Economics in Action

In the latest of a series of interviews from the Royal Economic Society Conference 2007, Romesh Vaitilingam talks to Kerry Papps the effect of divorce on women and work.

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Married women work more hours in the labour market when they face a high likelihood of divorce: for example, a woman who is unhappy with her marriage will work on average 283 hours more in the following year than a woman who is very happy with her marriage. In contrast, married men are unaffected by the probability of divorce.

These are among the findings of new research by Kerry Papps. The study also finds that both single men and single women work more when they have a high chance of marrying in the near future.

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In the fourth of a series of interviews from the Royal Economic Society annual conference 2007, Romesh Vaitilingam talks to Costas Milas about UK interest rates.

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Monetary policy-makers do not make minor adjustments to interest rates when inflation is close to the inflation target  but they do respond vigorously when inflation begins to move further from the target. That is the central argument of new research by Professors Christopher Martin and Costas Milas, presented to the Royal Economic Society’s 2007 annual conference at the University of Warwick.

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In the third of a series of interviews from the Royal Economic Society annual conference 2007, Romesh Vaitilingam talks to Stephen Drinkwater about self-employment among Britain’s Asian community.

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The typical Asian working age male is now younger, better educated and more likely to be UK-born than his parents generation were. According to research by Ken Clark and Stephen Drinkwater, each of these factors contributes to lower rates of self-employment, particularly among men of Indian and Chinese ethnicity. This suggests greater assimilation of these groups into the UK labour market and education system.

But the study, presented to the Royal Economic Society’s 2007 annual conference at the University of Warwick, also finds relatively stable rates of self-employment among Pakistani and Bangladeshi men. It seems likely that discrimination in paid employment against these groups is keeping them in self-employment, working long hours in relatively poorly rewarded sectors such as catering and taxi-driving

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In the second of a series of interviews with economics researchers at the Royal Economic Society Conference 2007, Romesh Vaitilingam talks to Richard Kneller about the effect of exchange rate movements on UK exports.

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Changes in exchange rates have little impact on UK manufacturing exports and are likely to have only a modest effect in reducing the countrys record trade deficit, according to research by Dr Richard Kneller and colleagues, presented to the Royal Economic Society’s 2007 annual conference at the University of Warwick.

Dr Kneller said:

The findings may surprise many people intuitively you would expect a strong pound to be bad for exports and a weak pound to lead to much greater exports. (more…)

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Britain’s national minimum wage has not only raised the pay of low-paid employees. It has also led to a reduction in the rate of these employees absence through sickness  and hence improved their productivity. That is the finding of new research by Marco Ercolani and Martin Robson, presented at the Royal Economic Society Conference 2007. This effect might help to explain why the introduction of the minimum wage was greeted with apparent equanimity by many employers.

Employee sickness absence is widely recognised as a major problem for the economy. In recent years, for example, it has been calculated that the direct costs of sickness absence in terms of the value of lost output amount to over £11 billion per annum; around 1% of the country’ annual GDP.

On top of this, there are the indirect costs such as the loss of employee morale among those required to cover for absent colleagues. While many instances of employee sickness absence represent genuine cases of ill health, a significant proportion almost certainly does not. (more…)

How can we help the developing countries of Africa? This three-minute BBC radio interview (RealPlayer required) features an interesting take on the issue from Paul Collier, an Oxford Professor of Economics.

Collier points out that Africa has some fragile democracies which are at real risk of falling to a military coup or descending into civil war. The security that comes from stable government makes it more feasible to escape the cycle of poverty. Hence the rich European countries could help by supplying some of their military power, if backed with a legitimate authority.

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In November 2005, the independent Pensions Commission published its second report, setting out a series of recommendations for reform of the UK pension system. Drawing on recent research from the Centre for Market and Public Organisation (CMPO), University of Bristol, Sarah Smith discusses the Commissions proposals.

What is the pensions crisis all about?

Population ageing has put increasing strain on the UK pension system. Unlike many other OECD countries, there has not been the prospect of rapidly growing state spending on pensions. But past reforms have created their own problems, notably: (more…)

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Following on from the recent debates about education reform, Simon Burgess, Professor of Economics and Director of the Centre for Market and Public Organisation (CMPO), at the University of Bristol discusses school choice.

What should school reform be for?

· Raising standards is one obvious response. In England, this seems to be a particular problem at the lower end of the achievement scale, with large numbers of people leaving school with no qualifications.

· Another response is that it should be targeted at giving children from poorer families a better deal in the education system. (more…)

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A key argument for the introduction of the euro was that it would make prices transparent across Europe, thereby fostering competition and lowering prices. But research by Michael Baye, Rupert Gatti, Paul Kattuman and John Morgan reveals that in fact online shoppers in the eurozone have lost out relative to their counterparts elsewhere in the European Union (EU) following the currency changeover. Their results were presented at the Royal Economic Society’s Annual Conference.

The researchers find that the euro changeover neither mitigated price differences nor resulted in purchasing power parity for products sold online, either within or between countries. In fact, average prices charged by e-retailers within the eurozone increased by about 6% relative to those in EU countries not adopting the euro. The impact on the minimum or best prices in each country was even more dramatic, with the lowest online prices in the eurozone rising by 11% relative to non-eurozone e-retailers. (more…)

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Anyone who is good at using computers or communicating can expect to earn considerably more than their educational qualifications alone would suggest. That is the central conclusion of research by Professor Francis Green and Dr Andy Dickerson, presented at the Royal Economic Society’s Annual Conference.

Their analysis of the 2001 Skills Survey, a nationally representative survey of 4,500 working individuals in Britain aged 20-60 (and compares it with a similar survey of 2,500 individuals in 1997), shows that: (more…)