Labour markets

[field_auth], 24 August 2016

Guessing answers can undermine the effectiveness of multiple choice exams. Negative marking, in which incorrect answers are penalised, can limit guessing, but may bias the test against risk-averse test takers. Using Turkish university admission exam data, this column explores whether negative marking biases exams, particularly against women, who tend to be more risk averse. Differences in risk aversion appear to have a limited impact, especially for good students. 

[field_auth], 23 August 2016

Today’s labour market in the US has much in common with that of the late 19th and early 20th centuries. Then, as now, there were few government protections for workers, fears over cheap immigrant labour, rapid technological change, and increasing market concentration. This column explores the lessons that can be drawn from the earlier ‘Gilded Age’. The findings suggests that even as markets play a greater role in allocating labour, legal and political institutions will continue to shape bargaining power between firms and workers.

[field_auth], 18 August 2016

It has been widely demonstrated that parental divorce is associated with negative outcomes for affected children. However, the degree of causality in this relationship is not as clear. This column tackles this problem by using the level of gender integration in fathers’ workplaces as an instrument for divorce. The results suggest a causal link between divorce and worse economic outcomes that persists into early adulthood. 

[field_auth], 16 August 2016

Wage inequality was partly behind the vote for Brexit. This column shows how areas with relatively low median wages were substantially more likely to vote ‘Leave’, and discusses the likely implications of Brexit for wage inequality in the future. Increased likelihood of a recession, a negative shock to trade, reduced migration flows, and the possible loss of passporting rights for the City will all alter the structure of wages in ways that will need to be carefully monitored and studied in due course.

[field_auth], 05 August 2016

Lacklustre growth seems to be the new normal almost everywhere in the world except for one area – CEO pay. This column uses data on UK publicly listed firms to examine whether weak governance leads to pay rises for CEOs that are not justified by performance. CEO pay asymmetry – pay responding more to increases in firm performance than to decreases – appears to occur mainly in firms with a low share of institutional owners able to exert external control. CEOs at such firms are also more likely to be paid for ‘luck’, with pay rises rewarding random positive shocks unrelated to performance.

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