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The effects of expanding choice and competition in education

Pupils with many primary schools close to home generally do no better than pupils who have few local schools, according to research by Stephen Gibbons, Stephen Machin and Olmo Silva in the latest issue of CentrePiece, the magazine of the Centre for Economic Performance at LSE. 

Details of this study, and research by other LSE academics on Britain's minimum wage; technologies to tackle global warning; shifts in economic geography and their causes; the impact of trade liberalisations on mergers and acquisitions; Japan's conversion to Anglo-Saxon capitalism; the relationship between urban sprawl and obestity; and the Labour market costs of conflict in Bosnia, is now available. 

The Effects of Expanding Choice and Competition in Education

Pupils with many primary schools close to home generally do no better than pupils who have few local schools, according to research by Dr Stephen Gibbons|, Professor Stephen Machin| and Dr Olmo Silva|. But they do find evidence that schools with more autonomous governance structures and which run their own admission systems have higher educational standards in more competitive markets. And secondary school pupils seem to do better in urban schools that are not geographically isolated from other schools.

On the downside, the research also uncovers evidence that school competition increases inequality, with high and low-ability pupils more segregated in schools that face more competition. This suggests that whatever performance advantages it offers, further expansion of market mechanisms in education may come at the cost of increased social polarisation. Click here to download article| (PDF)

Britain's Minimum Wage: the impact on pay and jobs

The national minimum wage has led to a big boost in the pay of those towards the bottom of the pay league table but with no associated loss of jobs. According to Professor David Metcalf|, two million workers now benefit directly from the minimum wage - around one worker in ten - and there is no evidence of job losses either in the aggregate economy or in the low wage industries and occupations.

Part of the explanation for the absence of job losses is incomplete compliance with the minimum wage. For example, Metcalf's research finds that in Chinese restaurants and shops in London not a single worker below the level of chef or manager is paid the minimum wage. Click here to download article| (PDF)

Technologies to Tackle Global Warming

The Stern Review of the economics of climate change proposes a dramatic increase in public spending on research into carbon-mitigating technologies as well as market-based schemes for trading and taxing pollution. Dr Ralf Martin| suggests how these two policy elements might be most effectively combined.

Rather than entering the general tax revenue, extra revenue from carbon taxes should be earmarked for the suggested increase in public R&D spending. For example, a comparatively low US carbon tax on emissions of carbon dioxide from transportation of only $5 could raise a budget equal to current world public spending on energy R&D. In other words, the suggested doubling of public R&D funds could be easily achieved by US car owners alone at a price that would hardly induce them to stop driving. Click here to download article| (PDF)

Shifts in Economic Geography and their Causes

Why are economic activity and prosperity spread so unevenly across cities, nations and the world economy - and does globalisation necessarily narrow these differences? Professor Anthony Venables| explains how the 'new economic geography' helps us to think about future patterns of location for both developed and developing regions. The key building block of the analysis is the recognition that proximity is good for productivity: dense configurations of economic activity work better than sparse or fragmented ones.

In a world in which proximity matters, large income disparities are a perfectly natural outcome and the effects of increased trade are potentially ambiguous: cheaper spatial interactions can cause inequality not convergence. As globalisation causes dispersion of activity, some countries will experience rapid growth while others will be left behind. Click here to download article| (PDF)

Mergers and Acquisitions Increase After Trade Liberalisations

Freer trade between countries increases the number of mergers and acquisitions (M&A) between firms. Research by Holger Breinlich| finds that the 1989 Canada-United States free trade agreement had a significant impact on M&A activity, with resources being transferred to more productive owners.

These findings highlight the fact that adjustment to freer trade can take less drastic forms than firm and plant closure and the associated mass layoffs of workers and liquidation of capital. They also have important implications for competition policy: antitrust authorities should facilitate the necessary transfer of resources by reducing restrictions on acquisitions in the wake of trade liberalisations. Click here to read article| (PDF)

Japan's Conversion to Anglo-Saxon Capitalism

There are growing concerns in Japan about the emergence of a new 'divided society'. According to Professor Ron Dore|, these are an understandable response to the country's 'shareholder revolution' - a fundamental change in what the managers of Japanese companies believe are their key objectives. Over the past decade or so, true believers in shareholder value have become the dominant voice in Japanese boardrooms and ministries - and this has led to very different results in terms of how the benefits of economic growth are distributed between employees, managers and shareholders. Click here to download article| (PDF)

Fat City: urban sprawl doesn't lead to human sprawl

People living in sprawling neighbourhoods tend to be heavier than those living in neighbourhoods where development is compact and there are plenty of shops and amenities within walking distance. But according to research by Dr Henry Overman| and colleagues, this is not because sprawl causes obesity: people who move from compact to sprawling neighbourhoods do not gain weight.

In fact, populations in sprawling neighbourhoods are heavier because individuals with an innate propensity to be obese tend to live in such neighbourhoods. Thus someone with an idiosyncratic distaste for walking is both more likely to be obese and to prefer living where one can easily get around by car. Click here to download article| (PDF)

Bosnia: the labour market costs of conflict

People displaced and resettled as a result of the war in Bosnia and Herzegovina are faring worse in the labour market than their 'stayer' counterparts, according to research by Florence Kondylis. Her study of the costs of conflict-induced migration for individual households finds that Bosnians are not doing as well as Serbs in getting back into employment. Click here to download this article| (PDF)

CEP discussion papers examining the above research in more depth and more on CentrePiece can be found here|

Ends

For more information contact Romesh Vaitilingam on 0117 983 9770, email: Romesh@compuserve.com|

Notes:

1. CentrePiece is the magazine of the Centre for Economic Performance. It is published three times a year. The Winter 2006/07 issue is Volume 11 Issue 3. Cover price £5; subscription rates on application to 020 7955 6963. Email: centrepiece@lse.ac.uk|

2. The Centre for Economic Performance (CEP) is an independent ESRC funded research centre based at the London School of Economics. Its members are from the LSE and a wide range of universities within the UK and around the world. More on CEP at http://cep.lse.ac.uk/|

21 March 2007

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