Template-Type: ReDIF-Paper 1.0 Author-Name: Leonid Borodkin Author-Name: Brigitte Granville Author-Name: Carol Scott Leonard Title: The Rural Urban Wage Gap in the Industrialization of Russia, 1884-1910 Abstract: This paper presents econometric evidence of integration in rural and urban wages in Russia’s Northwest in the late tsarist era. Using the Autoregressive Distributed Lag (ARDL) approach to co-integration and error correction modelling, we show the flexibility of the rural wage in response to the lagged rural/urban wage ratio. Applying the model developed by Boyer and Hatton (1994) and Hatton and Williamson (1991a, 1991b, 1992), we show the similarity of the wage gap in northwest Russia in the late tsarist era to that during industrialization in the US, England and Western Europe. Although our evidence does not necessarily describe country-wide trends, it does support for an industrializing region the more positive view of the degree and nature of late tsarist economic growth. Growth was not slowing down, and there is little evidence of constraints on migration by traditional agrarian institutions. Creation-Date: 2007-09 File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP01.pdf Number: 1 Handle: RePEc:cgs:wpaper:1 Template-Type: ReDIF-Paper 1.0 Author-Name: Teresa da Silva Lopes Author-Name: Mark Casson Title: Entrepreneurship, Brands and the Development of Global Business Abstract: This paper provides an account of how entrepreneurs have contributed to the development of successful global brands in consumer goods industries in the twentieth century and why so few independent brands survived the merger waves of the 1980s. The industries analysed are those where the promotion of the brand relies principally on advertising rather than the technology embodied in the product. Drawing on cross-industry and cross-country comparisons of brands in consumer goods, and using a ‘stretched’ definition of the entrepreneur, the paper highlights the entrepreneurial and innovative strategies pursued by brand managers. It emphasises the role of distinct types of entrepreneurs and marketing knowledge in the creation and development of brands in successful global businesses. Creation-Date: 2007-09 File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP02.pdf Number: 2 Handle: RePEc:cgs:wpaper:2 Template-Type: ReDIF-Paper 1.0 Author-Name: Sushanta Mallick Author-Name: Helena Marques Title: Pass-through of Exchange Rate and Tariffs into Import Prices of India: Currency Depreciation versus Import Liberalisation Abstract: This paper examines the extent of pass-through of exchange rate and tariff changes into import prices using sectoral panel data (at the 2-digit SITC level) for the post-reform period in India (1990-2001). After having controlled for unobserved effects that might have an impact on the import prices by using sector dummies, we find that on average exchange rate pass-through (ERPT) is a dominant effect compared to tariff rate pass-through (TRPT) in explaining changes in India’s import prices. The sectoral panel results suggest that the pass-through of exchange rates and tariff rates varies across products. ERPT into import prices is significant in 12 industries, whereas TRPT is significant only in 6 industries, with full pass-through. However, ERPT is incomplete only in 4 industries, but TRPT is incomplete in 36 industries, which means that firms exporting to India more frequently adopt strategies to maintain their market share against tariffs than against exchange rate changes. The sectoral differences in pass-through seem to be related to the sector’s share in total imports and the sector’s effective protection rate. Hence India’s relatively high levels of protection have an impact on the behaviour of foreign exporters. Creation-Date: 2007-09 File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP03.pdf Number: 3 Handle: RePEc:cgs:wpaper:3 Template-Type: ReDIF-Paper 1.0 Author-Name: Brigitte Granville Author-Name: Carol Scott Leonard Title: Do Institutions Matter for Technological Change in Transition Economies? The Case of the Russia’s 89 regions and republics Abstract: We explore the impact of institutions on technological change in a transition economy. We use regional panel data for Russia’s 89 regions and republics during the period of recovery and growth from 1998 to 2004 to show the impact of institution building in transition. The degree of institutional reform ranged from full enforcement of property rights in the Northwest to red belt Communist regimes in the southeast. We find an unambiguous relationship between strong and sustained institutional development and technological change. We provide a model proxying the quality of institutions by the investment risk rating compiled by the rating agency ExpertRA Regions. Creation-Date: 2007-09 File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP04.pdf Number: 4 Handle: RePEc:cgs:wpaper:4 Template-Type: ReDIF-Paper 1.0 Author-Name: Sushanta Mallick Author-Name: Tomoe Moore Title: Foreign Capital in a Growth Model Abstract: Within the mechanism of endogenous growth, this paper empirically investigates the impact of financial capital on economic growth for a panel of 60 developing countries, through the channel of domestic capital formation. By estimating the model for different income groups, it is found that while private FDI flows exert beneficial complementarity effects on the domestic capital formation across all income-group countries, the official financial flows contribute to increasing investment in the middle income economies, but not in the low income countries. The latter appears to demonstrate that the aid-growth nexus is supported in the middle income countries, whereas the misallocation of official inflows is more likely to exist in the low income countries, suggesting that aid effectiveness remains conditional on the domestic policy environment. Creation-Date: 2007-09 File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP05.pdf Number: 5 Handle: RePEc:cgs:wpaper:5 Template-Type: ReDIF-Paper 1.0 Author-Name: Pedro S. Martins Author-Name: Yong Yang Title: The Impact of Exporting on Firm Productivity: A Meta-Analysis Abstract: We conduct a meta-analysis of more than 30 papers that study the causal relationship between exporting and firm productivity. Our results, robust to different specifications and to different weights for each observation, indicate that the impact of exporting upon productivity is higher 1) at developing economies (when compared to developed economies); 2) in the first year that firms start exporting (compared to later years); 3) with other estimators than OLS; and 4) when the sample used in the paper is not restricted to matched firms. Moreover, we find no evidence of publication bias. Creation-Date: 2007-10 File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP06.pdf Number: 6 Classification-JEL: F15, F20 Keywords: Productivity, Globalisation, Publication Bias Handle: RePEc:cgs:wpaper:6 Template-Type: ReDIF-Paper 1.0 Author-Name: T. Krishna Kumar Author-Name: Sushanta Mallick Author-Name: Jayarama Holla Title: Estimating Consumption Deprivation in India using Survey Data: A State-Level Rural-Urban Analysis before and during Reform Period Abstract: This paper assesses deprivation in India employing a measure proposed by Sitaramam and using consumption data at the household level. As cereals constitute a staple food and form a major portion of expenditure on food, the deprivation measure considered here is deprivation in cereal consumption. The total expenditure at which the Engel curve for cereals turns from concave to convex is taken as the cut-off to determine the deprived households. It is shown that cereal deprivation at the all-India level exhibits a declining trend over the period 1987-88 and 1999-2000, in the rural sector, while there is little change in the urban sector. Further, this decline in cereal deprivation seems to have been slowing down during the reform period. The estimates of deprivation are poorly correlated with the HCI and PGI at state level, both in rural and urban sectors. They, however, have better temporal correlations with those poverty measures. We offer some explanation for these observed differences in alternate deprivation indices. The trends in cereal deprivation are accompanied in some cases by a decline, in real terms, in maximum cereal consumption of each group of consumers. Whether this is an improvement or otherwise of the living standards of the poor, must await further analysis of per capita food consumption in general, with an analysis of prices and quantities of various food items. It is hoped that this kind of study on deprivation of essential commodities may increase our understanding of poverty, and even suggest direct intervention strategies. Creation-Date: 2007-10 File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP07.pdf Number: 7 Handle: RePEc:cgs:wpaper:7 Template-Type: ReDIF-Paper 1.0 Author-Name: Pedro S. Martins Title: Dispersion in Wage Premiums and Firm Performance Abstract: Using matched employer-employee panel data, we estimate measures of pay dispersion per firm-year that take into account both rm and worker unobserved heterogeneity. Unlike research that controls only for differences in observables, we nd that within-firm pay inequality is significantly associated to lower firm performance. Creation-Date: 2008-05 File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP08.pdf Number: 8 Classification-JEL: M52, J31, D24 Keywords: Wage policies, Worker heterogeneity, Fairness Handle: RePEc:cgs:wpaper:8 Template-Type: ReDIF-Paper 1.0 Author-Name: Pedro S. Martins Author-Name: Jim Jin Title: Firm-Level Social Returns to Education Abstract: Do workers benefit from the education of their co-workers? We examine this question first by introducing a model of learning, which argues that educated workers may transfer part of their general skills to uneducated workers, and then by examining detailed matched employer-employee panel data from Portugal. We find evidence of large firm-level social returns (between 14% and 23%), much larger than standard estimates of private returns, and of significant returns accruing to less educated workers but not to their more educated colleagues. Creation-Date: 2008-05 File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP09.pdf Number: 9 Classification-JEL: J24, J31, I20 Keywords: Education Spillovers, Matched Employer-Employee Data, Endogenous Growth Handle: RePEc:cgs:wpaper:9 Template-Type: ReDIF-Paper 1.0 Author-Name: Teresa da Silva Lopes Title: Global Management and the Strategic Role of Brands Abstract: This study analyses the strategic role of brands, in explaining the management of business in the global alcoholic beverages industry and also the techniques used by firms to exploit economies of scale and scope in the international marketplace. It explains the different ways in which brands have been traded, what were the strategies of enterprises behind the creation of global brands, and how their operations have been affected by this increased importance of brands in firms’ everyday lives. It argues that the increase in the trade of brands has been led by the need for brands to be managed by entrepreneurs and firms with different levels and kinds of knowledge, and that this knowledge is greatly determined by the stages in the lives of brands, and the types of markets in which the brand is sold. Creation-Date: 2008-05 File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP10.pdf Number: 10 Classification-JEL: Keywords: Handle: RePEc:cgs:wpaper:10 Template-Type: ReDIF-Paper 1.0 Author-Name: Brigitte Granville Author-Name: Judith Shapiro Title: Scratch a Would-Be Planner: Robbins, Neoclassical Economics and the End of Socialism Abstract: Robbins’s central contribution to the debate on market versus plan links with identification of economics as science of how societies handle scarcity, a central contribution of the Essay. This was not a narrow focus on static efficiency; inflation was a key part of Robbins’s conception of (mis)handling scarcity. The irony that transition to the market led to movement away from the market in economics is analysed, highlighting the obscured role of macroeconomics, and questioning a new conventional wisdom that Russia should have followed the Chinese path of gradual and Pareto-improving institutional development. A conclusion is that the demise of the Washington Consensus should not lead to a new dogma: the neoclassical paradigm is not being replaced but extended. Creation-Date: 2008-05 File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP11.pdf Number: 11 Classification-JEL: P21, B31 Keywords: Transition, Lionel Robbins, socialist calculation debate, Russia, inflation Handle: RePEc:cgs:wpaper:11 Template-Type: ReDIF-Paper 1.0 Author-Name: Pedro S. Martins Title: Rent Sharing Before and After the Wage Bill Abstract: Many biases plague the analysis of whether employers share rents with their employees, unlike what is predicted by the competitive labour market model. Using a Portuguese matched employer-employee panel, these biases are addressed here in three complementary ways: 1) Controlling directly for the fact that firms that share more rents will, ceteris paribus, have lower net-of-wages profits. 2) Instrumenting profits via interactions between the exchange rate and the share of exports in firms’ total sales. 3) Considering firm or firm/worker spell fixed effects and highlighting the role of downward wage rigidity. These approaches clarify conflicting findings in the literature and result, in our preferred specifications, in significant evidence of rent sharing (a Lester range of pay dispersion of 56%), also shown to be robust to a number of competitive interpretations. Creation-Date: 2008-05 File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP12.pdf Number: 12 Classification-JEL: C33, J31, J41 Keywords: Rent Sharing, Instrumental Variables, Matched Employer-Employee Data, Fixed Effects. Handle: RePEc:cgs:wpaper:12 Template-Type: ReDIF-Paper 1.0 Author-Name: Pedro S. Martins Title: Worker Churning and Firms’ Wage Policies Abstract: If a random firm were to increase its wages, would that decrease the firm’s churning (excessive worker reallocation)? Although the trade-off between wage and churning costs has received attention in both the labour and HRM literatures, there seems to be no evidence about the causal impact of wages upon churning. This paper seeks to fill that gap by considering detailed Portuguese matched employer-employee panel data and different identification methods. After presenting comprehensive evidence about job and worker flows and churning, we find that even models based on within-firm time differences do still generate the negative association between wages and turnover found in most research. However, that result no longer holds when we consider instrumental variables based on minimum wages determined by collective bargaining arrangements. One possible interpretation of our finding is that workers’ effort may not be sufficiently sensitive to wages: employers may replace workers priced out of the labour market with more skilled individuals, so that churning does not fall. Creation-Date: 2008-05 File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP13.pdf Number: 13 Classification-JEL: J31, J50, J63, M50 Keywords: Worker Turnover, Endogeneity, Personnel Economics, Efficiency Wages Handle: RePEc:cgs:wpaper:13 Template-Type: ReDIF-Paper 1.0 Author-Name: Pedro S. Martins Author-Name: Luiz A. Esteves Title: Is There Rent Sharing in Developing Countries? Matched-Panel Evidence from Brazil Abstract: We provide evidence about the determinants of the wage structures of developing countries by examining the case of Brazil. Our specific question is whether Brazil's dramatic income and wage differentials can be explained by the division of rents between firms and their employees, unlike in competitive labour markets. Using detailed individual-level matched panel data, covering a large share of manufacturing firms and more than 30 million workers between 1997 and 2002, we consider the endogeneity of profits, by adopting different measures of rents and different instruments and by controlling for spell fxed effects. Our results, robust to different specifications and tests, indicate no evidence of rent sharing. This conclusion contrasts with findings for most developed countries, even those with flexible labour markets. Possible explanations for the lack of rent sharing include the weakness of labour-market institutions, the high levels of worker turnover and the macroeconomic instability faced by the country. Creation-Date: 2008-06 File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP14.pdf Number: 14 Classification-JEL: J31, J41 Keywords: Wage Bargaining, Instrumental Variables, Matched Employer-Employee Data, Developing Countries Handle: RePEc:cgs:wpaper:14 Template-Type: ReDIF-Paper 1.0 Author-Name: Pedro S. Martins Author-Name: Luiz A. Esteves Title: Foreign Ownership, Employment and Wages in Brazil: Evidence from Acquisitions, Divestments and Job Movers Abstract: How much do developing countries benefit from foreign investment? We contribute to this question by comparing the employment and wage practices of foreign and domestic firms in Brazil, using detailed matched firm-worker panel data. In order to control for unobserved worker differences, we examine both foreign acquisitions and divestments and worker mobility, including the joint estimation of firm and worker fixed effects. We find that changes in ownership do not tend to affect wages significantly, a result that holds both at the worker- and firm-levels. However, divestments are related to large job cuts, unlike acquisitions. On the other hand, movers from foreign to domestic firms take larger wage cuts than movers from domestic to foreign firms. Moreover, on average, the fixed effects of foreign firms are considerably larger than those of domestic firms, while worker selection effects are relatively small. Creation-Date: 2008-06 File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP15.pdf Number: 15 Classification-JEL: J31, J63, F23 Keywords: Foreign Direct Investment, Ownership Changes, Worker Mobility Handle: RePEc:cgs:wpaper:15 Template-Type: ReDIF-Paper 1.0 Author-Name: Luiz A. Esteves Author-Name: Pedro S. Martins Title: Is firm performance driven by fairness or tournaments? Evidence from Brazilian matched data Abstract: Theory and evidence are ambiguous about the effect of within-firm wage inequality on firm performance. This paper tests empirically this relationship drawing on detailed Brazilian matched employer-employee panel data, considering alternative measures of inequality and performance and different estimation methods. We find overwhelming evidence of a positive relationship between wage dispersion and firm performance when using cross-section analysis, especially in manufacturing. However, this relationship is weakened when controlling for firm time-invariant heterogeneity. Creation-Date: 2008-07 File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP16.pdf Number: 16 Classification-JEL: D31, J31, J33, J41, J53 Keywords: Tournaments, Incentives, Equity, Wage Dispersion Handle: RePEc:cgs:wpaper:16 Template-Type: ReDIF-Paper 1.0 Author-Name: Pedro S. Martins Title: Paying More to Hire the Best? Foreign Firms, Wages and Worker Mobility Abstract: In the context of the debate on the labour-market consequences of globalisation, we examine worker mobility in order to identify the wage differences between foreign and domestic firms. Using matched employer-employee panel data for Portugal, we consider virtually all spells of interfirm mobility over a period of ten years. We find that foreign firms offer significantly more generous wage policies, although there is also a (smaller) selection effect. The results are robust to the consideration of wage growth differences, the case of displaced workers and different subsets of workers. Creation-Date: 2008-07 File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP17.pdf Number: 17 Classification-JEL: J31, J63, F23 Keywords: Foreign Direct Investment, Worker Displacement, Wage Growth Handle: RePEc:cgs:wpaper:17 Template-Type: ReDIF-Paper 1.0 Author-Name: Stefan Schwarzkopf Title: Turning Trade Marks into Brands: how Advertising Agencies Created Brands in the Global Market Place, 1900-1930 Abstract: While historians and management students are familiar with the lore of how an internal memo at Procter & Gamble ‘invented’ brand management in 1931 (Fullerton, Low 1994; Dyer et al. 2004), little is known about how advertising agencies conceptualised and practiced branding during the early parts of the twentieth century. This paper presents evidence that by the 1920s advertising agencies drew on shared forms of implicit knowledge about consumer psychology which anticipated post-1950s debates about brand image, brand personality, brand identity, lifestyle brands and the global brand. I argue that large-scale, international advertising agencies discovered the symbolic and emotional capacities of brands in building consumer loyalty and in forming certain consumer identities much earlier than usually acknowledged. American and British agencies developed the field of tacit knowledge about the brand-consumer relationship as a source of competitive advantage in the competition for clients which increasingly sought consumers in overseas markets. Creation-Date: 2008-08 File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP18.pdf Number: 18 Classification-JEL: M31, M37, N84 Keywords: brands, marketing, advertising, advertising agencies, business history Handle: RePEc:cgs:wpaper:18 Template-Type: ReDIF-Paper 1.0 Author-Name: Alvaro Angeriz Author-Name: Shanti Chakravarty Title: A Decade of Changing Pattern of Poverty in Great Britain Abstract: It has been noted in the literature that failure to meet the target set by government for reducing the headcount ratio of child poverty in Britain is partly due to the success of government policy in generating economic growth. Apart from missing the argument that absolute poverty is not a meaningful idea, this apology for the failure of government to meet poverty targets also misses wider problems embedded in recent trends in household income distribution. For example, inequality measures that are sensitive to the distribution of income amongst the poor suggest that the experience of those who have failed to benefit from government policy and remained poor has worsened. Also, households containing no children have been neglected. Creation-Date: 2008-08 File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP19.pdf Number: 19 Classification-JEL: D31, I32, I38 Keywords: household income distribution, poverty reduction Handle: RePEc:cgs:wpaper:19 Template-Type: ReDIF-Paper 1.0 Author-Name: Alvaro Angeriz Author-Name: John McCombie Author-Name: Mark Roberts Title: Returns to Scale for EU Regional Manufacturing Abstract: Recent theoretical advances have emphasised the importance of localised increasing returns to scale in understanding both the regional growth and agglomeration processes. However, considerable empirical controversy still exists over whether returns to scale are constant or increasing. Consequently, this study aims to provide some new estimates of the degree of returns to scale for EU regional manufacturing. It does so within the framework of the Verdoorn law. Unlike previous studies, issues of specification of fundamental importance to recent theoretical developments are brought to attention. Overall, the paper concludes that localised increasing returns in EU regional manufacturing are substantial. Creation-Date: 2008-08 File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP20.pdf Number: 20 Classification-JEL: O18, O33, R11 Keywords: increasing returns, Verdoorn law, manufacturing, productivity growth, spatial econometrics Handle: RePEc:cgs:wpaper:20 Template-Type: ReDIF-Paper 1.0 Author-Name: Paul Duguid Author-Name: Teresa da Silva Lopes Author-Name: John Mercer Title: Shifting Patterns in Marks and Registration: France, the United States and United Kingdom, 1870-1970 Abstract: This paper looks at trademarks and brands, beyond the conventional interests of marketing and law, as a way to explaining the evolution of international business and economies in general. It shows that the perspective defended by many scholars such as Chandler (1990), Wilkins (1991, 1994) and Koehn’ (2001), about the Anglo-Saxon countries, and in particular the United States, leading the transition to modern trade-marks is narrow in its focus. Instead of the United States standing out as historically on the leading edge of innovation in the law and practice of trade marking, it appears from several directions to have been on the trailing edge. France and Britain have a more enduring interest in trademarking. The paper also looks at one particular subset of trade mark registration data – non durable consumer goods. These, and in particular food, are the dominant sectors in the three countries in terms of trademarking, reflecting the character of the sectors where imagery associated with the products is so central in competition. The paper relies on original data from three countries, France, the United Kingdom and the United States, in particular trade mark registrations, and the analysis spans for a period of one hundred years period 1870-1970. Creation-Date: 2008-09 File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP21.pdf Number: 21 Keywords: trade marks, brands, international business history, intellectual property rights, trademark law Classification-JEL: F14, F31 Handle: RePEc:cgs:wpaper:21 Template-Type: ReDIF-Paper 1.0 Author-Name: Bernadette Kamleitner Title: Coupling: the implicit assumption behind sunk cost effect and related phenomena Abstract: Coupling is the degree to which thoughts of consumption evoke thoughts of payment and vice versa. This mental association is crucial for diverse phenomena like sunk costs but has rarely been addressed in the literature. This article provides a framework for the phenomenon, highlights its theoretical and practical relevance, compiles existing literature, adds empirical findings, and comes up with directions for future research. Creation-Date: 2008-09 File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP22.pdf Number: 22 Classification-JEL: D11, D83 Keywords: coupling, sunk costs, consumer psychology Handle: RePEc:cgs:wpaper:22 Template-Type: ReDIF-Paper 1.0 Author-Name: Michael Heller Title: Corporate Brand Building at Shell-Mex Ltd in the Interwar Period Abstract: This paper is an analysis of corporate brand building at Shell-Mex Ltd in the inter-war period in Britain. While there has been some historical analysis of product brand development in the UK, this has not been the case in corporate or institutional brand building which has remained neglected. This paper outlines this process at Shell-Mex, the distributive arm in Britain for the Shell Transport and Trading Company, part of the larger Royal Dutch Shell Group. The paper argues that Shell consistently and coherently built up its corporate brand in the inter-war period through a series of strategies which included publicity, sponsorship of record breaking flights, links with empire, use of prominent artists, documentaries, road guides and association with the British countryside. This development of its corporate brand had multiple benefits for the group, both internally within its organisation, and externally in relation to its product brands and overall competitiveness. Creation-Date: 2008-09 File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP23.pdf Number: 23 Classification-JEL: M31, N84 Keywords: brand building, Shell-Mex Handle: RePEc:cgs:wpaper:23 Template-Type: ReDIF-Paper 1.0 Author-Name: Pedro S. Martins Title: Dismissals for cause: The difference that just eight paragraphs can make Abstract: We present evidence about the effects of dismissals-for-cause requirements, a specific component of employment protection legislation that has received little attention. We study a quasi-natural experiment generated by a law introduced in Portugal: out of the 12 paragraphs in the law that dictated the costly procedure required for dismissals for cause, eight did not apply to small firms. Using matched employer-employee longitudinal data and difference-in-differences methods, we examine the impact of that differentiated change in firing costs upon several variables over a long period of time. In our results, we do not find robust evidence of effects on job or worker flows, although some estimates suggest a slight increase in hirings. On the other hand, firms that gain flexibility in their dismissals exhibit consistently slower wage growth and sizeable increases in their relative performance. Our findings suggest that reducing firing costs of the type studied here increase workers' effort and reduce their bargaining power. Creation-Date: 2008-09 File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP24.pdf Number: 24 Classification-JEL: J53, J63, J31 Keywords: Employment protection legislation, worker flows, wages, firm performance Handle: RePEc:cgs:wpaper:24 Template-Type: ReDIF-Paper 1.0 Author-Name: Martha Prevezer Title: The emergence of markets and capabilities, dynamic transaction costs and institutions: effects on organizational choices in offshored and outsourced business services in China Abstract: This paper has three aims: 1) to use Langlois’ framework of dynamic transaction costs to illustrate the coevolution of firm capabilities and the emergence of new markets for offshored and outsourced business services in China; 2) to use Coase’s institutional structure of production framework to analyse the influence of Chinese institutions on the organizational choices made in the offshoring and outsourcing of business services in China and 3) to link the two themes and understand the interaction between Chinese institutions and the emergence of markets and capabilities in business services in China. We use case studies and interview data to look at these issues. Creation-Date: 2008-09 File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP25.pdf Number: 25 Keywords: offshoring, China, business services, institutions, dynamic transactions costs Handle: RePEc:cgs:wpaper:25 Template-Type: ReDIF-Paper 1.0 Author-Name: Suma Athreye Author-Name: Martha Prevezer Title: R&D offshoring and the domestic science base in India and China Abstract: This paper uses patent and publication data to assess the nature of technological advantages that are attracting R&D offshoring and outsourcing activities to India and China and the possible consequences of such R&D offshoring in increasing domestic innovative capability and building domestic research infrastructure. We find evidence that domestic patenting is concentrated in sectors that are different from sectors of R&D offshoring. Furthermore, whilst the domestic science base (as measured by publications data) in India and China shows strong complementarities in its specialisation profile to that in the US, our data also suggest that the location of international R&D activity in these economies from 1995 may not have strengthened the science base of these economies. Foreign patenting activities in India and China are also marked by a low attachment to the science base. Creation-Date: 2008-09 File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP26.pdf Number: 26 Keywords: R&D offshoring/internationalisation, Science base, Emerging economies, India and China Handle: RePEc:cgs:wpaper:26 Template-Type: ReDIF-Paper 1.0 Author-Name: Brigitte Granville Title: Trust In Fairtrade: The 'Feel-Good' Effect Abstract: Fairtrade is nurtured with stories aimed at making consumers feel good by buying Fairtrade products. This ‘feel-good’ factor may vary when it is found that, the proportional division of the benefits between producer and other potential gainers is biased towards the distributors. There is, therefore, an incentive to verify whether the trust accorded to Fairtrade is justified. If trust and therefore the feel-good factor are undermined or enhanced as a result of the validation of the stories, then the whole Fairtrade movement could potentially crumble or burgeon. Drawing on elements in Glaeser (2005)’s model, this paper analyses the factors behind the recent expansion of Fairtrade. Creation-Date: 2009-01 File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP27.pdf Number: 27 Keywords: Fairtrade Handle: RePEc:cgs:wpaper:27 Template-Type: ReDIF-Paper 1.0 Author-Name: Luisa Affuso Author-Name: Alvaro Angeriz Author-Name: Michael Pollitt Title: The Impact of Privatisation on the Efficiency of Train Operation in Britain Abstract: Twenty-five train operating companies (TOCs) were created between 1994-1997, as part of the restructuring process of the railway industry in Great Britain. The TOCs operate monopoly franchises for the provision of passenger rail services over certain routes - some of which continue to receive government subsidies. This paper investigates how the efficiency of these train operating companies evolved prior to the October 2000 Hatfield crash (which caused significant disruption to the network) using data envelopment analysis and stochastic frontier analysis. Our data allows us to look at the relative efficiency and productivity through the privatisation, to control the efficiency scores for environmental data and to correlate these results with safety and quality indicators. The analysis sheds some light on the successes and failures of the UK’s most controversial privatisation to date. Creation-Date: 2009-04 File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP28.pdf Number: 28 Classification-JEL: L51, L52, L92, M21, M48 Keywords: Railways, Comparative Efficiency, Data Envelopment Analysis, Stochastic Frontier Analyisis, Malmquist Productivity Index, Train Operating Companies, Privatisation Handle: RePEc:cgs:wpaper:28 Template-Type: ReDIF-Paper 1.0 Author-Name: Pedro S. Martins Title: Individual Teacher Incentives, Student Achievement and Grade Inflation Abstract: How do teacher incentives affect student achievement? Here we examine the effects of the recent introduction of teacher performance-related pay and tournaments in Portugal's public schools. Specifically, we conduct a difference-in-differences analysis based on population matched student-school panel data and two complementary control groups: public schools in autonomous regions that were exposed to lighter versions of the reform; and private schools, which are subject to the same national exams but whose teachers were not affected by the reform. We find that the focus on individual teacher performance decreased student achievement, particularly in terms of national exams, and increased grade inflation. Creation-Date: 2009-12 File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP29.pdf Number: 29 Classification-JEL: I21, M52, I28 Keywords: Tournaments, Public Sector, Matched School-Student Data Handle: RePEc:cgs:wpaper:29 Template-Type: ReDIF-Paper 1.0 Author-Name: Yong Yang Author-Name: Pedro S. Martins Title: Firm Performance and the Geography of FDI: Evidence from 46 Countries Abstract: The literature on the link between multinationality and firm performance has generally disregarded the role of geography. However, the geography of FDI may matter, particularly now that globalisation has increased the heterogeneity of overseas investments. Moreover, although the range of countries that conducts FDI has widened considerably, the literature still tends to focus on the case of a relatively small number of US firms. In contrast, our paper draws on firm-level data covering over 16,000 multinationals from 46 countries and allows for different effects upon the performance of the multinational firm depending on the level of development of the host economy. In our results, we find a clear positive and linear relation between multinationality and firm performance. However, investment in developing countries is associated with larger and increasing effects on performance than in the case of investment in developed countries. Overall, our results suggest that the net gains for multinationals from greater geographical diversification have not yet been fully met. Creation-Date: 2010-01 File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP30.pdf Number: 30 Classification-JEL: F20, F23, F02 Keywords: Multinationality, Firm Performance, Location Choices Handle: RePEc:cgs:wpaper:30 Template-Type: ReDIF-Paper 1.0 Author-Name: Saul Estrin Author-Name: Martha Prevezer Title: The Role of Informal Institutions in Corporate Governance: Brazil, Russia, India and China Compared Abstract: This paper argues that the role of informal institutions is central to understanding the functioning of corporate governance. We focus on the four largest emerging markets; Brazil, Russia India and China – commonly referred to as the BRIC countries. Our analysis is based on the Helmke and Levitsky framework of informal institutions and focuses on two related aspects of corporate governance: firm ownership structures and property rights; and the relationship between firms and external investors. We argue that for China and some states of India, ‘substitutive’ informal institutions, whereby informal institutions substitute for and replace ineffective formal institutions, are critical in creating corporate governance leading to positive domestic and foreign investment. In contrast, Russia is characterized by ‘competing’ informal institutions whereby various informal mechanisms of corporate governance associated with corruption and clientelism undermine the functioning of reasonably well set-out formal institutions relating to shareholder rights and relations with investors. Finally Brazil is characterized by ‘accommodating’ informal institutions which get round the effectively enforced but restrictive formal institutions and reconcile varying objectives that are held between actors in formal and informal institutions. Creation-Date: 2010-03 File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP31.pdf Number: 31 Keywords: institutions (informal and formal), corporate governance, shareholder rights, suppliers of finance, emerging markets Handle: RePEc:cgs:wpaper:31 Template-Type: ReDIF-Paper 1.0 Author-Name: Martha Prevezer Author-Name: Pietro Panzarasa Author-Name: Tore Opsahl Title: Geographic clustering and network evolution of innovative activities: Evidence from China’s patents Abstract: This study examines the spatial distribution and social structure of processes of learning and knowledge creation within the context of the inventor network connecting Chinese patent teams. Results uncover mixed tendencies toward both geographic co-location and dispersion arising from combined processes of intra-cluster learning and extra-cluster networking. These processes unfold within a social network that becomes less fragmented over time: as a giant component emerges and increases in size, social distances among inventors become longer. The interplay between geographic and network proximity is assessed against China’s institutional environment. Implications of the findings are discussed for regional development and policy-making. Creation-Date: 2010-03 File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP32.pdf Number: 32 Classification-JEL: L11; M13; O53; R12 Keywords: clusters; knowledge transfer; social networks; patenting Handle: RePEc:cgs:wpaper:32 Template-Type: ReDIF-Paper 1.0 Author-Name: Marion Frenz Author-Name: Martha Prevezer Title: The impact of technological regimes on patterns of sustained and sporadic innovation activities in UK industries Abstract: This paper brings together ideas about technological regimes and looks at their influence on patterns of sustained or persistent innovation across UK manufacturing and services industries using two waves of the UK Community Innovation Surveys. It builds a link between technological regimes and Schumpeterian patterns of innovation, and tests these on the CIS databases. It creates a model using the variables within the technological regime to see whether these can explain sustained patterns of innovation. These variables include appropriability, cumulativeness, technological opportunity and closeness to the science base as well as enterprise size. The paper finds that strong appropriability, a high degree of cumulativeness, and closeness to the applied science base are strong predictors of sustained innovation activities. The results on technological opportunity are ambiguous. High tech manufacturing industries, i.e. chemicals and scientific instruments as well as some high tech services i.e. telecoms are more likely to register persistent innovation. Creation-Date: 2010-03 File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP33.pdf Number: 33 Handle: RePEc:cgs:wpaper:33 Template-Type: ReDIF-Paper 1.0 Author-Name: Bernadette Kamleitner Author-Name: Bianca Hornung Author-Name: Erich Kirchler Title: Over-indebtedness and the interplay of factual and mental money management: An interview study Abstract: Previous research has shown that money management contributes to over-indebtedness. This article sheds new light on this relation by looking at factual money management and its mental underpinnings, mental accounting. In a conceptual model we propose that fuzzy factual and mental money management practices aggravated by lack of congruency between factual and mental structures play an important role in over-indebtedness. Twenty-five in-depth interviews deliver preliminary support for this proposition. Successful financial control seems to build on efficient and inter-coordinated factual and mental money management. This reduces the willpower necessary for controlling financial behavior and helps to prevent and fight over-indebtedness. Creation-Date: 2010-04 Classification-JEL: D14, D1 Keywords: debt, money management, mental accounting, self-control File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP34.pdf Number: 34 Handle: RePEc:cgs:wpaper:34 Template-Type: ReDIF-Paper 1.0 Author-Name: Brigitte Granville Author-Name: Eshref Trushin Title: The hope for neglected diseases: R&D incentives Abstract: Neglected diseases are neglected because they cannot generate enough return on R&D to pharmaceutical firms. This paper analyzes and compares existing proposals for public intervention in R&D for neglected diseases. Incentives for neglected diseases are comprehensively evaluated based on seventeen selected criteria grouped into four categories: efficiency, feasibility, fairness, and sustainability. Our conclusion is that public-private partnerships coordinated through a centralized service platform have the highest potential to satisfy the criteria for the successful development.. Creation-Date: 2010-08 Classification-JEL: I12, I18, H41, H87 Keywords: neglected diseases, incentives, pharmaceutical R&D, policy analysis File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP35.pdf Number: 35 Handle: RePEc:cgs:wpaper:35 Template-Type: ReDIF-Paper 1.0 Author-Name: Brigitte Granville Author-Name: Eshref Trushin Title: Two-stage public-private partnership proposal for R&D on neglected diseases Abstract: We propose a 2-stage procurement model of public-private partnership to provide better incentives for R&D on neglected diseases. The model combines advance market commitment, subsidized clinical trials, and rewards based on therapeutical contributions of new drugs through a prize screening mechanism. The model is primarily intended to facilitate small firms’ R&D by providing cash flow, rewarding quality of new drugs, and sharing risks and costs of new drugs development, while limiting moral hazards. The model’s advantages include reduction of overpayments, better disclosure of information, provision of production licences, and direct targeting of better quality drugs. Creation-Date: 2010-10 Classification-JEL: I12, I18, D82, H41 Keywords: neglected diseases, prize screening, pharmaceutical R&D File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP36.pdf Number: 36 Handle: RePEc:cgs:wpaper:36 Template-Type: ReDIF-Paper 1.0 Author-Name: Pedro S. Martins Title: Cronyism Abstract: Politicians can use the public sector to give jobs to cronies, at the expense of the efficiency of those organisations and general welfare. Motivated by a simple model of cronyism that predicts spikes in appointments to state-owned firms near elections, we regress 1980-2008 monthly hirings across all state-owned Portuguese firms on the country's political cycle. In most specifications, we also consider private-sector firms as a control group. Consistent with the model, we find that public-sector appointments increase significantly over the months just before a new government takes office. Hirings also increase considerably just after elections but only if the new government is of a different political colour than its predecessor. These results also hold when conducting the analysis separately at different industries and most job levels, including less skilled positions. We find our evidence to be consistent with cronyism and politically-induced misallocation of public resources. Creation-Date: 2010-12 Classification-JEL: J45, H11, J23 Keywords: Corruption, matched employer-employee panel data, public-sector employment File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP37.pdf Number: 37 Handle: RePEc:cgs:wpaper:37 Template-Type: ReDIF-Paper 1.0 Author-Name: Shannon Sutton Title: Add Producers and Stir? (Re) politicizing Fairtrade participation Abstract: While recent changes to Fairtrade's governance structures aim to facilitate 'stronger voices' for producers (Fairtrade International 2011b), relatively little is known about the impact of these new structures on individuals. Utilizing Fung and Wright's (2003) framework of Empowered Participatory Governance, I am to explore the nature of participation in Fairtrade governance for the co-operatives and individuals belonging to the Fairtrade Africa producer network. I then consider Fung's (2002) notion of countervailing power as a means of understanding representation, particularly as it pertains to those individuals who are typically marginalized within governance processes such as women, the landless, and migrant workers. This paper is part of a broader research project on Tanzanian Fairtrade coffee farmers. Creation-Date: 2012-03 Classification-JEL: J45, H11, J23 Keywords: Fairtrade, co-operatives, collaborative governance, participation, representation File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP38.pdf Number: 38 Handle: RePEc:cgs:wpaper:38 Template-Type: ReDIF-Paper 1.0 Author-Name: Sanghamitra Bandyopadhyay and Elliott Green Title: Pre-Colonial Political Centralization and Contemporary Development in Uganda Abstract: The importance of pre-colonial history on contemporary African development has become an important field of study within development economics in recent years. In particular (Gennaioli & Rainer, 2007) suggest that pre-colonial political centralization has had an impact on contemporary levels of development within Africa at the country level. We test the (Gennaioli & Rainer, 2007) hypothesis at the sub-national level for the first time with evidence from Uganda. Using a variety of datasets we obtain results which are striking in two ways. First, we confirm the (Gennaioli & Rainer, 2007) hypothesis that pre-colonial centralization is highly correlated with modern-day development outcomes such as GDP, asset ownership and poverty levels, and that these correlations hold at the district, sub-county and individual levels. We also use an instrumental variable approach to confirm this finding using the distance from ancient capital of Mubende as an instrument. However, our second finding is that public goods like immunization coverage and primary school enrolment are not correlated with pre-colonial centralization. These findings are thus consistent with a correlation between pre-colonial centralization and private rather than public goods, thereby suggesting the persistence of poverty and wealth from the pre-colonial period to the present. Creation-Date: 2012-11 Classification-JEL: J45, H11, J23 Keywords: Pre-colonial Political Centralization, Development, Uganda File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP39.pdf Number: 39 Handle: RePEc:cgs:wpaper:39 Template-Type: ReDIF-Paper 1.0 Author-Name: Sanghamitra Bandyopadhyay Title: The Vulnerable Are Not (Necessarily) the Poor Abstract: In this paper I examine the concept of vulnerability within the context of income mobility of the poor. While the concept of poverty is well developed, the concept of vulnerability is less established in the economic literature. I test for the dynamics of vulnerable households in the UK using Waves 1 - 12 of the British Household Panel Survey and find that, of three different types of risks for which I test, household-specific shocks and economy-wide aggregate shocks have the greatest impact on consumption, in comparison to shocks to the income stream. I find vulnerable households up to at least 10 percentile points above the poverty line. Savings and earnings from a second job are not significantly associated with smoothing consumption of all vulnerable households. The results strongly indicate that income transfers and benefits assist the vulnerable in smoothing consumption. Thus, traditional poverty alleviating policies are not likely to assist the vulnerable. Creation-Date: 2012-10 Classification-JEL: J45, H11, J23 Keywords: income variability, vulnerability, poverty, insurances File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP40.pdf Number: 40 Handle: RePEc:cgs:wpaper:40 Template-Type: ReDIF-Paper 1.0 Author-Name: Sanghamitra Bandyopadhyay and Elliott Green Title: On the Relationship Between Fertility and Wealth: Evidence from Widow Suicides (Satis) in Early Colonial India Abstract: Evidence on the pre-modern relationship between wealth and fertility has so far almost entirely relied upon data from Europe. We use British colonial records from early 19th-century India on widow suicides (satis) to show that there is a robust positive relationship between income and fertility. Creation-Date: 2013-02 Classification-JEL: J45, H11, J23 Keywords: fertility, wealth, early colonial India File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP41.pdf Number: 41 Handle: RePEc:cgs:wpaper:41 Template-Type: ReDIF-Paper 1.0 Author-Name: Brigitte Granville Title: The Current Eurozone – an impediment to critical French reform Abstract: France currently needs deep structural reforms to boost competitiveness; but such reforms seem impossible while France remains in the straitjacket of the rules-bound transfer union that is the current Eurozone. High outstanding sovereign debt coupled with almost zero economic growth pose a real challenge to the French economy saved only by the relatively low government bond yield but this is subject to market swings. An unacceptably large proportion of the French workforce is trapped in long-term unemployment with the most affected part of the population being the young and older workers suffering from long term unemployment because of the adverse incentives brought about by a social safety net financed by taxing labour. Creation-Date: 2013-03 Classification-JEL: J45, H11, J23 Keywords: Euro, transfers, internal devalution, current account, public debt, inflation. File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP42.pdf Number: 42 Handle: RePEc:cgs:wpaper:42 Template-Type: ReDIF-Paper 1.0 Author-Name: Colin Haslam, Nick Tsitsianis and Y Ping Yin Title: Apple’s financial success. The precariousness of power exercised in global value chains Abstract: This working paper is about the Apple Inc Business Model and how, in a financialized world, the success of this business model is represented in the form of what we term financial point values. Our argument is that there is a tendency to promote specific point valuation multiples as measures of success but these values, by their nature, do not reveal the contingent and variable nature of power relations exercised in and along global supply chains. Firms like Apple, exploit resources and capabilities to 'create value but also exercise power to recalibrate relations with suppliers in the value chain to secure 'value capture', for financial transformation. Value capture is an active ingredient that can help inform our understanding of the fragility of the Apple business model and frame a critical argument about the precarious nature and sustainability of AppleÕs huge profit margins. Creation-Date: 2013-04 Classification-JEL: F23, M21 and L25 Keywords: Apple Inc Business Model, Global Value Chains, Point Values, Value Capture. File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP43.pdf Number: 43 Handle: RePEc:cgs:wpaper:43 Template-Type: ReDIF-Paper 1.0 Author-Name: Pedro S. Martins, Matloob Piracha and José Varejão Title: Do Immigrants Displace Native Workers? Evidence from Matched Panel Data Abstract: Using matched employer-employee data, we analyse the impact of immigrants on natives’ employment in Portugal. Using different model specifications, we show that the natives and immigrants are ‘complements’ at most occupation levels, in the sense that both types are hired when the number of immigrants is increasing. Controlling for different skill-level groups as well as for temporary and permanent jobs, the estimates show that, contrary to the evidence from some existing literature, the natives at the lower end of the skills spectrum are not affected by the presence of immigrants as well. There is, however, some evidence that when the number of immigrants in the firm is decreasing, natives tend to replace immigrants. Creation-Date: 2013-10 Classification-JEL: J15, J61 Keywords: matched employer-employee data, displacement, immigrants. File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP44.pdf Number: 44 Handle: RePEc:cgs:wpaper:44 Template-Type: ReDIF-Paper 1.0 Author-Name: Ioannis Bournakis Author-Name: Sushanta Mallick Author-Name: David Kernohan Author-Name: Dimitris A.Tsouknidis Title: Measuring Firm-Level Productivity Convergence in the UK: The Role of Taxation and R&D Investment Abstract: This paper examines the direct effects of corporate tax on firm productivity along with the interaction effects of tax policy and R&D activity on productivity at firm level for over 13,062 firms during 2004-2011. Our main findings are first, that there is evidence for productivity convergence and we find that there is a positive robust relationship between R&D and firm productivity, whereas tax policy has a negative distortionary effect on TFP. Second, firms with greater export orientation do not seem to achieve much improvement in productivity, whereas the favourable productivity effect in the case of R&D-based firms suggests that if there are tax incentives in place for R&D type activity, it can promote innovation and drive productivity convergence (lagging firms closing the technology gap with those at the frontier), particularly so when there is a continued decline in overall economic activity. The results also show a significant non-linear effect of tax rate on firm-level productivity, identifying an inverse U-shaped relationship Creation-Date: 2013-11 Classification-JEL: O3, O4 Keywords: Total Factor Productivity, Catch-Up, Effective Tax Rate, Firm-level Productivity Convergence, UK. File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP45.pdf Number: 45 Handle: RePEc:cgs:wpaper:45 Template-Type: ReDIF-Paper 1.0 Author-Name: Sanghamitra Bandyopadhyay Author-Name: Elliott Green Title: Urbanization and Mortality Decline Abstract: We investigate the relationship between mortality decline and urbanization, which has hitherto been proposed by demographers but has yet to be tested. Using pooled-OLS, fixed effects first differences and long differences we find evidence for a robust negative correlation between crude death rates and urbanization. The use of Granger causality tests and instrumental variables suggest that this relationship is causal. Our preliminary results suggest that mortality decline causes urbanization through the creation of new cities rather than promoting urban growth in already-extant cities. Creation-Date: 2013-11 Classification-JEL: J11, N90, O18, R00 Keywords: Urbanization, Mortality Decline, Demography, Population Growth File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP46.pdf Number: 46 Handle: RePEc:cgs:wpaper:46 Template-Type: ReDIF-Paper 1.0 Author-Name: Brigitte Granville Author-Name: Dominik Nagly Title:Determinants of relative bargaining power in monetary unions Abstract: This paper studies the bargaining power of the debtors versus the creditors in Europe’s Economic and Monetary Union (EMU). Creation-Date: 2013-12 Classification-JEL: C79, E02, E42, E58, E61 Keywords: Bargaining power, competitiveness, disagreement cost, European Monetary Union, internal devaluation, transfer union File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP47.pdf Number: 47 Handle: RePEc:cgs:wpaper:47 Template-Type: ReDIF-Paper 1.0 Author-Name: Julie Bower Author-Name: Howard Cox Title: Merger regulation, firms, and the co-evolutionary process: An empirical study of internationalisation in the UK alcoholic beverages industry 1985-2005 Abstract: We present an historic industry study of the consolidation of the UK alcoholic beverages firms to inform debates in organisation studies relating to co-evolution and the dynamics of internationalisation. We distinguish behavioural and structural co-evolutionary factors in firms’ strategic intent, mirroring the two types of remedies that competition authorities can impose on merging firms. We test this theoretical construct in an empirical investigation of the consolidating UK alcoholic beverages firms between 1985 and 2005. In this era Diageo was formed from the landmark merger of Grand Metropolitan and Guinness. Subsequently Diageo acquired the former international spirits empire of Seagram in partnership with a major competitor. Successful implementation of Diageo’s merger strategy owed much to an ability to navigate the evolving multijurisdictional co-ordinated oversight of cross-border mergers and acquisitions. The formation of novel deal structures as well as co-operation with competitors to circumvent policy intervention were significant co-evolutionary mechanisms that have featured more generally in subsequent international mergers as others have copied these deal structures to achieve similar regulatory outcomes. Creation-Date: 2013-12 Classification-JEL: K21, L22, L66 Keywords: Alcoholic beverages; Co-evolution; Competition policy; Merger regulation File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP48.pdf Number: 48 Handle: RePEc:cgs:wpaper:48 Template-Type: ReDIF-Paper 1.0 Author-Name: Dietmar Harhoff Author-Name: Georg von Graevenitz Author-Name: Stefan Wagner Title: Conflict Resolution, Public Goods and Patent Thickets Abstract: Post-grant validity challenges at patent offices rely on the private initiative of third parties to correct mistakes made by patent offices. We hypothesize that incentives to bring post-grant validity challenges are reduced when many firms benefit from revocation of a patent and when firms are caught up in patent thickets. Using data on opposition against patents at the European Patent Office we show that opposition decreases in fields in which many others profit from patent revocations. Moreover, in fields with a large number of mutually blocking patents the incidence of opposition is sharply reduced, particularly among large firms and firms that are caught up directly in patent thickets. These findings indicate that post-grant patent review may not constitute an effective correction device for erroneous patent grants in technologies affected by either patent thickets or highly dispersed patent ownership. Creation-Date: 2014-06 Classification-JEL: Keywords: File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP49.pdf Number: 49 Handle: RePEc:cgs:wpaper:49 Template-Type: ReDIF-Paper 1.0 Author-Name: Brigitte Granville Author-Name: Dominik Nagly Title: Conflicting incentives for the public to support the EMU Abstract: This paper studies the how government policy can influence positively public attitudes towards the Economic and Monetary Union (EMU). Creation-Date: 2014-06 Classification-JEL:E42, E44, F33, F36 Keywords: Monetary Regime, Monetary System, Real Activity, EMU, Exchange Rates, Currency Area File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP50.pdf Number: 50 Handle: RePEc:cgs:wpaper:50 Template-Type: ReDIF-Paper 1.0 Author-Name: Pedro S. Martins Title: 30,000 minimum wages: The economic effects of collective agreement extensions Abstract: Several countries extend collective bargaining agreements to entire sectors, therefore binding non-subscriber workers and employers. These extensions may address coordination issues but may also impose sector-specific minimum wages and other work conditions that are not appropriate for several workers and firms. In this paper, we analyse the impact of such extensions along several margins drawing on firm-level monthly data for Portugal, a country where extensions have been widespread until recently. We find that both formal employment and wage bills in the relevant sector fall, on average, by 2% - and by 25% more across small firms - over the four months after an extension is issued. These results are driven by both reduced hirings and increased firm closures. On the other hand, informal work, not subject to labour law or extensions, tends to increase. Our findings are robust to several checks, including a falsification exercise based on extensions that were announced but not implemented. Creation-Date: 2014-06 Classification-JEL: J31, J52, J23 Keywords: Collective agreements, Worker flows, Wage rigidity File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP51.pdf Number: 51 Handle: RePEc:cgs:wpaper:51 Template-Type: ReDIF-Paper 1.0 Author-Name: Pedro S. Martins Author-Name: Sofia Pessoa e Costa Title: Reemployment effects from increased activation: Evidence from times of crisis Abstract: Although activation services such as monitoring, training, job subsidies or workfare have been shown to increase exits from unemployment, there is no evidence about their effects during recessions. We address this policy-relevant question by evaluating a large activation programme introduced in Portugal in early 2012, a time of very high and still increasing unemployment. The programme was based on requiring specific unemployment benefit recipients to meet caseworkers in jobcentres and then participate in active labour market policies. Our analysis draws on rich longitudinal data, the targeted nature of the programme (namely of its component focused on those unemployed for at least six months), and fuzzy regression discontinuity methods. We find that, despite the weak labour market, the programme is very succesful as it doubles the monthly reemployment probability. Moreover, we find no effects in terms of income or transitions to non-employment. The results are robust to a number of checks, including a falsification exercise based on pre-programme data. Creation-Date: 2014-06 Classification-JEL: J64, J68, J22 Keywords: Public employment services, job search, public policy evaluation File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP52.pdf Number: 52 Handle: RePEc:cgs:wpaper:52 Template-Type: ReDIF-Paper 1.0 Author-Name: Lutao Ning Author-Name: Martha Prevezer Author-Name: Yuandi Wang Title: Top Management Turnover and Corporate Governance in China: effects on innovation performance Abstract: Research Question: How does Chinese corporate governance in publicly-listed firms affect the relationship between innovation productivity and top management turnover? Is state shareholding in China a positive force for innovation productivity? Research Insights: A balance is maintained between the negative effect of (relatively high) top management turnover on investment horizons and innovation productivity, mitigated by positive effects of high state ownership, up to a certain level of ownership concentration. Beyond this level, potential for abuse by the dominant shareholder curtails positive effects on innovation. This contrasts with foreign dominant shareholders where no alignment between dominant shareholder and top management occurs and shorter investment horizons are preferred with lower innovation productivity. Theoretical Implications: In China, with state-held and controlled publicly listed firms, there is an alliance between the dominant shareholder and top management with relatively low employee protection and weak protection for lesser shareholders . This may have positive outcomes for long term innovation but may also lead to principal-principal abuses. Any such alliance needs to be tempered by stronger internal governance structures to protect minority shareholders. But stronger protection may in turn reduce investment horizons and lower innovation. Policy Implications: As well as strengthening external corporate governance mechanisms, insider corporate governance mechanisms need to be strengthened to discipline managers. However stronger countervailing powers to secondary shareholders, stronger Supervisory Board rights and greater independence of Directors may tend to decrease time horizons of investment for the firm and impede innovation. Creation-Date: 2014-09 Classification-JEL: P3 L2 P5 Keywords: Corporate governance; Top management turnover; innovation performance; China File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP53.pdf Number: 53 Handle: RePEc:cgs:wpaper:53 Template-Type: ReDIF-Paper 1.0 Author-Name: Martha Prevezer Title: Institutional choices for low-income countries: state capacity, property rights and development paths in Tanzania Abstract: I am using the North Wallis Weingast (2009) framework to analyse the nature of the basic Limited Access Order (LAO) in Tanzania. Looking at Tanzania historically in terms of the creation of state capacity, I use Levy’s (2013) categorisations to place Tanzania in weighing up centralized state capacity vs strength of checks and balances and state dominance vs competitive clientelism models and identifying who the dominant elites have been, particularly since independence in 1961. Tanzania has strong state capacity compared with Zambia and various other Low Income countries but relatively weaker checks and balances to constrain state power; Tanzania fits better with a state dominance model than a competitive clientelism model in relation to dominant elites and nature of institutions. I combine this with an analysis of the history of property rights in Tanzania and following Boone (2007) outline the tensions between three types of property rights: communal, customary rights vs private individualized rights vs state user rights. Despite considerable debate within Tanzania (the Shivji Commission and other bodies), state user rights have won out over both customary and to a lesser extent private rights. I outline how the dominance of state user rights over property combined with strong centralized state capacity via its bureaucracy and patronage over jobs has underpinned Tanzania’s development path, in line with Bates (1982,2014) analysis for many SSAs. In the 1960s and 1970s this path was to redistribute resources away from small farmer agriculture towards a monopolistic nascent industrial sector in a push to develop industry, absorbing surpluses from agriculture in exportable crops (eg coffee, sisal) via state-controlled structures such as Marketing Boards. Other supports such as extension officers, inputs, training shaped which farmers were supported and controlled prices paid to farmers to subsidize urban wage goods and control urban unrest. Since liberalization in the 1990s constraints on agriculture have been loosened, but in practice the power of District Commissioners and Marketing Boards remain in force. Land, backed by state user rights, is redistributed for the purposes of urban and rural/industrial enterprise away from smallholder farming and away from communal rights. More recent enterprise development has been in agribusiness, manufacturing and construction, diversified across industries but concentrated in relatively few firms. (Sutton 2012). There is a tension between the combined forces of strong centralized state capacity, weaker checks on the state plus property rights that give the state ultimate power to determine land use, and the fostering of bottom-up agricultural enterprise, either through cooperatives or through individual private enterprise. Liberalization has favoured private industrial enterprise, although difficulties over clarity of land rights, availability of land and administrative issues over transferring land continue to be obstacles. Creation-Date: 2014-09 Classification-JEL: P00, O1, O5 Keywords: Institutions, Property rights, low-income countries, Tanzania, development File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP54.pdf Number: 54 Handle: RePEc:cgs:wpaper:54 Template-Type: ReDIF-Paper 1.0 Author-Name: Lutao Ning Author-Name: Martha Prevezer Author-Name: Yuandi Wang Title: Technological diversification in China: Based on Chinese patent analysis during 1986-2011 Abstract: This paper confirms the positive relationship between national technological size and technological diversification (following Cantwell, Vertova 2004 for major developed economies) for China over three periods: from its premarket status 1986-1990, through its rapid marketization of 1991-2000, to its globalization phase from 2001-2011. The Chinese technological trajectory differs from the earlier developed world model significantly in tending to greater technological specialization from the outset of technological growth in the 1990s. We analyse a dataset of 3.7 million Chinese patents at the SIPO, Chinese patent office. Using shift-share analysis, we decompose changes in the relationship between technological size and diversification into those attributable to the increase in size (number of patents, population, GDP) and those attributable to the structural shift towards diversification or specialization between technological fields. We find that although the positive relation between size and diversification holds over all three periods, there is a structural shift between each period towards greater technological specialization. We argue that this mirrors the ‘globalizing’ FDI-driven shift that occurred in the US towards technological specialization between 1965 and 1990 (Cantwell and Vertova 2004). In China this represents a shift away from traditional fields such as consumer goods and equipment or transportation towards electronics and computing fields. Creation-Date: 2014-09 Classification-JEL: O1, O3, O5, P5 Keywords: technological diversification and specialization; patents; China; R&D investment structure; size-diversification relationship File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP55.pdf Number: 55 Handle: RePEc:cgs:wpaper:55 Template-Type: ReDIF-Paper 1.0 Author-Name: Brigitte Granville Author-Name: Sana Hussain Title:Eurozone cycles: an analysis of phase synchronization Abstract: This paper examines the synchronization in business and financial cycles both across and within a representative sample of Eurozone countries. Creation-Date: 2014-10 Classification-JEL:C14, E32, E44 Keywords: business cycles, concordance, European Union, financial cycles, time-frequency analysis. File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP56.pdf Number: 56 Handle: RePEc:cgs:wpaper:56 Template-Type: ReDIF-Paper 1.0 Author-Name: Ioannis Bournakis Author-Name: Dimitris Christopoulos Author-Name: Sushanta Mallick Title: Knowledge Spillovers, absorptive capacity and growth: An Industry-level Analysis for OECD Countries Abstract: Given the decline in growth momentum in the manufacturing sector in many OECD countries, the role of knowledge-based capital has emerged as a key driver for sustained growth. While empirical studies on estimating knowledge spillovers have usually been undertaken at the country level, the spillover effects can be more definitive only if the analysis is conducted at the industry-level. The effectiveness of international spillovers is conditional on recipient country’s absorptive capacity and this is an important component of the spillover mechanism that has not attracted significant attention so far. This paper therefore assesses the effect of spillovers in driving per capita output growth taking into account the role of absorptive capacity. Our main findings are first, that there is evidence for a robust positive relationship between human capital and output growth across these countries at industry level. Second, the potential of international spillover gains is greater in countries with higher human capital and a more protective environment as far as intellectual property rights are concerned. Countries that improve their absorptive capacity can potentially increase gains from spillovers either via trade or FDI (including vertical FDI). Finally, significant heterogeneity is found between high and low-tech industries with high-tech group displaying greater knowledge spillovers, suggesting that low-tech industries need to be more innovative in order to absorb the technological advancements of domestic and international rivals. Creation-Date: 2015-04 Classification-JEL: E24; F1; F6; O3; O4 Keywords: Growth; R&D; Knowledge Spillovers; Absorptive Capacity; Human Capital; Intellectual Property Rights. File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP57.pdf Number: 57 Handle: RePEc:cgs:wpaper:57 Template-Type: ReDIF-Paper 1.0 Author-Name: Colin Haslam Author-Name: Nick Tsitsianis Title: Financialized Accounting: Capitalization and leveraging the intangible Abstract: This paper is about the financialization of international accounting standards by the International Accounting Standards Board (IASB). International Financial Reporting Standards (IFRS’s) now incorporate fair value reporting for different types of corporate assets. Thus the interminable process of speculative recapitalization and financial volatility associated with asset trading in secondary capital markets is absorbed into the fabric of corporate financial statements. This change in the reporting process, within the financial statements, creates new forms of risk. First, the process of double entry bookkeeping transmits disturbance between line items that may or may not have an equivalent capacity to absorb these financial adjustments. Second, asset valuations in current time are very sensitive to changes in assumptions about future cash flow, risk and cost of capital. The IASB’s financialization of accounting has the potential to generate dysfunctional economic and social outcomes because accounting line items are increasingly wired into capital market conditions and valuation modelling. Creation-Date: 2015-05 Classification-JEL: F3, G32 Keywords: Financialization, International Accounting Standards, Mark to Market Accounting, Risk. File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP58.pdf Number: 58 Handle: RePEc:cgs:wpaper:58 Template-Type: ReDIF-Paper 1.0 Author-Name: Junsong Wang Author-Name: Martha Prevezer Title:Related variety in Chinese cities: local and Foreign Direct Investment related variety and impacts on urban growth Abstract: The paper measures agglomeration economies through related variety and their impact on growth and employment in Chinese cities, using prefecture level city-industry data from 2003 to 2010. Creation-Date: 2015-06 Classification-JEL: O2 R1 Keywords: Related variety; Jacobs externalities; FDI-knowledge spillovers; Urban growth in China File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP59.pdf Number: 59 Handle: RePEc:cgs:wpaper:59 Template-Type: ReDIF-Paper 1.0 Author-Name: Bronwyn H. Hall Author-Name: Christian Helmers Author-Name: Georg von Graevenitz Title: Technology Entry in the Presence of Patent Thickets Abstract: We analyze the effect of patent thickets on entry into technology areas by firms in the UK. We present a model that describes incentives to enter technology areas characterized by varying technological opportunity, complexity of technology, and the potential for hold?up in patent thickets. We show empirically that our measure of patent thickets is associated with a reduction of first time patenting in a given technology area controlling for the level of technological complexity and opportunity. Technological areas characterized by more technological complexity and opportunity, in contrast, see more entry. Our evidence indicates that patent thickets raise entry costs, which leads to less entry into technologies regardless of a firm?s size. Creation-Date: 2015-08 Classification-JEL: K11, L20, O31, O34 Keywords: Patenting, Entry, Patent Thickets File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP60.pdf Number: 60 Handle: RePEc:cgs:wpaper:60 Template-Type: ReDIF-Paper 1.0 Author-Name: Pedro S. Martins Title: Working to get fired? Regression discontinuity effects of unemployment benefit eligibility on prior employment duration Abstract: In most countries, the unemployed are entitled to unemployment benefits only if they have previously worked a minimum period of time. This institutional feature creates a sharp change at eligibility in the disutility from unemployment and may distort the duration of jobs. In this paper, we show that this effect can be evaluated using a regression discontinuity approach. Our evidence is based on longitudinal social security data from Portugal, where the unemployed are required to work a relatively long period to collect benefits. We find that monthly transitions from employment to unemployment increase by 10% as soon as the eligibility condition is met. This result is driven entirely by transitions to subsidised unemployment, which increase by 20%, as non-subsidised unemployment is not affected. The effects are even larger for the unemployed with high replacement ratios or those who meet the eligibility condition from multiple employment spells. Creation-Date: 2015-08 Classification-JEL: J65, J63, C55 Keywords: Unemployment insurance, Moral hazard, Employment duration, Big data File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP61.pdf Number: 61 Handle: RePEc:cgs:wpaper:61 Template-Type: ReDIF-Paper 1.0 Author-Name: Pedro S. Martins Title: The Diversity of Personnel Practices and Firm Performance Abstract: Personnel economics tends be based on single-firm case studies. Here we examine the personnel practices of nearly 5,000 firms, over a period of 20 years, using detailed matched employer-employee panel data from Portugal. In the spirit of Baker et al (1994a, b), we consider different dimensions of personnel management within each firm: worker turnover, the role of job levels and human capital as wage determinants, the dispersion of wages within job levels, the importance of tenure in terms of promotions and exits, and the scope for careers. We find a large degree of diversity in most of these practices across firms. Moreover, some personnel practices are shown to be robust predictors of higher levels of firm performance, even after controlling for time-invariant firm heterogeneity and other variables: low wage dispersion at low and intermediate job levels and a tight relationship between human capital variables and wages. Creation-Date: 2015-08 Classification-JEL: M51, M52, J31 Keywords: Personnel Economics, Job Levels, Wages, Big Data File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP62.pdf Number: 62 Handle: RePEc:cgs:wpaper:62 Template-Type: ReDIF-Paper 1.0 Author-Name: Brigitte Granville Author-Name: Jaume Martorell Cruz Author-Name: Martha Prevezer Title: Elites, Thickets and Institutions: French Resistance versus German Adaptation to Economic Change, 1945-2015. Abstract: This paper explores a nexus that runs from the construction of an elite thicket in France through a shared mental model or doxa to a centralized activist state that modernized the French economy during the trentes glorieuses but since the mid-1990s has led to behavioural stasis, dependency on state solutions and institutional deterioration. Creation-Date: 2015-10 Classification-JEL: N24, N40, N44, O38, 043, Z10 Keywords: Culture, Economic History, Institutions, Industrial Relations, Elites, Varieties of Capitalism, Mental Models. File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP63.pdf Number: 63 Handle: RePEc:cgs:wpaper:63 Template-Type: ReDIF-Paper 1.0 Author-Name: Pedro Martins Author-Name: Andy Snell Author-Name: Heiko Stueber Author-Name: Jonathan Thomas Title: Bias in Returns to Tenure When Firm Wages and Employment Comove: A Quantitative Assessment and Solution Abstract: It is well known that, unless worker-firm match quality is controlled for, returns to firm tenure (RTT) estimated directly via reduced form wage (Mincer) equations will be biased. In this paper we argue that even if match quality is properly controlled for there is a further pervasive source of bias, namely the co-movement of firm employment and firm wages. In a simple mechanical model where human capital is absent and separation is exogenous we show that positively covarying shocks (either aggregate or firm level) to firms employment and wages cause downward bias in OLS regression estimates of RTT. We show that the long established procedures for dealing with traditional RTT bias do not circumvent the additional problem we have identified. We argue that if a reduced form estimation of RTT is undertaken, firm-year fixed effects must be added in order to eliminate this bias. Estimates from two large panel datasets from Portugal and Germany show that the bias is empirically important. Adding firm-year fixed effects to the regression increases estimates of RTT in the two respective countries by between 3.5% and 4.5% of wages at 20 years of tenure -? over 80% (50%) of the estimated RTT level itself. The results extend to tenure correlates used in macroeconomics such as the minimum unemployment rate since joining the firm. Adding firm-year fixed effects changes estimates of these estimates also. Creation-Date: 2016-03 Classification-JEL: J31, J63, C23 Keywords: Matched data, Tenure effects, Germany, Portugal File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP64.pdf Number: 64 Handle: RePEc:cgs:wpaper:64 Template-Type: ReDIF-Paper 1.0 Author-Name: Sanghamitra Bandyopadhyay Author-Name: Gaston Yalonetzky Title: An individual-based approach to measurement of multiple-period mobility for nominal and ordinal variables Abstract: This paper discusses meanings of intra-generational mobility when variables take values corresponding to either unordered or ordered categories. We propose concepts of maximum and minimum mobility, along with mobility-inducing transformations and related desirable properties. Then we axiomatically characterize indices of individual mobility and social mobility. Our first set of concepts, properties and indices, measures mobility as diversity, unpredictability or instability in people’s status along the accounting period. This notion of mobility is relevant and applicable to both nominal and ordinal variables. Our second set measures mobility as average distance travelled across categories from one period to the next. This latter notion is only relevant for ordinal variables. We apply these indices to measure the extent of mobility in the responses to subjective wellbeing questions in the United Kingdom, using the British Household Panel Survey. Creation-Date: 2016-07 Classification-JEL: D30 Keywords: Intra-generational mobility, categorical variables, life satisfaction File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP65.pdf Number: 65 Handle: RePEc:cgs:wpaper:65 Template-Type: ReDIF-Paper 1.0 Author-Name: Laura Kudrna Author-Name: Georgios Kavetsos Author-Name: Chloe Foy Author-Name: Paul Dolan Title: Without my Medal on my Mind: Counterfactual Thinking and Other Determinants of Athlete Emotions Abstract: How achievement makes people feel depends upon counterfactual thoughts about what could have been. One body of evidence for this comes from studies of observer ratings of Olympians’ happiness, which suggests that category-based counterfactual thoughts affect the perceived happiness of Olympians. Silver medallists are less happy than bronze medallists, arguably because silver medallists think about how they could have won gold, and bronze medallists feel lucky to be on the podium at all. We contribute to this literature by showing that the effect of category-based counterfactual thoughts on Olympians’ happiness depends on the margin by which athletes secured their medal. Although gold and bronze medallists appeared happier the better they performed, silver medallists were less happy when they were closer to winning gold. This suggests silver medallists feel disappointed relative to gold medallists but that bronzes do not feel particularly fortunate relative to non-medal winners. Teams were rated as happier than individual athletes and Olympians happier than Paralympians. Observers’ ethnic and gender similarity to athletes negatively influence happiness ratings; whilst observers’ self-reported happiness has a negligible effect on ratings. We integrate these findings with prior literature on counterfactual thinking and the determinants of happiness, and suggest avenues for future research. Creation-Date: 2016-07 Classification-JEL: D60, I31 Keywords: Counterfactual thinking, Close calls, Relative status, Happiness, Olympic Games File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP66.pdf Number: 66 Handle: RePEc:cgs:wpaper:66 Template-Type: ReDIF-Paper 1.0 Author-Name: Patrick K. O’Brien Author-Name: Nuno Palma Title: Danger to the Old Lady of Threadneedle Street? The Bank Restriction Act and the Regime Shift to Paper Money, 1797-1821 Abstract: The Bank Restriction Act of 1797 made legal the Bank of England’s suspension of the convertibility of its banknotes. The current historical consensus is that it was a result of the state's need to finance the war, France’s remonetisation, a loss of confidence in the English country banks, and a run on the Bank of England’s reserves. We argue that while these factors help us understand the timing of the Restriction period, they cannot explain its success. We deploy new long-term data which leads us to a complementary explanation: the policy succeeded thanks to the reputation of the Bank of England, achieved through a century of monetary stability. Creation-Date: 2016-07 Revision-Date: 2016-10 Classification-JEL: N13, N23, N43 Keywords: Bank of England, financial revolution, fiat money, money supply, monetary policy commitment, reputation, and time-consistency, regime shift, financial sector growth File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP67.pdf Number: 67 Handle: RePEc:cgs:wpaper:67 Template-Type: ReDIF-Paper 1.0 Author-Name: Alexander Hijzen Author-Name: Pedro S. Martins Title: No Extension without Representation? Evidence from a Natural Experiment in Collective Bargaining Abstract: In many countries, notably across Europe, collective bargaining coverage is enhanced by government-issued extensions that widen the reach of collective agreements beyond their signatory parties to all firms and workers in the same sector. This paper analyses the causal impact of such extensions on employment using a natural experiment in Portugal: the immediate suspension by the government that took office in 21 June 2011 of the (until then) nearly automatic extensions. The combination of this suspension and the time needed for processing the extension applications resulted in a sharp and unanticipated decline in the extension probability of agreements signed several months earlier, around 1 March 2011. Our results, based on a regression discontinuity design and matched employer-employee-agreement panel data, suggest that extensions had a negative impact on employment growth. Moreover, the effects tend to be concentrated amongst non-affiliated firms. The lack of representativeness of employer associations is a potentially important factor behind the adverse effect of extensions. Another is the role of retro-activity in combination with the administrative delay in processing extensions. This is particularly relevant in the context of a recession. Creation-Date: 2016-07 Classification-JEL: J52, J58, J21 Keywords: collective bargaining, industrial relations, employer associations, wage setting, employment File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP68.pdf Number: 68 Handle: RePEc:cgs:wpaper:68 Template-Type: ReDIF-Paper 1.0 Author-Name: Samira Barzin Author-Name: Sabine D'Costa Author-Name: Daniel Graham Title: A Pseudo-Panel Approach to Estimating Dynamic Effects of Road Infrastructure Provision on Firm Performance in a Developing Country Context Abstract: We construct a pseudo-panel of Colombian firms based on the Colombian Annual Manufacturing Survey to study the effects of transportation infrastructure on firm performance in a developing country. Our findings report an output elasticity with respect to road infrastructure of 0.132 to 0.146 across the specifications, which confirms our initial hypothesis that roads are an important driver for private sector output growth. The fact that our results are larger than those reported in the literature for developed countries could suggest that the role of transportation infrastructure is relatively more important for the economy of developing countries. Furthermore, our findings reveal that there exists a time lag with which firms’ productions react to changes in the road stock. We interpret these findings as firms requiring time to adjust their production processes to road improvements of at least a year. We furthermore identify that the effect of road infrastructure is particularly large for those manufacturing industries that are capital-intensive and produce heavy goods. Further robustness tests reveal that our results are not driven by the possibility of agglomeration economies or the chosen measurement of transportation infrastructure. We additionally provide Monte Carlo simulations to provide support for the validity of pseudo-panels in the context of firm-level data. Creation-Date: 2016-08 Classification-JEL: O18, O14, R42, C15 Keywords: Infrastructure; Roads; Economic Development; Pseudo-Panels; Monte Carlo Simulations; Latin America; Colombia File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP69.pdf Number: 69 Handle: RePEc:cgs:wpaper:69 Template-Type: ReDIF-Paper 1.0 Author-Name: Paul Dolan Author-Name: Georgios Kavetsos Author-Name: Christian Krekel Author-Name: Dimitris Mavridis Author-Name: Robert Metcalfe Author-Name: Claudia Senik Author-Name: Stefan Szymanski Author-Name: Nicolas R Ziebarth Title: The Host with the Most? The Effects of the Olympic Games on Happiness Abstract: We show that hosting the Olympic Games in 2012 had a positive impact on the life satisfaction and happiness of Londoners during the Games, compared to residents of Paris and Berlin. Notwithstanding issues of causal inference, the magnitude of the effects is equivalent to moving from the bottom to the fourth income decile. But they do not last very long: the effects are gone within a year. These conclusions are based on a novel panel survey of 26,000 individuals who were interviewed during the summers of 2011, 2012, and 2013, i.e. before, during, and after the event. The results are robust to selection into the survey and to the number of medals won. Creation-Date: 2016-08 Classification-JEL: I30, I31, I38, L83, Z20, Z28 Keywords: Subjective well-being, Life Satisfaction, Happiness, Olympic Games, Natural experiment File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP70.pdf Number: 70 Handle: RePEc:cgs:wpaper:70 Template-Type: ReDIF-Paper 1.0 Author-Name: Georg von Graevenitz Author-Name: Christian Helmers Author-Name: Valentine Millot Author-Name: Oliver Turnbull Title: Does Online Search Predict Sales? Evidence from Big Data for Car Markets in Germany and the UK Abstract: We use online search data to predict car sales in the German and UK automobile industries. Search data subsume several distinct search motives, which are not separately observable. We develop a model linking search motives to observable search data and sales. The model shows that predictions of sales relying on observable search data as a proxy for prepurchase search will be biased. We show how to remove the biases and estimate the effect of pre-purchase search on sales. To assist identification of this effect, we use the introduction of scrappage subsidies for cars in 2008/2009 as a quasi-natural experiment. We also show that online search data are (i) highly persistent over time, (ii) potentially subject to permanent shocks, and (iii) correlated across products, but to different extent. We address these challenges to estimation and inference by using recent econometric methods for large N, large T panels. Creation-Date: 2016-08 Classification-JEL: D Keywords: Online search, Google Trends, Serial correlation, Non-stationarity, Common Correlated Effects, Large Panels File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP71.pdf Number: 71 Handle: RePEc:cgs:wpaper:71 Template-Type: ReDIF-Paper 1.0 Author-Name: Pedro S. Martins Title: Can overtime premium flexibility promote employment? Firm- and worker-level evidence from a labour law reform Abstract: In 2012, in the midst of a recession, a labour law reform in Portugal allowed firms to reduce the overtime premium paid to their workers by 50% or more. Until then, overtime premiums were set by law at a relatively high level and could not be cut unilaterally. We analyse matched employer-employee panel data, including worker-level base and overtime hours and pay, to shed light on the effects of the resulting greater flexibility in overtime pay setting. We find that half of the firms using overtime in 2011 did reduce their overtime premiums in a manner consistent with the reform, in particular those firms making greater use of overtime and paying higher premiums. Moreover, using difference-in-differences matching and a long list of covariates, we find that those firms that cut overtime premiums exhibit significant relative increases in overtime usage, employment and sales following the reform. Overall, our results highlight the important but not exclusive role of legal restrictions behind downward nominal pay rigidity. Our findings also suggest a significant potential of overtime pay flexibility to promote employment, even during a downturn. Creation-Date: 2016-08 Classification-JEL: J22, J23, J38 Keywords: Working time, wage rigidity, employment resilience, labour reforms File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP72.pdf Number: 72 Handle: RePEc:cgs:wpaper:72 Template-Type: ReDIF-Paper 1.0 Author-Name: Pedro S. Martins Title: Should the maximum duration of fixed-term contracts increase in recessions? Evidence from a law reform Abstract: Fixed-term contracts (FTCs) may be an important tool to promote hirings and employment, particularly in recessions or when permanent contracts are costly. Therefore, it may be useful to let some of the legal parameters of FTCs (as well as those of other labour market institutions) vary systematically over the business cycle, namely increasing their flexibility during downturns. We evaluate this idea by examining the short-term effects of a new law introduced in Portugal, in the midst of a recession, which increased the maximum duration of FTCs from three to four and a half years. Our analysis is based on regression-discontinuity (and difference-in-differences) methods, applied to matched panel data. We find a considerable take up of this measure, as conversions to permanent contracts drop by 20%. Moreover, while we do not detect significant effects on employment status in the subsequent year, worker churning is reduced significantly, as mobility of eligible fixed-term workers to other firms drops by 10%. Creation-Date: 2016-08 Classification-JEL: J23, J41, J63 Keywords: Employment law, worker mobility, segmentation, counterfactual evaluation File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP73.pdf Number: 73 Handle: RePEc:cgs:wpaper:73 Template-Type: ReDIF-Paper 1.0 Author-Name: Sanghamitra Bandyopadhyay Title: The persistence of inequality across Indian states Abstract: The persistence of regional inequalities in developing countries is well recognised to be of great concern. In this paper I track stochastic convergence in relative incomes for Indian states between 1960-2011 with the intent to identify high persistence and mean reversal. Traditional unit root tests suggest that shocks to relative incomes across the Indian states are permanent thus contradicting the stochastic convergence hypothesis. Interval estimates of the largest autoregressive root for the relative incomes of 15 Indian states are very wide. However, confidence interval estimates of the half life of the relative income shocks, that are robust to high persistence and small samples, reveal that in most cases they die out within 10 years, suggesting mean reversion for a large number of states. Finally, I estimate a fractionally integrated model and obtain mixed evidence of mean reversion in the data, with six out of the fifteen states experiencing mean reversion. In sum, while the evidence obtained does not support the stochastic convergence hypothesis, our findings reveal that the relative incomes have a relatively short half life and that some states’ relative incomes are mean-reverting. This result is encouraging and in contrast to earlier studies which indicate long term divergence and polarisation (Bandyopadhyay 2011). Creation-Date: 2016-09 Classification-JEL: O47, O53 Keywords: Inequality, Stochastic Convergence, Half Life, Fractional Integration, India File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP74.pdf Number: 74 Handle: RePEc:cgs:wpaper:74 Template-Type: ReDIF-Paper 1.0 Author-Name: Pedro S. Martins Title: The third worker: Assessing the trade-off between employees and contractors Abstract: Firms make labour demand decisions not only between permanent and non-permanent employees but also increasingly more between employees and contractors. Indeed, this third work format can be attractive, also when employment protection law is restrictive. This paper examines empirically this scarcely researched trade-off drawing on a recent reform in Portugal that cut the severance pay of new employee hires while leaving unchanged the regulations affecting contractors. Our analysis draws on difference-in-differences methods and original high-frequency firm-level panel data on both employees and contractors. We find that the reduction in severance pay had a large relative positive effect on the wage bills and worker counts of employees compared to contractors. This result, robust to a number of checks, highlights the role of labour regulations as an additional driver of more flexible labour formats. Creation-Date: 2016-09 Classification-JEL: J23, J41, J63 Keywords: Employment law, segmentation, duality, future of work File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP75.pdf Number: 75 Handle: RePEc:cgs:wpaper:75 Template-Type: ReDIF-Paper 1.0 Author-Name: Jose Ignacio Gimenez Nadal Author-Name: Almudena Sevilla Title: Intensive Mothering and Well-being: The Role of Education and Child Care Activity Abstract: We use data from the 2012, and 2013 Well-being Module of the American Time Use Survey to understand maternal momentary well-being, and how these vary by educational attainment. We document that even after controlling for a wide set of maternal characteristics, higher educated mothers report lower levels of happiness and meaning, and higher levels of fatigue when engaging in child-related activities than mothers with lower educational attainment. Further analysis reveals that there is no education gap in momentary wellbeing among fathers and non-mothers. These findings are consistent with more educated mothers feeling the pressures from the ideology of intensive mothering, whereby mother’s continuous time and attention is understood as being crucial for child development. Creation-Date: 2016-10 Classification-JEL: J31, J63, Z01 Keywords: Mothering. Momentary well-being, Child care, Ideology of intensive mothering, Time use File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP76.pdf Number: 76 Handle: RePEc:cgs:wpaper:76 Template-Type: ReDIF-Paper 1.0 Author-Name: Pedro S. Martins Title: Do wages increase when severance pay drops? Not in recessions Abstract: According to theory, wage rigidity may increase the scope for employment protection legislation (EPL) to have negative effects on employment. In this paper, we study this issue by analysing the extent to which entry wages respond to EPL. We exploit a recent reform in Portugal, in the midst of a recession, that reduced severance pay for new hires alone. Our main analysis is based on a regression-discontinuity approach using long monthly data on entry wages. We find no evidence of wage adjustments following the change in EPL, even when considering many different specifications and samples. This result highlights the potential of greater flexibility in EPL over the business cycle to reduce employment fluctuations. Creation-Date: 2016-10 Classification-JEL: J65, J31, E24 Keywords: Employment law, Seasonality, Wage rigidity, Severance File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP77.pdf Number: 77 Handle: RePEc:cgs:wpaper:77 Template-Type: ReDIF-Paper 1.0 Author-Name: Brigitte Granville Author-Name: Jaume Martorell Cruz Title: Squared Segmentation: How the Insider/Outsider divide across Public/Private Employment shapes attitudes towards markets. Abstract: This paper addresses an important gap in the literature by exploring the interaction of twin insider-outsider and public private/employment dualities on shaping attitudes towards markets. We show how, in countries highly segmented in both dimensions, the insider-outsider cleavage and the public-private employment division combines into a squared segmentation with public and private insiders, and public and private outsiders. Our assumption is that this squared segmentation is accompanied by negative attitudes towards market mechanisms that hinder reforms required to diminish the gap between insiders and outsiders. To flesh out this dynamic, we use France as our main case study, because it is an economy where these dualities are sharply drawn. We explore our assumption based on the Wave 5 of the World Values Survey, limiting our analysis to French and German respondents. Germany offers a suitable comparison group to France, as it has also a highly dual economy but structured through production sectors rather than through the public/private divide. The results are broadly in line with our assumptions. Unlike in Germany, French respondents’ attitudes towards markets depend heavily on whether they are employed in the public or private sector Creation-Date: 2016-11 Classification-JEL: J41, Z10, Z18 Keywords: labour market dualism, collective bargaining, market attitudes, institutions. File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP78.pdf Number: 78 Handle: RePEc:cgs:wpaper:78 Template-Type: ReDIF-Paper 1.0 Author-Name: Pedro S. Martins Title: Employment Resilience through Services Exports? Evidence from Matched Employer-Employee Data Abstract: Can increased exports of services make a significant contribution to employment resilience during recessions? We study the case of Portugal between 2007 and 2013, a period that includes both a major downturn and a number of structural reforms. Our methodology is based on matched employer-employee panel data and a simple difference-in-differences approach, contrasting service sectors, including those with greater export potential, with other sectors. We find that the employment levels of service sectors exhibit relative increases of approximately 10% in 2012-13. We also find that foreign direct investment explains an important part of this positive employment effect. Overall, our results support the view that services exports can accelerate macroeconomic adjustment, particularly when countries are able to attract foreign capital. Creation-Date: 2016-11 Classification-JEL: F16, J21, J31 Keywords: Exports of services, unemployment, labour reforms File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP79.pdf Number: 79 Handle: RePEc:cgs:wpaper:79 Template-Type: ReDIF-Paper 1.0 Author-Name: Alberto Alesina Author-Name: Caterina Gennaioli Author-Name: Stefania Lovo Title: Public Goods and Ethnic Diversity: Evidence from Deforestation in Indonesia Abstract: This paper shows that the level of deforestation in Indonesia is positively related to the degree of ethnic fractionalization at the district level. To identify a casual relation we exploit the exogenous timing of variations in the level of ethnic heterogeneity due to the creation of new jurisdictions. We provide evidence consistent with a lower control of politicians, through electoral punishment, in more ethnically fragmented districts. Our results bring a new perspective on the political economy of deforestation. They are consistent with the literature on (under) provision of public goods and social capital in ethnically diverse societies and suggest that when the underlying communities are ethnically fractionalized decentralisation can reduce deforestation by delegating powers to more homogeneous communities. Creation-Date: 2016-12 Classification-JEL: D73, H0, L73, 010 Keywords: Deforestation, Ethnic Diversity, Corruption, Indonesia. File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP80.pdf Number: 80 Handle: RePEc:cgs:wpaper:80 Template-Type: ReDIF-Paper 1.0 Author-Name: Pedro S. Martins Title: (How) Do Non-Cognitive Skills Programs Improve Adolescent School Achievement? Experimental Evidence Abstract: Non-cognitive skills programs may be an important policy option to improve the academic outcomes of adolescents. In this paper, we evaluate experimentally the EPIS program, which is based on relatively short bi-weekly individual or small-group non-cognitive mediation meetings with students selected based on their low school achievement. Our RCT estimates, covering nearly 3,000 7th- and 8th-grade students across over 50 schools and two years, indicate that the program increases the probability of progression by 11\% to 22\%. The effects are stronger amongst older students, girls, and in language subjects, and when the program mediator is of the same gender as the student. Creation-Date: 2017-04 Classification-JEL: I20, I24, J08 Keywords: Exports of services, unemployment, labour reforms File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP81.pdf Number: 81 Handle: RePEc:cgs:wpaper:81 Template-Type: ReDIF-Paper 1.0 Author-Name: Caterina Gennaioli Author-Name: Gaia Narciso Title: Toxic roads: Unearthing hazardous waste dumping Abstract: Illegal disposal of toxic waste has become an issue of concern in both developing and developed countries. Recycling hazardous waste entails very high costs, which might give strong incentives to dispose toxic material in an illegal way. This paper adopts an innovative strategy to identify where toxic waste might have been illicitly dumped. The strategy relies on a crucial premise: road constructions provide an ideal setting in which the burial of hazardous waste may take place. Guided by the medical literature, we investigate the health outcomes of individuals living along recently constructed roads in Ethiopia. We construct a unique dataset, which includes the extensive Demographic and Health Survey, together with georeferenced data on roads, villages and economic development, covering a 10-year period. We find that an additional road within a 5 kilometres radius is associated with an increase in infant mortality by 3 percentage points. Moreover, we provide evidence that young children living near a recently built road show a lower level of haemoglobin and are more likely to suffer from severe anaemia. A series of robustness checks confirms the above findings and excludes other potential confounding factors. Length: 63 pages Creation-Date: 2017-09 Classification-JEL: I15, Q51, Q53, O10. Keywords: Hazardous Waste, Health, Infant Mortality, Ethiopia File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP82.pdf Number: 82 Handle: RePEc:cgs:wpaper:82 Template-Type: ReDIF-Paper 1.0 Author-Name: Roxana Gutiérrez-Romero Author-Name: Luciana Mendez-Errico Title: Does inequality foster or hinder the growth of entrepreneurship in the long-run? Abstract: This article assesses the extent to which historical levels of inequality affect the creation and survival of businesses over time. To this end, we use the Global Entrepreneurship Monitor (GEM) survey across 66 countries over 2005–2011. We complement this survey with data on income inequality dating back to early 1800s and current institutional environment, such as the number of procedures to start a new business, countries’ degree of financial inclusion, corruption and political stability. We find that although inequality increases the number of firms created out of need, inequality reduces entrepreneurial activity as in net terms businesses are less likely to be created and survive over time. These findings are robust to using different measures of inequality across different points in time and regions, even if excluding Latin America the most unequal region in the world. Our evidence then supports theories that argue early conditions, crucially inequality, influence development path. Creation-Date: 2017-09 Classification-JEL: M2, O1, D3, C23. Keywords: Inequality; entrepreneurship; panel data; instrumental variables. File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP83.pdf Number: 83 Handle: RePEc:cgs:wpaper:83 Template-Type: ReDIF-Paper 1.0 Author-Name: Roxana Gutiérrez-Romero Title: How does inequality affect long-run growth? Abstract: This article shows that countries with higher historical levels of income inequality, dating back to the early 1800s, experienced lower rates of growth centuries after in terms of number of firms created, number of employees hired, firms’ output, value added and profit margin. To increase the understanding as the channels through which historical inequality deterred growth, the article exploits the differences across industries’ intensities in skilled labour, physical capital, dependence on external finance and written contracts across 28 sectors in 57 countries during the 1985–2010 period. It is shown that industries relatively more in need of external finance and contracts experienced lower firm creation growth in countries with higher levels of past inequality. Similarly, industries intensive in skilled labour and physical capital experienced lower rate of growth in the number of employees hired, firms’ output and real value in more unequal countries. Creation-Date: 2017-09 Classification-JEL: O11, O47, C5 Keywords: Inequality, Entrepreneurship, panel study File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP84.pdf Number: 84 Handle: RePEc:cgs:wpaper:84 Template-Type: ReDIF-Paper 1.0 Author-Name: Pedro S. Martins Title: Clicking towards Mozambique's New Jobs: A research note Abstract: Online jobs portals can be an important source of labour market information, also in developing countries. This paper presents an illustration from Mozambique, a country that has exhibited high economic growth rates but limited employment creation as other countries in Sub-Saharan Africa. First, we highlight the potential but also pitfalls of these portals in characterising and improving the functioning of the labour market. We then analyse the micro (mouse-click-level) data made available by a portal focused on the formal sector of the Mozambique labour market. Our evidence is also consistent with high levels of unemployment and or underemployment. The findings are also suggestive of mismatches between labour demand and the supply of schooling and training. Creation-Date: 2017-09 Classification-JEL: J23, J24, J64 Keywords: Big data, Labour market information systems, Internet, Matching File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP85.pdf Number: 85 Handle: RePEc:cgs:wpaper:85 Template-Type: ReDIF-Paper 1.0 Author-Name: Sabine D’Costa Author-Name: Enrique Garcilazo Author-Name: Joaquim Oliveira Martins Title: Impact of macro-structural reforms on the productivity growth of regions: distance to the frontier matters Abstract: Using a panel of 265 regions from 24 OECD countries from 1997 to 2007, we explore the impact of nation-wide macroeconomic and structural policies on the productivity growth of subnational regions. We find that average relationships between nation-wide policies and the growth of regions can hide strong differentiated effects according to the distance to the frontier: relaxing employment protection legislation on temporary contracts, lowering barriers to trade and investment as well as increasing trade openness enhances productivity growth in lagging regions, whereas reducing barriers to entrepreneurship or higher levels of government debt has a positive effect on regions that are closer to the productivity frontier. Creation-Date: 2017-12 Classification-JEL: R11, R58, O18 Keywords: structural reforms; regional growth; lagging regions File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP86.pdf Number: 86 Handle: RePEc:cgs:wpaper:86 Template-Type: ReDIF-Paper 1.0 Author-Name: Danula K. Gamage Author-Name: Pedro S. Martins Title: Evaluating Public-Private Partnerships in Employment Services: The Case of the UK Work Programme Abstract: Although there are many public-private partnerships in employment services around the world, relatively little is known about the link between the design and structures of these partnerships and their labour market effects. Here we examine the case of the UK Work Programme (WP), which features considerable flexibility in interventions and offers financial incentives that vary strongly with jobseeker profiles and outcomes. We draw on data on all two million WP participants between 2011 and 2016 and exploit the programme's structure to disentangle the role of the different providers and jobseeker profiles from business cycle and other confounding effects. Our main results are: 1) the WP has a much stronger effect in increasing transitions out of unemployment than increasing transitions to employment, even if its incentives are related to the latter outcomes; 2) the performance differences across providers are small, despite their large number and the flexibility in interventions; 3) although transitions to employment of harder-to-help jobseekers are significantly better rewarded, these individuals still performed significantly worse than participants closer to the labour market. Creation-Date: 2018-01 Classification-JEL: J64, J68, J22. Keywords: Public employment services, job search, public policy evaluation File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP87.pdf Number: 87 Handle: RePEc:cgs:wpaper:87 Template-Type: ReDIF-Paper 1.0 Author-Name: Judite Goncalves Author-Name: Pedro S. Martins Title: The effect of self-employment on health: Evidence from longitudinal social security data Abstract: The growth of novel flexible work formats raises a number of questions about their effects upon health and the potential required changes in public policy. However, answering these questions is hampered by lack of suitable data. This is the first paper that draws on comprehensive longitudinal administrative data to examine the impact of self-employment in terms of health. It also considers an objective measure of health -hospital admissions- that is not subject to recall or other biases that may affect previous studies. Our findings, based on a representative sample of over 100,000 individuals followed monthly from 2005 to 2011 in Portugal, indicate that the likelihood of hospital admission of self-employed individuals is about half that of wage workers. This finding holds even when accounting for a potential self-selection of the healthy into self-employment. Similar results are found for mortality rates. Creation-Date: 2018-01 Classification-JEL: I18, J24 Keywords: Self-employment; hospitalization; sick leave; mortality File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP88.pdf Number: 88 Handle: RePEc:cgs:wpaper:88 Template-Type: ReDIF-Paper 1.0 Author-Name: Thomas Kemeny Author-Workplace-Name: Queen Mary, University of London Author-Name: Taner Osman Author-Workplace-Name: University of California, Los Angeles Title: The Wider Impacts of High-Technology Employment: Evidence from U.S. Cities Abstract: Innovative, high-technology industries are commonly described as drivers of regional development. ‘Tech’ workers earn high wages, but they are also said to generate knock-on effects throughout the local economies that host them, spurring growth in jobs and wages in nontradable activities. At the same time, in iconic high-tech agglomerations like the San Francisco Bay Area, the home of Silicon Valley, the success of the tech industry creates tensions, in part as living costs rise beyond the reach of many non-tech workers. Across a large sample of U.S. cities, this paper explores these issues systematically. Combining annual data on wages, employment and prices from the Quarterly Census of Employment and Wages, the Department of Housing and Urban Development and the Consumer Price Index, it estimates how growth in tradable tech employment affects the real, living-cost deflated wages of local workers in nontradable sectors. Results indicate that high-technology employment has significant, positive, but modest effects on the real wages of workers in nontradable sectors. These effects appear to be spread consistently across different kinds of nontradable activities. In terms of substantive wider impacts, tech appears benign, though fairly ineffectual. Creation-Date: 2018-05 Classification-JEL: E24, J21; J31, L86, O18, R11, R31 Keywords: high-technology, inequality, real wages, nontradable services; specialization, housing File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP89.pdf Number: 89 Handle: RePEc:cgs:wpaper:89 Template-Type: ReDIF-Paper 1.0 Author-Name: Sanghamitra Bandyopadhyay Author-Workplace-Name: Queen Mary, University of London Author-Name: Elliott Green Author-Workplace-Name: London School of Economics Title: Explaining inter-ethnic and inter-religious marriage in Sub-Saharan Africa Abstract: Inter-cultural marriages have long been of great interest to social scientists who wish to examine how ethnic, religious, racial and other identities form and change over time. However, the vast majority of this research has been concentrated in developed countries. As such we undertake the first major examination into the causes and correlates of inter-ethnic and inter-religious marriage in contemporary Sub-Saharan Africa. We use Demographic and Health Survey (DHS) couples data in a series of multi-level logit models from up to 36 countries to document a number of findings. First, we show that inter-ethnic marriage rates are high, at 22.3% on average, and rising across Africa over the past 30 years, with rates approaching 50% for recent marriages in Gabon and Zambia and rising rates over time for all countries in our dataset. In contrast, however, we show that inter-religious marriage rates are much lower, at only 5%, and stagnant, with no country average higher than 15% and declining over time in a number of countries. Second, as expected from the literature on inter-cultural marriages in other contexts, we show that modernization variables such as urbanization, literacy/education, wealth and declines in polygamy and agricultural employment are significantly correlated with rising levels of inter-ethnic marriage; in contrast, the relationship between modernization and inter-religious marriage is much more ambiguous. Third, we show that inter-ethnic marriage is significantly correlated with higher age at marriage, being previously married and migration before marriage. Finally, we find no evidence that inter-married couples have fewer children, in contrast to findings elsewhere. Creation-Date: 2018-05 Classification-JEL: J12, N37, O10 Keywords: Ethnicity, Religion, Marriage, Sub-Saharan Africa, DHS data, Modernization File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP90.pdf Number: 90 Handle: RePEc:cgs:wpaper:90 Template-Type: ReDIF-Paper 1.0 Author-Name: Ravshonbek Otojanov Title: Energy Transitions, Directed Technical Change and the British Industrial Revolution Abstract: This paper provides an alternative view on the transition from stagnation to growth by building a two-sector model of the British Industrial Revolution. The sectors differ only in the use of input factors, wood and coal. The model characterises the transition from stagnation to high growth as a direct consequence of the transition from biomass to coal use in Britain. Formalising the accounts of economic historians, technological progress is modelled as an endogenous process driven by the cost differentials between wood and coal. As wood price rises and coal price remains stable it becomes profitable to innovate in coal-using technologies and hence, innovation shifts to the coal-using sector. The model is calibrated to match the main features of the British economy in the transition period between 1550 and 1849. The model reproduces one of the important characteristics of the First Industrial Revolution – transition from low growth to high growth. Counterfactual analyses indicate that, absent coal reserves and low cost coal supplies, growth would have been slower and income per capita would have been 53% of that observed in 1849. Also, the model does a good job in explaining the timing of structural transformations in the British economy. Creation-Date: 2018-09 Classification-JEL: O30, O41, Q43, D50 Keywords: Industrial Revolution; Economic Growth; Directed Technical Change; Innovation; Energy Transitions. File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP91.pdf Number: 91 Handle: RePEc:cgs:wpaper:91 Template-Type: ReDIF-Paper 1.0 Author-Name: Ravshonbek Otojanov and Roger Fouquet Title: Factor prices and induced technical change in the Industrial Revolution Abstract: Allen (2009) has argued that the divergence in factor prices determined the direction of technical change that altered the course of economic growth in Britain. Using historical data for the 1700 – 1914 period, this paper derives and analyses the nature and direction of technical change. The results show that technical change was biased during the Industrial Revolution and that the bias stemmed from the divergence in the cost of labour and energy. In particular, labour saving responded strongly to the acceleration in wage growth in the 1850-1914 period. Overall, technical change was labour-saving, energy-using and hence capital-deepening. Moreover, the evidence shows that the expansion of effective energy supply allowed British economy to sustain output growth in the First Industrial Revolution era. Labour-saving innovations were particularly crucial in the Second Industrial Revolution. Creation-Date: 2018-09 Classification-JEL: N13, O3, O11 Keywords: Industrial Revolution; Factor-Saving Technical Change; Induced Technical Change, Productivity, Innovation. File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP92.pdf Number: 92 Handle: RePEc:cgs:wpaper:92 Template-Type: ReDIF-Paper 1.0 Author-Name: Pedro S. Martins Title: The Microeconomic Impacts of Employee Representatives: Evidence from Membership Thresholds Abstract: Employee representatives in firms are a potentially key but not yet studied source of the impact of unions and works councils. Their actions can shape multiple drivers of firm performance, including collective bargaining, strikes, and training. This paper examines the impact of union rep mandates by exploiting legal membership thresholds present in Portugal: for instance, while firms employing up to 49 union members are required to have one union rep, this increases to two (three) union reps for firms with 50 to 99 (100-199) union members. Drawing on matched employer-employee data on the unionised sector and regression discontinuity methods, we find that a one percentage point increase in the legal union rep/members ratio leads to an increase in firm performance of at least 7%. This result holds across multiple dimensions of firm performance and appears to be driven by increased training. However, we find no effects of union reps on firm-level wages, given the predominance of sectoral collective bargaining. Creation-Date: 2018-10 Classification-JEL: J51, J31, L25 Keywords: Firm Performance, Union Delegates, Collective Bargaining. File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP93.pdf Number: 93 Handle: RePEc:cgs:wpaper:93 Template-Type: ReDIF-Paper 1.0 Author-Name: Georg von Graevenitz Author-Workplace-Name: Queen Mary, University of London Author-Name: Antanina Garanasvili Author-Workplace-Name: Bournemouth University Title: The European Patent System: A Descriptive Analysis Abstract: The European Patent System consists of national patent offices (NPOs) and the supranational European Patent Office (EPO). EPO and the NPOs have granted patents in Europe side-by-side since 1980. The resulting patent system is complicated and less coordinated than might be expected. Firms must consider a number of variables when selecting the route of patenting they take within this system: price, rigour of examination, duration of examination, quality of legal redress. To date there is little descriptive evidence on how firms choose between EPO and national offices. This paper provides a rich descriptive analysis of patenting in Europe. We analyze how origin, size and technological focus of companies, affect how they choose among patent offices within the EPS and report differences in examination durations and grant rates across patent offices. Creation-Date: 2018-10 Classification-JEL: O34, O31, L20, K11 Keywords: Patents, European Patent System, Validation, Patent Propensity File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP94.pdf Number: 94 Handle: RePEc:cgs:wpaper:94 Template-Type: ReDIF-Paper 1.0 Author-Name: Pedro S. Martins Title: Making their own weather? Estimating employer labour-market power and its wage effects Abstract: The subdued wage growth observed over the last years in many countries has spurred renewed interest in monopsony views of the labour market. This paper is the first to measure the extent and robustness of employer labour-market power and its wage implications exploiting comprehensive matched employer-employee data. We find average (employment-weighted) Herfindhal indices of 800 to 1,100; and that less than 9% of workers are exposed to concentration levels thought to raise market power concerns. However, these figures can increase significantly with different methodological choices. Finally, when holding worker composition constant and instrumenting concentration, wages are found to be negatively affected by employer concentration, with elasticities of between -1.5% and -3%. Creation-Date: 2018-10 Classification-JEL: J42, J31, J63 Keywords: Oligopsony, Wages, Portugal File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP95.pdf Number: 95 Handle: RePEc:cgs:wpaper:95 Template-Type: ReDIF-Paper 1.0 Author-Name: Wenjing Duan Author-Name: Pedro S. Martins Title: Rent sharing in China: Magnitude, heterogeneity and drivers Abstract: Do firms in China share rents with their workers? We address this question by examining firm-level panel data covering virtually all manufacturing firms over the period 2000-2007, representing an average of 200,000 firms and 54 million workers per year. We find robust evidence of rent sharing (RS): workers that would move from low- to high-profit firms would see their wages increase by about 45%. The results are based on multiple instrumental variables, including firm-specific international trade shocks. We also present a number of complementary findings: RS is weaker in firms with more women and less educated workers; RS involves an element of risk sharing, as wages also decrease when profits fall; RS is lower in regions with more latent competition from rural workers; higher minimum wages tend to reduce RS; and, while employer labour market power reduces wages, it increases RS. Overall, despite its importance, RS in China is smaller than in developed economies, which reflects the weaker bargaining power of its workers and the different scope of its labour market institutions. Creation-Date: 2018-12 Classification-JEL: J31, J41, J50 Keywords: Wages, Bargaining, Monopsony File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP96.pdf Number: 96 Handle: RePEc:cgs:wpaper:96 Template-Type: ReDIF-Paper 1.0 Author-Name: Antoine Dechezleprêtre Author-Name: Caterina Gennaioli Author-Name: Ralf Martin Author-Name: Mirabelle Muûls Author-Name: Thomas Stoerk Title: Searching for Carbon Leaks in Multinational Companies Abstract:Does unilateral climate change policy cause companies to shift the location of production, thereby creating carbon leakage? In this paper, we analyse the effect of the European Union Emissions Trading System (EU ETS) on the geographical distribution of carbon emissions of multinational companies. The empirical evidence is based on unique data for the period 2007-2014 from the Carbon Disclosure Project, which tracks emissions of multinational businesses by geographical region. Because they already operate from multiple locations, multinational firms should be the most prone to carbon leakage. Our data includes regional emissions of 1,122 companies, of which 261 are subject to EU ETS regulation. We find no evidence that the EU ETS has led to a displacement of carbon emissions from Europe towards the rest of the world, including in countries with no climate policy in place and within energy-intensive companies. A large number of robustness checks confirm this finding. Overall, the paper suggests that modest differences in carbon prices between countries do not induce carbon leakage. Creation-Date: 2019-01 Classification-JEL: H23, Q53, Q54, Q58. Keywords: Carbon leakage, EU-ETS, CO2 emissions, multinational companies. File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP97.pdf Number: 97 Handle: RePEc:cgs:wpaper:97 Template-Type: ReDIF-Paper 1.0 Author-Name: Georg von Graevenitz Author-X-Name-First: Georg Author-X-Name-Last: von Graevenitz Author-Email: g.v.graevenitz@qmul.ac.uk Author-Workplace-Name: School of Business and Management, Queen Mary University of London. Author-Name: Stuart J.H. Graham Author-X-Name-First: Stuart J.H. Author-X-Name-Last: Graham Author-Email: Author-Workplace-Name: Georgia Institute of Technology Author-Name: Amanda Myers Author-X-Name-First: Amanda Author-X-Name-Last: Myers Author-Email: Author-Workplace-Name: United States Patent & Trademark Office. Title: Distance (Still) Hampers Diffusion of Innovations Abstract: This paper introduces a new innovation data source to re-examine how spatial distance affects the diffusion of ideas and innovations in an economy. We exploit the descriptions of products and services contained in U.S. trademark registrations during 1980-2012 to identify terms (tokens) not previously used by firms to describe products and services. From these we select tokens frequently re-used by follower firms. By linking the new tokens to the business addresses of innovator and follower firms, our data encompass all instances in which innovations captured by trademark tokens arise within and diffuse across the United States. We aggregate innovations at the year and ZIP code level and estimate Poisson models of the likelihood and intensity of diffusion between locations. After endogenising the creation of new diffusion links between ZIP codes, our results show that spatial distance no longer affects the creation of diffusion links within the US after 1996. However, contingent on previous diffusion from a sending to a receiving ZIP code, we find persistent, strong and negative effects of greater spatial distance on the intensity (extent) of diffusion for existing transfer links between locations within the US. Length: 24 pages Creation-Date: 2019-08 Revision-Date: Publication-Status: Classification-JEL: O3, O51, R1, R32 Keywords: Innovation, Diffusion, Rate of Diffusion, Distance, Innovation Index, Trademarks, Patents File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP98.pdf Number: 98 Handle: RePEc:cgs:wpaper:98 Template-Type: ReDIF-Paper 1.0 Author-Name: Georg von Graevenitz Author-X-Name-First: Georg Author-X-Name-Last: von Graevenitz Author-Email: g.v.graevenitz@qmul.ac.uk Author-Workplace-Name: School of Business and Management, Queen Mary University of London. Author-Name: Stuart J.H. Graham Author-X-Name-First: Stuart J.H. Author-X-Name-Last: Graham Author-Email: Author-Workplace-Name: Georgia Institute of Technology Author-Name: Amanda Myers Author-X-Name-First: Amanda Author-X-Name-Last: Myers Author-Email: Author-Workplace-Name: United States Patent & Trademark Office. Title: The Problem of Earlier Rights: Evidence from the European Trademark System Abstract: Laws protecting intellectual property rights balance interests of earlier and later rights holders. The tradeoffs are well established for patents. We argue that similar considerations apply to trademarks. Jurisdictions differ in how strongly they protect earlier rights, with EU trademark law protecting the registered use of an earlier right for much longer than US trademark law. Laws in both jurisdictions seek to eventually align registered use of earlier rights with their actual use, creating space on the trademark register for later rights. Data from a recent reform of trademark fees reveal that registered and actual use of EU marks frequently fail to align as intended. We analyse trademark opposition cases at EUIPO to test whether this creates costs for owners of later rights. We find that a subset of firms relies on the protection afforded to earlier rights to permanently expand the breadth of their marks beyond actual use, limiting access to trademarks for later applicants. We discuss policy implications. Length: 24 pages Creation-Date: 2020-03 Revision-Date: Publication-Status: Classification-JEL: Keywords: Trademark, Clutter, Opposition, Non-use, Barriers to entry. File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP99.pdf Number: 99 Handle: RePEc:cgs:wpaper:99 Template-Type: ReDIF-Paper 1.0 Author-Name: Li Dai Author-X-Name-First: Li Author-X-Name-Last: Dai Author-Email: li.dai@qmul.ac.uk Author-Workplace-Name: School of Business and Management, Queen Mary University of London. Author-Name: Pedro S. Martins Author-X-Name-First: Pedro S. Author-X-Name-Last: Martins Author-Email: p.martins@qmul.ac.uk Author-Workplace-Name: School of Business and Management, Queen Mary University of London. Title: Does vocational education pay off in China? Instrumental-variable quantile-regression evidence Abstract: As China's economy evolves, vocational education may become more important.In this paper, we study the returns to secondary vocational education in China and their differences along the wage distribution. We also use instrumental variables, based on geographical and longitudinal changes in academic and vocational enrolment opportunities, to address the selection between the two types of education. We find that vocational education provides a wage premium vis-a-vis academic education of over 30% but only for individuals at the middle of the conditional wage distribution. Length: 45 pages Creation-Date: 2020-04 Revision-Date: Publication-Status: Classification-JEL: I26, I25, J24, J31, C36 Keywords: return to education, vocational education, instrumental variables, quantile treatment effects. File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP100.pdf Number: 100 Handle: RePEc:cgs:wpaper:100 Template-Type: ReDIF-Paper 1.0 Author-Name: Roxana Gutiérrez-Romero Author-X-Name-First: Roxana Author-X-Name-Last: Gutiérrez-Romero Author-Email: r.gutierrez@qmul.ac.uk Author-Workplace-Name: School of Business and Management, Queen Mary University of London. Title: The contrasting effects of ethnic, cultural and immigrant diversity on entrepreneurship and job creation Abstract: This paper is the first one to examine empirically whether ethnic, cultural and immigrant population diversity within countries is favourable for entrepreneurship and job creation. Building on existing, yet disjointed theories on diversity, the paper provides insights as to why different types of diversity may have different effects on entrepreneurship. We test our predictions using multilevel modelling and the Global Entrepreneurship Monitor survey of over 1.5 million people across 88 countries. We find that diversity boosts the number start-ups and new businesses. Also, businesses hire more employees in countries that have a higher population share of skilled or unskilled immigrants due to skill complementarity. However, businesses are more likely to close down in countries with higher cultural or immigration diversity, likely due to market fragmentation. Our results show that small changes in diversity lead to significant changes in the probability of business survival and job creation. These results have important policy implications for countries seeking to toughen their immigration policies. Since societies will continue to become more diverse, considering the multiple dimensions of diversity will become ever more relevant for research and policymaking. Length: 39 pages Creation-Date: 2020-04 Revision-Date: Publication-Status: Classification-JEL: F22, M13, M14, M21, M51, L26, R11. Keywords: Ethnolinguistic diversity; culture; immigration, entrepreneurship; start-ups; job creation; GEM survey; cross-country analysis. File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP101.pdf Number: 101 Handle: RePEc:cgs:wpaper:101 Template-Type: ReDIF-Paper 1.0 Author-Name: Roxana Gutiérrez-Romero Author-X-Name-First: Roxana Author-X-Name-Last: Gutiérrez-Romero Author-Email: r.gutierrez@qmul.ac.uk Author-Workplace-Name: School of Business and Management, Queen Mary University of London. Title: Inequality affects long-run growth: Cross-industry, cross-country evidence Abstract: The theoretical literature has predicted that inequality affects long-run growth by reducing human and physical capital, particularly in the presence of imperfect credit markets and other contractual frictions. We test these four mechanisms using measures of inequality at the country-level, dating as far back as the 1700s, and the 1800s, and data for 27 manufacturing industries across 88 countries during 1981–2015. Our findings show industries that are more dependent on financial markets experience lower long-run growth in real output, number of firms and real salaries in more unequal countries compared to more egalitarian. Similarly, industries intensive in physical capital experience lower growth in salaries in highly unequal countries. However, there is no evidence that industries intensive in human capital experience any differential growth in output, the number of firms, average number of employees or salaries in unequal countries compared to more egalitarian, suggesting that the progress made in public schooling provision could have lessened the effect of inequality. Moreover, industries with complex contractual arrangements experience lower growth in the number of firms and paradoxically higher growth in the number of employees hired in more unequal countries, in line with the predictions of the theoretical literature. These findings are robust to using contemporaneous indicators of inequality and instrumental variable specifications. Length: 42 pages Creation-Date: 2020-04 Revision-Date: Publication-Status: Classification-JEL: O11, O47, O50, E22, J24, C36. Keywords: Inequality, Growth, Benchmark analysis,Instrumental variables. File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP102.pdf Number: 102 Handle: RePEc:cgs:wpaper:102 Template-Type: ReDIF-Paper 1.0 Author-Name: Roxana Gutiérrez-Romero Author-X-Name-First: Roxana Author-X-Name-Last: Gutiérrez-Romero Author-Email: r.gutierrez@qmul.ac.uk Author-Workplace-Name: School of Business and Management, Queen Mary University of London. Title: Inequality, persistence of the informal economy, and club convergence Abstract: Several new dualistic models have re-examined the causes of the informal economy and have made testable predictions about the long-lasting role of inequality. We test these predictions using historical indicators of inequality, dating back to the 1700s, and data on the informal economy across 138 countries over the 1991–2015 period. We find that past levels of inequality are the most salient factors explaining the size of the informal economy, while improving credit access, reducing tax burden and business costs play a minor role. These results are robust to using alternative inequality measures from various years during the 1700–1992 period, using instrumental variables, and four alternative measurements of the informal economy. Moreover, there is no evidence that the informal economy is converging to the same steady state. Instead, there is convincing evidence of club convergence. Countries with the highest levels of initial inequality are diverging from those that started with lower levels of inequality and those who have made significant redistribution. Results suggest the importance of early conditions in determining the persistence of the dual economy with important policy implications. Length: 78 pages Creation-Date: 2020-04 Revision-Date: Publication-Status: Classification-JEL: E2, D63, O47, O5. Keywords: Informal economy, Inequality, Club convergence, Institutions. File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP103.pdf Number: 103 Handle: RePEc:cgs:wpaper:103 Template-Type: ReDIF-Paper 1.0 Author-Name: Roxana Gutiérrez-Romero Author-X-Name-First: Roxana Author-X-Name-Last: Gutiérrez-Romero Author-Email: r.gutierrez@qmul.ac.uk Author-Workplace-Name: School of Business and Management, Queen Mary University of London. Title: Conflict in Africa during COVID-19: social distancing, food vulnerability and welfare response Abstract: We study the effect of social distancing, food vulnerability, welfare and labour COVID-19 policy responses on riots, violence against civilians and food-related conflicts. Our analysis uses georeferenced data for 24 African countries with monthly local prices and real-time conflict data reported in the Armed Conflict Location and Event Data Project (ACLED) from January 2015 until early May 2020. Lockdowns and recent welfare policies have been implemented in light of COVID-19, but in some contexts also likely in response to ongoing conflicts. To mitigate the potential risk of endogeneity, we use instrumental variables. We exploit the exogeneity of global commodity prices, and three variables that increase the risk of COVID-19 and efficiency in response such as countries colonial heritage, male mortality rate attributed to air pollution and prevalence of diabetes in adults. We find that the probability of experiencing riots, violence against civilians, food-related conflicts and food looting has increased since lockdowns. Food vulnerability has been a contributing factor. A 10% increase in the local price index is associated with an increase of 0.7 percentage points in violence against civilians. Nonetheless, for every additional anti-poverty measure implemented in response to COVID-19 the probability of experiencing violence against civilians, riots and food-related conflicts declines by approximately 0.2 percentage points. These anti-poverty measures also reduce the number of fatalities associated with these conflicts. Overall, our findings reveal that food vulnerability has increased conflict risks, but also offer an optimistic view of the importance of the state in providing an extensive welfare safety net. Length: 41 pages Creation-Date: 2020-05 Revision-Date: Publication-Status: Classification-JEL: D74, Q11, Q18, I38, J08. Keywords: Riots, violence against civilians, food-related conflict, food insecurity, effects of welfare and labour programmes, Africa, COVID-19. File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP104.pdf Number: 104 Handle: RePEc:cgs:wpaper:104 Template-Type: ReDIF-Paper 1.0 Author-Name: Mostak Ahamed Author-X-Name-First: Mostak Author-X-Name-Last: Ahamed Author-Email: M.Ahamed@sussex.ac.uk Author-Workplace-Name: University of Sussex Business School, University of Sussex, Brighton, UK. Author-Name: Roxana Gutiérrez-Romero Author-X-Name-First: Roxana Author-X-Name-Last: Gutiérrez-Romero Author-Email: r.gutierrez@qmul.ac.uk Author-Workplace-Name: School of Business and Management, Queen Mary University of London. Title: COVID-19 response needs to broaden financial inclusion to curb the rise in poverty Abstract: The ongoing COVID-19 pandemic risks wiping out years of progress made in reducing global poverty. In this paper, we explore to what extent financial inclusion could help mitigate the increase in poverty using cross-country data across 78 low- and lower-middle-income countries. Unlike other recent cross-country studies, we show that financial inclusion is a key driver of poverty reduction in these countries. This effect is not direct, but indirect, by mitigating the detrimental effect that inequality has on poverty. Our findings are consistent across all the different measures of poverty used. Our forecasts suggest that the world’s population living on less than $1.90 per day could increase from 8% to 14% by 2021, pushing nearly 400 million people into poverty. However, urgent improvements in financial inclusion could substantially reduce the impact on poverty. Length: 34 pages Creation-Date: 2020-05 Revision-Date: Publication-Status: Classification-JEL: G21; G22; I30; I32; C53. Keywords: Financial inclusion, poverty, inequality, COVID-19, forecasts. File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP105.pdf Number: 105 Handle: RePEc:cgs:wpaper:105