Department of Economics

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    Public investment in defence research can increase business innovation

Public investment in defence research can increase business innovation

Government funding for innovation related to military uses represents a key channel through which governments all over the world shape innovation. In the US, for example, annual government defence-related research and development (R&D) expenditures were $78 billion in 2016, over 57% of all government-funded R&D (Congressional Research Service, 2018). While defence-related R&D is motivated by goals that are not […]

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    Silicon Roundabout: did light touch policy interventions work?

Silicon Roundabout: did light touch policy interventions work?

London’s technology ecosystem is thriving. The city has over 50,000 tech firms, with over 260,000 employees. Venture capital investment rose from £384 million in 2013 to £1.8 billion in 2018. A number of companies, such as Deepmind, Transferwise and Deliveroo, have become unicorns, valued at more than £1 billion. It survived the financial crisis and is — so far […]

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    To meet its ambitious ‘net zero’ target, the UK will need to ramp up climate change policies

To meet its ambitious ‘net zero’ target, the UK will need to ramp up climate change policies

UK greenhouse gas emissions are declining and have been declining for some time. The UK has a framework of long-run targets developed by the Committee on Climate Change, an independent body of experts advising government. Despite this, things are far from well when it comes to climate change in the UK and there are concerns about the country’s ability […]

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    Brexit will leave the UK worse off economically in all scenarios

Brexit will leave the UK worse off economically in all scenarios

Since the UK voted to leave the European Union in June 2016, Brexit has dominated UK politics and economic policy. Three and a half years after the referendum, the UK is yet to leave the EU, there is no certainty over if or when Brexit will take place, and the shape of future UK-EU relations is yet to be […]

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    John Van Reenen: ‘A lot of promises are just smoke and mirrors’

John Van Reenen: ‘A lot of promises are just smoke and mirrors’

As director of LSE’s Centre for Economic Performance (CEP) up to 2016, British economist John Van Reenen led a team of academic researchers who produced detailed analysis of the consequences a divorce from the European Union would have on the UK economy. They predicted a fall in GDP, employment, direct investment, wages and productivity. Of these indicators, only employment […]

Economic insecurity breeds support for the right

Economic insecurity is attracting growing attention in social, academic, and policy circles. It has arguably risen for a number of reasons in recent years: the Great Recession (with its associated job instability), automation and the fear of job loss, the Chinese import shock, and ageing populations and migration, amongst others. As well as its obvious implications for family finances […]

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 and welfare within countries (the so called “reallocation channel”), trade scepticism is at a historical high in many policy circles around the world.

It is well understood that […]

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    Measuring the effect of innovation on productivity inside firms

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 improving the information we have at the firm level can we say something about the links between productivity, firm performance and the implementation of new ideas. In […]

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 government’s own officials predicted that the outcome of this “No Deal Brexit” would be shortages of medicines and fresh foods, civil unrest and transport chaos. […]

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

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 important implications for our cities. Why? Because air pollution is primarily an urban problem. It is in large cities and their urban cores where we typically experience the worst air quality. As a result, the economist’s textbook description of urbanisation lists air pollution as one of […]

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    Can economic incentives promote a more equal gender division of house chores?

Can economic incentives promote a more equal gender division of house chores?

Gender identity norms such as the male bread-winner model are possible drivers of persistent gender inequalities in the labour market. However, the extent to which they restrict the behaviour of couples is debated. While the simple observation of men’s and women’s specialisation in market and domestic work may be revealing of gender identity norms, the observed time allocation of […]

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

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 of the Panama Canal, bridging the Atlantic and Pacific Oceans. And while the new canal cut the distance […]

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, retaliated with tariffs averaging 16 per cent on approximately $121 billion of US exports, plunging the United States into its first episode of large-scale reciprocal […]

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    Workers respond to local job losses by migrating and changing the commute

Workers respond to local job losses by migrating and changing the commute

Today’s polarising politics are characterised by deep geographical ruptures, clearly visible in the Brexit referendum, as well as in national elections in the US, France, Italy, Germany and elsewhere. This has shone a spotlight on the severe and persistent regional disparities in economic opportunity between former industrial heartlands and service-based cities, which afflict many countries in the developed world.

But […]

Happy employees and their impact on firm performance

A growing number of companies claim to place a high priority on the wellbeing of their workers – and there is a fast-growing industry of firms selling products related to employee wellbeing. But does investing in employee wellbeing actually lead to higher productivity and are there any tangible benefits to the business bottom line? Experimental evidence such as Oswald […]

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    Workers would give up half their hourly wages in exchange for a steady job

Workers would give up half their hourly wages in exchange for a steady job

The past two decades have seen a large increase in the number of workers engaged in “atypical” work arrangements. This type of work includes employment like zero-hour contracts (ZHCs), gig work such as driving an uber or taskrabbiting, and various types of other self-employment like freelancing. In the UK, the proportion of solo self-employed (e.g. freelancers, contractors, gig and […]

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    What happens to people’s careers when demand for their occupations declines?

What happens to people’s careers when demand for their occupations declines?

Technological change facilitates long run growth, but labour-replacing technologies are often perceived as a threat to the livelihood of workers. The recent wave of technologies is no longer confined to replacing routine workers such as machine operative and clerical workers: it could well reduce the employment of, among others, drivers, lawyers, and even fashion designers. Since more occupations are […]

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    When firms have asymmetric market power, stronger multilateral cooperation is needed

When firms have asymmetric market power, stronger multilateral cooperation is needed

The opinion on the benefits of free trade, and of multilateral agreements, which are free trade’s preferred policy companion, has changed through history. After having enjoyed some decades of favour, the support to multilateralism (and free trade) seems to be declining. The theoretical premise that the free market equilibrium is efficient is the basis for multilateralism. Economists learn in […]

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    Apprenticeships bring returns for young people with low-medium qualifications

Apprenticeships bring returns for young people with low-medium qualifications

In recent times, there has been a policy drive to increase the number of people undertaking apprenticeships in England and there are plans to dramatically change the post-16 system, which would include making apprenticeships a more important part of it. This raises the question as to how beneficial apprenticeships are to young people currently.

In our paper, we use administrative […]

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    Millennials are some of the worst hit by social mobility decline in the UK

Millennials are some of the worst hit by social mobility decline in the UK

Comparing the standard of living today with that of the past is crucial to understanding the UK’s economic and social health. In fact, both in our everyday lives and in studies of social sciences, we often assess economic progress by comparing our standard of living to that of our parents. A recent poll by Ipsos Mori shows that only […]