This week from CEPR: 28 April

Thursday, April 28, 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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    Sergei Guriev, Andrei Markevich, Ekaterina Zhuravskaya
    CEPR DP No. 17244 | 23 April 2022

    A new CEPR study by Sergei Guriev, Andrei Markevich and Ekaterina Zhuravskaya discusses the growing literature on the Russian economic history of the 19th and 20th centuries, to reveal new insights on the dramatic institutional and policy experiments that took place in the country, which are unique in global history. Among the findings:

    • Examining the long-term trends in economic development and living standards, the research finds that throughout history Russia significantly underperformed advanced economies. 
    • The new literature confirms the important role of institutions in the relatively low level of economic development of the Russian Empire, highlighting a causal negative effect of serfdom, peasant communes, and excessive regulatory barriers.
    • New studies of the Soviet command system explain its slowdown over time and the eventual collapse of the system by the command economy's inability to provide incentives to individual agents. The concentration of power in the hands of the dictator and the extensive use of coercion did not solve these problems.
    • With novel data and advanced empirical methodology, the recent literature also shows that, in contrast to conventional wisdom, Stalin’s industrialisation did not do better economically than the extrapolation of the imperial trend or comparator market economies, despite the enormous human costs during Stalin’s Big Push.
    • The recent research also studies the long-run consequences of the many quasi-natural historical and policy experiments, such as central planning and command allocation of resources, forced collectivisation, industrialisation, mass repressions and deportations during the Soviet period, border changes, top-down imposition of values and norms, and devastating wars. The results strongly support the view that history casts long shadows.
    • The Soviet period, when decision-making was often unrelated to supply and demand forces, generated an especially large number of shocks that continue to influence the behaviour of economic agents and the institutional environment in modern Russia and other former Soviet republics. 
    • Serfdom, abolished half a century before the Soviet period, also remains an important impediment to growth even 150 years since emancipation, despite the shocks that occurred during the Soviet era.

    The authors conclude by discussing the lessons of the literature and highlight open questions for future research.


    • THE INTRODUCTION OF FACEBOOK ACROSS US COLLEGE CAMPUSES NEGATIVELY IMPACTED STUDENTS’ MENTAL HEALTH

    SOCIAL MEDIA AND MENTAL HEALTH
    Luca Braghieri, Roee Levy, Alexey Makarin
    CEPR DP No. 17252 | 25 April 2022

    The introduction of social media platforms coincided with a deterioration of mental health among adolescents. Well-identified causal evidence of the role of social media, however, remains scarce. A new CEPR study by Luca Braghieri, Roee Levy and Alexey Makarin estimates the impact of social media on mental health by leveraging a unique natural experiment: the staggered introduction of Facebook across US colleges in the mid-2000s. Using survey data on college students’ mental health collected in the years around Facebook’s expansion, the research finds that:

    • The roll-out of Facebook at a college increased symptoms of poor mental health, especially depression. 
    • Among students predicted to be most susceptible to mental illness, the introduction of Facebook led to increased utilisation of mental healthcare services and use of anti-depressants.
    • After the introduction of Facebook, students were more likely to report experiencing impairments to academic performance resulting from poor mental health. 
    • Additional evidence on mechanisms suggests that the results are due to Facebook fostering unfavourable social comparisons. 
    • The effects are particularly pronounced for students who may view themselves as comparing unfavourably to their peers, such as students who live off-campus – and therefore are more likely to be excluded from on-campus social activities – students of lower socioeconomic status, and students not belonging to fraternities/sororities.
    • The introduction of Facebook directly affected the students’ beliefs about their peers’ social lives and behaviours, especially in relation to alcohol consumption.

    These results are consistent with the hypothesis that social media might be partly responsible for the recent deterioration in mental health among teenagers and young adults.

    Figure: Effects of the Introduction of Facebook on Student Mental Health



    STRENGTH IN UNITY: The economic cost of trade restrictions on Russia and the EU

    François Langot, Franck Malherbet, Riccardo Norbiato, Fabien Tripier 
    22 April 2022

    A study by François Langot, Franck Malherbet, Riccardo Norbiato and Fabien Tripier analyses the costs for Russia and the EU of further trade restrictions with varying intensity, to show that strength in unity has never been more relevant:

    • An embargo only by the EU would cost Russia three times as much as it would cost the EU. 
    • However, if an embargo were imposed by the EU and other countries ‘unfriendly’ to Russia, the relative cost would be 13 times higher for Russia. 
     

    HOW GERMANY AND EUROPE CAN STEP UP CONFLICT RESOLUTION IN THE UKRAINE WAR

    Tilman Eichstädt
    27 April 2022

     

    With the Donbas and towns in other regions of Ukraine rattled by the second phase of the Ukraine war, Germany and the rest of Europe are still struggling to find an effective response to the Russian aggression. 

    A study by Tilman Eichstädt uses negotiation analysis and non-cooperative game theory to argue that import taxes or tariffs can be a very effective way to influence the duration of the conflict. Implementing these in a clear step-by-step approach would increase the time pressure on Russia to end the war and raise the credibility of further actions.


    LEARNING LOSSES DUE TO THE RUSSIAN INVASION OF UKRAINE

    Jonathan Federle, André Meier, Gernot Müller, Victor Sehn
    18 April 2022

    A study by Noam Angrist, Simeon Djankov, Pinelopi Goldberg and Harry Patrinos shows that from a position of relative parity with its neighbours pre-pandemic, learning outcomes in Ukraine are now estimated to be below the lowest-performing countries in Europe.

    The research suggests opening classes for Ukrainian refugees, providing online or by-phone tutoring, or adapting curricula for refugees can help minimise the long-term impacts of the conflict.

     

    WHAT ARE THE POTENTIAL COSTS TO FIRMS OF CUTTING RUSSIAN ENERGY IMPORTS?

    Raphaël Lafrogne-Joussier, Andrei Levchenko, Julien Martin, Isabelle Mejean
    24 April 2022

    A study by Raphaël Lafrogne-Joussier, Andrei Levchenko, Julien Martin and Isabelle Mejean uses detailed firm-level data to show that some firms adjust to cutting energy imports, mitigating the effects of the shock. However, exposure to these shocks differs across firms. This has distributional consequences, with less exposed firms gaining market shares over more exposed ones.


    THE RESILIENCE OF THE US SEMICONDUCTOR INDUSTRY DURING COVID AND THE UKRAINE-RUSSIA WAR 

    Willem Thorbecke
    26 April 2022

    A study by Willem Thorbecke uses high-frequency data to reveal that supply chain disruption caused by the Ukraine war and the covid pandemic did not severely damage the industry in the US. However, the US is less competitive than the East Asian countries in the semiconductor industry because of educational attainment, fiscal discipline, and employment incentives. Policymakers should be aware of these factors before subsidising the industry.



    THE DRIVERS OF VACCINE HESITANCY: Evidence from Italy

    Claudio Deiana, Andrea Geraci, Gianluca Mazzarella, Fabio Sabatini 
    23 April 2022

    On 15 March, the Italian government suspended the use of AstraZeneca following reports of very rare blood clots (thrombi). Writing at VoxEU, Claudio Deiana, Andrea Geraci, Gianluca Mazzarella and Fabio Sabatini find that the suspension may have unintentionally altered the balance between the perceived risks of contracting the disease and incurring vaccine-adverse events for many people, resulting in increased reluctance to get the vaccine, especially in areas with fewer cases.

     

    MORE DECENTRALISED COUNTRIES MAY BE BETTER EQUIPPED TO DEAL WITH CLIMATE CHANGE MITIGATION AND ADAPTATION

    Luiz de Mello, João Tovar Jalles 
    19 April 2022

    A study by Luiz de Mello and João Tovar Jalles shows that there is a link between policy decentralisation and attitudes towards the environment, with evidence from individual-level survey-based and aggregate national accounts data pointing to the potential for decentralisation to foster environmentally friendly attitudes and to influence policymaking.


    ARE LONG-RUN IMPROVEMENTS IN LIFE EXPECTANCY DUE TO HEALTH OR MONEY?

    Leandro Prados de la Escosura 
    23 April 2022

    Human wellbeing is increasingly viewed as a multidimensional phenomenon, of which income is only one facet. However, economists continue to rely on GDP to gauge wellbeing. Analysing the relationship between life expectancy at birth and per capita income over the past 150 years, a study by Leandro Prados de la Escosura shows that: 

    • Life expectancy and per capita income growth behaved differently in terms of trends and distribution over the period. 
    • The relationship was particularly weak during the period 1914 to 1950. 
    • Separately, medical improvements and the diffusion of medical knowledge have been crucial drivers of life expectancy improvements across the world.

    DESIGNING AN EFFECTIVE BORDER CARBON ADJUSTMENT MECHANISM

    Goran Dominioni, Dan Esty  
    22 April 2022

    The EU and the US are considering proposals for border carbon adjustment mechanisms to curtail the risk of carbon leakage. Writing at VoxEU, Goran Dominioni and Dan Esty argue that these mechanisms can better mitigate climate change and more likely comply with WTO law when designed to account for effective carbon prices in exporting countries instead of focusing on explicit carbon prices alone. 

    While there are administrative challenges to crediting effective carbon prices, existing trade accounting methods (notably from anti-dumping and countervailing duty subsidy cases) provide ample experience and know-how to overcome these difficulties.



    CEPR’s COMPETITION POLICY RPN: Achievements and next steps

    Rod Sims and Tommaso Valletti interviewed by Tim Phillips, 26 April 2022

    The CEPR's Competition Policy RPN has a new chair, Rod Sims, and director, Tommaso Valletti. What has the network achieved so far, and how are they going to build on its achievements so far?




    INEQUALITY AND CREATIVE DESTRUCTION

    Richard Blundell interviewed by Tim Phillips, 22 April 2022

    Governments are desperate to create innovation hubs or attract tech companies to kickstart economic growth, but that creates winners and losers. Richard Blundell tells Tim Phillips how policy can balance the impact of innovation on inequality and create policies so that creative destruction and social mobility can go hand-in-hand.