Masayuki Morikawa, 06 July 2017

Given the early stages of diffusion of many AI and robotic technologies, it is too early to measure the impact of these innovations on jobs. This column uses comprehensive survey data from Japan to measure the extent to which workers across different industries, levels of education, and occupations perceive their jobs to be at risk. Workers with adaptable skills acquired through higher education (particularly in science and engineering) or occupation-specific skills (particularly those in human-intensive personal services) are less worried about their jobs being replaced by AI and robotics.

Randolph Bruno, Nauro Campos, Saul Estrin, 25 May 2017

The economic effects of foreign direct investment are generally expected to be positive for the host economy. However, this is usually conditional on certain thresholds of development being met, for instance in terms of human capital or institutional quality. This column argues that the economic impact of foreign direct investment is less ‘conditional’ than commonly thought, perhaps because below the thresholds, the difference between private and social returns is substantial, while above them it is smaller.

Rui Luo, 14 May 2017

While the impact of modern technological change on the skill premium has been well explained, there has been no study of the evolution of the skill premium over the very long run. This column reveals that the skill premium in Western Europe declined between 1300 and 1600, and converged to a low and stable level afterwards. Growth and technological change, while stimulating economic development and the transition from a pre-modern era to modern era, reduced wage inequality between different working groups.

Nicholas W. Papageorge, Gwyn C. Pauley, Mardge Cohen, Tracey E. Wilson, Barton H. Hamilton, Robert Pollak, 01 April 2017

A link has been established between domestic violence and poor labour market outcomes. This column uses US data to explore the relationship between health and both domestic violence and drug use. HIV+ women who benefitted from the introduction of a medical innovation that delayed the onset of immune system decline experienced less domestic violence and reduced their drug use. Ignoring the link between medical innovation, health, and outcomes such as these is likely to lead to underinvestment in research.

William Maloney, Felipe Valencia Caicedo, 24 March 2017

The generation and diffusion of scientific knowledge and technology are assumed to be drivers of modern economic growth, but there is a lack of firm empirical evidence of this. This column uses the first detailed data on the density of engineers in the western hemisphere to argue that historical differences in innovative capacity, as captured by the density of engineers in 1880, explain a significant fraction of the Great Divergence. The results confirm the imperative of developing higher-order human capital.

Yoshio Higuchi, Naomi Kodama, Izumi Yokoyama, 11 November 2016

Studies have confirmed an increase in earnings inequality in Japan, but do not agree on how or when it increased, or which groups were most affected. This column decomposes changes in earnings data to show a recent decrease in the returns to general human capital of almost all Japanese workers, at the same time as an increase in the returns to firm-specific human capital among male workers with high wage rates. Gender-based wage inequality has persisted.

Giacinta Cestone, Chiara Fumagalli, Francis Kramarz, Giovanni Pica, 05 November 2016

Diversified business groups and conglomerates have been shown to withstand economic shocks better than equivalent standalone companies. This column uses employment data from France to argue that business groups use internal labour markets to save on termination, search, and training costs, which helps them cope with unexpected changes. These internal markets also provide implicit employment insurance to employees.

Reda Cherif, Fuad Hasanov, Min Zhu, 03 September 2016

Amid a persistent fall in oil prices, many oil-exporting countries are realising that economic diversification should be a top priority. One important pathway is to create a dynamic export sector. This column argues the standard policy of structural reforms – which mostly tackle ‘government failures’ rather than ‘market failures’ – are not sufficient. The state needs to intervene to change the incentive structure of firms and workers, and impose a strict accountability framework.

Adrienne Lucas, 19 July 2016

Health and education are two key components of human capital. In this video, Adrienne Lucas discusses the impact of the treatment for HIV+ parents on their children’s school achievements. This video was recorded during a UNU-WIDER conference on “Human capital and growth” held in June 2016.

Kehinde Ajayi, 08 July 2016

In this video, Kehinde Ajayi discusses the ways in which schools affect students’ performance. Allowing students to make informed choices about which school to attend is key to improving educational attainment. This video was recorded during a UNU-WIDER conference on “Human capital and growth” held in June 2016.

Giovanni Mastrobuoni, 20 May 2016

Education usually has a protective effect – people with higher levels of education are less likely to start criminal activities. In this video, Giovanni Mastrobuoni discusses the benefits of education on members of the Italian-American Mafia. Although the nature of the business is illegal, those involved in business-related crimes (loan sharking, drug dealing) are those who gain the most from an extra year in school. This video was recorded in March 2016 during the Royal Economic Society’s Annual Conference held at the University of Sussex.

Rudiger Ahrend, Alexander 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.

Dino Pinelli, István Székely, Janos Varga, 22 December 2015

Italy’s economic performance is lagging behind other Eurozone and OECD countries. This column argues that radical changes in human capital, financial, innovation and product markets, and taxation would restore growth, but will take time to bear fruits. This leaves no room for complacency in the ongoing reform efforts. 

Adriana Kugler, Maurice Kugler, Juan Saavedra, Luis Herrera, 28 January 2016

Vocational training programmes offer a second chance to those who drop out of the formal education system. Most studies of the success of such programmes, however, typically only analyse outcomes directly after participation. This column examines the medium- and long-term outcomes of a vocational training programme in Colombia. Results suggest that vocational training and formal education are complementary investments and that there are educational spillover effects for family members, in particular among applicants with high baseline educational attainment.

Elisabeth Bublitz, 22 July 2015

Workers who switch firms can lose firm-specific human capital. This column presents evidence of how moving to occupationally specialised firms can compensate workers for wage losses that are caused by ‘specific human capital’. When switches occur between firms that are very distant from each other in terms of their knowledge structure, occupationally specialised firms are prepared to pay a wage premium that can outweigh the costs of such long-distance switches.

Markus Brückner, Daniel Lederman, 07 July 2015

The relationship between aggregate output and income inequality is central in macroeconomics. This column argues that greater income inequality raises the economic growth of poor countries and decreases the growth of high- and middle-income countries. Human capital accumulation is an important channel through which income inequality affects growth. 

Rune Fitjar, Andrés Rodríguez-Pose, 24 June 2015

Policymakers have used a variety of measures to promote firm innovation but their exact impact remains unclear. This column argues that regional context, proxied by investment in R&D and education levels, is fundamental in shaping the innovative performance of firms. The local socioeconomic environment either favours or limits the innovative capacity of firms, depending on their level of interaction both with neighbouring and distant economic actors.

Kirill Shakhnov, 17 January 2015

The rapid growth of the US financial sector has driven policy debate on whether it is socially desirable. This column examines the trade-off between finance and entrepreneurship, and links the growth of finance to rising wealth inequality. Although financial intermediation helps allocate capital efficiently, people choosing a career in finance do not internalise the negative effect on the pool of talented entrepreneurs. This mechanism can explain the simultaneous growth of wealth inequality and finance in the US, and why more unequal countries have larger financial sectors.

Antonio Cabrales, Juan Dolado, Ricardo Mora, 05 December 2014

The negative consequences of dual labour markets have been extensively documented, but so far little attention has been paid to their effects on workers’ on-the-job training and cognitive skills. This column discusses evidence from PIAAC – an exam for adults designed by the OECD in 2013. Temporary contracts are associated with a reduction of 8–16 percentage points in the probability of receiving on-the-job training, and this training gap can explain up to half of the gap in numeracy scores between permanent and temporary workers.

Victor Lavy, Avraham Ebenstein, Sefi Roth, 20 November 2014

Admission to higher education often depends on the results of high-stakes tests, but assessing the consequences of having a ‘bad day’ on such tests is challenging. This column provides evidence from a dataset on Israeli high-school students. Random variations in pollution have measurable effects on exam performance, and these in turn have significant effects on students’ future educational and labour-market outcomes. The authors argue that placing too much weight on high-stakes exams may not be consistent with meritocratic principles.

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