A sizeable middle class is essential to protect societies against socioeconomic and political instability. This column examines the effect of economic recessions on the size of the middle class using different income-based and self-perception definitions. It finds that anticipated recessions do not produce an overall middle-class squeeze, but unanticipated shocks such as the Great Recession do. It also finds that recessions increase the share of the population that regards itself as middle class.
Enforcing collective action through social norms and social sanctions can be particularly relevant in poor countries, where local social networks are often key in risk sharing and information diffusion. This column uses two experimental exercises to test whether social norms shape aggregate labour supply in informal markets for casual daily agricultural labour in India. It finds that social norms help sustain wage floors, with workers taking jobs at wage cuts in private but rejecting them in public due to fear of sanctions.
Since 2006, e-cigarettes have become increasingly popular among young people in the US. But a series of recent vaping-related illnesses have heightened concerns among critics, who do not see them as a healthier alternative to traditional cigarettes. Against this backdrop of uncertainty, this column examines the effects of e-cigarette taxes on smoking outcomes in a particularly important group: pregnant women. Its primary findings are twofold: e-cigarette taxes increase traditional cigarette smoking among pregnant women, and do not appear to influence birth outcomes.
While it is common to read in the press about linkages between the economic performance of a country and the evolution of its currency, the scientific literature suggests that exchange rates are disconnected from the state of the economy, and that macro variables that characterise the business cycle cannot explain asset prices. This column shares evidence of a robust link between currency returns and the relative strength of the business cycle in the cross-section of countries. A strategy that buys currencies of strong economies and sells currencies of weak economies generates high returns both in the cross section and over time.
Since the early 1980s, technology has reduced the demand for low and medium-skill workers, the young, and women, especially in manufacturing industries. The column investigates which technologies have had the largest effect, and on which types of worker. It finds that robots and software raised the demand for high-skill workers, older workers, and men, especially in service industries.
Other Recent Columns:
- Strong economy, strong currency
- How different technologies affect different workers
- Chinese urban elite transformation between 1988 and 2013
- The effectiveness of export promotion measures
- Herd behaviour in asset markets: The role of monetary policy
- The effect of trade policy shocks on multinational enterprise activities
- Global banks and synthetic funding
- Changing business cycles: The role of women’s employment
- Political bias and the economic impact of Chinese aid
- Gender discrimination in small business lending
- Converging military spending and its fiscal consequences
- The Clean Water Rule and economic research on US water pollution regulation
- The emergence of Big Tech in financial intermediation
- Dimensions of ECB policy communication and their financial market effects
- The efficiency of job separations
- Deep recessions, large immigration waves, and the rise of populism
- Regulating the doom loop
- The Euro Area Monetary Policy Event-Study Database
- World wide currency
- Political and economic drivers of pogroms
Most Read
Vox eBooks
Petralia, Philippon, Rice, Véron, 24 September 2019
Vox Talks
Events
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17 - 18 October 2019 / Florence, Italy / Florence School of Banking and Finance, European University Institute
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21 - 21 October 2019 / Frankfurt am Main / The Bank of England, the Board of Governors of the Federal Reserve System and the European Central Bank
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28 - 30 October 2019 / Florence, Italy / Florence School of Banking and Finance, European University Institute
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4 - 6 November 2019 / Florence, Italy / Florence School of Banking and Finance, European University Institute
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6 - 6 November 2019 / Brussels, Belgium / European Capital Markets Institute
