This week from CEPR: February 24

Wednesday, February 23, 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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    • New Discussion Papers


    • WHY IS COVID-19 MORE DEADLY IN SOME PLACES THAN IN OTHERS? Trust, polarisation, populism and COVID-19 deaths across European regions

    UNCOOPERATIVE SOCIETY, UNCOOPERATIVE POLITICS OR BOTH? 
    Nicholas Charron, Victor Lapuente, Andrés Rodríguez-Pose
    CEPR DP No. 17046 | February 2022

    A new CEPR study by Nicholas Charron, Victor Lapuente and Andrés Rodríguez-Pose examines the substantial differences in COVID-19 incidence across European regions by analysing how variations in social and institutional trust and social and political polarisation may have contributed to explain variations in COVID-19-related excess mortality during the first wave of the pandemic. The analysis covers 165 regions in Europe to show that:

    • In addition to well-known drivers, such as age and density, accessibility, the preparation of the health system, or climate, variation in (social and institutional) trust explain the uneven geography of the pandemic.
    • Regions characterised by a low social and institutional trust witnessed a higher excess mortality during the first wave.
    • The research finds some support for the idea that the bigger the chasm in trust between government and nongovernment supporters in a region, the higher the excess mortality in the region – yet not in all models and only regarding political (or institutional) trust, not social trust.
    • When the divide in political trust between supporters and opponents of incumbent governments within societies is high, there is consistently higher COVID-19-related excess mortality.
    • The results highlight that social division – ‘uncooperative society’ – is highly correlated with excess mortality.
    • The research also finds support for the relationship between political division – ‘uncooperative politics’ – and higher mortality. 
    • Although limited evidence is found of elite polarisation driving excess deaths, partisan differences on one particular ideological dimension emerge as a strong predictor of higher levels of excess deaths: the attitudes towards the EU. The reason for this may be that regions with a sharper divide between Eurosceptics (i.e. anti-expert populists) and EU-supports (i.e. pro-expert policies) among politicians have more problems to gather consensus around (what mostly are expert-based) anti-pandemic measures.
    • In regions where the political elite is less supportive of European integration (i.e. more anti-expert populist), the excess deaths have been significantly higher.
    • Regions with more traditional, authoritarian and nationalistic parliaments present higher rates of excess death on average, providing further evidence that the prevalence of populism (among the political elite) has negative effects for handling a pandemic.

    Overall, these findings indicate that lower social or institutional trust, as well as greater social and political polarisation, may have ended up costing lives during the first wave of COVID-19 in Europe.

    Figure: Excess deaths in percentage across European regions

    Note: Total deaths by region in 2020 between weeks 1 and 27 (until beginning of July) in comparison with Average deaths by region (2015-2019) between weeks 1 and 27, darker shades=higher excess deaths. Shades of green (orange) imply fewer (greater) than ‘0’ excess deaths.


    • QUALITY OF REGIONAL GOVERNMENT MATTERS A LOT FOR ECONOMIC GROWTH ACROSS EUROPE: Evidence from the EU cohesion policy

    IMPROVING GOVERNMENT QUALITY IN THE REGIONS OF THE EU AND ITS SYSTEM-WIDE BENEFITS FOR COHESION POLICY
    Javier Barbero Jiménez, Martin Christensen, Andrea Conte, Patrizio Lecca, Andrés Rodríguez-Pose, Simone Salotti 

    CEPR DP No. 17045 | February 2022

    A new CEPR study by Javier Barbero Jiménez, Martin Christensen, Andrea Conte, Patrizio Lecca, Andrés Rodríguez-Pose and Simone Salotti examines the effects on economic growth of improving the quality of institutions at the regional level in the context of the implementation of the European Cohesion Policy for the European Union and the UK. The study uses new data and a wide variety of sophisticated econometric methods to show that: 

    • There is a significant direct effect of government quality on economic growth.
    • There are considerable system-wide benefits of policies aiming to improve the quality of institutions in the regions of the EU.
    • The economic impact of improving the quality of regional government can be substantial in terms of additional GDP and jobs generated.
    • The precise magnitude of these effects depends on a few key factors which include the initial level of the quality of government, its persistence over time, and the stock of capital with which each region is endowed.
    • A relatively small increase in government quality of 5% can yield large monetary gains both in the short run and in the long run, boosting the average regional GDP impact of ESIF public capital investments (a major EU funding programme) by up to 7% and 3% in the short and long run, respectively, depending on the starting conditions of each region.
    • As a larger share of Cohesion funds is being channelled to regions in less-developed and/or newer member states that also have the greatest institutional bottlenecks, the economic implications for the returns of Cohesion Investment of improvements in government quality may vary considerably across Europe.

    The findings have important implications for policy-makers, suggesting that the returns of promoting greater public investment to trigger economic growth can be substantially enhanced if improving government quality becomes a part of public policy, in general, and of the European Cohesion effort, in particular. The dimension of the benefits can be important, as even a relatively small increase in government quality is likely to yield considerable benefits.

    Figure: Distribution of cumulative ESIF public capital expenditure by region (% of 2013 GDP)

    Source: own elaborations on DG REGIO data.



    EU GROWTH EXPECTED TO REGAIN TRACTION AFTER WINTER SLOWDOWN: The European Commission's Winter 2022 Economic Forecast

    Maarten Verwey, João Leal, Przemyslaw Wozniak                
    18 February 2022

    Following a strong rebound in 2021, growth in the EU is now forecast at 4.0% in 2022 (down from 4.3% in the Autumn Forecast) and 2.8% in 2023. The euro area inflation forecast for 2022 is revised up on the expectation that energy prices will stay high for longer. Inflation is expected to return to just below 2% in 2023. 

    Intensified headwinds softened the EU’s growth momentum around the turn of the year. The European Commission’s Winter 2022 Forecast expects that as these headwinds gradually fade, the expansion of the European economy will regain pace in the second quarter and remain robust until 2023. 

     

    WTO ACCESSION CONTRIBUTED TO AN INCREASE IN VIOLENCE AGAINST WOMEN IN CAMBODIA

    Bilge Erten, Pinar Keskin                   
    18 February 2022

    A study by Bilge Erten and Pinar Keskin finds that Cambodia’s accession to the WTO in 2004 had significant effects on male–female employment gaps, intrahousehold bargaining dynamics and increased intimate partner violence experienced by women. The research shows that:  

    • In districts facing larger tariff reductions, men’s paid employment significantly declined, while women’s employment in family enterprises increased. 
    • Women in those districts also experienced an increase in physical, sexual, and psychological violence. 

    Neglecting such potentially large backlash effects from increased intimate partner violence may skew estimates of the societal benefits of trade liberalisation.


    EARMARKED PATERNITY LEAVE INCREASES PARENTAL WELLBEING: Evidence from across Europe

    Pontus Korsgren, Max Van Lent                   
    19 February 2022

    A study by Pontus Korsgren and Max Van Lent uses data on life satisfaction in Europe to show that paternity leave quotas have a positive effect on both mothers’ and fathers’ wellbeing. This uplift disproportionately benefits mothers and is driven by improvements to satisfaction within the home, not the workplace.

    While previous research has documented limited, if any, effect, of earmarked paternity leave on mothers’ labour market participation, especially in the long run, these findings support the policy’s wider impact on parental wellbeing.


    US REGULATIONS ON LEAD POLLUTION CREATES POLLUTION-HAVEN EFFECTS IN MEXICO, WORSENING HEALTH OUTCOMES FOR LOCALS

    Shinsuke Tanaka, Kensuke Teshima, Eric Verhoogent              
    21 February 2022

    A study by Shinsuke Tanaka, Kensuke Teshima and Eric Verhoogen shows that tightened US regulations around lead pollution increased exports of lead-acid batteries to Mexico for recycling, worsening health outcomes for locals, especially the poor. 

    The research shows that health costs of dirty industries are not distributed evenly, and are creating pollution-haven effects between the global North and South. The overall effectiveness of environmental regulation thus depends crucially on the extent of displacement of polluting activities across borders. The authors call for international pressure to raise environmental standards, beyond what developing-county governments would choose for themselves.


    A FASTER, MORE PROGRESSIVE APPROACH TO TRADE REFORM IS NEEDED TO RESTORE CONFIDENCE IN GLOBALISATION

    Klaus Schwab, Sean Doherty                   
    23 February 2022

    Despite recent commitments, countries’ climate mitigation policies are not enough to meet their ambitious emissions reduction targets, according to a new study by Mauro Pisu, Filippo Maria D’Arcangelo, Ilai Levin and Asa Johansson, which puts forward a framework for designing comprehensive decarbonisation strategies that promote growth and social inclusion. The authors suggest a policy mix based on three components: 

    • Emission pricing 
    • Standards and regulations 
    • Complementary policies that offset distributional effects. 

    A robust and independent institutional framework and credible communications campaigns are key to managing policy constraints and enhancing public acceptance of mitigation policies.


    SEVERE SHOCKS EXPERIENCED DURING PREGNANCY HAVE LONG-LASTING HEALTH EFFECTS ON OFFSPRING

    Gabriella Conti, Peter Ekamper, Stavros Poupakis           
    21 February 2022


     

    Writing at Vox, Gabriella Conti, Peter Ekamper and Stavros Poupakis show how sever shocks experienced during pregnancy, such as environmental or man-made disasters, can have significant impacts on adolescence health.

    The research finds that cohorts exposed since early gestation to the Dutch Hunger Winter at the end of World War II had higher BMI and were more likely to be obese at age 18, partly due to warfare exposure & reduced protein intake.


    PARENTS’ MATHS AND LANGUAGE SKILLS PASSED DOWN TO THEIR CHILDREN: Evidence of intergenerational skills transmission from the Netherlands

    Eric Hanushek, Babs Jacobs, Guido Schwerdt, Rolf van der Velden, Stan Vermeulen, Simon Wiederhold        
    22 February 2022

    Using data from the Netherlands, a study by Eric Hanushek, Babs Jacobs, Guido Schwerdt, Rolf van der Velden, Stan Vermeulen and Simon Wiederhold shows that parents’ maths and language skills strongly affect the same skills in their children, and that skills within dynasties are not just genetically determined but are significantly affected by educational experiences. The research, the first causal evidence on cognitive skill transmission in the family, highlights the importance of good educational environments in alleviating persistent inequalities.


    ASSESSING THE EFFECTIVENESS OF LOCKDOWNS: Pandemic modelling with network structure and behaviour

    Alberto Bisin, Andrea Moro                   
    20 February 2022

    Analysis by Alberto Bisin and Andrea Moro shows how the demographic structure and spatial distribution of populations affected the spread of Covid. The research reveals that:

    1. Local herd immunities induced by the spatial structure of the population along socio-demographic dimensions substantially affect the effectiveness of various non-pharmaceutical interventions such as lockdowns. 
    2. In this context, policies naively ignoring agents’ and firms’ behavioural responses (hence exposed to a Lucas critique argument) have substantial costs in terms of their effectiveness in containing the pandemic.

    WOMEN AT WORK IN AFRICA

    Taryn Dinkelman, Liwa Rachel Ngai                     
    17 February 2022

    AThe entry of women into the labour force is central to the ongoing structural transformation of African economies. A study by Taryn Dinkelman and Liwa Rachel Ngai uses detailed time-use data from across the continent of the scale and nature of female participation in both unpaid work in the home and paid work in the market, to show that:  

    • While female labour force participation is high, most hours continue to be worked in the home, on tasks such as cooking and cleaning, rather than in the market. 
    • The development of a service sector in many economies has created female-intensive jobs and allowed for the marketisation of some home services (e.g. restaurants and food stalls).
    • Market work is common among African women, but market hours are low.
    • The way African women use their time at home resembles historical patterns of time use among American housewives in the 1920s and 1960s.

    The research suggests that policy has an important role to play to address both technological and cultural barriers to paid market work for women. 



    INVESTING IN TECHNOLOGY HELPED FIRMS COPE WITH COVID-19: Evidence from Brazil, Senegal, and Vietnam?

    Diego Comin interviewed by Tim Phillips, 22 February 2022

    Which firms were most resilient when Covid-19 devastated their economies? New research highlights the value of investment in digital technologies.
    Read more about this research and download the free DP: Cirera, X, Comin, D, Cruz, M, Lee, K and Torres, J. 2022. 'Technology and Resilience'. CEPR



    ANTI-LGBT DISCRIMINATION IN TRANSITION ECONOMIES

    Cevat Giray Aksoy, Ralph De Haas interviewed by Tim Phillips, 18 February 2022

    A recent experiment in Serbia, Turkey and Ukraine attempted to overcome deep-seated prejudice against the LGBT community using information. Ralph De Haas and Cevat Aksoy of the European Bank for Reconstruction and Development tell Tim Phillips about which messages cut through, and what impact can they have in the face of religious and state hostility.

    You can read more about this research and download the free DP: Aksoy, C, Carpenter, C, de Haas, R, Dolls, M and Windsteiger, L. 2022. 'Reducing Sexual-Orientation Discrimination: Experimental Evidence from Basic Information Treatments'. CEPR