CEPR News In focus this week: 04 January 4 Jan 2024 This weekly press briefing highlights some of the latest research reports, discussion papers and other publications from CEPR. It also features some of the latest columns on VoxEU, as well as new blogs/reviews, audio interviews and short films.
MOTHERHOOD AND THE COST OF JOB SEARCH Why do women experience a persistent drop in labour earnings upon becoming mothers, i.e. a "child penalty"? A new CEPR study by Arnaud Philippe and Daphne Skandalis explores a new mechanism: search frictions. Analysing data from job applications on a popular online platform and linked with administrative data for 350,000 involuntarily unemployed workers in France, the research highlights differences in job search behaviour between mothers and similar women with no children. Mothers were found to send 12.2% fewer job applications and are more selective regarding wage and non-wage amenities, ultimately resulting in a lower job finding rate.
Ogilby, John and Montanus, Arnoldus. London: John Ogilby, 29x36 cm AFRICAN SLAVERY AND THE RECKONING OF BRAZIL Using over 12,000 observations of new archival data, a CEPR study by Guilherme Lambais and Nuno Palma analyse the consequences of the slave trade in Brazil – a nation that witnessed more enslaved Africans disembarking than in any other country in the New World. The authors build the first-ever real wages and inequality series covering more than three centuries (1574 to 1920) in Brazil. The findings indicate that initially, real wages and inequality in Brazil were on a similar level to Europe. However, as the slave trade surged, wages declined, and inequality escalated. Unskilled workers experienced some of the world's lowest real wages, only recovering with the abolition of the slave trade.
IMMIGRATION, MONOPSONY AND THE DISTRIBUTION OF FIRM PAY: Evidence from Germany A new CEPR study by Michael Amior and Jan Stuhler argues that the arrival of immigrants with low reservation wages can strengthen the monopsony power of firms. Firms can exploit “cheap” migrant labour by offering lower wages, though at the cost of forgoing potential native hires who demand higher wages. This monopsonistic trade-off can lead to large negative effects on native employment, which exceed those in competitive models, and which are concentrated among low-paying firms. To validate these predictions, we study changes in wage premia and employment across the firm pay distribution, during a large immigration wave in Germany. These adverse effects are not inevitable, and may be ameliorated through policies which constrain firms’ monopsony power over migrants.
FRENCH URBAN SERVICES BOOM: Micro Data Reveals Productivity Growth and Rising Costs Using micro data from France, a study by Natalie Chen, Dennis Novy, Carlo Perroni and Horng Chern Wong shows that the shift towards services has been more pronounced in urban areas. Large services firms have expanded in large French cities, helping boost their productivity and grow their services exports. The rise of services in urban areas has been accompanied by increased land prices and housing costs.
BREXIT INFLATION: The impact of trade policy uncertainty on UK import prices The Brexit referendum increased uncertainty regarding future trade conditions between the UK and EU. Writing at VoxEU, Alejandro Graziano, Kyle Handley and Nuno Limão show that relative import prices of goods exposed to a higher risk of tariffs co-moved with the expected Brexit probability before the referendum. The authors estimate that trade policy uncertainty increased UK import price indices from the EU by 11% and consumer prices by 0.6%. These effects are likely to be persistent, as post-referendum agreements have reduced trade policy uncertainty, but have not eliminated it.
FROM THE GREAT DIVERGENCE TO SOUTH-SOUTH DIVERGENCE The long era of the Great Divergence has come to an end with the rapid economic ascendance of Eastern Asia, and China in particular. But economic historians have yet to define an agenda to analyse the causes and consequences of the rapid, and more recent, economic divergence across the Global South. Writing at VoxEU, Ewout Frankema argues that there is an urgent need to focus on this South-South divergence.
GREEN JOBS FOR FOSSIL FUEL WORKERS: The implications of geography and skills for the clean energy transition A study by Michaël Aklin evaluates two labour market frictions that could slow down the fossil-to-green transition in the US: skills and geography. The findings suggest that the fossil-to-green pipeline is feasible, but only if the green jobs materialise near areas where fossil fuel workers live.
ASSESSING CHINA’S EFFORTS TO INCREASE SELF-RELIANCE Writing at VoxEU, Francois de Soyres and Dylan Moore argue that China’s reliance on imported inputs for production has decreased in several key sectors such as high tech, electrical products, and the automotive industry. In the automotive sector, China has become a net exporter for finished vehicles over the past few years, as well as significantly increasing net exports of auto parts. As geopolitical tensions rise, domestic and foreign restrictions on cross-border trade and investment have also intensified, potentially increasing China’s urgency in pursuing its self-reliance goals.
THE IMPACT OF REFUGEES ON COMMUNITY HEALTH Africa’s refugees often live in large, permanent camps. While the arrival of refugees is often an economic boost for the region, it is also bad for the health of the children of local families. Anna Maria Mayda and Jean-François Maystadt tell Tim Phillips how their research resolved this contradiction.