Branko Milanovic, 29 January 2021

In classical capitalism, the rich earn their money from capital while the poor sell the value of their labour. In which countries is that still true, and how does it affect the gap between rich and poor? Branko Milanovic tells Tim Phillips about a new way in which we can think about inequality.

Casey Mulligan, 28 January 2021

The spread of COVID-19 in the US has prompted extraordinary steps by individuals and institutions to limit infections. Some worry that ‘the cure is worse than the disease’ and these measures may lead to an increase in deaths of despair. Using data from the US, this column estimates how many non-COVID-19 excess deaths have occurred during the pandemic. Mortality in 2020 significantly exceeds the total of official COVID-19 deaths and a normal number of deaths from other causes. Certain characteristics suggest the excess are deaths of despair. Social isolation may be part of the mechanism that turns a pandemic into a wave of deaths of despair; further studies are needed to show if that is the case and how. 

Chiara Farronato, Jessica Fong, Andrey Fradkin, 24 January 2021

Mergers between digital platforms frequently attract widespread attention, not just from the media but from researchers in economics and law as well. This column explores the effects of a merger between two rival platforms, using the case of the two largest US two-sided markets for dog sitting. The results of the study suggest that online users are, on average, no better off with a single dominant platform compared to two competitors. The authors argue that this net effect is the result of two counterbalancing forces: network effects and platform differentiation.

Nikhil Agarwal, Charles Hodgson, Paulo Somaini, 17 January 2021

In the US, most patients who need a kidney transplant must participate in a centralised deceased-donor kidney allocation mechanism. The allocation system seeks to make the best use of available organs and maximise ‘life years from transplant’. This column estimates the life years from transplant generated by the US kidney assignment system, using data on transplants and outcomes for patients on the waiting list between 2000 and 2010. Patient choice to reject or accept the transplant increases life years from transplant. The policy goal to maximise life years from transplant would result in younger, healthier patients receiving transplants at the expense of older, more urgently sick patients.

Adnan Seric, Holger Görg, Wan-Hsin Liu, Michael Windisch, 07 January 2021

The Covid-19 pandemic has exposed the fragility of the global trade network underpinning global value chains. Initial disruptions in the supply chains for key medical goods due to surges in demand and newly erected trade barriers have prompted policymakers around the world to question their country’s reliance on foreign suppliers and international production networks. This column takes a closer look at China’s post-pandemic recovery and argues that its response may hold clues to the future of global value chains.

Scott Baker, Aniket Baksy, Nicholas Bloom, Steven Davis, Jonathan Rodden, 22 December 2020

Elections can cause economic uncertainty, especially when elections take place in a politically polarised context. This column studies how national election cycles in 23 countries influence economic policy uncertainty, as measured by the share of newspaper articles that discusses uncertainty and economic policy. Economic policy uncertainty clearly rises in the months leading up to national elections. Average economic policy uncertainty values are 13% higher in the month before and the month of national elections than in other months during the same election cycle. In the US, economic policy uncertainty increases are especially pronounced around close and highly polarised presidential elections. 

Catherine Maclean, Justine Mallatt, Christopher J. Ruhm, Kosali Simon, 20 December 2020

Opioid misuse in the US is estimated to cost over $500 billion annually, with fatalities from opioid overdoses exceeding the American death count from the Vietnam War. This column examines the causes and consequences of the opioid crisis, based on a review of more than 100 economic studies. Policies such as prescription drug monitoring programmes, pill mill laws, prescribing limits, and doctor-shopping laws reduce opioid prescribing. However, their effects may be more limited in environments where many have already become addicted to opioids. 

Simeon Djankov, Tea Trumbic, Eva (Yiwen) Zhang, 14 December 2020

The global pandemic has exacerbated the gender pay gap for many, but not all, advanced economies. This column examines evidence from eight countries to show that certain policy responses to the pandemic have better served women’s participation in the labour force than others – notably those tailored to flexible working to accommodate home and childcare responsibilities, as well as those serving industries with greater participation by women. Such policies should be taken into account, especially as historically the reintegration of women into the labour force can take time after a crisis.

Anna McDougall, George Orlov, Douglas McKee, 10 December 2020

Many higher learning institutions have shifted to remote learning in response to the COVID-19 pandemic. Although research has found that online classes can be just as effective as in-person classes, there is evidence that suggests disadvantaged students may perform relatively worse. This column compares student performance on a set of standard assessments at four PhD-granting institutions in the US before and after the switch to online classes. It finds little evidence that disadvantaged groups were further disadvantaged by the pandemic in their college learning. Instructor experience with online teaching and the use of active-learning techniques have a positive effect on student outcomes.

Umut Akovali, Kamil Yilmaz, 10 December 2020

Balancing the trade-off between strict public health measures and economic activity has been the key concern for governments since the Covid-19 outbreak. This column studies Covid-19 infections and their connectedness across US states.  It finds that states with lax government policy and community mobility response had higher case growth trajectories and generated connectedness of Covid-19 cases to other states.  Further, states with Republican governors tend to have higher connectedness of Covid-19 cases among themselves and generate net connectedness to states with Democratic governors.

Matthew Spiegel, Heather E. Tookes, 07 December 2020

As the COVID-19 pandemic continues worldwide, policymakers are still grappling with the question of which non-pharmaceutical policy interventions are effective. In the US, state and county policies varied widely, as did the growth in fatalities due to COVID-19. This column examines US business policies to help shed light on which policies save more lives. Stay-at-home orders, mandatory mask requirements, beach and park closures, restaurant closures, and high-risk (Level 2) business closures most consistently predict lower fatality growth four to six weeks ahead. Closures of low- and medium-risk businesses do not appear effective and, despite their costs, may even be counterproductive.

Kristina Bluwstein, Michał Brzoza-Brzezina, Paolo Gelain, Marcin Kolasa, 07 December 2020

Transmission of monetary policy depends to a large extent on the phase of the housing cycle. This is because residential property prices are important determinants of banks’ willingness to lend. This column presents analysis for the US which shows that in the mature phase of the housing market boom, or immediately after a bust began, the effects of a monetary expansion were smaller than they were earlier in the housing cycle. This is relevant for central banks which are considering responding to the Covid-19 pandemic by easing monetary policy during a period of relatively high house prices.

Simeon Djankov, Eva (Yiwen) Zhang, 04 December 2020

Foreign direct investment flows to the US have seen a sharp decline in the past two years, despite a cut in the corporate tax rate from 35% to 21% in 2017. Previous research suggests that such a tax cut should have resulted in increased investor appetite. This column argues that countervailing forces, in particular the shift in investment sentiment driven by the corrosion of US openness to trade and global cooperation, have played the dominant role in reducing flows.  

Marco Ranaldi, Branko Milanovic, 03 December 2020

Similar levels of income inequality may coexist with completely different distributions of capital and labor incomes. This column introduces a new measure of compositional inequality, allowing the authors to distinguish between different capitalist societies. The analysis suggests that Latin America and India are rigid ‘class-based’ societies, whereas in most of Western European and North American economies (as well as in Japan and China), the split between capitalists and workers is less sharp and inequality is moderate or low. Nordic countries are ‘class-based’ yet fairly equal. Taiwan and Slovakia are closest to classless and low inequality societies. 

James Snyder, Hasin Yousaf, 28 November 2020

Holding large rallies is an especially important campaign activity for many populist leaders, including for Donald Trump during the 2016 US presidential race. This column studies the effect of campaign rallies held by Democratic and Republican US presidential candidates since 2008, including Donald Trump. It explores the effect of rallies on citizens’ preferences over candidates, policy issues, and their intention to vote. Populist leaders may be particularly effective in gaining support via their campaign rallies, at least temporarily. Populist leaders’ success may depend on connecting with voters via rallies.

Jean-Paul Renne, Guillaume Roussellet, Gustavo Schwenkler, 26 November 2020

Could restrictions at the federal level have slowed the spread of COVID-19 in the US? This column addresses this question using a novel, multi-region epidemiological model that calculates the number of deaths that would have resulted from the federal government mirroring the policies of those states with the earliest and most rigorous restrictions. It finds that by late September 2020, more than two-thirds of the country’s COVID-19 deaths could have been prevented,highlighting the need for unified action from state and federal regulators.

Maja Adena, Ruben Enikolopov, Maria Petrova, Hans-Joachim Voth, 19 November 2020

In conflicts, adversaries aim for victory by using both direct and indirect forces to break the enemy’s will to resist. During WWII, Allied forces used strategic bombing and radio propaganda to undermine German morale. This column compares German domestic resistance to the Nazi regime, based on treason trial records, with the monthly volume of bombing and the locations of BBC radio transmitters. Where radio reception was better and Allied air forces bombed more heavily, German domestic resistance was markedly more likely, despite the draconian punishments for even the mildest transgressions.

Gordon Betcherman, Mauro Testaverde, 18 November 2020

The Covid-19 crisis has profoundly affected employment everywhere, but countries have adopted different strategies to try to mitigate the worst of the effects. This column compares the Greek experience to the rest of Europe, as well as to North America. The authors conclude that given the nature of the pandemic, models for managing labour market shocks will need to offer extended support where the shock persists or reoccurs. Crucially, successful policy approaches will need to be well suited for enabling job creation once conditions are in place for a restart.

Antoine Bozio, Bertrand Garbinti, Jonathan Goupille-Lebret, Malka Guillot, Thomas Piketty, 18 November 2020

How much can redistribution policies account for long-run changes in inequality? This column reveals that the reduction of inequality implied by redistribution is significant in France and the US and increased throughout the entire 20th century, but pre-tax income inequality appears to be the main factor accounting for the differential levels and trends in the two countries. These findings suggest that policy discussions on inequality should pay more attention to policies affecting pre-tax inequality and should not focus exclusively on redistribution.

Monica Deza, Catherine Maclean, Keisha Solomon, 14 November 2020

The correlation between mental illness and crime has been widely documented. In general, individuals with poor mental health are more likely to be involved with crime, either as an offender or as a victim, compared to other individuals. This column presents evidence from the US, arguing that policies that grant support to mental healthcare may have long-term positive effects on crime rates. Since crime is a complex outcome, a flexible and varied policy response is essential to tackling the issue.

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