Economics

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    A postgraduate degree protects you against the business cycle

A postgraduate degree protects you against the business cycle

College graduates receive a wage premium over non-college workers. However, both types of workers are subject to similar wage shocks over the business cycle. As the share of workers with postgraduate degrees has doubled since 1980, I compare postgraduates to those who only have bachelor degrees. I document a new fact: in the US, postgraduates experience smaller shocks to […]

The fallacy of basic economic rights

One of the main questions dividing the left and the right is about how economic rights rank compared to other rights and public goals. That is, the question is about what can or cannot outweigh economic rights.

Basic vs prima facie rights

The left regularly argues that economic rights can be outweighed by legitimate state interests, like social justice, such that […]

Why endorsements may advantage MBA applicants

The graduate school application process can be daunting and highly competitive, particularly in the case of Masters of Business Administration (MBA) programmes. The process starts when candidates submit an application that typically includes their resume, cover letter, essays, transcripts, and standardised test scores. Akin to screening and hiring assessments in many of today’s corporations, applications are then evaluated by […]

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    Jobs cannot be created by fiat: efforts to do so will cause harm in the long run

Jobs cannot be created by fiat: efforts to do so will cause harm in the long run

What’s the difference between a developed country and a developing country? Filling station attendants.

Whereas most of the western world allows you to fill your tank, you will still find filling station attendants in some of the largest economies in the developing world, and nearly everywhere on the African continent. The primary defence is jobs; in Brazil, for example, a 2000 […]

June 9th, 2018|Economics|0 Comments|

Migrants are key to productivity gains for countries

For decades, the focus of the economic literature when studying migration was, for the most part, on the impact it has on labour-related outcomes such as wages and unemployment, among others. But these studies have been able to tell us one side of the story. As is the case with other flows, such as trade and investment, there are […]

June 5th, 2018|Economics|1 Comment|

Structural labour market reforms in Europe: timing matters

The German government implemented large-scale structural labour market reforms in the years 2003 to 2005 to fight high and upward trending unemployment rates (see Figure 1). The reforms aimed at increasing labour market flexibility, improving the matching of unemployed workers and job vacancies, and decreasing unemployment benefits and their duration. Ever since, the unemployment rate in Germany has almost […]

June 4th, 2018|Economics|0 Comments|
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    Are high inflation and low growth the effects of Brexit or just a coincidence?

Are high inflation and low growth the effects of Brexit or just a coincidence?

Ben Bernanke, former president of the US Federal Reserve, recounts an interesting exchange with a US senator on September 24 2008, just after he failure of the Lehman Brothers investment bank (in his book, The Courage to Act). The senator “had spoken to small-town bankers, auto dealers and others in his district with knowledge of the ‘real’ US economy. […]

June 2nd, 2018|Economics|0 Comments|

Why the Bank of England should stand its ground

Monetary policy has been unprecedentedly very accommodating in the post-global financial crisis (GFC) era, particularly in the developed economies. In the last few years, there has been a debate about the rolling back of some of the actions taken in the wake of the crisis, for which different terms and jargons have been invented, e.g. “exit-strategy” and/or “normalisation” of monetary policy. […]

May 31st, 2018|Economics|0 Comments|
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    Will it pay to be large in the EU steel industry? The answer may not be straightforward

Will it pay to be large in the EU steel industry? The answer may not be straightforward

There is a widespread belief that many of the problems that have recently plagued the EU steel industry can be resolved, or at least alleviated, by increased market concentration. Aligned with this conviction, many analysts and industry executives have positively welcomed the recent merger of the European operations of Germany’s ThyssenKrupp and India’s Tata Steel. The thinking goes that concentrating […]

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    Big box retailers aren’t always able to squeeze small suppliers

Big box retailers aren’t always able to squeeze small suppliers

Has the rise and consolidation of ‘big box’ retailers, such as Walmart, Tesco and Carrefour, undermined the ability of suppliers, especially small ones, to earn sizeable profits? Are small suppliers that bargain with these giants doomed to earn a meagre share of the ‘channel surplus’ – the difference between retail revenues and variable production costs?

While the answer to these […]

May 24th, 2018|Economics|0 Comments|
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    When the IMF and the EU don’t see eye to eye on economic policy

When the IMF and the EU don’t see eye to eye on economic policy

The recent IMF and World Bank Spring meetings with finance ministers and central bankers are one key forum where the IMF performs its mandated role as conduit of international economic co-ordination, and its self-appointed role as global arbiter of ‘sound’ economic policy. Christine Lagarde recently set out the IMF’s policy priorities, offering some pointed messages for European policy-makers about […]

May 19th, 2018|Economics|0 Comments|
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    Climate change: extreme heat will decrease rural employment and increase migration in Mexico

Climate change: extreme heat will decrease rural employment and increase migration in Mexico

Climate change is predicted to bring increased incidence of extreme weather events, rising temperatures, melting ice caps, and changing precipitation patterns. A growing body of literature suggests that the economic costs of climate change may be substantial and far-reaching, impacting agriculture, mortality, labour productivity, economic growth, civil conflict, and migration. Until recently, however, the literature has remained relatively silent […]

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    Zombie firms: kept alive at the expense of investment, employment and productivity

Zombie firms: kept alive at the expense of investment, employment and productivity

With the global economy stuck in a low growth trap, it is crucial to understand the factors behind the weak recovery in potential output growth, and particularly the barriers to productivity growth. In our recent research, we show that this dynamic can be partly understood in terms of the increasing survival of zombie firms – i.e. those firms that […]

May 16th, 2018|Economics|1 Comment|
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    Investment in education can counter the economic impact of an older population

Investment in education can counter the economic impact of an older population

Population ageing is one of the most important economic and social challenges in the twenty-first century. With increasing life expectancy and falling fertility, the populations of most countries are growing older. Large cohorts are being replaced by relatively smaller but better educated young cohorts, resulting in substantial shifts in the workforce and its age and education composition.

Although these demographic […]

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    Political ideology influences how we do business and whom we want to work with

Political ideology influences how we do business and whom we want to work with

After the bruising and contentious 2016 US presidential election and the subsequent controversies of President Donald Trump’s first year in office, it’s not surprising that Americans’ evaluations of members of the opposite political party have reached an all-time low. According to data from the Pew Research Center, 45 per cent of Republicans and 41 per cent of Democrats think the other party […]

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    The market failures that keep us from dealing effectively with superbacteria

The market failures that keep us from dealing effectively with superbacteria

There have been bacteria on this planet for at least the last 3.5 billion years. For the entirety of our species’ existence we have relied on bacteria to aid us in breaking down food, whilst being helpless to guard against their wrath whenever we had a bacterial infection. It wasn’t until the late 19th century that more powerful microscopes lead […]

May 12th, 2018|Economics|0 Comments|

Polish immigrants stimulate innovation in Germany

Even in an immigration system that is not based on skill selection, immigrants have positive innovation effects. They are directly engaged in patenting activities but they also have positive spillover effects on inventors already living in the country. With this finding we contribute to the ongoing public debate on the costs and benefits of immigration.

Immigration policy has been an […]

May 10th, 2018|Economics|0 Comments|
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    Why the Bank of England should stay put and not raise rates now: the view of leading economists

Why the Bank of England should stay put and not raise rates now: the view of leading economists

Ahead of the May 2018 interest rate decision of the Bank of England’s Monetary Policy Committee, more than two-thirds of leading economists surveyed by the Centre for Macroeconomics (CFM) agree that in a period of great uncertainty and after a prolonged period of weak real wage growth, monetary policy-makers can afford to wait for greater certainty about real wage […]

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    Rising US income inequality: the disproportionate gains of the highest earners

Rising US income inequality: the disproportionate gains of the highest earners

The increase in U.S. income inequality since 1970 largely reflects gains made by households in the top 20 per cent of the income distribution. Estimates suggest that households outside this group have suffered significant losses from foregone consumption, measured relative to a scenario that holds inequality constant. A substantial mitigating factor for the losses has been the dramatic rise […]

May 7th, 2018|Economics|0 Comments|
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    When multinationals offshore production, where do they locate innovation?

When multinationals offshore production, where do they locate innovation?

With the emergence of global value chains (GVCs), production processes have become increasingly fragmented and dispersed across different countries. R&D (research & development) and innovation have typically been among the least internationalised functions of the value chain and were traditionally considered as ‘core activities’ to be retained close to companies’ headquarters. But despite the important ‘home bias’ in global […]

May 5th, 2018|Economics|0 Comments|