Knowledge economy

Cities, Jobs and Economic Change

 
Working papers

Poverty traps and affluence shields: modelling the persistence of income position in Chile
Joaquin Prieto
Working Paper 66

Poverty traps and affluence shields: modelling the persistence of income position in Chile

The author proposes analysing the dynamics of income positions using dynamic panel ordered probit models. He disentangles, simultaneously, the roles of state dependence and heterogeneity (observed and non-observed) in explaining income position persistence, such as poverty persistence and affluence persistence. He applies this approach to Chile exploiting longitudinal data from the P-CASEN 2006–2009. First, he finds that income position mobility at the bottom and the top of the income distribution is much higher than the expected, showing signs of high economic insecurity. Second, the observable individual characteristics have a much stronger impact than true state dependence to explain individuals’ current income position in the income distribution extremes.

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Faith No More? The divergence of political trust between urban and rural Europe
Frieder Mitsch, Neil Lee, and Liz Morrow
Working paper 64

Faith No More? The divergence of political trust between urban and rural Europe

Events such as Brexit and the Gilet Jaunes protests have highlighted the spatial nature of populism. In particular, there has been increasing political divergence between urban and rural areas, with rural areas apparently having lost faith in national governments. We investigate this divergence using data on over 125,000 EU citizens from the European Social Survey from 2008-2018. We show that people in rural areas have lower political trust than urban or peri-urban residents, with this difference clear for six different forms of political institutions, including politicians, political parties, and national parliaments. There has been divergence of political trust between urban and rural Europe since 2008, although this is primarily driven by Southern Europe. While these results can partly be explained by demographic differences between cities and the countryside, divergent economic experiences, differences in values, and perceptions that public services are less effective outside of urban areas, there is a residual ‘rural effect’ beyond this. We argue that the polarization of urban-rural political trust has important implications for the functioning of European democracies.

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Understanding Changes in the Geography of Opportunity Over Time: the case of Santiago, Chile
Isabel Brain and Joaquín Prieto
Working paper 63

Understanding Changes in the Geography of Opportunity Over Time: the case of Santiago, Chile

The geography of opportunity research has made significant progress in recent years. The use of composite indexes aimed at capturing the attributes of different urban areas has been particularly useful to deepen the understanding of the role that the urban context plays in people’s life chances. However, little attention has been paid to the dynamic component of the geography of opportunity, that is, what explains its changes over time and whether or not those changes (positive or negative) are substantial. The contribution of this work is that it offers a methodology (a conceptual framework, a composite geography of opportunity index and relative and absolute measures) that provides a holistic and in-depth approach to analyse not only the set of opportunities available in the different urban areas but also their change over time (how they change, the depth of those changes and the forces explaining it). The information generated through this approach has the advantage of better informing place-based policy interventions since it offers not only a clear classification of areas but also a useful method for comparing and monitoring the changes in the geography of opportunity over time.

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Regional Inequality in Multidimensional Quality of Employment (QoE): insights from Chile, 1996-2017
Mauricio Apablaza, Kirsten Sehnbruch, Pablo Gonzáles and Rocío Méndez Pineda
Working paper 61

Regional Inequality in Multidimensional Quality of Employment (QoE): insights from Chile, 1996-2017

This paper uses a multi-dimensional methodology for measuring the quality of employment (QoE) across Chile's regions using household survey data from 1996 – 2017. The paper shows how much a regional perspective can add to an analysis of the QoE and how it can inform policy makers in a way that goes beyond traditional variables such as participation or unemployment rates, which are not always good indicators of labour market performance in developing countries with large informal sectors. Building on previous work that measures QoE deprivation, we use the Alkire/Foster (AF) method to construct a synthetic indicator of the quality of employment (QoE) at an individual level. We select three dimensions that must be considered as both instrumentally and intrinsically important to workers: income, job security and employment conditions. Job security is then divided into two sub-dimensions (occupational status and job tenure), as is employment conditions (social security affiliation and excessive working hours). A threshold is then established within each dimension and sub-dimension to determine whether a person is deprived or not within each dimension, before calculating composite levels of deprivation. The results generated by this index highlight important differences between Chile's regions, but also a process of convergence, which has been driven by employment regulation on minimum wages and the statutory working week in particular. National policies such as the improvement of educational standards have also contributed to this process. On the one hand, this paper illustrates the importance of public policies in labour market performance, and on the other, the index also enables policy makers to focus more precisely on the most vulnerable groups of workers in the labour market. This paper opens up important avenues for future research: once a QoE index has been developed, it can be used to track workers' employment trajectories using either panel or administrative data. This would allow policy makers to understand, whether and to what extent workers become trapped in poor quality jobs, and what active labour market policies could do to help them.

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Quality of sub-national government and regional development in Africa.
Yohan Iddawela, Neil Lee and Andrés Rodríguez-Pose
Working paper 59

Quality of sub-national government and regional development in Africa.

Despite widespread interest in government quality and economic development, the role of sub-national government has been largely overlooked. This represents an omission in Africa, given ongoing processes of devolution in much of the continent. In this article, we consider the impact of sub-national government institutions on economic development in 356 regions across 22 African countries. We create a novel index of sub-national government quality based on large-scale survey data and assess its impact on regional economies using satellite data on night light luminosity. To address causality concerns, we instrument sub-national government quality with data from pre-colonial societies. Our results show a positive and significant relationship between sub-national government quality and regional economic development, even when controlling for the quality of national level institutions. Better sub-national governments are a powerful but often overlooked determinant of development in Africa.

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Investigating the gender wealth gap across occupational classes.
Nora Waitkus and Lara Minkus
Working paper 56

Investigating the gender wealth gap across occupational classes

This study examines the role of occupational class in the Gender Wealth Gap (GWG). Despite rising interest in gender differences in wealth, the central role of occupations in restricting and enabling its accumulation has received less scrutiny thus far. Drawing on the German Socio-economic Panel, we employ quantile regressions and decomposition techniques. We find explanatory power of occupational class for the gender wealth gap, which operates despite accounting for other labour-market-relevant parameters, such as income, tenure, and full-time work experience at all points of the wealth distribution. Wealth gaps by gender vary between and within occupational classes. Particularly, women's under-representation among the self-employed and over-representation among socio-cultural professions explain the GWG. Our study thus adds another dimension of stratification - occupational class - to the discussion of the gendered distribution of wealth.

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Unemployment insurance in Chile: lessons from a high inequality developing country.
Kirsten Sehnbruch, Rafael Carranza and Dante Contreras
Working paper 54

Unemployment insurance in Chile: lessons from a high inequality developing country.

One of the most complex social policy issues that developing countries commonly face is the question of how they can protect the unemployed. However, the analysis of unemployment insurance (UI) in developing economies with large informal sectors is in its infancy, with few papers providing solid empirical evidence. This paper makes several contributions to the development literature: first, it applies Chetty’s 2008 landmark work on UI to a developing country (Chile) and shows that the moral hazard effects expected by policy makers, who designed the system are minimal, while liquidity effects were entirely neglected. By means of an RDD, it analyses the Chilean UI system using a large sample of administrative data, which allows for an extremely precise analysis of how the system is working, thus providing invaluable empirical lessons for other developing countries. Second, this paper shows that it is not enough merely to quantify an effect such as moral hazard, but to understand its causes and implications. An extended unemployment period stemming from moral hazard has extremely different welfare implications than one stemming from a liquidity effect and should therefore result in different policy recommendations. Third, our results also highlight that the Chilean UI system is regressive overall, as it protects workers with higher income levels and more stable jobs much more than it protects vulnerable workers, who are also much more likely to become unemployed. Fourth, this paper shows that it is essential that developing countries should take into account the specific labour market and macroeconomic context when designing social policies as the incentives embedded in such a policy may not be enough to compensate for the limitations that arise from the structure of a labour market. This research thus has implications for many developing countries, which may also be considering the implementation of some form of UI and/or the partial or complete replacement of existing severance pay legislation with continuous contributions to individual savings accounts, as recommended by the international development institutions. Furthermore, even high-income developing countries, such as Chile, cannot rely on unemployment insurance alone when it comes to protecting workers from the fallout of an economic crisis or rapid changes in the labour market that generate unemployment. Any UI system must also be linked to other social protection mechanisms to provide complimentary benefits to workers with precarious jobs.

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Occupational dualism and intergenerational educational mobility in the rural economy: evidence from China and India.
M. Shahe Emran, Francisco Ferreira, Yajing Jiang and Yan Sun
Working paper 52

Occupational dualism and intergenerational education mobiltiy in the rural economy: evidence from China and India

This paper extends the Becker-Tomes model of intergenerational educational mobility to a rural economy characterized by farm-nonfarm occupational dualism and provides a comparative analysis of rural China and rural India. The model builds a micro-foundation for the widely used linear-in-levels estimating equation. Returns to education for parents and productivity of financial investment in children’s education determine relative mobility, as measured by the slope, while the intercept depends, among other factors, on the degree of persistence in nonfarm occupations. Unlike many existing studies based on coresident samples, our estimates of intergenerational mobility do not suffer from truncation bias. The sons in rural India faced lower educational mobility compared with the sons in rural China in the 1970s to 1990s. To understand the role of genetic inheritance, Altonji et al. (2005) biprobit sensitivity analysis is combined with the evidence on intergenerational correlation in cognitive ability in economics and behavioral genetics literature. The observed persistence can be due solely to genetic correlations in China, but not in India. Father’s nonfarm occupation was complementary to his education in determining a sons’ schooling in India, but separable in China. There is evidence of emerging complementarity for the younger cohorts in rural China. Structural change in favor of the nonfarm sector contributed to educational inequality in rural India. Evidence from supplementary data on economic mechanisms suggests that the model provides plausible explanations for the contrasting roles of occupational dualism in intergenerational educational mobility in rural India and rural China.

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The American knowledge economy.
David Soskice
Working paper 51

The American knowledge economy.

Perhaps the most extraordinary contribution of the US since the late C19th has been its leadership of successive waves of Schumpeterian innovation. These (three) waves are often referred to by economic historians as the Scientific Revolution (late C19th and early C20th), the Fordist Revolution (1920s), and the ICT Revolution (1980s on)12 . (The first wave historically, the co-called Industrial Revolution, based on iron, steam and coal, and centred on the UK, had taken place from the late C18th through the mid C19th.) One contribution of this paper is to explain how this dominance was possible in terms of key institutions of American advanced capitalism. It also stresses the key complementary role of the Federal government, the Supreme Court and city administrations, in the Scientific and Fordist technological revolutions.

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Lives and Livelihoods: Estimates of the Global Mortality and Poverty Effects of the Covid-19 Pandemic.
David Soskice Benoit Decerf, Francisco H. G. Ferreira, Daniel G. Mahler, and Olivier Sterck
Working paper 48

Lives and Livelihoods: Estimates of the Global Mortality and Poverty Effects of the Covid-19 Pandemic

This paper evaluates the global welfare consequences of increases in mortality and poverty generated by the Covid-19 pandemic. Increases in mortality are measured in terms of the number of years of life lost (LY) to the pandemic. Additional years spent in poverty (PY) are conservatively estimated using growth estimates for 2020 and two dif-ferent scenarios for itsdistributional characteristics. Using years of life as a welfare metric yields a single parameter that captures the underlying trade-off between lives and livelihoods: how many PYs have the same welfare cost as one LY. Taking an agnostic view of this parameter, estimates of LYs and PYs are compared across countries for different scenarios. Three main findings arise. First, as of early June 2020, the pandemic (and the observed private and policy responses) has generated at least 68 million additional poverty years and 4.3 million years of life lost across 150 countries. The ratio of PYs to LYs is very large in most coun-tries, suggesting that the poverty consequences of the crisis are of paramount importance. Second, this ratio declines systematically with GDP per capita: poverty accounts for a much greater share of the welfare costs in poorer countries. Finally, the dominance of poverty over mortality is reversed in a counterfactual “herd immunity” scenario: without any policy intervention, LYs tend to be greater than PYs, and the overall welfare losses are greater.

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EU migrants' experiences of claims-making in German job centres
Nora Ratzmann
Working paper 45

EU migrants' experiences of claims-making in German job centres 

The paper describes intra-EU migrants’ experiences with (transnational) social security in Germany, showcasing their sense-making of the claims-making process to basic subsistence benefits in local job centres. The analysis of 48 qualitative interviews with intra- EU migrants and key informants illustrates how they are not merely passive recipients but may actively assert their rights, based on their degree of familiarity with German welfare bureaucracy, their pre-existing welfare expectations, and their available cultural and social capital. Whether EU migrant citizens decide to claim relates to their cost-benefit analyses on the accessibility to benefits and to alternative means of support, as well as their perceived social legitimacy to draw on German public social support. As a general trend, EU citizens first tried to exhaust all other means of generating an income, seeking to remain financially independent from state-provided welfare, before seeking to claim social assistance-type benefits as a last resort. The data also shows how some applicants are less able than others to pay the hidden costs imposed onto them during the claiming process. The paper finally highlights how, in the light of the inequalities of access they face, intra-EU migrants have developed a variety of strategies to satisfy their social protection needs, relying on a mix of formal and informal welfare arrangements.

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Entrepreneurship and the fight against poverty in US Cities
Neil Lee and Andrés Rodríguez-Pose
Working paper 44

Entrepreneurship and the fight against poverty in US Cities

Entrepreneurship is sometimes portrayed as a cure-all solution for poverty reduction. Proponents argue it leads to job creation, higher incomes, and lower poverty rates in the cities in which it occurs. Others, by contrast, posit that many entrepreneurs are actually creating low-productivity firms serving local markets. Yet, despite this debate, little research has considered the impact of entrepreneurship on poverty in cities. This paper addresses this gap using a panel of US cities for the period between 2005 and 2015. We hypothesise that the impact of entrepreneurship depends on whether it occurs in tradeable sectors – and, therefore, is more likely to have positive local multiplier effects – or non-tradable sectors, which may saturate local markets. We find that entrepreneurship in tradeables reduces poverty and increases incomes for non-entrepreneurs. The result is confirmed using an instrumental variable approach, employing the inheritance of entrepreneurial traits as an instrument. In contrast, while there are some economic benefits from non-tradeable entrepreneurship, we find these are not large enough to reduce poverty.

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Superstar cities and left-behind places: disruptive innovation, labor demand, and interregional Inequality
Tom Kemeny and Michael Storper
Working paper 41 

Superstar cities and left-behind places: disruptive innovation, labor demand, and interregional Inequality

After a long period of convergence, around 1980, inter-place gaps in economic well-being in the United States began to increase. This rising inequality offers a rich terrain to explore causality in regional economics and development theory. This paper presents new, long-run evidence on interregional inequality that highlights the need to situate the current moment in a context of episodic alternations between convergence and divergence. In light of this evidence, the paper revisits the theoretical literature, finding gaps in existing supply- anddemand-side models. A demand-led perspective can be strengthened by integrating a primary role for disruptive technological change. We posit a theory of alternating waves, where major technology shocks initially concentrate, and eventually deconcentrate, demand for skilled workers performing complementary tasks. Labor supply responds to these centripetal and centrifugal forces. These reversals yield the observed patterns of rising and falling interregional inequality. We trace out the implications of this theory in both academic and policy terms.

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American Exceptionalism in Inequality and Poverty: a (tentative) historical explanation
Nicola Lacey and David Soskice
Working paper 32

American Exceptionalism in Inequality and Poverty: a (tentative) historical explanation

 

The United States is a fascinating case study in the complex links between crime, punishment and inequality, standing out as it does in terms of inequality as measured by a number of economic standards; levels of serious violent crime; and rates of imprisonment, penal surveillance and post-conviction disqualifications. In this chapter, we build on previous work arguing that the exceptional rise in violent crime and punishment in the US from the mid 1970s to the early 1990s could be explained by the interaction of four political and economic variables: ‘technological regime change’; ‘varieties of capitalism’ and ‘varieties of welfare state’; types of ‘political system’; and – critically and specifically – the US as a radical outlier in the degree of local democracy.  Here we ask three further questions implied by our previous work.  First, why did such distinctive patterns of local democracy arise in America? And to what extent is this political structure tied up with the history and politics of race? Second, what did the distinctive historical development of the US political economy in the 19th century imply for the structure of its criminal justice institutions? And third, why did the burden of crime and punishment come to fall so disproportionately on African Americans? 

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Do Firms Manage Pay Inequality?
Paul Willman and Alexander Pepper
Working paper 31

Do Firms Manage Pay Inequality?

We examine the role of the modern firm in generating income inequality. Specifically, we consider the growth in the use of asset-based rewards for senior executives, combined with continued use of salaries and wages for other employees, and the impact this has on measures of inequality within firms.  Our paper presents data on intra firm inequality from the UK FTSE 100 for the period 2000-2015. It looks at ratios of CEO to average earnings and attempts to explain both the growth in inequality on this measure and the extent of variance between firms. It distinguishes between a period of “administered inequality” up to the early 1980’s when intra-firm processes defined differential pay and a subsequent one of “outsourced inequality” when capital market measures dominate executive pay. In the latter period, intra firm inequality measures are defined by upward movements in capital market measures and the extent of outsourcing of low paid work.

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Rent Sharing and Inclusive Growth
Brian Bell, Paweł Bukowski and Stephen Machin
Working paper 29

Rent Sharing and Inclusive Growth 

 

The long-run evolution of rent sharing is empirically studied. Based upon a comprehensive and harmonized panel of the top 300 publicly quoted British companies over thirty five years, the paper reports evidence of a significant fall over time in the extent to which firms share rents with workers. It confirms that companies do share their profits with employees, but at much smaller scale today than they did during the 1980s and 1990s. This is a robust finding, corroborated with industry-level analysis for the US and EU. The decline in rent sharing is coincident with the rise of product market power that has occurred as worker bargaining power has dropped. Although firms with more market power previously shared more of their profits, they experienced a stronger fall in rent sharing after 2000.

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Populism and the Rule of Law
Nicola Lacey
Working paper 28

Populism and the Rule of Law

 

The resurgence of populism in Europe and North America is widely thought to have placed the rule of law under pressure. But how many of the relevant developments are indeed associated with populism? And is any such association a contingent or analytic matter: does populism inevitably threaten the rule of law, or do other conditions intervene to shape its impact? After setting out how I will understand the rule of law and populism, I examine the ways in which contemporary populist discourse has challenged the rule of law through a variety of mechanisms - notably agenda-setting, policy impact, influencing discretionary decisions and convention-trashing - considering the institutional and social conditions which conduce to strengthen or weaken these mechanisms in particular contexts. Finally, I consider the implications of the analysis for contemporary criminalisation, assessing how many of the factors producing ‘penal populism’ or ‘overcriminalization’ are truly a product of populism.

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The Great British Sorting Machine: adolescents’ future in the balance of family, school and the neighborhood
Jonathan J.B. Mijs and Jaap Nieuwenhuis
Working paper 26

The Great British Sorting Machine: adolescents’ future in the balance of family, school and the neighborhood

 

Research calls attention to the divergent school and labor market trajectories of Europe’s youth while, across the Atlantic, researchers describe the long-lasting consequences of poverty on adolescent development. In this paper we incorporate both processes to shed a new light on a classic concern in the sociology of stratification: how are adolescents’ aspirations, expectations, and school performance shaped by the combined socioeconomic contexts of family, school and neighborhood life? Theoretically, social contexts provide children with cultural resources that may foster their ambitions and bolster their academic performance. Reference group theory instead highlights how seemingly positive settings can depress educational performance as well as aspirations and expectations. We empirically test these competing claims, drawing on the Avon Longitudinal Study of Parents and Children (ALSPAC) which describes the school and neighborhood trajectories of 7,934 British children followed from birth to adolescence. We find that, generally, childhood school and neighborhood deprivation is negatively associated with adolescents’ school performance, aspirations and expectations for their future, in line with the cultural resource perspective. However, there are important exceptions to this pattern which point to reference group processes for (1) children of highly-educated parents, whose academic performance especially suffers from growing up in a poor neighborhood, and (2) for children from low-educated parents, whose academic aspirations and expectations are unexpectedly high when they either went to an affluent school or lived in an affluent neighborhood—but not both. We conclude by discussing implications for theory, policy and future research. 

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Inclusive Growth in Cities: a sympathetic critique
Neil Lee
Working paper 25

Inclusive Growth in Cities: a sympathetic critique

 

The concept of “Inclusive Growth” – a concern with the pace and pattern of growth – has become a new mantra in local economic development. Despite enthusiasm from some policymakers, others argue it is a buzzword which is changing little. This paper summarises and critiques this agenda. There are important unresolved issues with the concept of Inclusive Growth, which is conceptually fuzzy and operationally problematic, has only a limited evidence base, and reflects an overconfidence in local government’s ability to create or shape growth. Yet, while imperfect, an Inclusive Growth model is better than one which simply ignores distributional concerns. 

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Private Renting: Can social landlords help?
Anne Power, Alice Belotti, Laura Lane and Bert Provan
Working paper 21

Private Renting: can social landlords help?

 

Private renting is a massively expanding sector, and has now overtaken social housing to become the second largest housing tenure in Britain after owner-occupation. Private renting plays a crucial role in housing many groups who can neither afford to buy, and are unable to access social housing. Vulnerable and homeless people are more and more housed in privately rented accommodation. However, the private rented sector is weakly regulated and offers little security to tenants.

This report explores how social landlords are increasingly contributing to the growth of private renting in a variety of different ways. Social landlords have experience in managing rented housing and a strong track record in providing long-term, secure, decent homes. They have an ethical purpose and a core mission to house people. Their involvement in the private rented sector provides an opportunity to make the PRS more stable, secure, and affordable. As well-established landlords and housing managers, social landlords can provide decent quality and secure homes to the people who need them within the private sector. As institutional investors, private renting at sub-market or intermediate rent becomes possible and social landlords should not seek to maximise profits as their main purpose. We also look at how local authorities can improve the private rented sector, looking at case studies of Newham, Liverpool, and other areas that have established local housing companies, have increased their regulatory role with licensing schemes and enforcement powers, as well as how the private rented sector differs in the devolved nations.

The overall conclusion of our report is that private renting by social landlords can deliver good housing for households in need of a home. This activity provides decent private rental homes; and surpluses to cross-subsidise social housing. We believe that through the development of private rented accommodation and the regulation and licensing of the private rented sector, social landlords and local authorities are able to provide a more social model of private renting. 

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Can cultural consumption increase future earnings? Exploring the economic returns to cultural capital
Aaron Reeves and Robert de Vries
Working paper 20

Can cultural consumption increase future earnings? Exploring the economic returns to cultural capital

 

Cultural consumption is often viewed as a form of embodied cultural capital which can be converted into economic rewards because such practices increase the likelihood of moving into privileged social positions. However, quantitative evidence supporting this proposition remains uncertain because it is often unable to rule out alternative explanations. Cultural consumption appears to influence hiring decisions in some elite firms, in both the U.S. and the U.K., but it is unclear whether these processes are generaliseable to other professional occupations and other labour market processes such as promotions. We examine these processes using data from Understanding Society, an individual-level panel survey conducted in the UK, allowing us to explore whether cultural consumption predicts future earnings, upward social mobility, and promotions. People who consume a larger number of cultural activities are more likely to earn higher wages in the future, to be upwardly socially mobile, and to be promoted. Cultural consumption, then, can function as cultural capital in some labour market settings, potentially contributing to the reproduction of income inequality between generations.

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Immobility and the Brexit vote
Neil Lee, Katy Morris and Tom Kemeny
Working paper 19

Immobility and the Brexit vote

 

Popular explanations of the Brexit vote have centred on the division between cosmopolitan internationalists who voted Remain, and geographically rooted individuals who voted Leave. This paper conducts the first empirical test of whether residential immobility - the concept underpinning this distinction - was an important variable in the Brexit vote. It finds that locally rooted individuals - defined as those living in their country of birth - were 7 percent more likely to support Leave. However, the impact of immobility was filtered by local circumstances: immobility only mattered for respondents in areas experiencing relative economic decline or increases in migrant populations. 

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The transition to the knowledge economy, labour market institutions, and income inequality in advanced democracies
David Hope and Angelo Martelli
Working paper 18

The transition to the knowledge economy, labour market institutions, and income inequality in advanced democracies

The transition from Fordism to the knowledge economy in the advanced democracies was underpinned by the ICT revolution. The introduction and rapid diffusion of ICT pushed up wages for college-educated workers with complementary skills and allowed top managers and CEOs to reap greater rewards for their talents. Despite these common pressures, income inequality did not rise to the same extent everywhere; the Anglo-Saxon countries stand out as being particularly unequal. To shed new light on this puzzle, we carry out a panel data analysis of 18 OECD countries between 1970 and 2007. The analysis stands apart from the existing empirical literature by taking a comparative perspective. We look at the extent to which the relationship between the knowledge economy and income inequality is influenced by national labour market institutions. We find that the expansion of knowledge employment is positively associated with both the 90–10 wage ratio and the income share of the top 1%, but that these effects are mitigated by the presence of strong labour market institutions, such as coordinated wage bargaining, strict employment protection legislation and high bargaining coverage. The study provides robust evidence against the argument that industrial relations systems are no longer important safeguards of wage solidarity in the knowledge economy.

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Top Incomes during Wars, Communism and Capitalism: Poland 1892-2015
Pawel Bukowski and Filip Novokmet
Working paper 17

Top Incomes during Wars, Communism and Capitalism: Poland 1892-2015

This study presents the history of top incomes in Poland. We document a U-shaped evo-lution of top income shares from the end of the 19th century until today. The initial high level, during the period of Partitions, was due to the strong concentration of capital income at the top of the distribution. The long-run downward trend in top incomes was primarily induced by shocks to capital income, from destructions of world wars to changed political and ideological environment. The Great Depression, however, led to a rise in top shares as the richest were less adversely affected than the majority of population consisting of smallholding farmers. The introduction of communism abruptly reduced inequalities by eliminating private capital income and compressing earnings. Top incomes stagnated at low levels during the whole communist period. Yet, after the fall of communism, the Polish top incomes experienced a substantial and steady rise and today are at the level of more unequal European countries. While the initial upward adjustment during the transition in the 1990s was induced both by the rise of top labour and capital incomes, the strong rise of top income shares in 2000s was driven solely by the increase in top capital incomes, which make the dominant income source at the top. We relate these developments to processes associated with the new phase in globalisation. 

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The Wider Impacts of High-Technology Employment: evidence from U.S. cities
Tom Kemeny and Taner Osman
Working paper 16

The Wider Impacts of High-Technology Employment: evidence from U.S. cities

Innovative, high-technology industries are commonly described as drivers of regional development. ‘Tech’ workers earn high wages, but they allegedly generate knock-on effects throughout the local economies that host them, producing new jobs and raising 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 US 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 substantively modest effects on the real wages of workers in nontradable sectors. However, in cities with highly price-inelastic housing markets, the relationship is inverted, with tech generating negative externalities for nontradable workers. 

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Land Politics under Kenya's New Constitution: Countries, Devolution, and the National Land Commission
Catherine Boone, Alex Dyzenhaus, Seth Ouma, James Kabugu Owino, Catherine Gateri, Archiba Gargule, Jackie Klopp, and Ambreena Manji

Land Politics under Kenya's New Constitution: countries, devolution, and the National Land Commission

Kenya's new constitution, inaugurated in August 2010, altered the institutional structure of the state in complex ways. In the land domain, reform objectives were as explicit and hard-hitting as they were anywhere else. Reform of land law and land administration explicitly aimed at putting an end to the bad old days of overcentralization of power in the hands of an executive branch considered by many to be corrupt, manipulative, and self-serving. This research asks how these significant reforms are changing land control and governance in rural Kenya.

This project was partly supported by the III Research Innovation Fund.

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Understanding the Determinants of Penal Policy: crime, culture and comparative political economy
Nicola Lacey, David Soskice and David Hope
Working paper 13

Understanding the Determinants of Penal Policy: crime, culture and comparative political economy

This review sets out four main explanatory paradigms of penal policy—focusing on, in turn, crime, cultural dynamics, economic structures and interests, and institutional differences in the organisation of different political economies as the key determinants of penal policy.  We argue that these paradigms are best seen as complementary rather than competitive, and present a case for integrating them analytically in a comparative political economy framework situated within the longue durée of technology regime change.  To illustrate this, we present case studies of one exceptional case—the United States—and of one substantive variable—race. Race has been thought to be of importance in most of these paradigms and provides a pertinent example of how the different dynamics intersect in practice. We conclude by summarising the explanatory challenges and research questions that we regard as most urgent for the further development of the field, and point to the approaches that will be needed if scholars are to meet them.

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De-Democratisation and Rising Inequality: the underlying cause of a worrying trend
Dena Freeman
Working paper 12

De-Democratisation and Rising Inequality: the underlying cause of a worrying trend

This paper is concerned with the question of why economic inequality has increased so dramatically in recent decades, and in particular, with the seemingly paradoxical situation that this upswing in inequality has taken place at the same time as a major spread of democracy worldwide. This paper argues that democracy itself has changed in this period and that globalization has led to a process of economic de-democratisation – by (1) the direct removal of certain economics matters from political control, (2) by increasing restrictions on the policy options available to policy-makers, and (3) by transformations in the structure of the policy-making process itself. In each of these shifts the representation of capital has been significantly increased, while that of labour has been correspondingly decreased. This analysis has major implications for how we should go about tackling the contemporary rise in inequality and suggests that it is imperative to democratise economic policy making at both the national and the global level.  If we are serious about tackling inequality then we must be serious about democracy.

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Lives and LivelihoodsEstimates of the Global Mortality and Poverty Effects of the Covid-19 Pandemic

Benoit Decerf, Francisco H. G. Ferreira, Daniel G. Mahler and Olivier Sterck
Working paper 48 

Lives and LivelihoodsEstimates of the Global Mortality and Poverty Effects of the Covid-19 Pandemic

Benoit Decerf, Francisco H. G. Ferreira, Daniel G. Mahler and Olivier Sterck
Working paper 48