Department of Economics

The economics of coronavirus

The coronavirus (Covid-19) pandemic is first and foremost one of the gravest health crises of the past hundred years, threatening to generate millions of premature deaths worldwide. But it also represents a major – and unusual – challenge for economic policymakers.

In most economic downturns, the appropriate policy response is qualitatively straightforward, if sometimes difficult to calibrate or implement. For […]

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    Covid-19: We shouldn’t give priority to sustaining the GDP over the wellbeing of the people

Covid-19: We shouldn’t give priority to sustaining the GDP over the wellbeing of the people

We are in a very difficult situation. But I do believe that if we handle it right we can come out of this better than we went into it. We can come out of it with a society in which people are caring more for each other and in which they are taking better care of themselves.

So, let me […]

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    We can increase happiness through public policy – and in our jobs and private lives too

We can increase happiness through public policy – and in our jobs and private lives too

Thomas Jefferson said that ‘The care of human life and happiness… is the first and only legitimate object of good  government.’ We agree with him, as did the LSE’s main architects – the Webbs and William Beveridge. So too do an increasing number of policymakers worldwide: only last October, the European Union’s Council of Ministers requested that all of […]

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    If the UK is high tech, why is productivity growth slow? Economists weigh in

If the UK is high tech, why is productivity growth slow? Economists weigh in

The UK has seen slow rates of productivity growth over the past decade, with output per hour and real wages no higher today than they were prior to the global financial crisis. The February 2020 Centre for Macroeconomics (CFM) survey asked its panel of top UK economists about the causes of and possible policy responses to slow growth in UK […]

Does more competition spur innovation or discourage it?

Increased levels of global trade integration, especially driven by the rise of China, have led to a fierce public debate about the winners and losers from international trade. Recently, calls for protectionism have become louder in many countries, leading to a backlash against globalisation (OECD 2017).

When it comes to firms, the increase in import competition has led researchers to […]

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    Technology can benefit a few superstar workers, at the expense of everyone else

Technology can benefit a few superstar workers, at the expense of everyone else

Technical change is disrupting many labour markets and is re-shaping the world of work. A widespread fear is that new technologies generate winner-take-all labour markets that benefit a small group of superstars, at the expense of the majority of the workforce. These so-called “superstar effects” arise when technologies open up bigger markets and make it possible to reach consumers […]

Brexit: mourning the economic and personal damage

Britain has left the European Union (EU). The loss I feel is almost as much as when my father died, almost a quarter of a century ago. He was 16 when he came to Britain with my grandfather, who was a South African political refugee. After completing his UK national service, he married the daughter of a Merseyside dockworker. […]

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    The UK has the world’s 9th most resilient labour market, but things are not as rosy as they seem

The UK has the world’s 9th most resilient labour market, but things are not as rosy as they seem

UK’s labour market continues to show resilience – but all is not as rosy as it seems. A recent analysis of labour market trends by The Institute for the Future of Work reveals strengths and weaknesses that should help plans to ‘level up’ the regions. The analysis supports the case for increased devolution; ‘mega-city’ networks connecting cities with surrounding […]

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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 […]