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Impact in Economics

Impact in Economics

Our research is increasing our understanding of the world and helping to tackle some of the complex challenges we face in the 21st century

If you would like to get in touch in relation to any of this research, please contact Dr Juan Pablo Rud at juan.rud@royalholloway.ac.uk.

Covid-19

A key concern during the ongoing pandemic was that the lockdown policies that were adopted in many countries could potentially trigger increases in the prevalence of intimate partner violence (IPV). Reports from charities and helpline providers indeed reported substantial increases in the demand for their services. Research based on police data in contrast showed only very small increases in reported domestic abuse cases. This, however, could reflect a reduced propensity to report abuse to the police. We use daily data from Google Trends on search intensities for a large number of IPV-related search terms along with daily data on reported cases from the London Metropolitan Police Service spanning five years. This allows us to generate a search-based measure of IPV incidence using pre-crisis data. We can then compare the impact of the crisis on our search-based IPV measure and the police-reports based measure. In line with the findings in other studies we find only a small increase (<10%) in IPV when measured using the police data. In contrast, we find a much larger increase (close to 40%) when using our search-based IPV measure.
 

Using data on American women and the health status of their children, this paper studies the effect of remote work on female earnings. Instrumental variables estimates, which exploit a temporary child health shock as exogenous variation in the propensity to work at home, yield an hourly wage penalty of 77.1 percent. Earnings losses together with positive selection, and alternative first-stage regressions, suggest that task re-assignment or lack of social interaction are likely mechanisms. The estimates also have implications for the costs of social distancing during a pandemic and may be especially applicable when children must be temporarily quarantined. 

Paper available here

 

How does social distancing affect the reach of an epidemic in social networks? We present Monte Carlo simulation results of a Susceptible-Infected-Removed (SIR) model on a network, where individuals are limited in the number of other people they can interact with. While increased social distancing always reduces the spread of an infectious disease, the magnitude varies greatly depending on the topology of the social network. Our results also reveal the importance of coordination at the global level. In particular, the public health benefits from social distancing to a group (e.g., a country) may be completely undone if that group maintains connections with outside groups that are not social distancing. 

Our Published Work

The possible adverse aspects of the political resource curse in developing countries are well known: lower economic growth, appropriation by the elites, rent-seeking and ultimately conflict. In this research, we evaluate an information campaign about the discovery of natural resources and the rights of local communities in the province of Cabo Delgado, Mozambique. The reasoning behind this campaign was that informed citizens demand more from local politicians, which could increase political accountability. That is what we find. Communities that received the campaign have higher demand for accountability, less appropriation of community funds by leaders and higher social cohesion. Additionally, we use geo-referenced violence events (ACLED/GDELT) to show those communities have fewer violent events than control villages where the campaign did not happen. Overall, we find evidence that information can have a significant impact on counteracting the political resource curse. 

Read More: GlobalDevIGC

See publication.

 

At at a time where self-employment and small business activity is an increasingly important feature of most advanced economies, women are held back when it comes to starting and growing their own businesses by significant financial constraints that are stronger for them than for men.

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Children born in crises face different initial conditions. Data on children born in East Germany just after the Berlin Wall came down confirms that this corresponds to worse adult outcomes. ‘Children of the Wall’ have 40% higher arrest rates, are 33% more likely to have repeated a grade by age 12, and are 9% more likely to have been put into a lower educational track. This column argues that these negative outcomes can be explained by the lower average parenting skills of those who decided to have children during a period of high economic uncertainty.

Read more here and here

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There is widespread concern that economic recessions may lead to increases in intimate partner violence. In this research we combine high quality data from the Crime Survey for England and Wales on domestic abuse with Labour Force Survey data on local area unemployment rates among men and women in order to explore the relationship between adverse labour market conditions and women’s experiences of abuse between 2004 and 2011. In contrast to the traditionally held view that unemployment and economic hardship in general is positively related to abusive behaviour we find that women’s exposure to abuse increases with the female unemployment rate but decreases with the male unemployment rate.  Moreover, exposure to abuse is only related to male and female rate of unemployment within the own age group – not other age groups. Our results suggest that the relative labour market conditions for men and women matter more for the incidence of abuse towards women than does the overall level of unemployment.

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The 2016 RES prize was awarded to Dan Anderberg (Royal Holloway, University of London), Helmut Rainer (University of Munich and Ifo Institute), Jonathan Wadsworth (Royal Holloway, University of London) and Tanya Wilson (University of Stirling) at the Royal Economic Society's 2017 Conference for this article.  Watch a video here.

We examine stock index futures and Treasury futures around the release time of 30 U.S. macroeconomic announcements. Nine of the 20 announcements that move markets show evidence of substantial informed trading before the official release time. Prices begin to move in the “correct” direction about 30 minutes before the release time. The pre-announcement price drift accounts on average for about 40% of the total price adjustment. This implies that some traders have private information about macroeconomic fundamentals. Preannouncement drift might originate from a combination of information leakage and superior forecasting that incorporates proprietary data.

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The rise in obesity has largely been attributed to an increase in calorie consumption. This column investigates this claim by examining the evolving consumption and lifestyles of English households between 1980 and 2013. While there has been an increase in calories from restaurants, fast food, soft drinks, and confectionery, there has been an overall decrease in total calories purchased. This decline in calories can be partially rationalised with weight gain by the decline in the strenuousness of work and daily life, and increasingly sedentary lifestyles. 

Read more here and here

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Scientific progress can accelerate when scientists are less than fully informed about the advances their peers are achieving. Even though isolated scientists may have to work on projects whose productivity is less promising, they are also forced to select riskier research projects. Strangely, it is the riskier scientific projects that in the long run can lead to the greatest progress. A good example is provided by the success of particle physicists in the Soviet Union during the cold war, who worked in isolation from their Western counterparts.

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This paper examines how subsistence farmers respond to extreme heat. Using micro-data from Peruvian households, we find that high temperatures reduce agricultural productivity, increase area planted, and change crop mix. These findings are consistent with farmers using input adjustments as a short-term mechanism to attenuate the effect of extreme heat on output. This response seems to complement other coping strategies, such as selling livestock, but exacerbates the drop in yields, a standard measure of agricultural productivity. Using our estimates, we show that accounting for land adjustments is important to quantify damages associated with climate change.

Read more here

Our ongoing work

The paper studies the impact of change in IP regime in India brought about by the Patents Amendment Act of 2002. Earlier, only processes could be patented: a product invented by one firm could also be sold by another firm as long as it used a different process, which allowed easy imitation. The Act of 2002 strengthened intellectual property protection by introducing product patents: the same product could no longer be produced by other firms irrespective of the process used. Studying a large cross-section of the Indian manufacturing firms, we demonstrate that this change lead to an increase in wage inequality between managers and workers. Moreover, this increase in wage disparity is larger for firms that were technologically advanced before the legislation was introduced. In effect, the change increased the value of patents and led to increased capital investment especially in firms that were already ahead in the race for patents. Since managerial skills are complementary to technological capital, the value of managers relative to workers increased in these firms.  

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In markets with a small number of firms, antitrust authorities usually interpret the information sharing among competitors as evidence of collusion. This paper shows that, under certain conditions, some level of information sharing prior to competition could be good for firms and customers. Experimental evidence shows high levels of information sharing in situations in which collusion is not feasible.

Drone strikes are followed by strongly elevated rates of suicide attacks. On average, roughly one additional suicide attack occurred during a 30-day window following a drone strike in Pakistan. This suicide attack caused, on average, 20 deaths and 48 injuries. The trend of strike followed by suicide attack was elevated under Bush compared to Obama.

Read more here and here

This study uses administrative records of economics students at a university in the London metropolitan area to show that, contrary to commonly held beliefs about negative spill-overs from foreign students, the performance of English-speaking students is unaffected by the share of non-English-speaking students and the linguistic diversity of a classroom. Furthermore, increased linguistic diversity improves the academic performance of non-English-speaking students, especially for low-achieving students. This result appears to be driven by changed patterns of classroom interactions across ethnicities. Asked about their experiences, non-English-speaking students revealed they were much more likely to interact with English-speaking students when they were assigned to a more diverse classroom.

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Inadequate sanitation is a leading cause of poverty in developing countries, largely because it causes premature mortality. But policymakers in Nigeria still struggle to improve sanitation practices despite their importance to national health and poverty eradication strategies. IFS and Royal Holloway researchers, in partnership with WaterAid, provide new evidence on the effectiveness of one of the most popular interventions used by policy-makers and NGOs to improve rural sanitation practices in developing countries.

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Changes in the prize of gold on international markets affect the location of crime in the UK. Using detailed data on reported crime, Arnaud Chevalier and co-authors show that burglars alter their behaviour and increase their activities in neighbourhoods with a greater share of Asian households when the prize of gold goes up. This is because Asian households have a greater proclivity for holding gold – in the form of jewellery – making targeting these households rational when the prize of gold is high.

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Many people today spend some of their spare time doing volunteer work – as well as helping other people and developing skills, there is a common assumption that volunteer work is also looked on favourably by employers and leads to better-paying jobs. Our analysis of longitudinal data from the UK published in Social Science Research confirms that they’re right, but only for those with jobs in the ‘salariat’ – professionals, managers, administrators and the like. Working class volunteers pay a penalty.  

Read more: https://www.understandingsociety.ac.uk/blog/2020/03/10/volunteering-increases-income-%E2%80%93-but-only-for-the-middle-and-upper-classes 

Paper: https://www.iza.org/publications/dp/12713/the-economic-benefits-of-volunteering-and-social-class 

Introducing caps on interest rates would have been unthinkable to most policymakers before the financial crisis but is currently under consideration by many regulatory agencies (not to mention politicians). What are the likely effects of implementing such a policy? Standard competitive theory suggests it will price out riskier borrowers who, presumably, the policy aims to help. Our analysis, however, shows that the market is far from perfectly competitive and, once the relevant frictions are taken into account, a price cap is predicted to significantly benefit consumers with low credit ratings. This is due to the severe informational frictions plaguing the market, evidenced by the substantial dispersion in the interest rates paid by similar credit card borrowers.  

Read more here 

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