Dan Andrews, Nathan Deutscher, Jonathan Hambur, David Hansell, 01 October 2020

Young people bore the brunt of the labour adjustment to the Great Recession and the COVID-19 shock appears to be having similar effects. Using Australian data over 1991-2017, this column shows that graduating in a recession imparts scarring effects on earnings for up to ten years. Recessions disrupt worker-firm match quality, but the resulting scarring effects fade over time as workers switch to more productive firms. Timely macroeconomic stimulus and labour mobility-enhancing structural reforms can ameliorate the scarring effects of recessions.

Gregory Clark, Neil Cummins, 30 July 2018

Northern England is now less educated and less productive than the south. This north-south divide is often characterised by policymakers as evidence of market failure. This column uses surname distributions to show that the northern decline can instead be explained by persistent outmigration of talent from the north. People of northern origin perform as well on average as those of southern origin. Talented northerners, however, are now mainly located in the south, where they are an economic elite.

Wolfgang Dauth, Sebastian Findeisen, Jens Südekum, 21 February 2016

A common theme of recent trade theory models is that globalisation-related shocks induce worker sorting across industries, labour markets, and plants. However, there is little empirical evidence of shocks causing such endogenous mobility responses. This column explores how rising international trade exposure affected the job biographies and earnings profiles of German manufacturing workers since the fall of the Berlin Wall. Individuals are found to systematically adjust to globalisation, with a notable asymmetry in the individual labour market responses to positive and negative shocks. Critically, the push effects out of import-competing manufacturing industries are not mirrored by comparable pull effects into export-oriented branches.

Ian Fillmore, 04 March 2015

Colleges in the US charge high sticker prices but routinely offer discounts to individual students. This column presents research showing that colleges use a student’s federal aid form to learn about willingness-to-pay and to engage in substantial price discrimination in a way that amounts to a tax on income, with the primary effect of increasing tuition revenues. Nevertheless, the price discrimination also results in some redistribution to low-income students as well as a modest increase in student–college match quality.

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