GENERATION GAP: Evidence that young Brits are now less likely to ‘do better’ than their parents 

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GENERATION GAP: Evidence that young Brits are now less likely to ‘do better’ than their parents

Doing better financially than your parents is an important marker of success, and for much of the last half century, real earnings growth in the UK was strong enough that most young people achieved this milestone. But new research by Jo Blanden, Stephen Machin and Sumaiya Rahman shows that plummeting earnings since the Great Recession has meant that fewer young adults now are earning more than their fathers.

Comparing the standard of living today with that of the past is crucial for understanding the UK’s economic and social health. In a study to be presented at the Royal Economic Society’s annual conference at the University of Warwick in April 2019, the researchers use the concept of ‘absolute mobility’ – the proportion of people earning more than their parents – to explore this important topic.

AFTERMATH OF AUSTERITY: The UK tax and benefit system is less good at protecting households from income volatility

Thanks to the large cuts to working-age benefits and tax credits made as part of the UK government’s austerity programme, the tax and benefit system is now less effective at protecting households from adverse shocks to their income. That is the central finding of research by Professor Mike Brewer and colleagues, to be presented at the Royal Economic Society’s annual conference at the University of Warwick in April 2019.

Their study finds that between 2010 and 2016, income from social security benefits (such as child benefits, the state pension, housing benefit and jobseekers allowance) and tax credits (such as the child and working tax credits) became a less important part of household income. The share of household income that comes from social security and tax credits fell from 29% to 27%.

WHY THE ‘WAR ON DRUGS’ HAS HAD MIXED RESULTS: New analysis of the interactions and growth effects of drug control policies

New research on the impact of a variety of drug control policies finds that efforts to eradicate drug cultivation and compensate workers in source countries can boost trade and growth. The study by King Yoong Lim and Diego Morris, to be presented at the Royal Economic Society’s annual conference at the University of Warwick in April 2019, also concludes that neither interdiction of drug shipments nor tougher policies on the associated gun trade are effective in reducing illicit drug trade.

BEHAVIOURAL PROBLEMS IN YOUNG CHILDREN: New evidence on the influence of parents

Policy interventions targeting a stressful home environment can help to reduce the wide inequality in children’s behavioural problems at age 11. That is the implication of research by Gloria Moroni, Cheti Nicoletti and Emma Tominey, to be presented at the Royal Economic Society’s annual conference at the University of Warwick in April 2019.

Analysing data from a sample of children born in 2000 and 2001 in the UK, the study finds that harsh parenting, poor mental health of the mother and limited time spent in interactions between children and parents can all create a stressful environment for children, and amplify their behavioural disorders.

HOW PRESCHOOL CHANGED THE FAMILY: Evidence from the United States

The establishment of preschools (kindergartens) in the United States contributed to a 4% fall in fertility among married women, with mothers of poor and immigrant households seeing a 15% decline. This is the main conclusions of research by Philipp Ager and Francesco Cinnirella to be presented at the Royal Economic Society annual conference in April who show that the introduction of kindergartens in the 19th Century fundamentally changed the American family.

Their research, which combines newly collected data on the roll-out of kindergartens across cities in the United States with complete-count Census samples, also shows that those that attended kindergarten stayed four months longer in school, working in higher-skilled occupations and earned 7% more later in life. Attendance at kindergarten also increased the proficiency of English among immigrant children from non-English speaking countries.

LOCAL UNEMPLOYMENT IN THE UK: The impact on inward and outward migration

Unemployment in a local area in the UK induces people to move away and scares off potential incomers in roughly equal measure. That is the central finding of research by Monica Langella and Alan Manning, to be presented at the Royal Economic Society’s annual conference at the University of Warwick in April 2019. Their study also finds that distance plays a big role in explaining patterns of UK residential mobility, and that most of the action is within very short distance.

The UK has suffered from persistent regional differences in unemployment rates for many decades. A low responsiveness of internal migration to unemployment is often argued to be an important cause of this problem.

THE RISE OF CLOUD COMPUTING: Implications for economic statistics, measurement and policy-making

Cloud computing has all the characteristics of a ‘general purpose technology’ – comparable to the steam engine or electricity – and it will continue to change fundamentally the way that business is conducted. To provide robust economic policies, it is high time to update statistical surveys and industrial classification systems to get a grip on the economic implications of cloud computing.

That is the central message from a new study of cloud computing and national accounting by Diane Coyle and David Nguyen of the Economic Statistics Centre of Excellence. Their research will be presented at the Royal Economic Society’s annual conference at the University of Warwick in April 2019.

CAMPAIGN CONTRIBUTIONS AND FINANCIAL REGULATION: evidence from the United States

A 1% increase in campaign contribution from the financial sector can lead to a 12% increase in the likelihood of a politician voting to decrease the regulatory burden faced by financial firms.

This is according to a study by João Rafael Cunha presented at the Royal Economic Society annual conference at the University of Warwick in April, which looks at voting on financial regulation in the United States Congress between 1991-2014.

INEQUALITY AND REDISTRIBUTION IN FRANCE, 1990-2018: New evidence and a comparison with the United States

Income inequality before taxes in France is far lower than in the United States but perhaps surprisingly, the redistributive impact of French taxes and transfers on reducing inequality is less. That is one of the findings of new research by Antoine Bozio, Bertrand Garbinti, Jonathan Goupille-Lebret, Malka Guillot and Thomas Piketty, to be presented at the Royal Economic Society’s annual conference at the University of Warwick in April 2019.

Nevertheless, their analysis shows, the redistributive power of the French system increased significantly from the early 1990s. The increased progressivity of the system came mostly from reductions in social security contributions for the bottom 50% of individuals and tax increases for the top 10%. But in the past couple of years, progressivity has fallen back somewhat with the reform of the wealth tax and the creation of a flat tax for capital incomes.

HEALTH BENEFITS OF CLEAN ENERGY: Evidence from Indonesia  

Moving to clean energy can have significant health benefits. According to preliminary results of new research, the distribution of free liquefied petroleum gas (LPG) starter kits in Indonesia led to an annual fall of 3% in the infant mortality rate.

This study by Imelda from the Universidad Carlos III de Madrid is being presented at the Royal Economic Society annual conference in April 2019. It considers the health benefits of using cleaner energy for cooking by moving from a relatively dirty cooking fuel (kerosene) to a much cleaner one (LPG).

SAVINGS BY COUPLES AND SINGLES AFTER RETIREMENT: Evidence from the United States 

Retired high-income couples are more likely to grow their wealth during retirement. However, when one member of a couple dies the wealth of the survivor drops significantly and their wealth continues to fall for the rest of their lives.

This is the conclusion of research in the United States by Mariacristina De Nardi, Eric French, John Bailey Jones and Rory McGee presented at the Royal Economic Society annual conference in April 2019. They show evidence why couples and singles save differently, attributing savings to medical expenses, concerns about their spouse and transfers to other heirs.