School of Economics

Focus papers

Research briefings for the general public. Contribitions are from academic staff and PhD students. Some of the briefings also reflect the research done on the ESRC- funded project entitled 'Credit and Labour Foundations of the Macroeconomy ' (MacCaLM)

Back to the future: The gig economy and underemployment

These ought to be happy times for workers: unemployment rates in the UK, US and parts of the EU are at historically low levels (BBC 2018). However, underemployment - people working fewer hours than they would like - is increasing (Bershidsky 2018), and wages have not been keeping up with rising prices (Strauss 2018). How did this happen, and what role is technology playing?

by Postgraduate students Cristina Lafuente (University of Edinburgh), Rachel Scarfe (University of Edinburgh) & Carl Singleton (University of Reading)

Postgraduate Research Focus Paper

The extent and cyclicality of career changes: Evidence for the UK

One of the most important functions of the labour market is to pair the right set of workers with the right set of jobs. This assignment process, however, is slowed down by frictions that impede the reallocation of labour resources. For example, moving costs, re-training, learning about one’s ability, information frictions about the location of workers or jobs, among others, can be important barriers for efficient resource reallocation. This paper studies two specific dimensions of reallocation: occupational and sectoral mobility of workers.

Ludo Visschers

MacCaLM Focus Paper


Wage adjustments in the Great Recession and other downturns: Evidence from the United States and Great Britain

As of a quarter century ago, the conventional wisdom among macroeconomists was that real wage rates are more or less noncyclical, and many macroeconomic models described wage inflexibility as a key contributor to cyclical unemployment. Since then, however, numerous empirical studies based on microdata for workers have found that real wages are substantially procyclical. This was obscured in aggregate wage statistics, which tend to give more weight to low-skill workers during expansions than recessions. Most of the US microdata-based literature does not extend beyond the early 1990s. The question this paper addresses for the United State and Great Britain is what the cyclical wage patterns have been more recently, especially during the Great Recession.

Mike Elsby

MacCaLM Focus Paper


Providing Advice to Jobseekers at Low Cost: An Experimental Study on Online Advice

The most common method of assisting job seekers is to provide them with tailored advice, most commonly through an advisor, which is often costly and the advice provided is limited in scope given the financial and time constraints on advisors. Evidence from both the US and the UK shows that there is often a ‘mismatch’ where job seekers search in occupations with relatively few jobs available, while occupations with relatively more jobs available seem to attract less interest. Belot, Kircher and Muller have developed a new tool to tackle this ‘mismatch’. Their tool uses an algorithm based on representative labour success, the team put their algorithm to the test.

Michele Belot and Philipp Kircher

MacCaLM Focus Paper


Is a policy of free movement of workers sustainable?

Since its inception, the European Union (EU) has aimed at implementing a policy of free movement of workers between member states (Article 45, EU Lisbon Treaty). However, some EU member states have been reluctant to implement this policy. Similar difficulties have emerged in other country associations such as the North American Free Trade Area, in which the free movement of workers is only allowed between the US and Canada. The main reason for this reluctance lies in the fear that inflows of migrant workers might depress local labour market conditions and lower the welfare of the host country’s workers..

Tim Worrall

MacCaLM Focus Paper

Directed search over  the lifecycle

The US economy displays a great deal of labour reallocation, in the sense that workers move frequently between employment, unemployment and across different employers. However, these aggregate transition rates hide dramatic differences in the extent of labour reallocation for workers of different ages. The purpose of this paper is to explain these differences, specifically for young, middle-aged and old workers. To this end, a life-cycle model of the labour market is introduced, in which different worker–firm matches have different productivity and the allocation of the right workers to the right firms is a timeconsuming process because of search and learning frictions. On one side of the labour market, firms choose how many and what type of vacancies to open. On the other side, both employed and unemployed workers choose which type of vacancy to seek. In this sense, the search process is directed. When workers and firms match, they begin production and eventually learn the quality of their union.

Ludo Visschers

MacCaLM Focus Paper


How long has this been going on? Long-term unemployment in the UK

It is more than thirty years since the UK was shaken by the emergence of widespread longterm unemployment (LTU). A raft of economic modelling and policy responses was directed at the problem. But since the mid-1990s, LTU has been on a downward trend, and its response to the Great Recession of the late-2000s was conspicuously modest, especially compared with elsewhere in Europe. So why has the LTU problem subsided in the UK? And has the UK managed to alleviate longterm joblessness in general? If so, how? This paper briefly summarises the most plausible answers to these questions.

Mike Elsby

MacCaLM Focus Paper

Communal Land and Agricultural Productivity

Jan Grobovsek evaluates the effects of the 'communal agricultural land tenure' policy institution that is widespread around the developing world. The policy's defining characteristic being that individual land property rights are not complete as allocative control over land is vested in either the community or the state. The focus of the research is based in Ethiopia with models used to measure the impact of several policy reforms.

Jan Grobovšek

Focus Paper 22

The early origins of birth order differences in children's outcomes and parental behaviour

Many studies show that children born earlier in the family enjoy better wages andmore education. Our findings are the first to suggest that advantages of earlier-bornsiblings start very early in life. We observe parents changing their behaviour as newchildren are born, and offering less cognitive stimulation to children of higher birth order.

Ana Nuevo-Chiquero

Focus Paper 21

Transparency in Procurement: The design and use of information in trading mechanisms

The research is motivated by the need to reduce the public deficit through efficiency savings in procurement for large public institutions such as the NHS. The project's immediate objective is to increase the stock of theoretical knowledge about procurement mechanisms with the aim of producing insights that would be directly applicable in real procurement processes.

József Sákovics

Focus Paper 20

Higher income volatility hits American families’ wellbeing: Evidence from three decades to 2008

This study shows how higher income instability for many families, combined within adequate access to credit, led to larger unplanned changes in family consumption. Increasingly large fluctuations in many American households’ incomes over the 30-year period up to the Great Recession led to a fall in overall family wellbeing.

Olga Gorbachev

Focus Paper 19

Friends Without Benefits? New EMU Members and the “Euro Effect” on Trade

Increased trade integration is considered one of the economic benefits of joining European Monetary Union (EMU). The analysis of trade effects of currency unions peaked around the time of the introduction of the euro in the early 2000s. For this reason, we re-visited the evidence on the effect of the euro on trade, focusing on countries which joined the currency area in recent years. While there may an array of benefits stemming from Eurozone membership, our findings suggest that Eurozone accession is not likely to bring about a significant trade boost.

Focus Paper 18

Economic Democracy

‘Workers’ cooperatives are at least as productive as their capitalist counterparts, and yet they account for a relatively small proportion of GDP in most countries. Donald A R George describes research which aims to explain this paucity of workers’ cooperatives by reference to their financing and property rights structures.

Donald A R George

Focus Paper 17

Information Design

In many economic and social settings one person or institution is in charge of communicating with and disclosing information to multiple agents who are engaged in a strategic interaction. This communication takes the form of information provision about an issue or an object of common interest - the fundamental - which impacts the payoffs of the interaction.

Ina Taneva

Focus Paper 16

The Illusion of Choice: Evidence from Barcelona

In the last two decades, over two-thirds of OECD countries have augmented families’ capacity to choose schools for their children beyond those closest to their homes (Musset, 2012). The aims of school choice are to improve (1) the matching between children and schools and (2) students’ educational outcomes. At the same time, (3) there are equity concerns around school choice as maybe disadvantaged families are less able to exercise choice. Calsamiglia and Güell exploit a very rich administrative data set that contains all primary school applications in the city of Barcelona.

Maia Güell

Focus Paper 15

Economic Consequences of the Cultural Revolution

The Cultural Revolution is a watershed moment in 20th-century Chinese history. Spanning a decade from 1966 to 1976, it constitutes the final years of Mao Zedong’s chairmanship, and shortly precedes the country’s economic liberalization. Intended as a campaign to consolidate the communist revolution of 1949 by “cleansing the class ranks” of “bourgeois elements,” its accompanying violence and chaos is widely believed to have had a major impact on Chinese society. Dr Bai's research project explores the economic consequences of this period, focusing on the rural experience.

Liang Bai

Focus Paper 14

An Equilibrium Model of the African HIV-AIDS Epidemic

How can we accurately model the African HIV/AIDS epidemic? This paper presents new research that uses computational general equilibrium models to map the spread of HIV/AIDS. Emphasising the importance of understanding behavioural adjustments and equilibrium effects, this new way of modelling the epidemic may well prove a useful tool for further research.

Philipp Kircher

Focus Paper 13

Understanding Cyclical Behaviour in Strategic Situations

Results in learning theory show that in many games adaptive learning converges to Nash equilibrium, the type of equilibrium most commonly used in studying strategic situations. However, there is a dark side, rarely acknowledged, to the theory. In some other games learning never converges but rather continues to cycle.

Focus Paper 12

Designing and interpreting customer reviews

This papers considers if we can take online customer reviews or responses in social surveys at face value? If not, how should we “decode” them? How can questionnaires be designed to encourage effective communication when many people send information at the same time?

Kohei Kawamura

Focus Paper 11

Development Accounting with Intermediate Goods

In this Focus Paper a diagnostic tool called 'development accounting' is described which is useful, for example, when considering barriers to international trade in intermediate inputs; poor contract enforcement between buyers and suppliers of intermediates; inefficiencies in publicly provided intermediates such as energy or transportation.

Jan Grobovšek

Focus Paper 10

'Who is the fairest of them all?'

A paper which explains facial symmetry, body shapes and attractiveness in the context of behaviour and the effects of cooperation.

Santiago Sánchez-Pagés

Focus Paper 9

The importance 'to eat your greens'

Michèle Belot (University of Edinburgh), Jonathan James (University of Bath) and Patrick Nolen (University of Essex) carried out a randomised controlled field experiment to test whether providing short term incentives for eating fruit and vegetables increases consumption and helps develop healthier habits.

Michèle Belot

Focus Paper 8

Sovereign Default and International Trade

Robert Zymek provides an explanation for an empirical finding of why countries which default on their foreign debt tend to experience a decline in their trade with the rest of the world.

Robert Zymek

Focus Paper 7

The Theory of Planning a Successful Economic Recovery

A model based on two key concepts: the risk dominance criterion and the belief constraint.

József Sákovics

Jakub Steiner

Focus Paper 6

Intergenerational mobility and the informational content of surnames

Research that presents a novel and workable method of measuring intergenerational mobility which escapes from the slavery of panel data.

Maia Güell

José V. Rodríguez Mora

Focus Paper 5

Volatility of Housing

A project which considers the development of a theoretical framework where homelessness arises due to various economic and social factors that vary over time.

Olga Gorbachev

Focus Paper 4

Cohort Effects

An overview of the 2008-2011 ESRC funded project “Cohort effects within firms, and their implications for labour market outcomes and the business cycle”.

Jonathan Thomas

Focus Paper 3

Contractual Incompleteness

John Hardman Moore outlines his joint research with Oliver Hart, looking at the economics of power and control and the foundations of contractual incompleteness.

John Moore

Focus Paper 2

Money and Liquidity

John Hardman Moore outlines his joint research with Nobu Kiyotaki on the macroeconomic questions to do with the nature of money and liquidity, and the interplay between the financial system and the aggregate economy.

John Moore

Focus Paper 1