Institutions and economics

Robert Dixon, Guay Lim, Jan van Ours, 03 May 2016

Okun’s law describes the positive empirical relationship between unemployment and the output gap. This column explores how this relationship differs depending on age and gender, taking into account different labour market institutions. Using data for 20 OECD countries over three decades, the authors find that the effect of Okun’s relationship decreases with age. Labour market institutions have similar effects on the unemployment rates of all groups, though magnitudes vary by age and gender.

Jeremiah Dittmar, Ralf R Meisenzahl, 26 April 2016

Throughout history, most states have functioned as kleptocracies and not as providers of public goods. This column analyses the diffusion of legal institutions that established Europe’s first large-scale experiments in mass public education. These institutions originated in Germany during the Protestant Reformation due to popular political mobilisation, but only in around half of Protestant cities. Cities that formalised these institutions grew faster over the next 200 years, both by attracting and by producing more highly skilled residents.

Shamena Anwar, Patrick Bayer, Randi Hjalmarsson, 19 April 2016

Women remain underrepresented in many aspects of political and civic life. This column explores the empirical significance of representation, exploiting a 1919 law that made women eligible to serve on English juries. Archival court data show that female representation boosted convictions in sex offenses cases. The magnitude of results highlights how dramatically underrepresentation can influence the functioning of civic institutions.

Rudiger Ahrend, Alexander C. Lembcke, Abel Schumann, 19 January 2016

A city’s metropolitan governance structure has a critical influence on the quality of life and economic outcomes of its inhabitants. This column quantifies the impact of governance on productivity using data from five OECD countries. Administrative fragmentation, which complicates policy coordination across a city, has a negative effect on individual productivity. This finding, combined with benefits from good governance such as improved transport and lower pollution levels, highlights the importance of well-designed metropolitan authorities.

Patrick Arni, Rafael Lalive, Gerard van den Berg, 11 January 2016

The standard empirical evaluations of labour market policy only consider the direct effects of single programmes on their participants. This column argues that this fails to capture important aspects of real-world labour market policy – policy regimes and strategies. Using Swiss data, it employs a novel empirical approach that concurrently examines the effects of supportive and punitive policies (‘carrots’ and ‘sticks’). Policy regimes are shown to exert economically relevant effects, and accounting for these effects is crucial when designing labour market policy.

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