price in...Read more...

Blog

LSE Business Review:

Public investment in defence research can increase business innovation

That doesn't mean that defence R&D is the most efficient way to stimulate private sector innovation and productivity, write Enrico Moretti, Claudia Steinwender and John van Reenen....Read more...

Journal article

Oxford Review of Economic Policy:

Gender diversity in firms

This paper explores the recent efforts by the corporate world and public policy to increase the number of women in leadership positions in the workplace. We review and empirically evaluate the ‘business case’ for gender ...Read more...

CEP election analysis

#GE2019Economists: the research evidence on key issues for voters in the 2019 UK General Election

The general election of 2019 was called after negotiations over how the UK should leave the European Union became increasingly tortuous. While Brexit may have been the trigger for the election, it was far from being the ...Read more...

CEP discussion paper

Measuring the gains from labor specialization

We estimate the productivity effects of labor specialization using a judicial environment that offers a quasi-experimental setting well suited to this purpose. Judges in this environment are randomly assigned many differ...Read more...

CentrePiece article

In brief...Big city, bright future: why birthplace matters so much

How much does where you were born influence your future earnings? Analysing data from the British Household Panel Survey, Clément Bosquet and Henry Overman reveal that, on average, someone born in London in the 1970s ear...Read more...

Blog

LSE Business Review:

When free trade lands on the banking desk

The effect of trade liberalisation on economic activity remains one of the most important questions in economics. While prominent theories of international trade show that free trade improves the allocation of resources ...Read more...

Blog

LSE Business Review:

Measuring the effect of innovation on productivity inside firms

The role of innovation in explaining economic performance has been a focus of economic research for decades, and many questions remain unanswered. One of the main challenges is how we measure innovation. Only by improvin...Read more...

CEP discussion paper

When income effects are large: labor supply responses and the value of welfare transfers

I estimate the long-run income effect of welfare transfers on individual labor supply. Using Italian administrative data on the universe of survivor insurance recipients, I implement a regression discontinuity design aro...Read more...

Blog

LSE Review of Books:

Book Review: Social Mobility and its Enemies by Lee Elliot Major and Stephen Machin

In Social Mobility and its Enemies, Lee Elliot Major and Stephen Machin offer a thought-provoking assessment of the state of social mobility in Britain. In the context of much social and political change and rising level...Read more...

Blog

LSE Business Review:

Why No-Deal Brexit is a battle for the soul of our nation

We are careening towards the most extreme form of Brexit imaginable – flouncing out of the European Union (EU) after 46 years, without any transition plan. Operation Yellowhammer, a leaked secret report from the governme...Read more...

Blog

LSE Business Review:

Compact cities have many advantages – clean air isn’t one of them

Air pollution is bad for us. We all know that polluted air is detrimental to our health and recent research shows that it can also affect our performance in education, productivity at work and even our safety. This has i...Read more...

Blog

LSE British Politics and Policy:

Residential mobility in the UK: how distance and local economic conditions drive residential choices

Monica Langella and Alan Manning find that high unemployment in an area induces people to move away, and has an even stronger effect on the attractiveness of that area to potential movers. They also find that younger and...Read more...

CEP discussion paper

Vertical integration and foreclosure: evidence from production network data

This paper studies the prevalence of vertical market foreclosure using a novel dataset on U.S. and international buyer-seller relationships, and across a large range of industries. We find that relationships are more lik...Read more...

Blog

LSE Business Review:

How the Panama Canal reshaped the economic geography of the United States

In the early 20th century a ship travelling from San Francisco to New York or on to Europe first had to travel over 13,000 miles around the entirety of South America. That all changed in August of 1914 with the opening o...Read more...

Blog

LSE Business Review:

The 2018 trade war: consumers are paying a high price

Over the course of 2018, the Trump administration imposed import tariffs on approximately $283 billion of US imports, with rates ranging between 10 and 50 per cent. In response, US trading partners, especially China, ret...Read more...

Journal article

Journal of Political Economy:

CEO Behavior and Firm Performance

We measure the behavior of over 1,100 CEOs in six countries (Brazil, France, Germany, India, UK and US) using a new methodology that combines (i) a survey measuring each activity undertaken in a random work-week by the e...Read more...

CentrePiece article

Healthy Minds: the positive impact of a new school curriculum

As the UK government prepares to make personal, social, health and economic (PSHE) education compulsory, a recent trial shows how these subjects can be taught successfully. Grace Lordan and Alistair McGuire evaluate the ...Read more...

CEP discussion paper

Widening the high school curriculum to include soft skill training: impacts on health, behaviour, emotional wellbeing and occupational aspirations

From 2020 the health and relationships aspects of Personal, Social, Health and Economic Education will be compulsory in UK schools for adolescents. However less is known about how it can be taught in an effective manner....Read more...

CEP discussion paper

How to improve tax compliance? Evidence from population-wide experiments in Belgium

We study the impact of deterrence, tax morale, and simplifying information on tax compliance. We ran _ve experiments spanning the tax process which varied the communication of the tax administration with all income taxpa...Read more...

Blog

LSE British Politics and Policy:

Amplifying Islamophobic hate crime: UK media in the wake of terror attacks

Ria Ivandic,Tom Kirchmaier, and Stephen Machin study the empirical connections between local anti-Muslim hate crimes and international jihadi terror attacks. They find that local Muslim populations face a media-magnified...Read more...

Journal article

The Review of Economic Studies:

The changing returns to crime: do criminals respond to prices?

To what extent does crime follow the pattern of potential gains to illegal activity? This article presents evidence on how criminals respond to this key incentive by reporting crime-price elasticities estimated from a co...Read more...

Blog

LSE British Politics and Policy:

Childhood circumstances and young adult outcomes: the role of parental financial problems

Is there a relationship between childhood circumstances and outcomes later on in life? Andrew E. Clark, Conchita D’Ambrosio, and Marta Barazzetta consider the cognitive and non-cognitive consequences on young adults who ...Read more...

CEP discussion paper

The comparative advantage of firms

Multiproduct firms dominate production, and their product turnover contributes substantially to aggregate growth. Theories propose that multiproduct firms grow by diversifying into products which need the same know-how o...Read more...

CentrePiece article

When innovation policy trumped protectionism: the Reagan years

Giammario Impullitti and colleagues show that it was the Reagan administration's innovation policy - not a retreat from globalisation - that promoted US growth....Read more...

Journal article

Health Affairs:

Hospital prices grew substantially faster than physician prices for hospital-based care in 2007-14

Evidence suggests that growth in providers' prices drives growth in health care spending on the privately insured. However, existing work has not systematically differentiated between the growth rate of hospital prices a...Read more...

CEP discussion paper

Innovation and trade policy in a globalized world

How do import tariffs and R&D subsidies help domestic firms compete globally? How do these policies affect aggregate growth and economic welfare? To answer these questions we build a dynamic general equilibrium growth mo...Read more...

CEP discussion paper

Labor specialization as a source of market frictions

This paper investigates why labor specialization brings additional frictions to the labor market. The intuition is that labor specialized firms rely on complementarity and firm-specific human capital, assigning high valu...Read more...

CEP discussion paper

Misallocation in the market for inputs: enforcement and the organization of production

The strength of contract enforcement determines how firms source inputs and organize production. Using microdata on Indian manufacturing plants, we show that production and sourcing decisions appear systematically distor...Read more...

Journal article

Social Science and Medicine:

Life satisfaction, QALYs, and the monetary value of health

The monetary value of a quality-adjusted life-year (QALY) is frequently used to assess the benefits of health interventions and inform funding decisions. However, there is little consensus on methods for the estimation o...Read more...

CentrePiece article

in brief...Multinationals and the customs union

Leaving the customs union may lead multinationals to move out of the UK, resulting in the loss of thousands of jobs. That is the conclusion of research by Paola Conconi. She explains that in a customs union, goods cross ...Read more...

CEP discussion paper

Have R&D spillovers changed?

This paper revisits the results of Bloom, Schankerman, and Van Reenen (2013) examining the impact of R&D on the performance of US firms, especially through spillovers. We extend their analysis to include an additional 15...Read more...

Blog

ESRC blog:

Becoming a Research Institute: the Centre for Economic Performance

by Stephen Machin As Director of the Centre for Economic Performance (CEP) at LSE, I am delighted that the Centre has been named as one of the two inaugural ESRC Research Institutes. This is testament to the achievements...Read more...

CEP discussion paper

Specialization matters in the firm size-wage gap

This study applies the O-ring theory to explain the firm-size wage premium. It focuses on the joint role of the division of labor and employee characteristics. Including the firm heterogeneity of occupations in a standar...Read more...

CEP discussion paper

Firm-to-firm connections in Colombian imports

The vast majority of world trade flows is between firms. Only recently has research in international trade started to emphasize the importance of the connections between exporters and importers both in aggregate trade fl...Read more...

Journal article

Journal of Economic Dynamics and Control:

Growth volatility and size: A firm-level study

This paper provides a systematic cross-country investigation of the relation between a firm's growth volatility and its size. For the first time the analysis is carried out using comparable and representative sets of dat...Read more...

Journal article

Journal of Consumer Psychology:

The Power of Voice in Stimulating Morality: Eliciting Taxpayer Preferences Increases Tax Compliance

Decisions about paying taxes represent one of the most common moral quandaries faced by citizens. In the present research, we argue that taxpayer compliance can be raised by increasing "voice": allowing taxpayers to expr...Read more...

Journal article

Journal of World Business:

Emerging Economy MNEs: How does home country munificence matter?

Multinational Enterprises (MNEs) from emerging economies (EEs) are establishing operations in advanced economies (AEs), apparently departing from traditional models of internationalization. We explore an under-explored d...Read more...

Journal article

Regional Science and Urban Economics:

You've come a long way, baby. Husbands’ commuting time and family labour supply

This paper explores the effects of husbands’ commuting time on wives’ employment and family time allocation. We develop a unitary family model, and we show that when market services are imperfect substitutes of home prod...Read more...

CEP discussion paper

From final goods to inputs: the protectionist effect of rules of origin

Recent decades have witnessed a surge of trade in intermediate goods and a proliferation of free trade agreements (FTAs). FTAs use rules of origin (RoO) to distinguish goods originating from member countries from those o...Read more...

Journal article

Economics of Education Review:

A question of degree: The effects of degree class on labor market outcomes

How does performance at university affect labor market outcomes? Employing a regression discontinuity design, we show that university degree class causally affects graduates’ industry, wages, and earnings. Our sample c...Read more...

Journal article

Journal of Economic Perspectives:

The economic consequences of family policies: lessons from a century of legislation in high-income countries

By the early 21st century, most high-income countries have put into effect a host of generous and virtually gender-neutral parental leave policies and family benefits, with the multiple goals of gender equity, higher fer...Read more...

CEP discussion paper

Special economic zones and WTO compliance: evidence from the Dominican Republic

Special economic zones (SEZ), one of the most important instruments of industrial policy used in developing countries, often impose export share requirements (ESR). That is, firms located in SEZ are required to export mo...Read more...

CVER Research Paper

The Payoff to Vocational Qualifications: Reconciling Estimates from Survey and Administrative Data

This paper takes as a starting point the wage/earnings differentials associated with vocational qualifications that have been estimated in the literature. Two distinct parts of that literature are identified, using surve...Read more...

Journal article

National Institute Economic Review:

Local economic effects of Brexit

This paper studies local economic impacts of the increases in trade barriers associated with Brexit. Predictions of the local impact of Brexit are presented under two different scenarios, soft and hard Brexit, which are ...Read more...

Blog

LSE British Politics and Policy:

Where industry is strong and where it’s weak – key facts of UK business geography

Financial services aren’t as London-centric as the creative industries, and the coast-inland divide is growing, write Sandra Bernick, Richard Davies, and Anna Valero. The UK’s financial services industry is not nearly as...Read more...

Journal article

Journal of Technology Transfer:

Academic inventors: collaboration and proximity with industry

This paper addresses a number of fundamental research questions on university-industry (U-I) collaborations. Are U-I collaborations intrinsically different from other forms of collaboration, such as inter-firm or inter-u...Read more...

CEP Brexit analysis

The local economic effects of Brexit

This paper studies the local impacts of the increases in trade barriers associated with Brexit. Predictions of the local impact of Brexit are presented under two different scenarios, soft and hard Brexit. Average effects...Read more...

CEP election analysis

The NHS and Social Care: Prospects for Funding, Staffing and Performance into the 2020s

Health featured prominently in the 2016 referendum on the UK’s membership of the European Union (EU), with the Leave campaign’s claim that Brexit would mean that £350 million extra money per week could be transferred fro...Read more...

Journal article

American Economic Review:

Is modern technology responsible for jobless recoveries?

Since the early 1990s, recoveries from recessions in the US have been plagued by weak employment growth. We investigate whether a similar problem afflicts other developed economies, and whether technology is a culprit. W...Read more...

CEP discussion paper

What’s in a name? Expectations, heuristics and choice during a period of radical school reform

Education policy worldwide has sought to incentivize school improvement and facilitate pupil-school matching by introducing reforms that promote autonomy and choice. Understanding the way in which families form preferenc...Read more...

Blog

ESRC blog:

How English care homes have coped with the National Living Wage

Giulia Giupponi is an ESRC-funded PhD student at the London School of Economics and a research assistant at the Centre for Economic Performance. Stephen Machin is Professor of Economics at the London School of Economics ...Read more...

CEP discussion paper

Global banking: risk taking and competition

Direct involvement of global banks in local retail activities can reduce risk-taking by promoting local competition. We develop this argument through a model in which multinational banks operate simultaneously in differe...Read more...

CEP discussion paper

Fertility and mothers' labor supply: new evidence using time-to-conception

We analyze the impact of children on their mothers' labor market outcomes in the UK. We use time-to-conception of the first child as an exogenous variation in the probability of having more children. We find that having ...Read more...

SERC/Urban and Spatial Programme Discussion Paper

The Stimulative Effect of an Unconditional Block Grant on the Decentralized Provision of Care

Understanding the impact of central government grants on decentralized health care provision is of crucial importance for the design of grant systems, yet empirical evidence on the prevalence of flypaper effects in this ...Read more...

Blog

LSE British Politics and Policy:

Does immigration harm the job prospects of the UK-born? Brexit and the UK labour market

Following the referendum vote to leave the European Union, the UK faces a trade-off between retaining access to the Single Market and restricting free movement of labour. Barbara Petrongolo considers the likely impact of...Read more...

CentrePiece article

Faster broadband: are there any educational benefits?

Governments around the world are committing substantial public funds to upgrading their broadband infrastructure, partly in the hope of promoting education. Research findings by Rosa Sanchis-Guarner and colleagues raise ...Read more...

SERC/Urban and Spatial Programme Discussion Paper

Austerity States, Institutional Dismantling and the Governance of Sub-National Economic Development: The Demise of the Regional Development Agencies in England

Contributing to interpretations of the governance geographies of austerity, the paper explains how, why and in what forms austerity states are constructed by actors in particular political-economic contexts and geographi...Read more...

Blog

ESRC blog:

The ‘photo-finish effect’: when third place winners are happier than second

Laura Kudrna, a London School of Economics scholarship PhD candidate, researches the effects of achievement on happiness, particularly focusing on examples of when greater success – be it financial, academic, romantic, o...Read more...

Blog

LSE British Politics and Policy:

The aftermath of the Brexit vote – the verdict from a derided expert

John Van Reenen was disappointed but not surprised by the UK’s vote to Leave the EU. Whilst his own research predicts serious economic and political damage in the case of Brexit, he thought a Leave vote was a real possib...Read more...

CEP discussion paper

A unified approach to estimating demand and welfare

The measurement of price changes, economic welfare, and demand parameters is currently based on three disjoint approaches: macroeconomic models derived from time-invariant utility functions, microeconomic estimation base...Read more...

Blog

LSE British Politics and Policy:

Who voted Leave: the characteristics of individuals mattered, but so did those of local areas

Individual demographics had a huge effect in determining the outcome of the referendum, but the characteristics of local areas mattered as well, explain Monica Langella and Alan Manning. Immigration, the decline in manuf...Read more...

Blog

LSE British Politics and Policy:

Why leaving the EU would almost certainly damage our economic prospects

The economic consequences of leaving the EU have been a central focus of the referendum campaign. As June 23 draws near, Jagjit Chadha, Paul Johnson and John Van Reenen bring together the conclusions from their research ...Read more...

Blog

LSE British Politics and Policy:

The ‘Britain Alone’ scenario: how Economists for Brexit defy the laws of gravity

There is a degree of consensus among economists that a Brexit will make us worse off. The exception is recent work by Economists for Brexit. Their forecast of income gains from Brexit contrasts with all other economic an...Read more...

CEP discussion paper

Exporter dynamics and partial-year effects

Two identical firms that start exporting in different months, one each in January and December, will report dramatically different exports for the first calendar year. This partial-year effect biases down first year expo...Read more...

Blog

LSE British Politics and Policy:

The question is not whether Brexit will cost the UK in economic terms but how much

For over two years, a research team at the Centre for Economic Performance (CEP) has been studying the likely impact of the UK leaving the European Union. Their latest report focuses on the impact of ‘Brexit’ through cha...Read more...

CEP discussion paper

Special and differential treatment for developing countries

Special and Differential Treatment for Developing Countries (SDT) constitutes a central feature of the GATT/WTO system. Its formal goal is to foster export-led growth in developing countries. Its theoretical foundations ...Read more...

SERC/Urban and Spatial Programme Discussion Paper

Why Does Birthplace Matter So Much? Sorting, Learning and Geography

We consider the link between birthplace and wages. Using a unique panel dataset we estimate a raw elasticity of wage with respect to birthplace size of 4.6%, two thirds of the 6.8% raw elasticity with respect to city siz...Read more...

CEP discussion paper

Commuting, migration and local employment elasticities

Many changes in the economic environment are local, including policy changes and infrastructure investments. The effect of these changes depends crucially on the ability of factors to move in response. Therefore a key ob...Read more...

CEP discussion paper

The unbearable divergence of unemployment in Europe

Unemployment in Europe is not only “too high”, it is also too different across countries that belong to a monetary union. In this paper we i) document this increasing heterogeneity, ii) try to explain it and iii) draw fr...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...

CEP discussion paper

Merger policy in a quantitative model of international trade

In a two-country international trade model with oligopolistic competition, we study the conditions on market structure and trade costs under which a merger policy designed to benefit domestic consumers is too tough or to...Read more...

SERC/Urban and Spatial Programme Discussion Paper

ICT and Education: Evidence from Student Home Addresses

Governments are making it a priority to upgrade information and communication technologies (ICT) with the aim to increase available internet connection speeds. This paper presents a new empirical strategy to estimate the...Read more...

SERC/Urban and Spatial Programme Discussion Paper

Offshoring and the Geography of Jobs in Great Britain

This paper investigates the impact of the offshoring of production activities on domestic jobs in Great Britain. The paper considers both the spatial heterogeneity across local labour markets and variations in the intens...Read more...

Blog

ESRC blog:

Making the world a happier place

Professor Lord Richard Layard directs the Wellbeing Programme at the ESRC Centre for Economic Performance, and has made major contributions on unemployment, inflation, inequality and post-Communist reform. Author of the ...Read more...

Blog

LSE British Politics and Policy:

Corbyn and the political economy of nostalgia

Voting for Jeremy Corbyn as leader is a gut reaction to Labour’s electoral defeat. Corbyn does point to some real economic problems facing Britain but his policies are based largely on the kind of wishful thinking that i...Read more...

Blog

LSE British Politics and Policy:

Productivity Plan: A sound framework, but gaps in policy persist. More is needed to get productivity growing again

Following the summer budget, the government released a productivity plan aimed at dealing with a chronic issue facing the UK’s economy. Anna Valero and John Van Reenen review the plan, writing that overall the plan is br...Read more...

Blog

LSE British Politics and Policy:

Summer budget 2015: Osborne is right to raise wages, but a clearer productivity plan is required

Yesterday, George Osborne delivered the new government’s first budget in which he surprised many by hiking the minimum wage significantly. John Van Reenen reviews the measures introduced, writing that the Chancellor is r...Read more...

SERC/Urban and Spatial Programme Discussion Paper

Are People Moving Home Less? An Analysis of Address Changing in England and Wales, 1971-2011, Using the ONS Longitudinal Study

Expectations of migration and mobility steadily increasing in the longer term, which have a long currency in migration theory and related social science, are at odds with the latest US research showing a marked decline i...Read more...

SERC/Urban and Spatial Programme Discussion Paper

Is Internal Migration Slowing? An Analysis of Four Decades of NHSCR Records for England and Wales

This paper is prompted by the widespread acceptance that the rates of inter-county and inter-state migration have been falling in the USA and sets itself the task of examining whether this decline in migration intensitie...Read more...

CEP discussion paper

ICT and education: evidence from student home addresses

Governments are making it a priority to upgrade information and communication technologies (ICT) with the aim to increase available internet connection speeds. This paper presents a new strategy to estimate the causal ef...Read more...

CEP discussion paper

Firming up inequality

Earnings inequality in the United States has increased rapidly over the last three decades, but little is known about the role of firms in this trend. For example, how much of the rise in earnings inequality can be attri...Read more...

Blog

LSE British Politics and Policy:

The NHS: Promises and productivity

In the general election debate about healthcare, all the parties are seeking to portray an NHS protected from major public sector expenditure cuts, with expansion in some areas. But according to Alistair McGuire and John...Read more...

CEP election analysis

Top Rate of Income Tax

The main political parties disagree about the appropriate rate of income Tax on the highest incomes. This note lays out the economic principles surrounding the top rate of income tax and considers the evidence that high ...Read more...

CEP discussion paper

Integrated estimates of capital stocks and services for the United Kingdom: 1950-2013

This paper presents annual estimates of fixed capital stocks and capital services for the United Kingdom, 1950-2013, for the whole economy and for the market sector. Our estimates cover eight asset types (structures, mac...Read more...

Blog

LSE British Politics and Policy:

Budget 2015: What the Chancellor said and didn’t say

Who would have thought an election was around the corner? John Van Reenen looks at what George Osborne had to say in the budget speech as well as what he didn’t say; the Chancellor neither mentioned the productivity prob...Read more...

Blog

LSE British Politics and Policy:

Austerity in the UK: past, present and future

In this article, John Van Reenen looks at the UK’s economic performance since the global financial crisis and assesses the impact of austerity policies. He also examines the fiscal plans of the three major parties over t...Read more...

CEP discussion paper

Preferences for fair prices, cursed inferences, and the nonneutrality of money

This paper explains the nonneutrality of money from two assumptions: (1) consumers dislike paying prices that exceed some fair markup on firms’ marginal costs; and (2) consumers under infer marginal costs from available ...Read more...

CEP discussion paper

Locus of Control and Its Intergenerational Implications for Early Childhood Skill Formation

We propose a model in which parents have a subjective belief about the impact of their investment on the early skill formation of their children. This subjective belief is determined in part by locus of control (LOC), i....Read more...

CEP discussion paper

Benford's Law, Families of Distributions and a Test Basis

Benford's Law is used to test for data irregularities. While novel, there are two weaknesses in the current methodology. First, test values used in practice are too conservative and the test values of this paper are more...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...

CEP discussion paper

Reconciling Observed Tariffs and the Median Voter Model

Median voter theory applied to trade policy predicts positive tariffs in capital-abundant countries and negative tariffs in labor-abundant countries. Negative tariffs are rare, and this paper reconciles the median voter ...Read more...

CEP discussion paper

HRM Practices and Knowledge Processes Outcomes: Empirical Evidence from a Quasi-Experiment on UK SMEs in the Tourism Hospitality and Leisure Sector

This paper presents empirical evidence of the relationship between human resources practices and the effectiveness of a firm to capitalise on investment in knowledge as measured by the returns to innovation and business ...Read more...

CEP discussion paper

The Dynamics of Employment Growth: New Evidence from 18 Countries

Motivated by the on-going interest of policy makers in the sources of job creation, this paper presents results from a new OECD project on the dynamics of employment (DynEmp) based on an innovative methodology using firm...Read more...

Blog

LSE European Politics and Policy Blog:

Leaving the European Union would likely have a significant negative impact on the UK’s economy

How would leaving the EU affect the UK’s economy? Gianmarco Ottaviano, João Paulo Pessoa, Thomas Sampson and John Van Reenen outline findings from a new report on the economic consequences of a ‘Brexit’. They indicate th...Read more...

CentrePiece article

In brief - New technology: who wins, who loses?

Technology has transformed the once powerful office of ambassador into a glorified sales position, while nurses, teaching assistants and medical technicians all benefit from the ICT revolution. According to an empirical ...Read more...

CEP discussion paper

The Impact of Mandatory Entitlement to Paid Leave on Employment in the UK

I evaluate the impact of the UK Working Time Regulations 1998, which introduced mandatory paid holiday entitlement. The regulation gave (nearly) all workers the right to a minimum of 4 weeks of paid holiday per a year. W...Read more...

CEP discussion paper

Home Computers and Married Women's Labor Supply

I consider how the availability of a personal computer at home changed employment for married women. I develop a theoretical model that motivates the empirical specifications. Using data from the U.S. CPS from 1984 to 20...Read more...

CentrePiece article

Everybody needs good neighbours?

There are large disparities between the achievements, behaviour and aspirations of children in different neighbourhoods – but does this mean that the place where you grow up determines your later life outcomes? Steve Gib...Read more...

CentrePiece article

Outsourcing and the shift from manufacturing to services

Giuseppe Berlingieri looks at the structural transformation of the US economy over the past 60 years....Read more...

Blog

LSE European Politics and Policy Blog:

The state of the UK economy: Diagnosis, prognosis and recommended treatment

The UK economy has experienced a prolonged period of weakness over the last five years. John Van Reenen writes that the real problems for the UK are inadequate long-run investment in infrastructure, innovation and human ...Read more...

CentrePiece article

In brief...'Smart and illicit': the making of a successful entrepreneur

Smart teenagers who engage in illicit activities are much more likely to become entrepreneurs, according to research by Ross Levine and Yona Rubinstein. But, they note, being self-employed doesn’t necessarily make someon...Read more...

CentrePiece article

Lovely and lousy jobs

The phenomenon of ‘job polarisation’ is increasing inequality as the labour market splits into high- and low-wage work. According to Alan Manning, who coined the term a decade ago, we cannot ignore job polarisation – but...Read more...

SERC/Urban and Spatial Programme Discussion Paper

Do Long Distance Moves Discourage Homeownership? Evidence from England

We hypothesize that as the distance of a residential move increases, the cost of collecting information on the destination housing market rises, the amount and quality of information collected fall, and the chances of ma...Read more...

SERC/Urban and Spatial Programme Discussion Paper

Gibrat's Law and the British Industrial Revolution

This paper examines Gibrat’s law in England and Wales between 1801 and 1911 using a unique data set covering the entire settlement size distribution. We find that Gibrat’s law broadly holds even in the face of population...Read more...

External publication

World Happiness Report 2013

The second World Happiness Report, released on Sept 9th 2013, further strengthens the case that well-being should be a critical component of how the world measures its economic and social development....Read more...

CEP discussion paper

Smart and Illicit: Who Becomes an Entrepreneur and Does it Pay?

We disaggregate the self-employed into incorporated and unincorporated to distinguish between “entrepreneurs” and other business owners. The incorporated self-employed have a distinct combination of cognitive, noncogniti...Read more...

Journal article

Economica:

Unemployment in the Great Recession

This paper studies the responses of unemployment in Germany, the USA and the UK to the Great Recession of 2008-9 using Beveridge curve analysis, and in the entire OECD using other techniques. It is shown that the UK suff...Read more...

Blog

LSE European Politics and Policy Blog:

UK Spending Review 2013: A triumph of politics over reason?

The UK’s Spending Review has been forced on the British Chancellor because weak economic growth has blown a hole in the deficit reduction programme. John Van Reenen welcomes the partial reversal of the hugely damaging cu...Read more...

Blog

LSE European Politics and Policy Blog:

Small isn’t always beautiful: The cost of regulation on French firms

France has a raft of labour-market regulations that kick in for firms with 50 workers or more. Luis Garicano and John Van Reenen use this threshold to identify the economic effects of size-contingent regulations. Such po...Read more...

CEP discussion paper

Pushing On a String: US Monetary Policy is Less Powerful in Recessions

We estimate the impulse response of key US macro series to the monetary policy shocks identified by Romer and Romer (2004), allowing the response to depend flexibly on the state of the business cycle. We find strong evid...Read more...

CEP discussion paper

Unemployment in the Great Recession

This paper studies the responses of unemployment in Germany, the United States and Britain to the Great Recession of 2008-09 by making use of Beveridge curve analysis, and in the entire OECD with other techniques. It is ...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

Patents and Cumulative Innovation: Causal Evidence from the Courts

Cumulative innovation is central to economic growth. Do patent rights facilitate or impede follow-on innovation? We study the causal effect of removing patent rights by court invalidation on subsequent research related t...Read more...

Blog

LSE European Politics and Policy Blog:

No Triple Dip does not mean a good recovery for the UK

John Van Reenen reacts to the news this week that the UK has avoided economic contraction in the last quarter. Whilst Osborne may see this as cause to celebrate, there is nothing commendable about an economy that continu...Read more...

SERC/Urban and Spatial Programme Discussion Paper

Do Large Departments Make Academics More Productive? Agglomeration and Peer Effects in Research

We study the effect of a large set of department characteristics on individual publication records. We control for many individual time-varying characteristics, individual fixed-effects and reverse causality. Department ...Read more...

CEP discussion paper

Outsourcing and the Rise in Services

This paper investigates the impact of outsourcing on sectoral reallocation in the U.S. over the period 1948-2002. Roughly 40% of the growth of the service sector comes from professional and business services. This is an ...Read more...

CEP discussion paper

Does Working from Home Work? Evidence from a Chinese Experiment

About 10% of US employees now regularly work from home (WFH), but there are concerns this can lead to “shirking from home.” We report the results of a WFH experiment at CTrip, a 16,000-employee, NASDAQ-listed Chinese tra...Read more...

Journal article

The Quarterly Journal of Economics:

Does management matter? Evidence from India

A long-standing question is whether differences in management practices across firms can explain differences in productivity, especially in developing countries where these spreads appear particularly large. To investiga...Read more...

SERC/Urban and Spatial Programme Discussion Paper

The Size Distribution Across All 'Cities': A Unifying Approach

Older cities in the US tend to be larger than younger ones. The distribution of city sizes is, therefore, systematically related to the country's city age distribution. We introduce endogenous city creation into a dynami...Read more...

CentrePiece article

Science: why the gender gap?

Stereotypes, role models played by teachers and social norms influence girls’ academic self-concept and push girls to choose humanities rather than science. Do recruiters reinforce this strong selection by discriminating...Read more...

CentrePiece article

Working or shirking?

Over 10% of US employees now regularly work from home (WFH), but there is widespread skepticism over its impact highlighted by phrases like “shirking from home”. We report the results of a WFH experiment at Ctrip, a 13,0...Read more...

CEP discussion paper

Selection Effects with Heterogeneous Firms

We provide a general characterization of which firms will select alternative ways of serving a market. If and only if firms' maximum profits are supermodular in production and marketaccess costs, more efficient firms wil...Read more...

CEP discussion paper

Brain Drain or Brain Gain? Technology Diffusion and Learning On-the-job

This paper develops a theory of technology transfer when technology is embodied in human capital and learning requires on-the-job communication between managers and workers. Patterns of knowledge diffusion depend on wher...Read more...

CEP discussion paper

Taxes, Cigarette Consumption, and Smoking Intensity: Reply

This paper shows that smoking intensity, i.e. the amount of nicotine extracted per cigarette smoked, responds to changes in excise taxes and tobacco prices. We exploit data covering the period 1988 to 2006 across many US...Read more...

SERC/Urban and Spatial Programme Discussion Paper

The Effect of Public Sector Employment on Local Labour Markets

This paper considers the impact of public sector employment on local labour markets. Using English data at the Local Authority level for 2003 to 2007 we find that public sector employment has no identifiable effect on to...Read more...

CEE/Education and skills discussion paper

Do Professors Really Perpetuate the Gender Gap in Science? Evidence from a Natural Experiment in a French Higher Education Institution

Stereotypes, role models played by teachers and social norms influence girls’ academic self-concept and push girls to choose humanities rather than science. Do recruiters reinforce this strong selection by discriminating...Read more...

CEP discussion paper

Heterogeneity, Demand for Insurance and Adverse Selection

Recent empirical work finds that surprisingly little variation in the demand for insurance is explained by heterogeneity in risks. I distinguish between heterogeneity in risk preferences and risk perceptions underlying t...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

Global Value Chains During the Great Trade Collapse: A Bullwhip Effect?

This paper analyzes the performance of global value chains during the trade collapse. To do so, it exploits a unique transaction-level dataset on French firms containing information on cross-border monthly transactions m...Read more...

CEP discussion paper

Firm Size Distortions and the Productivity Distribution: Evidence from France

We show how size-contingent laws can be used to identify the equilibrium and welfare effects of labor regulation. Our framework incorporates such regulations into the Lucas (1978) model and applies it to France where man...Read more...

CEP discussion paper

Happiness as a Driver of Risk-Avoiding Behavior

Most governments try to discourage their citizens from taking extreme risks with their health and lives. Yet, for reasons not understood, many people continue to do so. We suggest a new approach to this longstanding ques...Read more...

CEE/Education and skills discussion paper

Subjective Performance Evaluation in the Public Sector: Evidence from School Inspections

Performance measurement in the public sector is largely based on objective metrics, which may be subject to gaming behaviour. This paper investigates a novel subjective performance evaluation system where independent ins...Read more...

CEP discussion paper

The Determinants of Intrafirm Trade: Evidence from French Firms

How well does the theory of the firm explain the choice between intrafirm and arms' length trade? This paper uses firm-level import data from France to look into this question. We find support for three key predictions o...Read more...

CEP discussion paper

Institutions and Export Dynamics

We study the role of contract enforcement in shaping the dynamics of international trade at the firm level. We develop a theoretical model to describe how agents build reputations to overcome the problems created by weak...Read more...

CEP discussion paper

Management Practices Across Firms and Countries

For the last decade we have been using double-blind survey techniques and randomized sampling to construct management data on over 10,000 organizations across twenty countries. On average, we find that in manufacturing A...Read more...

CEP discussion paper

Change and Persistence in the German Model of Collective Bargaining and Worker Representation

This paper depicts and examines the decline in collective bargaining coverage in Germany. Using repeat cross-section and longitudinal data from the IAB Establishment Panel, we show the overwhelming importance of behavior...Read more...

CEP discussion paper

Gender Gaps Across Countries and Skills: Supply, Demand and the Industry Structure

The gender wage gap varies widely across countries and across skill groups within countries. Interestingly, there is a positive cross-country correlation between the unskilled- to-skilled gender wage gap and the correspo...Read more...

CEP discussion paper

Wishful Thinking

An experiment tested whether and in what circumstances people are more likely to believe an event simply because it makes them better off. Subjects observed a financial asset's historical price chart, and received both a...Read more...

CEP discussion paper

The Role of Educational Quality and Quantity in the Process of Economic Development

We develop a theory of human capital investment to study the channels through which students react to school quality when deciding on investments in secondary education and above, and to study how educational quality aff...Read more...

CEP discussion paper

Mass Education or a Minority Well Educated Elite in the Process of Development: the Case of India

This paper analyses whether in developing countries mass education is more growth enhancing than to have a minority well educated elite. Using the Indian census data as a benchmark and enrollment rates at different level...Read more...

SERC/Urban and Spatial Programme Discussion Paper

Agglomeration Externalities and Urban Growth Controls

Should constraints on urban expansion be relaxed because of external agglomeration economies? In a system of heterogeneous cities, we demonstrate that second-best land use policy consists of a tax on city creation and a ...Read more...

SERC/Urban and Spatial Programme Discussion Paper

The Economics Implications of House Price Capitalization: A Synthesis

In this article I argue that the extent to which fiscal variables are capitalized into house prices has important economic implications. I synthesize an emerging literature that explores the conditions under which public...Read more...

CEP discussion paper

Productivity, Wages and Marriage: The Case of Major League Baseball

The effect of marriage on productivity and, consequently, wages has been long debated in economics. A primary explanation for the impact of marriage on wages has been through its impact on productivity, however, there ha...Read more...

CEP discussion paper

The Wealth and Poverty of Nations: True PPPs for 141 Countries

I set out a new method for estimating true (Konüs) PPPs. Household consumption per head deflated by these PPPs answers the question: by how much must the average expenditure per head of poor country A be increased to ena...Read more...

CEP discussion paper

Advertising Expenditure and Consumer Prices

This paper studies the effect of a change in the marginal costs of advertising on advertising expenditures of firms and consumer prices across industries. It makes use of a unique policy change that caused a decrease of ...Read more...

CEP discussion paper

Individual Voice in Employment Relationships: A Comparison Under Different Forms of Workplace Representation

This article considers the role of individual employee voice in regulating the ‘zone of acceptance’ within the employment relationship, and examines the extent to which different models of collective voice inhibit or fos...Read more...

CEP discussion paper

A Simple Theory of Managerial Talent, Pay Contracts and Wage Distribution

This paper develops a simple theory of pay structures and pay levels across heterogeneous agents by bringing together optimal contracts inside the firm and competitive resource allocation in the market. The central idea ...Read more...

CEP discussion paper

Union Density and Varieties of Coverage: The Anatomy of Union Wage Effects in Germany

Collective bargaining in Germany takes place either at the industry level or at the firm level; collective bargaining coverage is much higher than union density; and not all employees in a covered firm are necessarily co...Read more...

Journal article

American Economic Review:

Panic on the streets of London: police, crime, and the July 2005 terror attacks

In this paper we study the causal impact of police on crime, looking at what happened to crime and police before and after the terror attacks that hit central London in July 2005. The attacks resulted in a large redeploy...Read more...

CEP discussion paper

Booms and Busts in Asset Prices

We show how low-frequency boom and bust cycles in asset prices can emerge from Bayesian learning by investors. Investors rationally maximize infinite horizon utility but hold subjective priors about the asset return proc...Read more...

CEP discussion paper

Recursive Contracts

We obtain a recursive formulation for a general class of contracting problems involving incentive constraints. These constraints make the corresponding maximization (sup) problems non recursive. Our approach consists of ...Read more...

CEP discussion paper

Crime and Mental Wellbeing

Most estimates of the cost of crime focus on victims. Yet it is plausible that an even larger cost of crime occurs via its indirect impact on the mental wellbeing of non-victims. To test how crime affects individuals’ me...Read more...

SERC/Urban and Spatial Programme Discussion Paper

Where is the Economics in Spatial Econometrics?

Spatial econometrics has been criticized by some economists because some model specifications have been driven by data-analytic considerations rather than having a firm foundation in economic theory. In particular this a...Read more...

Blog

LSE British Politics and Policy:

From ‘Plan B’ to ‘Plan V’: what the UK economy needs to reboot and rebalance growth

With the threat of stagflation and interest rate rises, the current economic climate shows little sign of improvement in the near future. John Van Reenen finds that the government’s severe austerity programme, with its v...Read more...

CEP discussion paper

Does Management Matter? Evidence from India

A long-standing question in social science is to what extent differences in management cause differences in firm performance. To investigate this we ran a management field experiment on large Indian textile firms. We pro...Read more...

CEP discussion paper

Did Vietnam Veterans Get Sicker in the 1990s? The Complicated Effects of Military Service on Self-Reported Health

The veterans disability compensation (VDC) program, which provides a monthly stipend to disabled veterans, is the third largest American disability insurance program. Since the late 1990s, VDC growth has been driven prim...Read more...

CEP discussion paper

Anatomy of a Paradox: Management Practices, Organisational Structure and Energy Efficiency

This paper presents new evidence on managerial and organizational factors that explain firm level energy efficiency and TFP. We interviewed managers of 190 randomly selected manufacturing plants in the UK and matched the...Read more...

CEP discussion paper

Individualisation and Growing Diversity of Employment Relationships

At a time when the economic recession is more severe, and trade unions are weaker, than at any time since the War, it would be unproductive to speculate about the extent to which these changes have been imposed, acquiesc...Read more...

CEP discussion paper

Communal Responsibility and the Coexistence of Money and Credit Under Anonymous Matching

Communal responsibility, a medieval institution studied by Greif (2006), supported the use of credit among European merchants in the absence of modern enforcement technologies. This paper shows how this mechanism helps t...Read more...

Blog

LSE British Politics and Policy:

Academy schools under Labour combated disadvantage and increased pupil achievement: the coalition’s new policy may exacerbate existing inequalities

With the recent accusation that Michael Gove has been sending ‘mixed messages’ over academy schools, it is clear that the policy is still very controversial. Stephen Machin and James Vernoit take a step back and compar...Read more...

CEP discussion paper

Long Term Implications of the ICT Revolution: Applying the Lessons of Growth Theory and Growth Accounting

How big a boost to long run growth can countries expect from the ICT revolution? I use the results of growth accounting and the insights from a two-sector growth model to answer this question. The use of a two-sector rat...Read more...

SERC/Urban and Spatial Programme Discussion Paper

Do Neighbours Affect Teenage Outcomes? Evidence from Neighbourhood Changes in England

In this paper, we use census data on several cohorts of secondary school students in England matched to detailed information on place of residence to investigate the effect of neighbours’ background characteristics and p...Read more...

CEP discussion paper

Bank Bailouts, International Linkages and Cooperation

Financial institutions are increasingly linked internationally. As a result, financial crisis and government intervention have stronger effects beyond borders. We provide a model of international contagion allowing for b...Read more...

CEE/Education and skills discussion paper

Do Neighbours Affect Teenage Outcomes? Evidence from Neighbourhood Changes in England

In this paper, we use census data on several cohorts of secondary school students in England matched to detailed information on place of residence to investigate the effect of neighbours’ background characteristics and p...Read more...

CEP discussion paper

Monetary Policy Rules and Foreign Currency Positions

Using an endogenous portfolio choice model, this paper examines how different monetary policy regimes can lead to different foreign currency positions by changing the cyclical properties of the nominal exchange rate. We ...Read more...

CEP discussion paper

The Impact of Asymmetric Information Among Competing Insurgent Groups: Estimating an 'Emboldenment' Effect

This paper uses asymmetric access to information to test if an insurgency is factionalized. If it is factionalized, regional variation in information should influence attack levels as groups use violence to compete over ...Read more...

CEP discussion paper

Individual Voice in Employment Relationships: A Comparison Under Different Collective Voice Regimes

This article examines the relationship between individual and collective employee voice, and management-led voice (appraisal), under contrasted collective voice regimes. In the first, collective workplace voice depends o...Read more...

Submission to a parliamentary inquiry and government consultation

Department for Work and Pensions - 21st Century Welfare

Read more...

Blog

LSE British Politics and Policy:

To avoid creating a ‘lost generation’, with perhaps a fifth of all 18 year olds unemployed and outside training, a new push on apprenticeships would help

With record numbers of young people not gaining university places, the viability of apprenticeships could make a huge difference in preventing a ‘lost generation’ out of touch with the labour market. Dr Hilary Steedman o...Read more...

Blog

LSE British Politics and Policy:

LSE Centre for Economic Performance – A Note on Academy School Policy

The Academies programme3 was first introduced by the Labour government in September 2002, with the stated aim of improving the educational outcomes of some of the most disadvantaged pupils in English secondary schools. T...Read more...

CEP discussion paper

Trade Crisis? What Trade Crisis?

We provide an analysis of the 2008-2009 trade collapse using microdata from a small open economy, Belgium. First, we find that changes in firm-country-product exports and imports occurred mostly at the intensive margin: ...Read more...

Blog

LSE British Politics and Policy:

LSE Centre for Economic Performance: Reducing Crime: More Police, More Prisons or More Pay?

Crime is usually high on the list of voter concerns. This might seem surprising since total crime has fallen significantly since the mid 1990s. Yet two thirds of the population still (wrongly) think that crime is rising ...Read more...

Blog

LSE British Politics and Policy:

Hospital competition is good for patients, and for efficiency

The coalition government has taken great pains to assure the public that the NHS budget will be ‘ring-fenced’, and thus not subject to the cuts of 20 to 40 per cent forecast for other Whitehall departments. At the same t...Read more...

CEP discussion paper

The Growth of Extended 'Entry Tournaments' and the Decline of Institutionalised Occupational Labour Markets in Britain

In recent years, British labour markets have been characterised by a decline of institutional regulation of entry routes into many occupations and internal labour markets. This paper examines this change by comparing occ...Read more...

CEP discussion paper

Quality Matters - the Expulsion of Professors and Ph.D. Student Outcomes in Nazi Germany

I investigate the effect of faculty quality on Ph.D. student outcomes. To address the endogeneity of faculty quality I use exogenous variation provided by the expulsion of mathematics professors in Nazi Germany. I find t...Read more...

Blog

LSE British Politics and Policy:

LSE Centre for Economic Performance – all election analyses are now available

The complete series of Election Analyses from the Centre for Economic Performance (CEP) is now available, summarising research evidence on some of the key policy battlegrounds of the 2010 UK General Election. The followi...Read more...

CEP discussion paper

Slip Sliding Away: Further Union Decline in Germany and Britain

This paper presents the first comparative analysis of the decline in collective bargaining in two European countries where that decline has been most pronounced. Using workplace-level data and a common model, we present ...Read more...

SERC/Urban and Spatial Programme Discussion Paper

New Housing Supply and the Dilution of Social Capital

This paper examines the role of local housing supply conditions for social capital investment. Using an instrumental variables approach and data from the Social Capital Community Benchmark Survey, it is documented that t...Read more...

CEP discussion paper

Welfare Policy and the Distribution of Hours of Work

We examine the distribution of hours of work across industrial sectors in OECD countries. We find large disparities when sectors are divided into three groups: one that produces goods without home substitutes and two oth...Read more...

CEP discussion paper

Do Oil Windfalls Improve Living Standards? Evidence from Brazil

We use variation in oil output among Brazilian municipalities to investigate the effects of resource windfalls. We find muted effects of oil through market channels: offshore oil has no effect on municipal non-oil GDP or...Read more...

CEP discussion paper

Rates of Return and Alternative Measures of Capital Input: 14 Countries and 10 Branches, 1971-2005

We employ the EU KLEMS database to estimate the real rate of return to capital in 14 countries (11 in the EU, three outside the EU) in 10 branches of the market economy plus the market economy as a whole. Our measure of ...Read more...

CEP discussion paper

Can Family-Support Policies Help Explain Differences in Working Hours Across Countries?

It has been suggested in the literature that taxes and subsidies play an important role in explaining the differences in working hours across countries. In this paper I test whether public programmes for family support p...Read more...

CEP discussion paper

The Extent of Collective Bargaining and Workplace Representation: Transitions between States and their Determinants. A Comparative Analysis of Germany and Great Britain

Industrial relations are in flux in many nations, perhaps most notably in Germany and Britain. That said, comparatively little is known in any detail of the changing pattern of the institutions of collective bargaining a...Read more...

CEP discussion paper

How to Measure Living Standards and Productivity

This paper sets out a general algorithm for calculating true cost-of-living indices or true producer price indices when demand is not homothetic, i.e. when not all expenditure elasticities are equal to one. In principle,...Read more...

CEP occasional paper

Do Private Equity Owned Firms Have Better Management Practices?

We use an innovative survey tool to collect management practice data from over 4,000 medium sized manufacturing firms across Asia, Europe and the US. These measures of managerial practice are strongly associated with fir...Read more...

CEP discussion paper

The Organization of Firms Across Countries

We argue that social capital as proxied by trust increases aggregate productivity by affecting the organization of firms. To do this we collect new data on the decentralization of investment, hiring, production, and sale...Read more...

CEP discussion paper

The Distinct Effects of Information Technology and Communication Technology on Firm Organization

Guided by theories of management by exception, we study the impact of Information and Communication Technology on worker and plant manager autonomy and on span of control. We find, using an original dataset of American a...Read more...

CEP discussion paper

Hot and Cold Seasons in the Housing Market

Every year during the second and thirdquarters (the “hot season”) housing markets in the UK and the US experience systematic above-trend increases in both prices and transactions. During the fourth and first quarters (th...Read more...

CEP discussion paper

Capital Flows and Asset Prices

After liberalizing international transactions of financial assets, many countries experience large swings in asset prices, capital flows, and aggregate production. This paper studies how the adjustment to capital account...Read more...

CEE/Education and skills discussion paper

School Quality, Child Wellbeing and Parents Satisfaction

Researchers in economics of education usually assume that parents choose schools for their high academic performance, with some support from revealed preference evidence based on local house prices. However, anecdotal ev...Read more...

CEP discussion paper

The Margins of US Trade

Recent research in international trade emphasizes the importance of firms’ extensive margins for understanding overall patterns of trade as well as how firms respond to specific events such as trade liberalization. In th...Read more...

SERC/Urban and Spatial Programme Discussion Paper

Family Types and the Persistence of Regional Disparities in Europe

This paper examines the association between one of the most basic institutional forms, the family, and a series of demographic, educational, social, and economic indicators across regions in Europe. Using Emmanuel Todd’s...Read more...

CEP discussion paper

Modern Management: Good for the Environment or Just Hot Air?

We use an innovative methodology to measure management practices in over 300 manufacturing firms in the UK. We then match this management data to production and energy usage information for establishments owned by these ...Read more...

CEP discussion paper

Vulnerability of Currency Pegs: Evidence from Brazil

This paper analyses predictions of a simple model of currency crises in which the peg will be abandoned when the currency overvaluation hits a certain threshold, unknown to the agents. Due to learning about the threshold...Read more...

CEP discussion paper

Delayed Doves: MPC Voting Behaviour of Externals

The use of independent committees for the setting of interest rates, such as the Monetary Policy Committee (MPC) at the Bank of England, is quickly becoming the norm in developed economies. In this paper we examine the i...Read more...

Union Density and Varieties of Coverage: The Anatomy of Union Wage Effects in Germany

Collective bargaining in Germany takes place either at the industry level or at the firm level; collective bargaining coverage is much higher than union density; and not all employees in a covered firm are necessarily co...Read more...

CEP report

Interoperability and Market Foreclosure In the European Microsoft Case

In this paper we discuss some of the most important economic issues raised in European Commission vs. Microsoft (2004) concerning the market for work group servers. In our view, the most important economic issues relate ...Read more...

CEP discussion paper

Employment Outcomes in the Welfare State

We examine the implications of tax and subsidy policies for employment in the 'three worlds of welfare', Anglo-Saxon, Continental European and Scandinavian. We argue that home production is key to a proper evaluation of ...Read more...

CEP discussion paper

Talking Less and Moving the Market More: Is this the Recipe for Monetary Policy Effectiveness? Evidence from the ECB and the Fed

This paper examines and compares the communication strategies of the Federal Reserve and the European Central Bank, and their effectiveness. First we do a comparative study exercise. We find that on monetary policy commi...Read more...

CEP discussion paper

Panic on the Streets of London: Police, Crime and the July 2005 Terror Attacks

In this paper we study the causal impact of police on crime by looking at what happened to crime before and after the terror attacks that hit central London in July 2005. The attacks resulted in a large redeployment of p...Read more...

EDS discussion paper

Beautiful Pixels - Aesthetic Innovation in Interactive Online Art: The Case of BoyBlack

In the context of broad-based technological innovation that has allowed new art-making and showing practices to become increasingly available to artists, the paper examines the possibility of aesthetic innovation in 'int...Read more...

CEP discussion paper

Lags and Leads in Life Satisfaction: A Test of the Baseline Hypothesis

We look for evidence of habituation in twenty waves of German panel data: do individuals, after life and labour market events, tend to return to some baseline level of well-being? Although the strongest life satisfaction...Read more...

CEP discussion paper

Creative Destruction with On-the-Job Search

This paper is about the labour market consequences of creative destruction with on-the-job search. We consider a matching model in an economy with embodied technological progress and show that its dynamics are profoundly...Read more...

CEP discussion paper

Intra-Industry Foreign Direct Investment

We use a new firm level data set that establishes the location, ownership, and activity of 650,000 multinational subsidiaries—close to a comprehensive picture of global multinational activity. A number of patterns emerge...Read more...

CEP discussion paper

The Shimer Puzzle and the Correct Identification of Productivity Shocks

Shimer (2005a) claims that the Mortensen-Pissarides search model of unemployment lacks an ampiflication mechanism because it cannot generate the observed business cycle fluctuations in unemployment given labor productivi...Read more...

CEP discussion paper

Search Frictions, Real Rigidities and Inflation Dynamics

The standard New Keynesian model suffers from the so-called .macro-micro pricing conflict: in order to match the dynamics of inflation implied by macroeconomic data, the model needs to assume an average duration of price...Read more...

CEP discussion paper

Trust-Based Trade

Weak enforcement of international contracts can substantially reduce international trade. We develop a model where agents build reputations to overcome the difficulties that this institutional failure causes in a context...Read more...

CEP discussion paper

Productivity, Aggregate Demand and Unemployment Fluctuations

This paper presents new empirical evidence on the cyclical behavior of US unemployment that poses a challenge to standard search and matching models. The correlation between cyclical unemployment and the cyclical compone...Read more...

CEP discussion paper

Measuring Organization Capital in Japan: An Empirical Assessment Using Firm-Level Data

Globalization and the ICT revolution of the 1990s have forced many firms to reorganize in order to survive in a more competitive market. There are several approaches that can be used to assess the measurement of organiza...Read more...

CEP discussion paper

Wage Distributions by Bargaining Regime: Linked Employer-Employee Data Evidence from Germany

Using linked employer-employee data from the German Structure of Earnings Survey 2001, this paper provides a comprehensive picture of the wage structure in three wage-setting regimes prevalent in the German system of ind...Read more...

CEP discussion paper

The Division of Labor, Coordination, and the Demand for Information Processing

Since Adam Smith’s time, the division of labor in production has increased significantly, while information processing has become an important part of work. This paper examines whether the need to coordinate an increasin...Read more...

Manpower Human Resource Lab paper

Are There Day of the Week Productivity Effects?

Despite much debate about the productivity effects of flexible working and the regulation of working hours little attention is paid to temporal variance in productivity. This paper explains why one might expect to see pr...Read more...

CEP discussion paper

Economic Linkages Across Space

We develop a diagrammatic framework that can be used to study the economic linkages between regions or cities. Hitherto, such linkages have not been the primary focus of either the theoretical or empirical literatures. W...Read more...

CEE/Education and skills discussion paper

Urban Density and Pupil Attainment

We explore the association between urban density and pupil attainment using three cohorts of pupils in schooling in England. Although – as widely recognised – attainment in dense urban places is low on average, this is n...Read more...

CEP discussion paper

Chain Indices of the Cost of Living and the Path-Dependence Problem: An Empirical Solution

This paper proposes an empirically feasible method for correcting the path-dependence bias of chain indices of the cost of living. Chain indices are discrete approximations to Divisia indices and it is well known that th...Read more...

CEP discussion paper

The Effect of Marital Breakup on the Income Distribution of Women with Children

Having a female firstborn child significantly increases the probability that a woman’s first marriage breaks up. Recent work has exploited this exogenous variation to measure the effect of marital breakup on economic out...Read more...

CEP discussion paper

Seigniorage

In this paper I analyse four different but related concepts, each of which highlights some aspect of the way in which the state acquires command over real resources through its ability to issue fiat money. They are (1) s...Read more...

Journal article

Review of Economics and Statistics:

Lousy and lovely jobs: the rising polarization of work in Britain

This paper shows that the United Kingdom since 1975 has exhibited a pattern of job polarization with rises in employment shares in the highest- and lowest-wage occupations. This is not entirely consistent with the idea o...Read more...

CEP discussion paper

Multi-Product Firms and Trade Liberalization

This paper develops a general equilibrium model of multi-product firms and analyzes their behavior during trade liberalization. Firm productivity in a given product is modeled as a combination of firm-level “ability” and...Read more...

CEP discussion paper

American Economic Development Since the Civil War or the Virtue of Education

This paper is the first empirical framework that explains the phenomenon of fast growth combined with the demographic transition occurring in the United States since 1860. I propose a structural model that unifies those ...Read more...

CEP discussion paper

An R&D-Based Model of Multi-Sector Growth

We develop a multi-sector general equilibrium model in which productivity growth is driven by the production of sector-specific knowledge. In the model, we find that long run differences in total factor productivity grow...Read more...

CEP discussion paper

Search and Matching Frictions and Optimal Monetary Policy

I analyze optimal monetary policy in an economy with search and matching frictions in the labor market and staggered nominal wage and price contracts. In this framework, as opposed to the standard New Keynesian model, pr...Read more...

CentrePiece article

Panic on the Streets of London

The terrorist attacks of 7 July 2005 resulted in a very large redeployment of police officers to central London boroughs. New research by Mirko Draca, Stephen Machin and Robert Witt looks at the impact of this increased ...Read more...

CEP discussion paper

Unemployment and Hours of Work: The North Atlantic Divide Revisited

I examine the dynamic evolutions of unemployment, hours of work and the service share since the war in the United States and Europe. The theoretical model brings together all three and emphasizes technological growth. Co...Read more...

CEP discussion paper

Individual Employee Voice: Renegotiation and Performance Management in Public Services

Periodically, the ‘zone of acceptance’ within which management may use its authority to direct employees’ work needs to be adapted to the changing needs of organisations. This article focuses especially on the non-codifi...Read more...

CEP discussion paper

Information and Communication Technologies in a Multi-Sector Endogenous Growth Model

This paper investigates the impact of Information and Communication Technologies (ICT) on growth in an economy, consisting of three sectors, ICT-producing, ICT-using and non-ICT-using. The benefits from ICT come from the...Read more...

CEP discussion paper

Trends in Hours and Economic Growth

We study long-run trends in market hours of work and employment shifts across economic sectors driven by uneven TFP growth in market and home production. We focus on the structural transformation between agriculture, man...Read more...

CEP discussion paper

Co-Opetition and Prelaunch in Standard-Setting for Developing Technologies

Firms faced with the decision of whether to standardize or not prior to introducing a new network technology face a tradeoff: Compatibility improves the technology’s chances of consumer acceptance, but it also means havi...Read more...

CEP discussion paper

Multi-Product Firms and Product Switching

This paper examines the frequency, pervasiveness and determinants of product switching among U.S. manufacturing firms. We find that two-thirds of firms alter their mix of five-digit SIC products every five years, that on...Read more...

CEP discussion paper

Trade and Growth with Heterogeneous Firms

This paper explores the impact of trade on growth when firms are heterogeneous. We find that greater openness produces anti-and pro-growth effects. The Melitz-model selection effects raises the expected cost of introduci...Read more...

CEP discussion paper

Basic Research and Sequential Innovation

The commercial value of basic knowledge depends on the arrival of follow-up developments mostly from outside the boundaries of the inventing firm. Private returns would depend on the extent the inventing firm internalize...Read more...

CEP discussion paper

Technology, Information and the Decentralization of the Firm

This paper develops a framework to analyze the relationship between the diffusion of new technologies and the decentralization decisions of firms. Centralized control relies on the information of the principal, which we ...Read more...

CEP discussion paper

Knowledge Flow and Sequential Innovation: Implications for Technology Diffusion, R&D and Market Value

It is shown that spillovers can enhance private returns to innovation if they feed back into the dynamic research of the original inventor (Internalized spillovers), but will always reduce private returns, if the origina...Read more...

CEP discussion paper

Trade Liberalization and Industrial Restructuring through Mergers and Acquisitions

This paper analyzes mergers and acquisitions (M&A) as a previously neglected channel of industrial restructuring in the face of trade liberalization. Using the Canada-United States Free Trade Agreement of 1989 as a natur...Read more...

CEE/Education and skills discussion paper

New Technology in Schools: Is There a Payoff?

Read more...

CEP discussion paper

Changes in Returns to Education in Latin America: the Role of Demand and Supply of Skills

Changes in the relative wages of workers with different amounts of education have profound implications for developing countries, where initial levels of inequality are often very high. In this paper we use micro data fo...Read more...

CEP discussion paper

Agricultural Returns and Conflict: Quasi-Experimental Evidence from a Policy Intervention Programme in Rwanda

In 1997 Rwanda introduced a re-settlement policy for refugees displaced during previous conflicts. We exploit geographic variation in the speed of implementation of this policy to investigate the impact of conflict-induc...Read more...

CEP discussion paper

Agglomeration and the Adjustment of the Spatial Economy

We consider the literatures on urban systems and New Economic Geography to examine questions concerning agglomeration and how areas respond to shocks to the economic environment. We first propose a diagrammatic framework...Read more...

CEP discussion paper

Sinking the Blues: the Impact of Shop Closing Hours on Labor and Product Markets

There is a growing consensus among economists that extending shop opening hours creates jobs. While this is probably true in deregulating industries, this paper argues there are some deficiencies in the existing hypothes...Read more...

CEP discussion paper

Financial Globalization and Exchange Rates

The founders of the Bretton Woods System sixty years ago were primarily concerned with orderly exchange rate adjustment in a world economy that was characterized by widespread restrictions on international capital mobili...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

Zipf's Law for Cities: A Cross Country Investigation

This paper assesses the empirical validity of Zipf¿s Law for cities, using new data on 73 countries and two estimation methods ¿ OLS and the Hill estimator. With either estimator, we reject Zipf¿s Law far more often than...Read more...

CEP discussion paper

We Can Work It Out: the Impact of Technological Change on the Demand for Low Skill Workers

There is little doubt that technology has had the most profound effect on altering the tasks that we humans do in our jobs. Economists have long speculated on how technical change affects both the absolute demand for lab...Read more...

CEP discussion paper

Reconciling Workless Measures at the Individual and Household Level: Theory and Evidence from the United States, Britain, Germany, Spain and Australia

Individual and household based aggregate measures of worklessness can, and do, offer conflicting signals about labour market performance. We outline a means of quantifying the extent of any disparity, (polarisation), in ...Read more...

CEP discussion paper

Two Sides to Every Story: Measuring the Polarisation of Work

Individual and household based aggregate measures of joblessness can, and do, offer conflicting signals about labour market performance if work is unequally distributed. This paper introduces a simple set of indices that...Read more...

CEP discussion paper

The 'Network Economy' and Models of the Employment Contract: Psychological, Economic and Legal

The emergence of the so-called ¿network economy¿ and the development of project-based work pose a fundamental challenge to established methods of regulating the employment relationship. There appears to be an unsatisfied...Read more...

CEP discussion paper

Lousy and Lovely Jobs: the Rising Polarization of Work in Britain

This paper argues that skill-biased technical change has some deficiencies as a hypothesis about the impact of technology on the labor market and that a more nuanced view recently proposed by Autor, Levy and Murnane (200...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

Scale Effects in Markets with Search

Reduced-form tests of scale effects in markets with search, run when aggregate matching functions are estimated, may miss important scale effects at the micro level, because of the reactions of job searchers. A semi-stru...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

Does Inequality in Skills Explain Inequality of Earnings Across Advanced Countries?

The distribution of earnings and the distribution of skills vary widely among advanced countries, with the major English-speaking countries, the US, UK, and Canada, having much greater inequality in both earnings and ski...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

City Size Distributions As A Consequence of the Growth Process

The size distribution of cities in many countries follows some broadly regular patterns. Any good theory of city size distributions should (i) be able to account for this regularity, but also (ii) rely on a plausible eco...Read more...

CEP discussion paper

Consumption and Savings with Unemployment Risk: Implications for Optimal Employment Contracts

This paper derives optimal employment contracts when workers are risk averse and there are employment and unemployment risks. Without income insurance, consumption rises during employment and falls during unemployment. O...Read more...

CEP discussion paper

Managerial Ownership and Firm Performance in German Small and Medium-Sized Enterprises

This paper studies the effect of managerial ownership on performance and the determinants of managerial ownership for small and medium-sized private companies. We use a panel of around 1300 firms in the German business-r...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

Influences on Trade Union Organising Effectiveness in Great Britain

This paper brings together data from the 1998 Workplace Employee Relations Survey, National Survey of Unions and TUC focus on recognition survey to investigate influences on union organising effectiveness. Organising eff...Read more...

CEP discussion paper

Frustrated Demand for Unionisation: the Case of the United States and Canada Revisited

In this paper we demonstrate that there is a substantial union representation gap in the United States. We arrive at this conclusion by comparing Canadian and American worker responses to questions relating to desired un...Read more...

CEP discussion paper

Jobs, Workers and Changes in Earnings Dispersion

The 'fractal' nature of the rise in earnings dispersion is one of its key features and remains a puzzle. In this paper, we offer a new perspective on the causes of changes in earnings dispersion, focusing on the role o...Read more...

CEP discussion paper

Zipfs Law for Cities: An Empirical Examination

We use data for metro areas in the United States, from the US Census for 1900 û 1990, to test the validity of Zipf's Law for cities. Previous investigations are restricted to regressions of log size against log rank. In...Read more...

CEP discussion paper

Looking Into the Black Box: A Survey of the Matching Function

We survey the microfoundations, empirical evidence and estimation issues underlying the aggregate matching function. Several microeconomic matching mechanisms have been suggested in the literature with some successes but...Read more...

CEP discussion paper

Trade Unions and Industrial Injury in Great Britain

Anecdotal evidence suggests that trade unions succeed in ameliorating workplace health and safety, but no attempt has been made to link specific workplace injury rates with a respective union presence. Relying on WERS98,...Read more...

CEP discussion paper

R&D in Developing Countries: What Should Governments Do?

I consider the implications of recent research for R&D policy in developing countries. Typical new growth models, which assume free entry and no strategic behaviour by R&D producers, are less appropriate for policy guida...Read more...

CEP discussion paper

Optimal Currency Areas: Why Does the Exchange Rate Regime Matter? (With an Application to UK Membership in EMU)

Microeconomic efficiency and market transparency argue in favour of UK membership in EMU and for Scotland's membership in the UK monetary union and also in EMU. UK seigniorage (government revenues from money issuance) w...Read more...

CEP discussion paper

Mapping the Two Faces of R&D: Productivity Growth in a Panel of OECD Industries

Many writers have claimed that R&D has two 'faces'. In addition to the conventional role of stimulating innovation, R&D enhances technology transfer by improving the ability of firms to learn about advances in the lead...Read more...

CEP discussion paper

The Right to Know: Disclosure of Information for Collective Bargaining and Joint Consultation

The legal obligation on employers to provide information to employees has grown since the early 1970s. At that time, the emphasis was on disclosure for collective bargaining. In the 1980s and 1990s, the emphasis shifted ...Read more...

CEP discussion paper

The Fallacy of the Fiscal Theory of the Price Level

It is not common for an entire scholarly literature to be based on a fallacy, that is, 'on faulty reasoning; misleading or unsound argument'. The 'fiscal theory of the price level', recently re-developed by Woodford,...Read more...