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New research from the Centre for Economic Performance published in CentrePiece

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The summer 2007 issue of CentrePiece|, the magazine of the Centre for Economic Performance| at LSE, is published today (Wednesday 13 June). New research featured in this latest issue includes a look at the educational impact of widening access to grammar schools; the identity and attitudes of immigrants in Britain; and Microsoft's market power.

Microsoft's Market Power: competition policy in high-tech industries

The antitrust cases against Microsoft in the United States and Europe have been the most high profile implementation of competition law in the last 20 years. Research by Christos Genakos, Kai Uwe Kühn and John Van Reenen explains how and why the software giant abused its monopoly power - and the implications of the case for the conduct of competition policy in high-tech industries dominated by rapid innovation.

The European Commission's central argument against Microsoft was that it leveraged its market power: by degrading the ability of rival server operating systems to work with Windows, Microsoft 'foreclosed' the market. The 'remedy' was for Microsoft to reveal information to enable other server vendors to connect properly with Windows - and there are many reasons for believing that this could have a positive effect on industry-wide innovation.

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Culture Clash or Culture Club? The Identity and Attitudes of Immigrants in Britain

Contrary to what many people seem to believe, Britain is not riven by a large-scale culture clash. Indeed, despite widespread fears about the integration of Muslims into British culture, there is no evidence that Muslims are less likely to think of themselves as British than other groups. These are the conclusions of research by Alan Manning and Sanchari Roy, which has analysed data on the national identity and values of both immigrants and British-born people.

The study finds that the longer immigrants remain in Britain, the more likely they are to think of themselves as British - and that immigrants from poorer and less democratic countries assimilate faster into a British identity. For example, immigrants from Pakistan and Bangladesh assimilate into a British identity much faster than the average, while those from Western Europe and the United States do so more slowly, with Italians standing out as the group that assimilates least into a British identity.

Financial Markets React More to Central Bank Words than Deeds

Central bankers' announcements are a crucial and effective instrument for steering market interest rates, according to research by Carlo Rosa and Giovanni Verga. Their study - which measures the impact of both the words and the deeds of the European Central Bank (ECB) - finds that market interest rates now respond only very marginally to ECB deeds, more often to ECB words.

A unique institutional feature of ECB communication is that on one day, at two different points in time, the Governing Council announces first its monetary policy decision, and then its likely future monetary policy stance. The research shows that when the tone of the press conference differs from what the market expects, there is a sizeable and immediate reaction in the price of three-month Euribor futures (widely traded futures contracts based on short-term interest rates in the eurozone).

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We Need Specialist Teachers to Educate our Children about Values and Happiness

We need a new cadre of schoolteachers specifically trained to teach values and the ways to happiness, according to Richard Layard. He argues that a major purpose of schools must be to help develop good and happy people - especially at a time when growing numbers of children are suffering from emotional disturbance - and it should be an explicit aim of each school to train character and provide moral education.

For every subject - including the teaching of values - we should know from controlled trials what teaching methods work best. We need to create a profession of fully trained teachers of Personal, Social and Health Education (PSHE), giving evidence-based teaching that changes lives. The government should commit to producing a major specialism in this area within the postgraduate certificate of education.

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The Educational Impact of Widening Access to Grammar Schools

Widening access to the more academic track in education can generate positive net effects, according to research by Eric Maurin and Sandra McNally. Their study investigates the overall effects on educational attainment of widening access to grammar schools using the 'natural experiment' of the grammar school system in Northern Ireland, which has survived long after its dismantlement in England.

The research finds that when more pupils were able to attend Northern Irish grammar schools, overall educational attainment increased. Furthermore, grammar school attendance had no less effect on relatively disadvantaged pupils than on more advantaged pupils.

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Faith Primary Schools: better schools or better pupils?

Religious affiliation has little impact on a primary school's effectiveness at teaching core subjects, according to research by Stephen Gibbons and Olmo Silva. Their study finds that faith primary schools only offer a very small advantage over secular schools in terms of test scores at the age of 11 in mathematics and English. Moving a 'typical' secular school pupil into the faith sector would push him or her up the test-based pupil rankings by less than one percentile.

So while average levels of pupil achievement in faith schools may seem to be higher than in the secular sector, all of this apparent advantage can be explained by unobserved differences between pupils who apply and are admitted to faith schools and those who do not. Pupils who do not attend a faith primary school up to the age of 11 but attend a faith secondary school thereafter perform just as well at age 11 as those who attended a faith primary school but then attend a secular secondary school.

Trade Winners and Losers

Two new studies confirm the gains from opening up trade. Research by Guy Michaels shows how the construction of transport infrastructure like the US interstate highway system increases trade: for a country where distances were long, travel was slow and most economic activity was highly localised, the highways had dramatic effects on economic integration across the national land mass.

Research by Stephen Redding and colleagues finds that a reduction in trade barriers encourages simultaneous job creation and job destruction in all industries, but that both gross and net job creation vary with country and industry characteristics. Success breeds success often - for the vast majority - but the fruits of commerce are not always enjoyed by all. They conclude that addressing the uneven outcomes of globalisation is as big a challenge as pursuing liberalisation in the face of entrenched interests.

Blair's Economic Legacy

The outgoing prime minister leaves behind an economy in better shape than any previous Labour leader. But will the voters give his successor, the man who has overseen the current prosperity, the benefit of the doubt when the next recession comes? At the moment it looks unlikely, according to John Van Reenen.

He asks why Labour is struggling to convert economic success into the political currency of popularity - and (leaving Iraq aside) he puts it down to 'forgetfulness, fiscal policy and fairness'. But one thing is for certain: over the next two or three years, Gordon Brown will not have the luxury of being able to blame the policy mistakes of a previous government for any unfortunate economic news.

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

Notes for Editors

CentrePiece is the magazine of the Centre for Economic Performance. It is published three times a year. The Summer 2007 issue is Volume 12 Issue 1. Cover price £5; subscription rates on application to 020 7955 6963.

The Centre for Economic Performance 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.

Press cuttings

UK productivity on the rise
(2 July)
Improving Britain's productivity - the ultimate driver of living standards - has been the obsession of numerous governments including the current one, but a recent study from the London School of Economics' Centre for Economic Performance showed that output per hour worked in Britain is about 13 per cent lower than in Germany, 18 per cent lower than in the US and 20 per cent lower than in France. 

Fund Strategy
Brown's tenure was a productivity failure (2 July) 

Q&A: Grammar school policy (25 June)
A report earlier this month from the London School of Economics said allowing children from working-class backgrounds into grammar schools would boost their results and overall national performance. 

The top stories (19 June)
1 Happiness should be taught in schools, according to a government adviser. Richard Layard (of LSE).

Middle East North Africa Financial Network News
Overall grade performance increases in national school (19 June)
A researcher from the London School of Economics has found that children from working class environments will show better national performance if they are allowed admission into grammar schools, reports The Guardian.

Kansas City Star
Pursuit of happiness (scroll down) (19 June)
Recently, Lord Layard, a professor at the London School of Economics, argued that happiness should be taught alongside core subjects such as English and math. 

Conservatives, Northern Ireland
LSE Study Confirms That Northern Ireland education system benefits children from poor families (18 June)
A study by the London School of Economics and published last week has confirmed that Northern Ireland performs better than the rest of the UK in terms of exam success and social mobility because of our selection based sys

Belfast Telegraph
Exams plan spiralling out of control (17 June)
The 11-plus is on the way out, but the jury is still out on the question of academic selection. Grammar school supporters are already highlighting a report from the London School of Economics which found that selective education benefited children from a working class background. 

Daily Telegraph
Parents 'buying' places at grammar schools
(15 June)
A report published this week by the London School of Economics said that a grammar school education could be very beneficial to children from poor backgrounds. But it warned that many could not get in because admissions procedures were skewed against them.

Public Finance Magazine
Faith primary schools no better than secular, study finds (15 June)
Pupils in faith primary schools do no better than children in secular state primaries once covert selection has been eliminated, research from the London School of Economics has found.

Schools urged to teach children how to be happy (14 June)
Children should learn about moral values and the way to happiness from a new cohort of school teachers specifically trained for the job, according to new academic research by Richard Layard, of the London School of Economics. 

Alien nation (14 June)
The London School of Economics has just published a fascinating paper that explores who feels themselves to be British in the UK today and who subscribes to British values - that great bugbear of Gordon Brown.  

Grammar schools improve grades (14 June)
Allowing children from working-class backgrounds into grammar schools boosts their results and overall national performance, according to new research from the London School of Economics. 

Financial Times
Happiness lessons (14 June)
This week Lord Layard, a professor at the London School of Economics, argued that happiness should be taught alongside core subjects such as English and maths.

Daily Telegraph
Study shows grammars benefit poor pupils (13 June)
The row over academic selection was reignited last night after a study by the London School of Economics concluded that more grammar schools would boost the results of working class pupils and raise education standards nationwide.

Also in Daily Mail
Exam results boosted by the grammar effect (13 June)
The findings, from researchers at the respected Centre for Economic Performance, cast doubt on Conservative policy on grammar schools after the party abandoned support for selective education.

Daily Mail
Labour is failing (13 June)
The government is failing to capitalise on economic growth because of tax hikes and rising inequality. Britons take prosperity for granted and are focusing on the Government's failure to turn higher taxes into public service improvements, said John Van Reenen of the London School of Economics.

Financial Times
Call for happiness to be taught in schools (13 June)
In an article to be published today by the Centre for Economic Performance at LSE, Richard Layard said schools had a central role to play in countering a large rise in emotional disturbance by teaching children how to be happy

13 June 2007