Ramin Baghai, Rui Silva, Viktor Thell, Vikrant Vig, 18 May 2020

Businesses worldwide are reeling from the fallout caused by the COVID-19 pandemic, and a surge in bankruptcies is expected. Using micro-data and a large sample of Swedish bankruptcies from 2003 to 2011, this column documents how firms lose workers with the highest cognitive and noncognitive skills as they approach bankruptcy. Historical analysis suggests that the current high levels of leverage, combined with the reliance on skilled labour in modern firms, will pose unique challenges to businesses trying to weather the storm ahead.

Yanhui Wu, 03 March 2018

Performance-related pay is commonly linked to the surging incomes of top managers over recent decades. This column presents a theory to assess the role of incentive structures in sorting labour to achieve efficiency on the one hand, and in generating wage inequality on the other. The theory offers a new perspective for studying the effects of technological progress on both the wages and employment of various groups of individuals.

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.


CEPR Policy Research