This week from CEPR: January 06

Thursday, January 6, 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


    • LOCAL HOSTILITY TOWARDS REFUGEES HAMPERS CULTURAL AND ECONOMIC INTEGRATION: Evidence from Germany

    SCARED STRAIGHT? Threat and Assimilation of Refugees in Germany 
    Philipp Jaschke, Sulin Sardoschau, Marco Tabellini
    CEPR DP No. 16849 | January 2022

    A new CEPR study by Philipp Jaschke, Sulin Sardoschau and Marco Tabellini shows how locals' attitudes and behaviour towards refugees has a big impact on their integration. The research shows that assimilation pressure exerted, directly or indirectly, from the bottom-up by citizens at the local level may be at least as important as formal, top-down policies. The authors use survey data on cultural preferences and economic outcomes of refugees across German regions between 2013 and 2016. The findings reveal that:

    • Refugees assimilate both culturally and economically as they spend more time in Germany. 
    • Cultural convergence is faster among refugees assigned to areas where locals display higher hostility against minorities. 
    • While refugees assigned to more hostile regions converge to local culture more quickly, they do not exhibit faster economic assimilation.  
    • Refugees exert more assimilation effort in response to local threat, but fail to successfully integrate because of higher discrimination by locals in more hostile regions.

    The research shows that in order for refugees to successfully assimilate – socially and economically –, locals must be willing to accept them. If discrimination against minorities is higher in regions characterised by higher threat, refugees may not be able to achieve faster integration, even if they exert more effort to learn and adopt local culture. The findings also cast doubt on the effectiveness of pressure and hostility as tools to promote integration. 

    Figure: Economic and cultural convergence

    Notes: The graph shows the evolution of cultural (in blue solid line) and economic (in green dashed line) similarity between migrants and locals since refugee arrival. Economic and cultural similarity are z-standardised.


    • REDUCING LGBT DISCRIMINATION THROUGH INFORMATION CAMPAIGNS: Evidence from Serbia, Turkey and Ukraine

    Reducing Sexual-Orientation Discrimination: Experimental Evidence from Basic Information Treatments
    Cevat Aksoy, Christopher Carpenter, Ralph de Haas, Mathias Dolls, Lisa Windsteiger  CEPR DP No. 16852 | December 2021

    Serbia, Turkey, and Ukraine have highly restrictive LGBT equality laws and policies, and some of the lowest rates of social acceptance of sexual minorities in Europe. 

    A new CEPR study by Cevat Aksoy, Christopher Carpenter, Ralph de Haas, Mathias Dolls and Lisa Windsteiger shows that by providing information to people on the direct economic costs to their country from discrimination against sexual minorities, as well as revealing that the World Health Organization (WHO) does not consider homosexuality to be a mental disease, anti-gay sentiment is reduced and support increased for policies that promote equal employment opportunity. The research reveals four main findings:

    1. Providing information about the economic cost from sexual orientation discrimination significantly increases support for measures to safeguard equal employment opportunities regardless of someone’s sexual orientation. 
    2. These effects spill over to support for equal employment opportunities based on ethnic origin, religious beliefs, nationality, gender, and disability. 
    3. The discrimination treatment does not spill over to LGB support in other aspects of life. There are no effects on opinions concerning the moral acceptability and justifiability of homosexuality, as well as whether sexual minorities should be able to live their lives freely, and whether sexual minorities bring shame on their families. 
    4. Providing information that the WHO has stated that homosexuality is not a mental disease does not have a significant effect on support for equal employment opportunities but is associated with improved attitudes about sexual minorities in non-economic aspects of life. Specifically, the myth debunking treatment increases support regarding the moral acceptability and justifiability of homosexuality and the idea that sexual minorities should be able to live their lives freely. It also reduces the likelihood that individuals report that a gay or lesbian relative would bring shame on their family. 

    These results have two important implications for the expansion of LGB rights, particularly in parts of the world where anti-LGB attitudes are widely held and deeply ingrained. First, they clearly suggest that individuals in countries with strong views about the immorality of homosexuality can – when informed about the economic costs of sexual-orientation discrimination – still voice support for non-discrimination policies. This indicates that advances in LGB rights in socially conservative places may be more effective if they appeal to the economic costs of anti-LGB discrimination instead of trying to change the underlying LGB-related views themselves. Second, the results also indicate that even views about the acceptability of homosexuality itself can be modestly affected by the provision of basic information, particularly when framed in the context of institutions that people trust.


    • ECONOMIC SHOCKS HAVE SUBSTANTIALLY DIFFERENT EFFECTS DEPENDING ON WHEN THEY OCCUR IN AN INDIVIDUAL’S CAREER     

    THE EFFECT OF LABOR MARKET SHOCKS ACROSS THE LIFE CYCLE
    Kjell G Salvanes, Barton Willage, Alexander Willén
    CEPR DP16861 | January 2022

    A new CEPR study by Kjell G Salvanes, Barton Willage and Alexander Willén show how mass layoffs and business closures during economic shocks have substantial and varied effects across the life cycle on labour market outcomes and major life decisions: human capital investment, mobility, family structure, and retirement. The study follows individuals for up to 15 years after the economic shock to show that: 

    • Individuals at the beginning of their careers invest in human capital and relocate to new local labour markets, individuals in the middle of their careers reduce fertility and adjust family formation decisions, and individuals at the end of their careers permanently exit the workforce and retire. 
    • As a consequence of the differential interactions between economic shocks and life decisions, the very long-term career implications of labour shocks vary considerably depending on when the shock occurs. 
    • There are important differences across genders and education levels, both with respect to the immediate impact as well as the sum total of all these effects in the very long-term. 
    • The very long-term effect on individual earnings also varies dramatically: individuals in their early twenties display small but positive labour earnings effects 15 years after the displacement event, individuals in their late fifties display very modest and not economically meaningful effects, and individuals between these two age groups experience persistent adverse labour earnings effects. The positive long-run earnings effects among young displaced workers are exclusively driven by those who returned to school, and who relocate to new local labour markets, in response to the displacement event.

    The research shows that the effects of labour shocks are both more varied and more extensive than has previously been recognised, and that focusing on average effects among workers across the life cycle risks missing a great deal.



    THE COVID PANDEMIC MAY HAVE LASTING IMPACTS ON CHILDREN THROUGH ITS EFFECTS ON OTHER INFECTIOUS DISEASES: Evidence from Denmark

    N. Meltem Daysal, Hui Ding, Maya Rossin-Slater, Hannes Schwandt            
    04 January 2022

    A study by N. Meltem Daysal, Hui Ding, Maya Rossin-Slater and Hannes Schwandt uses data from Denmark to show that child’s exposure to respiratory diseases in early life have significant impacts on on population human capital and economic outcomes:

    • Younger siblings have two to three-times higher rates of hospitalisation for respiratory conditions during their first year of life compared to older siblings.  
    • The family unit plays a central role in virus transmission and birth order can influence children’s longer-term outcomes.

    Currently, the COVID-19 pandemic continues with no clear end in sight. While children have largely not been considered to be a high-risk group, the pandemic may have lasting and dynamic impacts on children through its effects on other infectious diseases.  .

     

    ONLINE OR IN-PERSON MEETINGS DURING COVID – WHAT WORKS?

    Shivani Taneja, Paul Mizen, Nicholas Bloom               
    04 January 2022

    Survey of over 2,000 UK working adults reveals that online meetings are more efficient for smaller gatherings of 2 to 4 people, while in-person meetings are preferred for gatherings of 10 or more.

    The study, by Shivani Taneja, Paul Mizen and Nicholas Bloom shows that online efficiency is also dependent on demographics, with women and more educated employees reporting that online meetings are relatively more efficient. Unsurprisingly, employees who work from home more and with good internet quality also report higher relative online meeting efficiency. 


    RISING INFLATION IS WORRISOME – BUT NOT FOR THE REASONS YOU THINK 

    Francesco D'Acunto, Michael Weber              
    04 January 2022

    Writing at Vox, Francesco D'Acunto and Michael Weber argue that to avoid the self-fulfilling prophecy of inflation, central bankers should also communicate directly with ordinary consumers, rather than only with financial market experts, and convince them that price increases will only be temporary.


    CLIMATE CHANGE, THE FOOD PROBLEM, AND THE FUTURE OF GLOBAL AGRICULTURAL SPECIALISATION: How barriers to trade can be barriers to climate change adaptation

    Ishan Nath             
    24 December 2021

    Global warming is expected to dramatically reduce agricultural productivity in hotter regions. Writing at Vox, Ishan Nath describes how policymakers can accommodate this change:

    • Hot, poor countries should shift away from agriculture into less vulnerable, non-agricultural sectors as temperatures rise, but such a reallocation of resources is unlikely without a major increase in global trade integration.  
    • As long as poor countries import little of their food, they are likely to continue specialising in agriculture to meet domestic subsistence needs, even as their farms become increasingly vulnerable to climate change. 

    COMPOSITION, DIVERSITY, AND COMPETENCIES OF MANAGERS KEY TO FIRM PRODUCTIVITY

    Chiara Criscuolo, Peter Gal, Timo Leidecker, Giuseppe Nicoletti              
    23 December 2021

    A study by Chiara Criscuolo, Peter Gal, Timo Leidecker and Giuseppe Nicoletti uses data from ten countries to show how differences in productivity outcomes of frontier and laggard firms depend on the composition, diversity, and competencies of their managers and their workers.

    Overall, this ‘human side’ explains about a third of the observed differences in productivity across firms, more than is accounted for by differences in capital intensity.


    THE SECOND WAVE OF ECONOMIC SANCTIONS IS HERE TO STAY

    Peter A.G. van Bergeijk            
    05 January 2022


     

    Drawing comparison from the drivers of the first wave of economic sanctions in the 1990s, Peter van Bergeijk argues that the recent wave of increased global economics sanctions will be sustained in the foreseeable future. 


    GLOBAL SERVICES VALUE CHAINS: A new path to development?

    Enrico Nano, Victor Stolzenburg            
    05 January 2022

    Writing at Vox, Enrico Nano and Victor Stolzenburg show how the rise of global services value chains offers developing countries new opportunities by providing jobs, revenue, and productivity growth. In addition, they do so in a more inclusive way than manufacturing. The research suggests that policymakers need to invest in human capital and address regulatory barriers to services trade to make the most of this development.


    HOW SALARY HISTORY DISCLOSURES IMPACT EMPLOYER DEMAND

    Amanda Agan, Bo Cowgill, Laura Gee               
    06 January 2022

    Salary history bans are increasingly popular. Writing at Vox, Amanda Agan, Bo Cowgill and Laura Gee show that disclosing a high salary is often a signal of quality and yields higher salary offers. However, higher salaries can also make candidates too expensive to justify a callback. The authors find evidence that such policies can equalise some outcomes across genders, but sometimes as a result of reductions for men rather than raises for women.



    COVID-19 FISCAL POLICY: Does it get in all of the cracks?

    Sebnem Kalemli-Ozcan interviewed by Tim Phillips,04 January 2021

    What were the effects of fiscal policy in response to the COVID-19 pandemic at the firm, sector, country and global level, and how efficient was it? 

    Read more about this research and download the free DP: 
    Gourinchas, P, Kalemli-Ozcan, S, Penciakova, V and Sander, N. 2021. 'Fiscal Policy in the Age of COVID: Does it 'Get in all of the Cracks?'' CEPR