VoxEU & CEPR Coverage of the Covid-19 Global Pandemic

Reflections on the EU’s Carbon Border Adjustment Mechanism

Yasuo Tanabe, 23 January 2022

In July 2021, the EU announced a Carbon Border Adjustment Mechanism aimed at avoiding carbon leakage from the EU and promoting emissions reductions worldwide. This column summarises and reflects on a recent conference on the topic held by the EU-Japan Centre for Industrial Cooperation. It discusses the mechanism’s proposed implementation schedule, consistency with WTO rules, and implications for EU–Japan trade relations. It highlights the important role Japan should play in the decarbonisation effort, especially by harnessing its strengths in technology and innovation.

Identifying state dependence in brand choice

Julia Levine, Stephan Seiler, 23 January 2022

Consumers tend to be loyal to products they have purchased in the past, which companies may exploit to raise prices. To better understand whether this brand loyalty is driven by preferences or state dependence, this column looks at how households react when stockouts due to hurricanes force them to purchase different brands of bottled water. The authors do not find evidence of state dependence in bottled water brand. Although there is a large and significant decrease in loyalty during the stockout weeks, there is no effect in the post-hurricane period.

Ramadan intensity and subsequent student achievement

Erik Hornung, Guido Schwerdt, Maurizio Strazzeri, 22 January 2022

The observance of fasting during Ramadan has been widely associated with detrimental health effects as well as poor economic performance. Less attention has been given to the potential benefits generated by the social aspects of this religious practice. This column argues that Muslim students achieve higher scores in educational performance tests following a more intensivee Ramadan. By sharing the religious experience, students can build their social capital and social identities, which in turn boosts educational performance.

Consumption inequality in the digital age

Kai Arvai, Katja Mann, 21 January 2022

When considering the effect of digitalisation on inequality, researchers usually focus on income inequality. This column compares the consumption baskets of US households to study the effect of digitalisation on consumption inequality. High-income households have a higher share of ICT-intensive products in their consumption, and thus benefit more from price declines in these goods due to digitalisation. The price channel accounts for 22.5% of the increase in consumption inequality between 1960 and 2017.

Gender differences in the labour market returns to child behaviour

Robert Kaestner, Ofer Malamud, 21 January 2022

The persistence of the gender wage gap suggests it may have roots extending back into childhood. Using data from a US longitudinal survey, this column examines how gender differences in adult earnings correspond to various childhood behaviours. Results indicate that women (but not men) who exhibited headstrong behaviour as children incurred significant earnings penalties as adults, while men (but not women) who exhibited more dependent behaviour as children were penalised. Whether these patterns are the result of nonconformity to gender norms and stereotypes warrants further attention and study. 

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