This week from CEPR: July 22

Thursday, July 22, 2021

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


    • GAY POLITICS GOES MAINSTREAM: What roles did the Democrats, Republicans, and their leaders play in this process of cultural change in the US? 

    Gay Politics Goes Mainstream: Democrats, Republicans, and Same-Sex Relationships
    Raquel Fernández, Sahar Parsa 
    CEPR Discussion Paper No. 16382 | July 2021 

    The presidential election and the subsequent congressional debates in 1992-'93 are associated with a dramatic change in opinion towards same-sex relationships. Given that the parties adopted opposing platforms towards gay individuals serving openly in the military, one might expect that opinions would have diverged along the lines of party identification. A new CEPR study by Raquel Fernández and Sahar Parsa shows that this is not the case.

    The authors investigate the role of political parties and their leaders in the process of cultural change towards gay people in the United States. The authors show that the partisan opinion gap emerged substantially prior to 1992 -- in the mid 1980s -- and did not increase as a result of the political debates in 1992-'93. They also identify people with a college-and-above education as the potential 'leaders' of the process of partisan divergence. Among the findings: 

    • After remaining fairly constant for over two decades, opinions towards same-sex relationships became more favourable starting in 1992 - a presidential election year in which the Democratic and Republican parties took opposing stands over the status of gay people in society. 
    • Although there was little aggregate change in approval of same-sex relationships prior to 1992, this static image hides a significant increase in divergence by party identification, with those who identify as Democrats becoming more positive relative to those who identify as Republicans.
    • Prior to 1984, the average partisan gap in the approval of same-sex relationships was 4.4 percentage points. This gap widened in the mid eighties and stabilised by 1989 to 17.6 percentage points, remaining relatively constant throughout the nineties.
    • Highly-educated individuals (those with college and above) were important contributors to the increase in opinion gap across party lines. In particular, individuals with a college education and above. 
    • By way of contrast, individuals with a high-school-and-below education showed almost no partisan differentiation in their approval of same-sex relationships prior to the late nineties.
    • The national party elite (interpreted as the presidential candidates or as reflected in the national party platforms) were not the leaders in generating partisan differences as evidenced by the stable opinion gap by party identification over the '90s.

    These findings are consistent with job loss increasing domestic violence on account of a negative income shock and an increase in exposure of victims to perpetrators, with unemployment benefits partially offsetting the income shock while reinforcing the exposure shock.


    • THE COVID EPIDEMIC DISPROPORTIONATELY AFFECTED THE ECONOMIC WELL-BEING AND HEALTH OF POOR PEOPLE   

    Inequality in Life and Death
    Martin Eichenbaum, Sérgio Rebelo, Mathias Trabandt
    CEPR Discussion Paper No. 16366 | July 2021

    The Covid epidemic disproportionately affected the economic well-being and health of poor people. There is a strong, robust correlation between pre-Covid measures of income inequality and Covid deaths across US states. This relation holds even when we control for differences in demography and access to health care. Taken together, these findings support the view that the Covid epidemic created more inequality in life and death.

    These are the main findings of a new CEPR study by Martin Eichenbaum, Sérgio Rebelo and Mathias Trabandt, which we develops a model to analyse why poor people suffered disproportionately from the Covid epidemic. Among the findings:

    • Low-wage workers are disproportionately employed in occupations that require a high level of social contact, making them susceptible to becoming infected.
    • The demand for the types of goods produced by these workers fell dramatically relative to the goods produced by high-income workers. The net effect was that many low-wage workers lost their job.
    • Those who retained their job were more likely to become infected than high-wage workers.
    • An exacerbating factor is that low- wage workers, at least in the US, have more limited access to high-quality health care than high-wage workers.
    • Two thirds of the inequality in Covid deaths reflect pre-existing inequality in comorbidity rates and access to quality health care. 
    • The remaining third, stems from the fact that low-income people work in occupations where the risk of infection is high. 

    The authors also assess the health-income trade-offs associated with fiscal transfers to the poor and mandatory containment policies.  


    • WHAT'S WORTH KNOWING? Economists' Opinions about Economics

    What's Worth Knowing? Economists' Opinions about Economics
    Peter Andre, Armin Falk     
    CEPR Discussion Paper No. 16344 | July 2021

    A new CEPR study by Peter Andre and Armin Falk documents economists' opinions about what is worth knowing and asks (i) which research objectives economic research should embrace and (ii) which topics it should study. Almost 10,000 economic researchers from all fields and ranks of the profession participated in our global survey. representing economic researchers who publish in English. The authors report four main findings: 

    1. Economists' opinions are vastly heterogeneous. 
    2. Most researchers are dissatisfied with the status quo, in terms of both research topics and objectives. 
    3. On average, respondents think that economic research should become more policy-relevant, multidisciplinary, risky and disruptive, and pursue more diverse topics. 
    4. Dissatisfaction with the status quo is more prevalent among female scholars and associated with lower job satisfaction and higher stress levels. 

    Taken together, the results suggest that economics as a field does not appreciate and work on what economists collectively prefer.



    LOCKDOWNS COULD INCREASE OVERALL (COVID-19 PLUS NON-COVID-19) MORTALITY FOR THE LOWEST-INCOME COUNTRIES

    Lin Ma, Gil Shapira, Damien de Walque, Quy-Toan Do, Jed Friedman, Andrei Levchenko  
    19 July 2021

    What type of lockdowns are warranted to counter Covid-19 and do the benefits justify the accompanying economic contractions? A study by Lin Ma, Gil Shapira, Damien de Walque, Quy-Toan Do, Jed Friedman and Andrei Levchenko finds that the impact of economic contractions on child mortality in poorer countries combined with their younger demographic composition, as well as the greater community-related transmission and lower healthcare capacity in these countries, mean that under certain circumstances, lockdowns could actually increase overall (COVID-19 plus non-COVID-19) mortality for the lowest-income countries.

     

    FOOTBALL PLAYERS OF AFRICAN ORIGIN, WHO ARE MOST FREQUENTLY TARGETED BY RACIST ABUSE, PERFORM BETTER IN THE ABSENCE OF SUPPORTERS

    Mauro Caselli, Paolo Falco, Gianpiero Mattera 

    22 July 2021

    Racism in football returned to the headlines recently following racial abuse of England players on social media after the final of the UEFA European Championship. How does the harassment of supporters affect discriminated athletes? 

    Using the COVID-19 lockdown as a natural experiment, a study by Mauro Caselli, Paolo Falco and Gianpiero Mattera compares the performance of individual football players in the Italian Serie A with and without fans at the stadium. The evidence shows that players of African origin, who are most frequently targeted by racist abuse, perform better in the absence of supporters.


    THE GREAT MIGRATION WAS INSTRUMENTAL FOR THE DEVELOPMENT OF THE CIVIL RIGHTS MOVEMENT IN THE UNITED STATES

    Alvaro Calderon, Vasiliki Fouka, Marco Tabellini                          
    20 July 2021

    New research on the Great Migration by Alvaro Calderon, Vasiliki Fouka and Marco Tabellini suggests it was instrumental for the development of the civil rights movement and political changes that led to progress towards racial equality in the United States. The authors find that:  

    • Black in-migration increased demand for racial equality and encouraged pro-civil rights activism in non-Southern counties. 
    • These effects were not only driven by Black voters, but also by progressive segments of the white population, who became aware of the brutal conditions prevailing in the South. 
    • Mirroring the changes in the electorate, non-Southern Congress members became more likely to promote civil rights legislation, but also grew increasingly polarised along party lines on racial issues.

    HOW BUSINESSES ARE SURVIVING COVID-19: The resilience of firms and the role of government support

    Sebastian Barnes, Robert Hillman, George Wharf, Duncan MacDonald                          
    16 July 2021

    As the economy locked down in March 2020, businesses across the UK struggled to operate. And yet, fewer firms declared bankruptcy during the pandemic than in preceding years. A study by Sebastian Barnes, Robert Hillman, George Wharf and Duncan MacDonald shows that government assistance rescued previously profitable firms that might not have survived lockdowns, but also propped up weaker firms that would have failed in normal times. The difficulties in effectively targeting aid justifies the expansive support distributed during the crisis.


    THE SHIFT TO TELEMEDICINE DURING THE PANDEMIC RESULTED IN AN INCREASE IN PRIMARY CARE UTILISATION AND NO SIGNIFICANT INCREASE IN OVERALL COSTS

    Dan Zeltzer, Liran Einav, Joseph Rashba, Ran Balicer                              
    21 July 2021

    The use of telemedicine rose sharply under the COVID-19 pandemic, and in the coming years we are likely to see more healthcare delivery that mixes in-person with remote care. But will remote care reduce care quality or increase costs? 

    Writing at Vox, Dan Zeltzer, Liran Einav, Joseph Rashba and Ran Balicer use data from Israel during the first lockdown in March and April 2020 to show that access to telemedicine results in a slight increase in primary care use and no significant increase in overall costs. There is no evidence for decreased accuracy or increased likelihood of adverse events.


    CHINESE FIRMS FACING US TARIFFS POSTED FEWER JOBS AND OFFERED LOWER SALARIES DURING THE RECENT TRADE WAR

    Chuan He, Karsten Mau, Mingzhi (Jimmy) Xu                        
    15 July 2021


     

    The winners of the US-China trade war remain elusive while losers can be found on both sides. Using data from a Chinese online job portal, a study by Chuan He, Karsten Mau and Mingzhi (Jimmy) Xu documents how firms facing US tariff increases during the recent trade war posted fewer jobs and offered lower salaries, among other adjustments. Chinese retaliatory tariffs have not induced any systematic adjustments in firms’ vacancy postings.


    THE LONG-RUN EFFECTS OF PANDEMICS ON INFLATION: Why this time may be different

    Dennis Bonam, Andra Smădu                        
    18 July 2021

    How does inflation behave following pandemics? Dennis Bonam and Andra Smădu look at historical data from Europe since the 14th century and discuss why the effects of the COVID-19 pandemic on inflation could play out differently this time around. 

    They find that, following a pandemic event, trend inflation falls steadily below its initial level for nearly a decade. This long-run depressing effect is also observed in major individual European countries – France, Germany, Italy, the Netherlands, and the UK. 


    FOREIGN INVESTMENT, EUROPEAN INTEGRATION, AND THE SINGLE MARKET

    Randolph Bruno, Nauro Campos, Saul Estrin                             
    17 July 2021

    Do different economic integration arrangements vary in terms of their capacity to attract foreign direct investment? A study by Randolph Bruno, Nauro Campos and Saul Estrin uses data from 142 countries between 1985 and 2018 to show that deep integration in the form of EU membership increases foreign direct investment by about 60% from outside the EU and about 50% from within the EU, effects way bigger than that from less deep arrangements; the Single Market makes the difference. 

    The effect of EU membership on FDI appears to be significantly larger than that from the less deep integration arrangements (EFTA, NAFTA, or MERCOSUR), with the Single Market the cornerstone of this differential impact. 


    THE ECB’S NEW MONETARY POLICY STRATEGY: Unresolved issues rather than clarifiation

    Ignazio Angeloni, Daniel Gros                            
    16 July 2021

    The outcome of the long-awaited second review of the ECB’s monetary policy strategy was communicated by the central bank on 8 July 2020. Writing at Vox, Ignazio Angeloni and Daniel Gros argue that the review constitutes a mixed bag:

    • The asymmetry of the inflation target, a long standing source of ambiguity and potential policy mistakes, has been corrected by announcing a symmetric central target at 2%. 
    • But major ambiguities remain concerning the width of the tolerance band around 2%, the definition of the relevant price index, the interpretation of the inflation process, and the way monetary policy is prepared to team-up with fiscal authorities to preserve the euro’s stability going forward. 
    • All in all, the glass remains half-empty and the water it contains is somewhat muddy.


    COVID-19 UNEMPLOYMENT IN SWEDEN

    Pamela Campa interviewed by Tim Phillips, 20 July 2021

    In early 2020, Sweden left restaurants and schools open when the rest of Europe shut them. So which sectors of the workforce were more or less likely to lose their jobs afterwards? And was that outcome due to Sweden’s institutions or its policies? Pamela Campa of SITE talks to Tim Phillips.



    A CURE FOR FRIDAY MORNING FEVER

    Tito Boeri interviewed by Tim Phillips, 16 July 2021

    People everywhere sometimes pretend to be sick on a Friday because a day off work means a three-day weekend. In Italy, sick workers may now get a surprise home visit from the doctor. Tito Boeri tells Tim Phillips how effective this has been as a cure for "Friday morning fever".
    The paper discussed is:
    Boeri, T, Di Porto, E, Naticchioni, P and Scrutinio, V. 2021. 'Friday Morning Fever. Evidence from a Randomized Experiment on Sick Leave Monitoring in the Public Sector.'. London, Centre for Economic Policy Research: https://cepr.org/active/publications/discussion_papers/dp.php?dpno=1610.