Department of Economics

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    If we want to create jobs in local areas, the idea of ‘local’ needs to be revisited

If we want to create jobs in local areas, the idea of ‘local’ needs to be revisited

Place-based policies that target disadvantaged areas are widespread in both high-income and developing countries. Their impact depends crucially on the effective size of local labour markets. If labour markets are very local, an effective intervention needs to be targeted to the disadvantaged areas themselves and more distant interventions will not benefit the target group. If labour markets are not […]

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    Budget 2017: productivity is the focus, but ‘fixes’ are unlikely to be enough

Budget 2017: productivity is the focus, but ‘fixes’ are unlikely to be enough

Budget 2017 began with a bleak assessment of the UK’s growth prospects. For those of us following the economic trends and policy debate, there was little surprise at the downgrade of future productivity growth by the Office for Budget Responsibility. Productivity has flat-lined since the financial crisis as successive budgets have failed to have much discernible effect on the […]

Work, joblessness and what they mean for our happiness

Since most of us spend much of our lives working, it is inevitable that work plays a key role in shaping our levels of happiness. In a chapter of the World Happiness Report 2017 – which is published annually to coincide with the United Nations’ International Day of Happiness – we look more closely at the relationship between work […]

Dark web: The economics of online drugs markets

Like many other consumer transactions, the buying and selling of drugs are increasingly moving online. This is one very visible dimension of cybercrime – and it has been receiving growing attention from researchers as the online drugs markets have expanded rapidly.

A key feature of online drugs platforms is that they are located on the so-called ‘dark web’, which is […]

Global risks from rising debt and asset prices

Wolfgang Schäuble, the outgoing German finance minister, warned in an FT interview last week that ‘economists all over the world are concerned about the increased risks arising from the accumulation of more and more liquidity and the growth of public and private debt.’ This follows an assessment by the Bank of International Settlements, whose chief economist, Claudio Borio, […]

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    Where industry is strong and where it’s weak: Key facts of UK business geography

Where industry is strong and where it’s weak: Key facts of UK business geography

The UK’s financial services industry is not nearly as London-centric as the creative industries. Rather than the South East of England being the country’s productivity engine, it is a band stretching west from the capital along the M4 corridor towards Bristol. The East of England stands out nationally in terms of the intensity of local investment in research and […]

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    Expert panel: Unemployment hurts the wellbeing of men more than that of women

Expert panel: Unemployment hurts the wellbeing of men more than that of women

Given a generally stronger social norm for men to be working in paid employment than for women, unemployment is typically worse for the wellbeing of men than women. That is the consensus finding of a survey of leading researchers on wellbeing from around the world.

But the experts are divided on whether unemployment is better for an individual’s happiness than […]

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    How the rise of the service sector boosted the demand for women workers

How the rise of the service sector boosted the demand for women workers

The rise in female participation in the workforce has been one of the most remarkable changes in the labour markets of high-income countries since World War 2. In the U.S, for example, the employment rate of women has more than doubled from about 35 per cent in 1945 to 77 per cent at the end of the 20th century, […]

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    Strong patent rights accelerate the diffusion of new medicines across countries

Strong patent rights accelerate the diffusion of new medicines across countries

In 1999 lovastatin, a blockbuster cholesterol drug with annual peak sales of more than $1 billion in the U.S., became commercially available in Egypt — twelve years after it was first approved for sale by the U.S. Food and Drug Administration. Our research shows that this is not exceptional — long launch lags are common and 45 per cent […]

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    Post-Brexit work visa quotas on EU nationals will likely favour graduates

Post-Brexit work visa quotas on EU nationals will likely favour graduates

Had things gone as most commentators expected, the UK would now be entering hard Brexit talks with the near certainty of leaving the single market and/or customs union and the consequent ending of free movement of people from the European Union. Two weeks later and that near certainty no longer seems as certain, with murmurings of a softer Brexit […]

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    What’s happening with real wages and living standards in the UK?

What’s happening with real wages and living standards in the UK?

As the election season progresses, an evaluation of the current labour market trends in the UK, and of possible future movements, is of significant importance is assessing the credibility of the parties’ manifesto proposals on work. This is particularly the case as, since the global financial crisis of 2007/08, workers’ real wages and family living standards in the UK […]

Flexible labour markets, real wages and economic recoveries

In its 2016 Employment Outlook, the OECD documents that real hourly wage growth has behaved quite differently across countries over the past ten years.

This is true even among the large European economies. Comparing the level of real hourly wages in the fourth quarter of 2015 with a counterfactual value based on the assumption that wages had grown according to […]

What research tells us about the avocado toast controversy

Australian millionaire and luxury property developer Tim Gurner recently suggested millennials should stop spending money on avocado toasts or expensive coffee so that they could afford to buy property. This comment started a heated debate relative to the way the young – and more generally lower income people – spend their money, and on the morality of conspicuous consumption.

The […]

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    Airports helped boost the manufacturing sector and productivity in China

Airports helped boost the manufacturing sector and productivity in China

Airport construction or expansion is often proposed as a policy lever to boost cities, regions and national economies worldwide – although this case is not clear cut as some well publicised ‘white elephants’ and the recent debate over expansion of London’s airports testify. But it is in large developing countries with poor road and rail infrastructure that air transport […]

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    Home ownership is falling faster for young people whose parents didn’t own a house

Home ownership is falling faster for young people whose parents didn’t own a house

It is well known that home ownership rates have been falling rapidly among young people. Linking own home ownership with parental home ownership, our new paper demonstrates that the sharpest falls occurred for those who grew up in families where their parents did not own their homes. Given the link between home ownership and wealth, the findings indicate growing […]

Sleep deprivation, even when moderate, hurts employment

Lack of sleep is responsible for human fatigue, and can undermine economic performance. Paradoxically, the extent to which sleep time is a productive activity, or not, has received very limited attention in economics research so far. Sleep is often overlooked in economic models despite its obvious restorative effects on human health alongside its influence on brain plasticity and feelings […]

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    Anna Valero: ‘Automation has taken away mid-level skills jobs’

Anna Valero: ‘Automation has taken away mid-level skills jobs’

As a Research Director of LSE’s Growth Commission, Anna Valero spent part of the post-Brexit vote months studying the gaps between public policy and the new economic reality in the UK.  In an interview with LSE Business Review’s managing editor, Helena Vieira, she discusses what the UK could do to stimulate economic growth and fight inequality. The skills gap is one of […]

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    Keeping up with the Joneses: Superstar houses and the US mortgage frenzy

Keeping up with the Joneses: Superstar houses and the US mortgage frenzy

Built in 1927 on the eve of the Great Depression, the Palm Beach residence of President Donald Trump – Mar-a-Lago – ranks among the 20 biggest houses in the United States. At 62,500 square feet, it is about 35 times the size of the median suburban house in the country.

Analysing a large dataset of houses built between 1920 and […]

Gender quotas and the crisis of the mediocre man

A common criticism against gender quotas is that they are anathema to meritocratic principles. This research on Sweden shows that the opposite can be true: Quotas actually increased the competence of politicians by leading to the displacement of mediocre men whether as candidates or leaders. The results may also be relevant for judging gender quotas in business.

More than 100 countries […]

Technology may not be responsible for jobless recoveries

Since the early 1990s, the US has been plagued by weak employment growth when emerging from recessions – so called ‘jobless recoveries’. Georg Graetz and Guy Michaels look at multiple recoveries elsewhere in the world over a 40-year period to see if the same applies – and whether modern technology is responsible.

Recoveries from recessions in the United States used […]