The extent to which spillover and neighbourhood effects affect interventions aiming at increasing education among young children is an important question. This column examines a large-scale early childhood intervention targeting the educational attainment of over 2,000 disadvantaged children in the US. It documents large spillover effects on both treatment and control children who live near treated children.
Religion has had a complexrelationship with technological progress throughout history,butthere is scant empirical evidence on how conservative religious values may have affected the spread of new ideas and, by extension, economic development. This column examines the influence of the Catholic Church on technical education in France during the Second Industrial Revolution. It finds that areaswith higher ‘religiosity‘ had lower levels o
The international co-movements of business cycles is a key determinant of trade and monetary policy, but the ways in which it is affected by technology, TFP, and trade openness are not fully understood. This column shows how such co-movements are affected by trade linkages and technology. It finds that non-technology shocks contribute more to international co-movement than TFP shocks, and that transmission plays a notable but small part in co-mov
Automatic enrolment in defined contribution pension plans might be the most common policy application of behavioural economics. But does automatic enrolment increase pension savings at the expense of increased household debt? This column examines a natural experiment in which the US Army began automatically enrolling its civilian employees in its retirement savings plan. It finds strong evidence against the hypothesis that automatic enrolment inc
As Brexit nears (again), are British firms choosing to invest in the UK or in other European markets? Are European firms investing in the UK to preserve access to its markets? And has "global Britain" got off the drawing board yet? Holger Breinlich and Dennis Novy lead Tim Phillips through the numbers.
The gravity equation has often been used to explain trade between regions or cities within countries. But it assumes that the distribution of industries is exogenous. This column explains how trade estimates are affected if we assume that large, centrally located cities attract more industries whose firms are more likely to export to other cities. Japanese data show exports from these cities are systematically underpredicted by aggregate gravity
Externalities can have a powerful effect on financial stability. This column studies the amplification effect that can operate despite value at risk regulation,which suffers from the ‘fallacy of composition‘. It shows thatthe magnitudes of booms and busts are amplified by two significant externalities triggered by aggregate shocks: the endogeneity of bank equity due to mark-to-market accounting and of bank liquidity due to ‘fire
The link between foreign ownership and environmental performance remains a controversial issue. Data from the Indonesian manufacturing census show that plants undergoing foreign acquisitions reduce their energy intensity by about 30% two years after acquisition by multinationals. This column argues that foreign direct investment can serve as a channel for the international transfer of environmentally friendly technologies and practices, thus dire
What has caused the rapid decline in US manufacturing employment in recent decades? This column uses novel data to investigate the role of US multinationals and finds that they were a key driver behind the job losses. Insights from a theoretical framework imply that a reduction in the costs of foreign sourcing led firms to increase offshoring, and to shed labour.
In response to the Global Crisis a decade ago, banks have tried to make themselves more resilient to shocks transmitted through interbank connections. But the opacity of interbank networks makes it difficult to measure the effectiveness of such policies. This column uses evidence from 20th century America to show how the founding of the Federal Reserve and the Great Depression affected interbank networks and lending practices. The creation of the
Has technological progress in manufacturing been skill-biased or deskilling? This column argues that the conventional distinction between white-collar and production workers has concealed substantial deskilling among manufacturing production workers since the 1950s. Automation has reduced the demand for skilled craftsmen around the world, thereby reducing the number of jobs in which workers with little formal education could acquire significant m
Futures trading should make spot markets more efficient. The column uses the introduction of purely financial traders in the California energy market to show that their presence reduced average price differences between day-ahead and real-time markets. The introduction of financial trading in high-demand hours saved 23 million in fuel costs and reduced emissions and pollution.
In 1965, the economist Ester Boserup argued that co-residential households would gradually converge under the combined forces of population pressure and market integration. Scholars inclined more towards culturalist anthropology disagreed, suggesting that because family structures depend on social norms and local culture, they will continue to differ across regions. Drawing on both traditions, this column argues that the evolution of family organ
Between 1885 and 1908, the Congo Free State was the site of some of the worst human rights abuses in Africa‘s colonial history. This column, taken from a Vox eBook, examines the long-term effects of labour coercion on economic development in what is now the Democratic Republic of Congo. It demonstrates that the labour coercion during the rubber regime under King Leopold II of Belgium has undermined long-run development in the DRC, despite t
Tax evasion is a very costly phenomenon. This column usestax records of 2.5 million taxpayers in Italy with corresponding audit filesto show thatlevels of evasion by taxpayers served by the same accountant are strongly correlated. Accountants can drive this correlation in two ways: either by serving as tax evasion facilitators, or as information hubs.
In the early 20th century, the US and Europe experienced striking reductions in tuberculosisand other infectious diseases, even before effective medical treatments were developed. However, evidence is mixed on whether improved public health interventions had any effect. This column analyses the effects of the first public health demonstration on TB mortality, total mortality, and infant mortality. Although generally considered a success, the find
Many policymakers are concerned that fast trading has adverse effects on markets, although the existing evidence is ambiguous. This column argues that high-frequency trading can increase market efficiency and the quality of trade. By creating noise, fast trades may prevent traders with a herd mentality from pushing prices in one direction.
The Brexit deliberations in the House of Commons have been chaotic, protracted, and inconclusive, but the impasse cannot last forever. This column outlines a model of parliamentary preferences, calibrated to the profiles of members on the meaningful and indicative votes, that can be used to analyse the Brexit ‘endgame‘ in a reasoned manner.