This week from CEPR: 17 June

Friday, June 17, 2022

Highlights from some of the latest research reports published in the Centre for Economic Policy Research (CEPR) network’s long-running series of discussion papers, as well as some other recent CEPR publications.

Also, links to some of the latest columns on Vox, the Centre’s policy portal, which provides ‘research-based policy analysis and commentary from leading economists’.

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    Andreas Diemer, Simona Iammarino, Andrés Rodríguez-Pose, Michael Storper
    CEPR DP No. 17371 | June 2022

    The concept of regional development trap refers to regions that face significant structural challenges in retrieving past dynamism or improving prosperity for their residents. A new CEPR study by Andreas Diemer, Simona Iammarino, Andrés Rodríguez-Pose and Michael Storper introduces and measures the concept of the regional development trap for regions in Europe to identify regions either in a development trap or at significant near-term risk of falling into it. Among the findings:

    • Many rural and old industrial regions, mostly in Western Europe, have since the early 1990s endured long periods of entrapment or are at significant risk of being trapped, including: Central and Northeastern France, Northern Italy, parts of Wallonia in Belgium, Northern Jutland in Denmark, Eastern Spain, or the English Midlands. 
    • Other traditionally well-off regions, such as Lower Austria, South Sweden, or Southern Finland also belong in this category.
    • In addition, a number of low income and low-growth regions in Southern Italy and Greece –most of them in the less developed European Cohesion Policy category – are in this group.
    • Many that are now trapped had not fully recovered from the shock of the Great Recession in the early 2010s, when additional shocks from global trade and COVID-19–related shutdowns, hit.
    • More subtly, many were already undergoing slow loss of human capital, and others suffered from visionless if well-meaning leadership.
    • Subpar economic performances, lack of employment opportunities, and loss of competitiveness are causing social and political resentment toward what is increasingly regarded – justly or unjustly – as a system that does not benefit areas being left behind.
    • The problems linked to economically trapped regions have mostly been neglected by European and national decision-makers, with attention focused instead devoted to the least advanced regions or reinforcing the winners. Caught between these two views, trapped regions have struggled to attract interest.

    Figure: Average risk of being trapped, quartiles of the distribution over 2001–15


    FIGHTING POPULISM ON ITS OWN TURF: Experimental Evidence from Italy
    Vincenzo Galasso, Massimo Morelli, Tommaso Nannicini, Piero Stanig 
    CEPR DP No. 17380 | June 2022

    A new CEPR study by Vincenzo Galasso, Massimo Morelli, Tommaso Nannicini and Piero Stanig evaluates how traditional parties may respond to populist parties on issues that are particularly fitting for populist messages, using the 2020 Italian referendum on the reduction of members of Parliament as a case study. The authors evaluate the effectiveness of two different strategies: 1) providing factual information on the side effects of the populist reform, in order to “win the argument”; 2) attacking the populist politicians who promoted the reform as the new establishment to reduce their credibility and voters’ trust in them, thereby employing a “use the same weapons” strategy. Among the findings: 

    • The latter video is more effective at capturing the viewers' attention. It decreases the turnout rate and, albeit less, the "Yes" votes (in favour of cutting MPs).
    • Both (unskippable) videos reduce the "Yes" votes and increase the share of undecided. 
    • The more aggressive “use the same weapons” strategy worked better at this. This suggests that to convince populist voters, who were not interested in acquiring information on the referendum, the most relevant aspect was to capture their attention.
    • However, findings from both the field and the survey experiment show that these voters were not convinced to switch camp and vote "No", but rather become undecided or chose to not vote. 
    • Hence, having traditional parties exploiting this “use the same weapons” strategy has costs in terms of increasing toxic messages during the electoral campaign and of reducing political participation. 

    These findings suggest that traditional parties, when devising their strategy to (best-) respond to populist parties during campaigns, should focus on mobilisation rather than persuasion, and should target not only demographic characteristics but also cultural (trust) attitudes. 



    RESTARTING UKRAINE’S AGRICULTURAL EXPORTS

    Oleksiy Blinov, Simeon Djankov
    10 June 2022

    Writing at VoxEU, Oleksiy Blinov and Simeon Djankov estimate that losses of agricultural export producers due to the Russian naval blockade on Ukraine reached $200 million a day in March through May 2022, with the next harvest at even higher risk due to lack of storage facilities and trading routes. The authors recommend several policy solutions, including:

    • Grain convoys in the Black Sea led by Bulgaria, Romania, and Turkey.
    • The EU could temporarily lift all border controls for Ukraine train and truck agricultural exports so that they can transit faster and cheaper through Europe and reach European ports.
    • Address Ukraine’s landline infrastructural bottlenecks.
    • EU funds to be used for increasing the logistical capacity in the western and south-western parts of the country, along the border with the EU.
     

    WESTERN SANCTIONS ON RUSSIA ARE WORKING, AN ENERGY EMBARGO NOW IS A COSTLY DISTRACTION

    Mark Harrison   
    13 June 2022

     

    Writing at VoxEU, Mark Harrison argues that Russia exporting one seventh of its national income to the rest of the world is weakening, not strengthening, its war effort. Rather than ‘paying for Putin’s war’, Russia’s exports are paying for the accumulation of idle balances of foreign currency. Sanctions are working, and we should not be distracted by worries about the distant financial implications of continuing to buy and pay for Russian energy for as long as we can. 


    GLOBAL SUPPLY CHAINS RATTLED BY RUSSIA-UKRAINE WAR

    Maria Grazia Attinasi, Rinalds Gerinovics, Vanessa Gunnella, Michele Mancini, Luca Metelli 
    09 June 2022

    A study by ECB economists Maria Grazia Attinasi, Rinalds Gerinovics, Vanessa Gunnella, Michele Mancini and Luca Metelli introduces a new indicator to show that Supply bottlenecks have worsened since the onset of the war, especially in sectors largely dependent on Russia’s and Ukraine’s exports.

    Despite the modest share of Russia and Ukraine in global trade, the ramifications for global activity can be sizeable as both countries are among the top global exporters of energy products and raw materials that enter upstream in the production processes of several manufactured goods and that may be hard to substitute in the short term.

     


    COMBATING CLIMATE CHANGE WITH FEMALE MANAGERS IN THE WORKPLACE

    Yener Altunbaş, Leonardo Gambacorta, Alessio Reghezza, Giulio Velliscig      
    16 June 2022

    A study by Yener Altunbaş, Leonardo Gambacorta, Alessio Reghezza and Giulio Velliscig finds that after the Paris Agreement in December 2015, firms with more women involved in the decision-making process reduced carbon dioxide emissions more than firms with a predominance of male managers. The finding suggests that gender diversity within organisations can have a significant impact on combating climate change.  

     

    THE SOBERING STORY OF THE WEBSITE THAT ATTEMPTED TO BRING UNEMPLOYMENT DOWN IN FRANCE 

    Aïcha Ben Dhia, Bruno Crépon, Esther Mbih, Louise Paul-Delvaux, Bertille Picard, Vincent Pons, Vestal McIntyre        
    14 June 2022

    A study by Aïcha Ben Dhia et al. evaluates the impact of an online platform for jobseekers in France, designed by a nonprofit with the French government employment agency, and finds no impact on time spent looking for a job, search scope, or self-reported wellbeing. The results also show no effect on any employment outcome in the short or medium run.

    The authors propose that in order to be successful, future interventions should be rooted in an in-depth understanding of jobseekers’ behaviour and their needs to increase the odds of successfully addressing these needs.


    NEW INSIGHTS ON HOW PATENT PUBLICATION INCREASES INNOVATION

    Deepak Hegde, Kyle Herkenhoff, Chenqi Zhu     
    16 June 2022

    A study by Deepak Hegde, Kyle Herkenhoff and Chenqi Zhu analyses the broader impacts of patents on innovation, leveraging a change in patent disclosure requirements in the US in 1999. The research shows that accelerating patent publication by two years increases future patent citations by 15% relative to the baseline, suggesting a significant impact on knowledge diffusion. This finding is contrary to historical arguments that patent disclosure stifles innovation or does not reveal useful information. 


    WOMEN IN EARLY MODERN ACADEMIA: A Catholic phenomenon

    David de la Croix, Mara Vitale        
    15 June 2022

    A study by David de la Croix and Mara Vitale finds that the participation of women in European academia from the first universities to the eve of the Industrial Revolution, taught mostly at universities or belonged to academies in Catholic southern Europe. 

    These findings challenge the idea that Protestantism was more liberal than Catholicism, at least where the participation of women in upper-tail human capital was concerned.


    WE MUST DISTINGUISH INTER- VS INTRA-INDUSTRY EFFECTS OF COMMON OWNERSHIP

    José Azar, Xavier Vives       
    15 June 2022

    Writing at VoxEU, José Azar and Xavier Vives argue that it is important to distinguish inter-industry from intra-industry effects of common ownership, which have largely been ignored in earlier empirical work. Using data from the airline industry, it shows that: 

    • Intra-industry common ownership is positively associated with prices, 
    • Inter-industry common ownership is negatively associated with prices. 
    • Antitrust regulation should take into account the procompetitive inter-industry effects of common ownership.

    NEW EVIDENCE ON THE FOSTER CARE-TO-PRISON PIPELINE

    Jason Baron, Max Gross    
    12 June 2022

    There is a well-documented correlation between foster care and crime, but little evidence on the long-term consequences of placing a child into foster care or leaving them with their family. Using data from the state of Michigan, Jason Baron and Max Gross estimate the causal effect of foster care placement on adult crime, to show that: 

    • Foster care placement reduced later-in-life crime, especially for male children and younger children. 
    • Foster care protects children from subsequent abuse and neglect and improves school performance. 
    • Birth parents also make improvements while their children are temporarily in foster care.


    IN-UTERO EFFECTS OF RAMADAN FASTING: Estimating the long-term outcomes

    Mazhar Waseem interviewed by Tim Phillips, 14 June 2022

    During Ramadan, observant Muslims do not eat or drink from sunrise to sunset. If pregnant women observe this ritual, might there be an effect on their child’s future prospects?


    MALE AND FEMALE VOICES IN ECONOMICS

    Sarah Smith interviewed by Tim Phillips, 10 June 2022

    We know women are under-represented in economics. But if male economists are more comfortable expressing a strong opinion, does this increase the perceived imbalance? Sarah Smith tells Tim Phillips about new research into the difference between male and female voices in economics.