Economics & Finance

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    How faster productivity growth in low-skill sectors contribute to wage stagnation

How faster productivity growth in low-skill sectors contribute to wage stagnation

The real wage of non-college workers in the U.S. has grown by about 20 per cent since the 1980s, which is less than half of the growth in aggregate labour productivity. This is rather puzzling because low-skill workers tend to work in sectors that have higher productivity growth, yet their wages are lagging behind those of high-skill workers and […]

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    How sensitive are the migration choices of top-income workers to the tax burden?

How sensitive are the migration choices of top-income workers to the tax burden?

In an environment with low migration costs and relevant tax rate differentials among countries, the net balance of top-income individuals’ flow is a crucial policy issue. For a single country or region, depending on people’s sensitivity to tax differentials, setting higher taxation rates may originate a leakage of highly productive workers, with a related reduction in fiscal revenue. On […]

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    COVID-19 makes IP protection of traditional knowledge even more urgent

COVID-19 makes IP protection of traditional knowledge even more urgent

“When it is unable to defend itself with the sword, Rome can defend itself by means of fever”. These are the words of the medieval chronicler Goffredo da Viterbo who, in 1167, told of how Rome, every summer, was plagued by malaria. The sting of the mosquito made no distinctions of wealth or birth and there were thousands of […]

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    New paradigms explore ‘systems-oriented’ ways of managing risk

New paradigms explore ‘systems-oriented’ ways of managing risk

In an increasingly uncertain world, the concept of ‘risk’ has come to the forefront of policy. We use it to describe the likelihood of a range of negative events occurring, from car accidents, to illnesses, to flooding. Derived from risicare – the vulgar Latin verb for ‘sailing a ship off a cliff’ – the modern usage of risk originates […]

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    How leading economists view antitrust in the digital economy

How leading economists view antitrust in the digital economy

In October, the US Department of Justice launched a federal antitrust lawsuit against Google, accusing the technology giant of abusing its dominance in the market for internet search. We invited both the US and European panels of the IGM Forum at the University of Chicago to express their views on some of the issues surrounding this case. We asked […]

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    Transparency about risks and consistent messaging may reduce vaccine scepticism

Transparency about risks and consistent messaging may reduce vaccine scepticism

Monday, 9 November brought welcome news from Pfizer about the successful Phase 3 trial of what appears to be a 90 per cent effective COVID-19 vaccine. Stock markets reacted with elation, seeming to declare the COVID-19 crisis over.

Challenges lie ahead, of course. There is the challenge of manufacturing the vaccine, which will have to be applied in two doses. […]

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    When COVID moved work online, it created an opportunity for countries in the global south

When COVID moved work online, it created an opportunity for countries in the global south

Overall, the pandemic has been bad – often very bad – for business in the short term. In the long term, however, it creates opportunities for innovation and efficiencies in richer nations and unprecedented growth and development in poorer ones.

This does not detract from how bleak the immediate picture can be. COVID restrictions have meant that many businesses, particularly […]

November 13th, 2020|Economics & Finance|1 Comment|

Green shoots emerge to commercialise social sciences

The social sciences have a crucial role to play in the COVID-19 recovery, and in addressing many other challenges society faces. However, it is clear that there are persistent barriers that continue to impact the route to social science commercialisation.

This topic was the subject of a recent webinar – part of the Aspect Annual Event series – which focused […]

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    Unintended consequences of fiscal stimuli: tightening households’ credit constraints

Unintended consequences of fiscal stimuli: tightening households’ credit constraints

Since Keynes, the benefits associated to countercyclical fiscal policies have been recognised by the greater part of the economics community. Indeed, the global financial crisis and, especially, the current COVID-19 crisis saw massive increases in public debt in order to support households and firms’ viability while getting the economy back in gear.

In particular, several papers have studied the effects […]

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    Remittances, a lifeline for many countries, have shown resilience during COVID

Remittances, a lifeline for many countries, have shown resilience during COVID

An April 2020 press release read: “World Bank Predicts Sharpest Decline of Remittances in Recent History.” Except that this prediction due to COVID did not prove correct. In June 2020, the Dominican Republic received a 26 per cent larger amount in remittances – the money immigrants send home – than in June 2019. Honduras saw a 15% year-on-year increase that […]

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    How enrolment in a university technical college affects student outcomes

How enrolment in a university technical college affects student outcomes

Boris Johnson has put the government’s skills policy agenda in the spotlight. In a recent speech denouncing skills shortages in several technical occupations, the prime minister vowed to “end the pointless, nonsensical gulf…between the so-called academic and the so-called practical varieties of education”.

University technical colleges (UTCs) are state-funded 14-19 schools established by the government in the past 10 years with […]

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    To help small firms recover from the COVID shock, governments should buy from them

To help small firms recover from the COVID shock, governments should buy from them

The negative impact of the pandemic on small enterprises is well documented. In a two-month period, from February to April 2020, the number of active business owners in the US fell by 3.3 million, or 22 per cent, the highest change in recorded history. To mitigate the impact of these changes, economies implemented numerous crisis response measures, including revising their procurement procedures to […]

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    Bank resolution mechanisms: how to prepare for a birthday with an imperfect plan

Bank resolution mechanisms: how to prepare for a birthday with an imperfect plan

The regulatory changes introduced after the 2007-08 global financial crisis require banks to have contingency plans in case of distress. However, it is still not clear how such plans could be effective in resolving banks’ problems and mitigating systemic risk. The COVID-19 crisis and the drastic policy response that followed has produced an army of companies limping along in […]

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    US and Chinese tech firms increasingly play a game of Pac-Man

US and Chinese tech firms increasingly play a game of Pac-Man

By all accounts, trust in the corporate sector is at an all-time low, and perhaps – for the first time in the history of humankind – it is a global phenomenon. While stock markets worldwide, and particularly in the United States, continue to rally, this is accompanied by an unprecedented economic contraction, conservatively estimated at 5 to 10% of […]

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    What drives regulation in the aftermath of financial crises?

What drives regulation in the aftermath of financial crises?

Financial crises are an endemic feature of market economies. The negative effects of these crises on national economies have generally been severe, leading to banking collapses, recessions and marked increases in government debt levels (Reinhart and Rogoff, 2009). Invariably this leads governments to intervene in one way or another either to ease the damage that the crises may impose […]

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    A cyclical strategy to manage COVID-19, save lives and avoid economic ruin

A cyclical strategy to manage COVID-19, save lives and avoid economic ruin

On September 22, 2020, in a forum jointly hosted by the CBI and the LSE, my co-author Ron Milo, from Israel’s Weizmann Institute of Science, and I presented a strategy to return to work in COVID-19 times in a way that will improve both health and economic outcomes. In this article I present the “big picture” and the possibility […]

COVID-19 hurt women’s employment the hardest

By the beginning of 2020 women’s labour force participation stood at 58%, nearly a three-fold increase in the past century (civilian labour force participation rate, 16 years and over). By September 2020, in the wake of Covid, this share had fallen by over two percentage points. This statistic masks a potentially huge emerging gender gap: According to data from […]

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    The faster the population grows, the higher the carbon tax needed to offset climate change

The faster the population grows, the higher the carbon tax needed to offset climate change

Essentially, all environmental problems are scale problems. It is difficult to imagine that the human impact on the global climate system would be a top priority in a world with a global population of 8 million. Even with substantially higher fossil fuel consumption per capita, this hypothetical economy would emit only a small fraction of current carbon emissions. However, […]

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    When the pandemic struck Indonesia, urban gig workers were hit the hardest

When the pandemic struck Indonesia, urban gig workers were hit the hardest

“We know what can end poverty. But how come poverty never diminishes?” was the reply I received from Harry, who works as a gig worker in a city in Scotland when we were discussing poverty. The reason I specify his identity is because it is significant to what I am about to elaborate.

Indonesia’s rural poverty has always been higher […]

The use of designer reputation to build tall in London

The Planning for the Future white paper tackles one costly feature of the British planning system: its peculiar reliance on case by case, essentially political, decision making for all significant development (see here). Tall office towers are significant developments, so whether or not to permit them is subject to this political process. In Chicago it is straightforward. There are rules. […]