Professor Tim Worrall

Professor of Economics


Educated at Liverpool and Essex Universities and graduated with a PhD in Economics from Liverpool University in 1983. Previously a member of Professor Frank Hahn's ESRC project on Risk, Information and Quantity Signals in Economics at Cambridge University 1983-85 and part of the DFG Sonderforschungsbereich 178 on the Internationalization of the World Economy at Konstanz and Kiel Universities, 1987-1990. Also Assistant Professor at the University of Western Ontario, Reading University and Liverpool University, Professor of Economics at Keele University 1996-2008 and Hallsworth Research Fellow in Political Economy at the University of Manchester, 2008-2011.


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Responsibilities & affiliations

Senior Fellow, The Rimini Centre for Economic Analysis.

Open to PhD supervision enquiries?


Areas of interest for supervision

I am available to spervise in the areas of dynamic contract theory, credit and labour markets.

Past PhD students supervised

  • Sikandar Soin (Data Analyst, Ministry of Justice, UK), graduated, Edinburgh University 2022.
  • Aodi Tang (Economist - Scenario Analysis, UBS, London), graduated Edinburgh University 2018.
  • Pongpalin Yingchoncharoen (Thammast University, Thailand), graduated with MRes in Economics, Edinburgh University 2018.
  • Rongyu Wang (Information Research Institute, Shandong Academy of Sciences, China), graduated Edinburgh University, 2016.
  • Sareh Vosooghi (Assistant Professor, University of Leuven, Belgium), graduated Edinburgh University, 2016
  • Vasco Filipe de Figueiredo Alves (Assistant Professor, University of Birmingham), graduated Edinburgh University, 2016.
  • Michael King (Lead, Analysis and Evaluation Team, National Physical Laboratory, London), graduated University of Manchester, 2011.
  • Ioannis Lazopoulos (Senior Lecturer in Economics, University of Surrey), graduated Keele University, 2006.
  • Alex Dickson (Reader in Economics, University of Strathclyde), graduated Keele University, 2005.
  • Svetlana Andrianova (Reader (Associate Professor) in Economics, University of Leicester), graduated London South Bank University, 2001.

Research summary

My principal research interests (with corresponding JEL classification) are: Game Theory and Bargaining Theory (C7) • Market Structure and Pricing (D4) • Information and Uncertainty (D8) • Intertemporal Choice and Growth (D9) • Consumption, Saving, Production, Employment and Investment (E2) • Financial Markets (G1) • Corporate Finance and Governance (G3) • Regulation and Industrial Policy (L5). My main areas of current research are in limited commitment, principal-agent problems and contract theory, risk and uncertainty and network design.

Current research interests

Intergenerational Insurance, Contract Theory; Risk and Uncertainty; Network Design.

Project activity

A current project (joint with Francesco Lancia and Alessia Russo) examines intergenerational insurance. The aim of the project is to provide a theoretical study of insurance between generations. Insurance provision is constrained by the need for it to be voluntary or politically sustainable: no young generation will provide insurance unless the expected future benefits at least compensate the current cost. To put in a contemporary UK context, can the triple lock on pensions be sustained if an increasing share of resources go to the old. More generally, the project studies how shocks to one generation are shared with future generations and how transfers between generations depend on the history of past shocks.

The work considers a standard two-period, overlapping generations, one-good, endowment economy with uncertainty and limited commitment. It considers a benevolent planner that chooses history-contingent transfer from the young to the old subject to the voluntary participation constraint. The existence of a set of transfers that improves on autarky is well-known and depends on an eigenvalue property of the relevant state-price matrix. Absent either risk or limited commitment, the long run distribution of consumption is degenerate even when the existence condition is satisfied. However, with risk and binding limited commitment constraints, there is convergence of the efficient transfers to a unique non-degenerate distribution on a endogenous but countable state space. This property is derived from the stochastic stability results for regenerative processes. In a simple case, we can derive the distribution and its properties via a shooting algorithm.

It is possible to interpret the transfer to the old as either a pension in a state pay-as-you-go social security system or as a debt that is repaid to the old. The proposed research will consider both applications. With the first interpretation, the model implies that the pension received in old age depends on a measure of the contribution made when young. In the case of logarithmic preferences, this measure is the contribution rate, the contribution to the pension as a proportion of income. In this case, the pension is an increasing function of the past contribution rate above a certain threshold and independent of the past contribution rate below this threshold. Additionally, for each given contribution rate paid when young, the pension the old receive is inversely related to their own endowment. That is, the optimal pension scheme will have both means testing and a mixture of flat-rate and contributory-related elements. All three of these features are commonly found in national pension schemes. Absent enforcement issues, the optimal pension scheme has only flat-rate and means-testing elements and therefore, a key prediction is that the optimal pension scheme has a contributory-related element whenever payments into the pension are constrained to be voluntary. Alternatively, the transfer to the old can be interpreted as debt. If preferences are logarithmic, there is a simplification in interpreting debt as the share of transfer relative to the endowment of the young. In this case, state-contingent bonds sell at the appropriate state prices. This generates a bond revenue for the planner and the planner taxes or subsidises the young to fund the inherited debt. This generates a fiscal reaction function that specifies the tax as a function of the inherited debt. The fiscal reaction function is non-linear and may exhibit fiscal fatigue at high levels of debt. The risk premium on debt is below the aggregate risk premium because debt acts as a hedge against risk, providing a potential explanation for the debt valuation puzzle. Moreover, the risk premium on debt varies with debt and evolves with the evolution of debt. In a two-state example, the gap between the aggregate risk premium and the risk premium on debt declines with debt.

Current project grants

Leverhulme Trust Research Fellowship on Intergenerational Insurance, January - December, 2024.

Past project grants

Co-Investigator, "Credit and Labour Market Foundations of the Macroeconomy" (John Hardman-Moore, Principal Investigator), Economic and Social Research Council Large Grant, June 2015 - June 2020.

Principal Investigator, Royal Economic Society award on "Evaluating the Research Performance of UK Economics" (with Gauthier Lanot), September 2006 - December 2006.

Co-Investigator on "Dynamic Relational and Self-Enforcing Contracts" (Jonathan Thomas, Principal Investigator), Economic and Social Research Council Research Grant, January 2005 - December 2006

Co-Investigator, "The effects of macro-financial liberalisation policies on micro-household savings and credit behaviour in developing countries" (Peter Lawrence, Principal Investigator), Department for International Development, April 2001 - March 2003.

Leverhulme Trust Fellowship, "Quasi-credit in less developed countries", October 1998 - September 1999.