EOPP Blog

Banco de Portugal - Lisbon Meeting Best Paper Award for Oliver Vanden Eynde

2011-10-14T16:28:00.003+01:00

Oliver Vanden Eynde, PhD student at EOPP has won the "Banco de Portugal - Lisbon Meeting Best Paper Award" for his paper titled "Targets of violence: Evidence from India's Naxalite Conflict".

This work was presented at the "Lisbon Meeting on Institutions and Political Economy". This is Oliver's second award, after

winning the "Economic History Society New Researchers' Prize" for his paper "Military Service and Human Capital

Accumulation: Evidence from Colonial Punjab" presented at the "2011 Economic History Society Annual Conference".

You can find more about Oliver's research on his personal website.

Recent Publication by Maitreesh Ghatak: The Land Acquisition Bill: A Critique and a Proposal

2011-10-14T16:13:00.002+01:00

The paper is joint work with Parikshit Ghosh and was published in Economic and Political Weekly of India, October 8, 2011, Vol. XLVI, No 41, it is available here. A shorter version can be accessed here.

Abstract: The 2011 Land Acquisition and Rehabilitation and Resettlement Bill on land acquisition recently tabled in Parliament is well-intentioned but seriously flawed. Its principal defect is that it attaches an arbitrary mark-up to the historical market price to determine compensation amounts. This will guarantee neither
social justice nor the efficient use of resources. The Bill also places unnecessary and severe conditions on land acquisition, such as restrictions on the use of multicropped land and insistence on public purpose, all of which are going to stifle the pace of development without promoting the interests of farmers.

We present an alternative approach that will allow farmers to choose compensation in either land or cash, determine their own price instead of leaving it to the government’s discretion, and also reallocate the remaining farmland in the most efficient manner. Our proposed method involves a land auction covering not only the project site but also the surrounding agricultural land.

Recent Publication by Tim Besley, Maitreesh Ghatak and Konrad Burchardi: Incentives and the de Soto Effect

2011-10-11T17:40:00.006+01:00

The paper is forthcoming in Quarterly Journal of Economics. The paper can be found here.

Abstract: This paper explores the consequences of improving property rights to facilitate the use of fixed assets as collateral, popularly attributed to the influential policy advocate Hernando de Soto. We use an equilibrium model of a credit market with moral hazard to characterize the theoretical effects, and also develop a quantitative analysis using data from Sri Lanka.
We show that the effects are likely to be non-linear and heterogeneous by wealth group. They also depend on the extent of competition between lenders. There can be significant increases in profts and reductions in interest rates when credit markets are competitive. However, since these are due to reductions in moral hazard, i.e. increased effort, the welfare gains tend to be modest when cost of effort is taken into account. Allowing for an extensive margin where borrowers gain access to the credit market, can make these effects larger depending on the underlying wealth distribution.

Recent Publication by Johannes Spinnewijn: Capital Income Taxes with Heterogeneous Discount Rates

2011-02-17T13:24:00.002Z

The paper (joint with Peter Diamond) is forthcoming in AEJ: Economic Policy

Abstract: With heterogeneity in both skills and discount factors, the Atkinson-Stiglitz theorem that savings should not be taxed does not hold. In a model with heterogeneity of preferences at each earnings level, introducing a savings tax on high earners or a savings subsidy on low earners increases welfare, regardless of the correlation between ability and discount factor. Extending Saez (2002), a uniform savings tax increases welfare if that correlation is sufficiently high. Key for the results is that types who value future consumption less are more tempted by a lower paid job. Some optimal tax results and empirical evidence are presented.

The paper can be found here

Recent Publication by Tim Besley: The Logic of Political Violence

2010-10-27T15:39:00.004+01:00

This paper (joint with Torsten Persson) is forthcoming in The Quarterly Journal of Economics

Abstract
This paper offers a uniﬁed approach for studying political violence whether it emerges as repression or civil war. We formulate a model where an incumbent or opposition can use violence to maintain or acquire power to study which political and economic factors drive one-sided or two-sided violence (repression or civil war). The model predicts a hierarchy of violence states from peace via repression to civil war, and suggests a natural empirical approach. Exploiting only within-country variation in the data, we show that violence is associated with shocks that can affect wages and aid. As in the theory, these effects are only present where political institutions are non-cohesive.

The paper can be found here

Recent Publications by Henrik Kleven

2010-10-14T13:44:00.004+01:00

A paper by Henrik Kleven entitled 'Unwilling or Unable to Cheat? Evidence from a Tax Audit Experiment in Denmark' is forthcoming in Econometrica

Abstract
This paper analyzes a tax enforcement ﬁeld experiment in Denmark. In the base year, a stratiﬁed and representative sample of over 40,000 individual income tax ﬁlers was selected for the experiment. Half of the tax ﬁlers were randomly selected to be thoroughly audited, while the rest were deliberately not audited. The following year, threat-of-audit letters were randomly assigned and sent to tax ﬁlers in both groups. We present three main empirical ﬁndings. First, using baseline audit data, we ﬁnd that the tax evasion rate is close to zero for income sub ject to third-party reporting, but substantial for self-reported income. Since most income is sub ject to third-party reporting, the overall evasion rate is modest. Second, using quasi-experimental variation created by large kinks in the income tax schedule, we ﬁnd that marginal tax rates have a positive impact on tax evasion for self-reported income, but that this effect is small in comparison to legal avoidance and behavioral responses. Third, using the randomization of enforcement, we ﬁnd that prior audits and threat-of-audit letters have signiﬁcant effects on self-reported income, but no effect on third-party reported income. All these empirical results can be explained by extending the standard model of (rational) tax evasion to allow for the key distinction between self-reported and third-party reported income.

The paper can be found here

A paper by Henrik Kleven entitled 'Transfer Program Complexity and
the Take Up of Social Beneﬁts' is forthcoming in the American Economic Journal: Economic Policy

Abstract
This paper models complexity in social programs as a byproduct of efforts to screen between deserving and undeserving applicants. While a more rigorous screening technology may have desirable effects on targeting efficiency, the associated complexity introduces transaction costs into the application process and may induce incomplete take up. The paper integrates the study of take up with the study of classiﬁcation errors of type I and type II, and argues that incomplete take up can be seen as a form of type I error. We consider a government interested in ensuring a minimum income level for as many deserving individuals as possible, and characterize optimal programs when policy makers can choose the rigor of screening (and associated complexity) along with a beneﬁt level and an eligibility criterion. It is shown that optimal program parameters reﬂect a trade-off at the margin between type I errors (including non-takeup) and type II errors. Optimal programs that are not universal always feature a high degree of complexity. Although it is generally possible to eliminate take up by the undeserving (type II errors), policies usually involve eligibility criteria that make them eligible and rely on complexity to restrict their participation. Even though the government is interested only in ensuring a minimum beneﬁt level, the optimal policy may feature beneﬁts that are higher than this target minimum. This is because beneﬁts generically screen better than either eligibility criteria or complexity.

The paper can be found here

Recent Publication by Maitreesh Ghatak: Thanks for Nothing? Not-for-Profits and Motivated Agents.

2010-10-14T13:33:00.002+01:00

This paper (joint with Hannes Mueller) has been published in the Journal of Public Economics.

Abstract
We re-examine the labor donation theory of not-for-profits and show that these organizations may exist not necessarily because motivated workers prefer to work in them, or that they dominate for-profits in terms of welfare, but because the excess supply of motivated workers makes the non-profit form more attractive to managers. We show that if Firms had to compete for motivated workers then not-for-profit would be competed out by for-profit Firms. Therefore, in the choice between not-for-profit and for-profit provision, other than incentive problems, the distribution of rents between management and workers, and consequently, the relative scarcity of motivated workers may play an important role.

The paper can be found here

EOPP Special Event: Summer School on Empirical Methods for Economic Development (23-26 June 2010)

2010-06-15T15:50:00.002+01:00

Oriana Bandiera is organizing the Second AMID Summer School on Empirical Methods for Economic Development on June 23-26 at the LSE.

The school is intended for PhD students, post-docs and junior faculty members. The aim is to provide young researchers with a detailed overview of the main methods used in empirical development research. Participants will also have the opportunity to discuss their own research projects with leading researchers in a relaxed and open atmosphere.

Lectures will be delivered by Esther Duflo (MIT), Greg Fischer (LSE), Radha Iyengar (LSE), and Eliana La Ferrara (Bocconi) on topics including difference in difference estimators, event studies, instrumental variables, randomised control trials and regression discontinuity approaches. Selected projects by participants will be presented and discussed during the day.

For more details, visit the website at http://econ.lse.ac.uk/staff/bandiera/amid_summerschool_programme.htm

EOPP Special Event: CEPR Public Policy Symposium 2010 (18-19 June 2010)

2010-06-15T15:47:00.001+01:00

Oriana Bandiera and Henrik Kleven, along with Thomas Piketty (Paris School of Economics and CEPR) and Emmanuel Saez (University of California, Berkeley and CEPR) are organizing a symposium on public economics to bring together economists in the field from across Europe and key researchers from outside the region.

The symposium will feature a keynote lecture entitled "Public Finance and Development" to be given by Professor Timothy Besley.

The conference hopes to provide a unique opportunity for researchers from different universities and countries to discuss their work in a relaxed atmosphere and to develop long-term collaborative relationships. It also aspires to provide young researchers with the opportunity to meet and discuss their work with senior economists.

For more details on the conference program and other information, visit the website at http://www.cepr.org/meets/wkcn/3/3540/

Conference on The Formation of Family and its Intergenerational Consequences (14-15 June 2010)

2010-06-14T16:22:00.000+01:00

The Conference on the Formation of Family and its Intergenerational Consequences was organised by the Departments of Economics and Management and sponsored by STICERD. The key organizers were Leonardo Felli, Ignacio Palacios-Huerta, Maitreesh Ghatak, and Yona Rubinstein. Distinguished speakers included Gary Becker, Pierre-Andre Chiappori, Bernard Salanie, among others.

For further informaiton on the conference programme and to view the papers presented visit the conference page the conference page

Johannes Spinnewijn wins CESifo Affiliate Award

2010-06-04T15:49:00.000+01:00

Johannes Spinnewijn has won the Distinguished CESifo Affiliate Award during this year's CESifo Annual Area Conferences.

Each year, the award is presented to a young economist for the " scientific originality, policy relevance and quality of exposition of their paper presented at the conference." in his or her specialist research area.

Johannes Spinnewijn's winning paper for the Employment and Social Protection Research Area was entitled Unemployed but Optimistic: Optimal Insurance Design with Biased Beliefs

Further information about the award can be found on the CESifo website.

EOPP: Recent Publications Gerard Padro-i-Miquel: Conflict and Deterrence under Strategic Risk

2010-03-29T12:37:00.000+01:00

A paper by Gerard Padro-i-Miquel (joint with Sylvain Chassang) entitled 'Conflict and Deterrence under Strategic Risk' will be published in Quarterly Journal of Economics.

The authors examine the determinants of cooperation and the effectiveness of deterrence when fear is a motive for conflict. They contrast results obtained in a complete information setting to those obtained in a setting with strategic risk, where players have different information about their environment. These two strategic settings allow them to identify and distinguish the role of predatory and pre-emptive incentives as determinants of cooperation and conflict. In their model, weapons unambiguously facilitate peace under complete information. In contrast, under strategic risk, the authors show that increases in weapon stocks can have a non-monotonic effect on the sustainability of cooperation. They also show that under strategic risk, asymmetry in military strength can facilitate peace, and that anticipated peace-keeping interventions may improve incentives for peaceful behaviour.

EOPP: Recent Publications by Tim Besley, Daniel Sturm, Robin Burgess and Oriana Bandiera

2010-03-16T11:20:00.002Z

The following papers, by EOPP members, will be published:

Robin Burgess, joint with Dave Donaldson (MIT): Can Openness Mitigate the Effects of Weather Shocks? Evidence from India's Famine Era, is forthcoming in the American Economic Review Papers and Proceedings.

Oriana Bandiera, joint with Valentino Larcinese (LSE) and Imran Rasul (UCL): Heterogeneous Class Size Effects: New Evidence from a Panel of University Students, is forthcoming in the Economic Journal.

Oriana Bandiera, Robin Burgess, Selim Gulesci and Munshi Sulaiman, joint with Markus Goldstein (World Bank) and Imran Rasul (UCL): Participation in Adolescent Training Programs, is forthcoming in the Journal of the European Economic Association, Papers and Proceedings.

Tim Besley, Daniel Sturm and Torsten Persson (IIES): Political Competition, Policy and Growth: Theory and Evidence from the United States, is forthcoming in the Review of Economic Studies.

For further information and to read abstracts see http://sticerd.lse.ac.uk/eopp/_new/publications/recent_publications.asp

Tim Besley receives the John von Neumann Award 2010

2010-02-17T10:46:00.000Z

The 2010 John von Neumann Award has been given to Prof. Tim Besley for his research on political institutions by the Rajk László College for Advanced Studies at Corvinus University of Budapest. The award was established in 1995 and is presented annually to leading scholars whose influential works have had a substantial impact on the studies and intellectual activity of the students at the College.

Previous award holders include John Harsanyi (UC Berkeley), Hal Varian (University of Michigan), Janos Kornai (Harvard University and Budapest College), Jean Tirole (University of Toulouse), Oliver Williamson (UC Berkeley) Jon Elster (Columbia University), Avinash K. Dixit (Princeton University), Maurice Obstfeld (UC Berkeley), Gary S. Becker (University of Chicago), Glenn C. Loury (Brown University), Matthew Rabin (UC Berkeley), Daron Acemoglu (MIT), Kevin Murphy (University of Chicago) and Philippe Aghion (Harvard University).

Further information on Prof. Besley's research can be found on Tim Besley's website. For more information on the John von Neumann Award see the Rajk László College for Advanced Studies website.

Maitreesh Ghatak: "What crisis has taught economics", The Financial Express, 09 Jan 2010

2010-01-28T13:46:00.002Z

Maitreesh Ghatak examines the legacy of Paul Samuelson, who pioneered the use of formal models in economics.

Read the full article in The Financial Express at
http://www.financialexpress.com/printer/news/565062/

Tim Besley: State Capacity, Conflict and Development

2009-11-30T11:02:00.002Z

A paper by Tim Besley entitled "State Capacity, Conflict and Development" (joint with Torsten Persson) will be published in Econometrica.

In this paper, the authors point out that the absence of state capacities to raise revenue and to support markets is a key factor in explaining the persistence of weak states. They report on an on-going project to investigate the incentive to invest in such capacities. The paper sets out a simple analytical structure in which state capacities are modelled as forward looking investments by government. The approach highlights some determinants of state building including the risk of external or internal conflict, the degree of political instability, and dependence on natural resources. Throughout, the authors link these state capacity investments to patterns of development and growth.

Maitreesh Ghatak: "Buying Land and Selling Kidneys", The Financial Express, 09 & 16 Nov 2009

2009-11-16T15:06:00.003Z

In two articles for the Financial Express Maitreesh Ghatak, looks at the legal and ethical limits of economic transactions by analysing the trade in human organs and finding parallels in coercive land acquisition.

Read the articles:
"Buying land and selling kidneys", published Nov 09, 2009
"Why would you sell your heart?", published Nov 16, 2009

Maitreesh Ghatak: "No Way Out of This Plot" Financial Express, New Delhi, Sep 2009

2009-10-05T11:35:00.001+01:00

Maitreesh Ghatak, joint with Sanjay Banerji (Essex), analyses the issues of land transfer from agriculture to industry in the context of industrialization in West Bengal, India in this Financial Express piece entitled "No Way Out of This Plot", published on Sep 30, 2009.

To read the full article, click here.

LSE Teaching Excellence Award: Justin Kueh

2009-09-17T11:01:00.000+01:00

Congratulations to Justin Kueh who received the LSE Teaching Excellence Award in June this year for Microeconomic Principles II (EC202)! Justin won another top prize, with nomination as the best class teacher students had ever encountered, partly for his gifts of explanation and intuition in this mathematically rigorous course partly for his evident dedication and contagious enthusiasm for the material. ("He extends the class material by relating it to current research" and "he makes me work hard for the subject because he is very motivating").

For more information, click here.

Maitreesh Ghatak: "Small is Smart" Financial Express, New Delhi August 09

2009-08-24T10:52:00.001+01:00

Maitreesh Ghatak analyses the effectiveness of microfinance in this article "Small is Smart" published in the Financial Express, August 24, 2009. He argues that while microfinance is no magic bullet for solving all the problems of poverty, it does relax credit constraints faced by the poor.

Journal Editorship: Maitreesh Ghatak

2009-07-27T10:36:00.002+01:00

Maitreesh Ghatak will be taking up the position of Editor-in-chief of the Journal of Development Economics starting October 1, 2009.

Recent Publications: "Defensive Weapons and Defensive Alliances" by Gerard Padró i Miquel

2009-06-29T12:42:00.001+01:00

A paper by Gerard Padró i Miquel entitled "Defensive Weapons and Defensive Alliances" (joint with Sylvain Chassang) has been published in the American Economic Review Papers and Proceedings in May 2009. The paper provides a careful formal analysis of how the unilateral acquisition of defensive weapons may affect the sustainability of peace.

Maitreesh Ghatak: Anger in the wake of Aila: Financial Express 11 June 2009

2009-06-18T19:09:00.004+01:00

Maitreesh Ghatak's latest article in the Financial Express on the role of the media in democracy in light of the recent cyclone in West Bengal, India.

International Growth Centre: Oriana Bandiera appointed Co-Program Director of State Capabilities Theme

2009-06-02T09:30:00.002+01:00

Oriana Bandiera has been appointed Co-Director, along with Raj Chetty (Berkeley), of the State Capabilities research programme at the International Growth Centre since April 2009.

EOPP Conference: Microfoundations of Development Workshop, May 29 - 30, 2009

2009-05-27T17:23:00.002+01:00

Maitreesh Ghatak is organizing the "Microfoundations of Development Workshop" on May 29 - 30, 2009 at LSE. The venue of the conference is:

R505, 5th Floor
Lionel Robbins Building, LSE
10 Portugal Street, WC2A 2AE.

The programme committee consists of Maitreesh Ghatak, Tim Besley, Greg Fischer and Gerard Padro i Miguel.

Coordinator: Miriam Sinn (email: M.J.Sinn@lse.ac.uk, Tel: +44 (0)20 7852 3536).

For more details, click here.

EOPP Conference: Microfoundations of Development Workshop: May 29 - 30, 2009

2009-05-27T17:23:00.001+01:00

Maitreesh Ghatak is organizing the "Microfoundations of Development Workshop" on May 29 - 30, 2009 at LSE. The venue of the conference is:

R505, 5th Floor
Lionel Robbins Building, LSE
10 Portugal Street, WC2A 2AE.

The programme committee consists of Maitreesh Ghatak, Tim Besley, Greg Fischer and Gerard Padro i Miguel.

Coordinator: Miriam Sinn (email: M.J.Sinn@lse.ac.uk, Tel: +44 (0)20 7852 3536).

For more details, click here.

Journal Editorship: Maitreesh Ghatak

2009-05-27T17:05:00.001+01:00

Starting January 2009, Maitreesh Ghatak has taken up the associate editorship of the Journal of Comparative Economics.

Best Paper Award: Nathan Foley-Fisher

2009-05-12T11:46:00.000+01:00

Nathan Foley-Fisher was awarded the "Best Paper in International Finance" award at the RIEF IX Doctoral Meeting in Aix-en-Provence, France for his paper on "The HIPC Initiative and Terms of Trade Shocks".

For more details click here.

Recent Publications: ''Social Incentives in the Workplace'' by Oriana Bandiera

2009-05-05T15:39:00.001+01:00

A paper by Oriana Bandiera entitled "Social Incentives in the Workplace" (joint with Iwan Barankay and Imran Rasul) is forthcoming in Review of Economic Studies.

In this paper, the authors present evidence on social incentives in the workplace, namely on whether workers’ behavior is affected by the presence of those they are socially tied to, even in settings where there are no externalities among workers due to either the production technology or the compensation scheme in place. To do so the authors combine data on individual worker productivity from a firm’s personnel records with information on each worker’s social network of friends in the firm. They find that compared to when she has no social ties with her co-workers, a given worker’s productivity is significantly higher when she works alongside friends who are more able than her, and significantly lower when she works with friends who are less able than her. As workers are paid piece rates based on individual productivity, social incentives can be quantified in monetary terms and are such that — (i) workers who are more able than their friends are willing to exert less effort and forgo 10% of their earnings; (ii) workers who have at least one friend who is more able than themselves are willing to increase their effort and hence productivity by 10%. The distribution of worker ability is such that the net effect of social incentives on the firm’s aggregate performance is positive. The results suggest that firms can exploit social incentives as an alternative to monetary incentives to motivate workers.

For more details, click here.

Maitreesh Ghatak: ''Poor Man's Capitalism'' Financial Express 23 March 2009

2009-03-25T10:07:00.001Z

Property rights are accepted as central to economic development. But in this article published in the Financial Express on 23 March 2009, Maitreesh Ghatak shows that property reforms alone cannot solve the problems of the poor who do not have any assets at all. He highlights the importance of financial sector reforms to make property rights effective, rather than nominal .

For more details click here

Henrik Kleven to Co-organize Conference on Tax Policy Analysis

2009-02-23T11:39:00.002Z

Henrik Kleven, together with Joel Slemrod (University of Michigan) and Wojciech Kopczuk (Columbia University), is organizing a conference entitled “Tax Policy Analysis Using Large Panel Data Sets of Tax Returns” at the University of Michigan, Ann Arbor on 13-14 March 2009.

For more details click here.

Recent Publications: Tim Besley and Maitreesh Ghatak

2009-02-13T15:10:00.001Z

"Property Rights and Economic Development" by Tim Besley and Maitreesh Ghatak is forthcoming as one of the chapters in the Volume V of the Handbook of Development Economics edited by Dani Rodrik and Mark Rosenzweig. The chapter develops a unified analytical framework for studying the role of property rights in economic development. It addresses two fundamental and related questions concerning the relationship between property rights and economic activity. (i) What are the mechanisms through which property rights affect economic activity? (ii) What are the determinants of property rights? In answering these, the chapter surveys some of the main empirical and theoretical ideas from the extensive literature on the topic.

International Growth Centre: Greg Fisher appointed Co-Program Director of Finance Theme

2009-02-11T16:06:00.000Z

Greg Fisher has been appointed the Co-Program Director of the Finance Theme at the International Growth Centre from January 2009.

Maitreesh Ghatak: "Barefoot Businessmen" Financial Express, New Delhi Jan 09

2009-02-04T17:09:00.001Z

Maitreesh Ghatak, in this article in the Financial Express, looks at detailed poverty studies and demolishes some conventional wisdom. The poor, he shows, are doughty entrepreneurs and small improvement in physical infrastructure and well-designed cash incentives can make dramatic improvements in their quality of life

for further details click here

RES Annual Conference 2009: Robin Burgess and Henrik Kleven

2009-01-22T14:21:00.001Z

Robin Burgess is Programme Chair and Henrik Kleven is Deputy Chair for the Annual Conference of the Royal Economic Society 2009, that will be held at the University of Surrey from Monday 20th to Wednesday 22nd April, 2009.

EOPP Visitor: Monica Singhal

2009-01-19T14:19:00.001Z

Monica Singhal, Assistant Professor of Public Policy at the Harvard Kennedy School, is visiting EOPP from January 15 to August 15, 2009. Her current research focuses on behavioral responses to taxation, the determinants of local public spending patterns, and public finance in developing countries.

Robin Burgess is Co-Director of newly launched International Growth Centre (IGC)

2008-12-10T18:20:00.000Z

International Development Secretary Douglas Alexander MP today launched the new International Growth Centre (IGC), to be led by the University of Oxford and the London School of Economics (LSE), to provide practical help to promote economic growth in developing countries. The Executive Director of the Centre will be Gobind Nankani while Professor Paul Collier of the University of Oxford and Professor Robin Burgess of the LSE will be Co-Directors. Other distinguished names associated with IGC are Lord Sir Nicholas Stern and Professor Tim Besley of LSE, Professor Stefan Dercon of Oxford, Nobel Laureate Mike Spence of Stanford and Professor Kenneth Rogoff of Harvard.

The Centre will be funded by the Department for International Development (DFID), which will provide £37million over the next three years. At the launch at the LSE on 10 December, Mr Alexander described the Centre as a ‘global brains trust’, which could improve the ability of developing countries to cope with effects of the economic downturn and provide innovative research on growth.

As well as commissioning and conducting research, the Oxford-LSE hub will seek to create a global network of experts by forging partnerships with individuals, networks and institutions from all over the world. The IGC, together with its partners, will be a unique resource providing a ‘hotline’ to the advice from world experts for developing countries that need practical support on issues, such as finance, agricultural yields, the energy sector or policies for the economy as a whole.

Research Award Granted: Gerard Padro

2008-12-01T14:24:00.000Z

Gerard Padro has been awarded an ESRC First Grant in June 2008 with effect from October 2008 for the research project Strategic Risk, Civil War and Intervention: A Dynamic Global Games Approach.

Research Award Granted: Henrik Kleven

2008-12-01T14:23:00.000Z

Henrik Kleven has been awarded an ESRC Grant for November 2008 - November 2010 for the research project entitled “An Experimental Evaluation of Tax Evasion and Tax Enforcement in Denmark”

Oriana Bandiera awarded Research Grant

2008-11-11T11:29:00.000Z

Oriana Bandiera has been awarded the British Academy Research Development Award for September 2008‐June 2010

Tim Besley (joint with Neil Meads and Paulo Surico) ''Insiders versus Outsiders in Monetary Policymaking'' forthcoming AER (Papers and Proceedings)

2008-11-11T11:27:00.000Z

A paper by Timothy Besley (joint with Neil Meads and Paulo Surico) “Insiders versus Outsiders in Monetary Policymaking” is forthcoming in American Economic Review(Papers and Proceedings)

Oriana Bandiera (joint with Iwan Barankay and Imran Rasul) ''Social Connections and Incentives in the Workplace: Evidence from Personnel Data''

2008-11-11T11:15:00.000Z

A paper by Oriana Bandiera (joint with Iwan Barankay and Imran Rasul) “Social Connections and Incentives in the Workplace: Evidence from Personnel Data” is forthcoming in Econometrica

The authors present evidence on the effect of social connections between workers and managers on productivity in the workplace. To evaluate whether the existence of social connections is beneficial to the firm’s overall performance, they explore how the effects of social connections vary with the strength of managerial incentives and worker’s ability. To do so, they combine panel data on individual worker’s productivity from personnel records with a natural field experiment in which we engineered an exogenous change in managerial incentives, from fixed wages, to bonuses based on the average productivity of the workers managed. The authors find that when managers are paid fixed wages, they favor workers to whom they are socially connected irrespective of the worker’s ability, but when they are paid performance bonuses, they target their effort towards high ability workers irrespective of whether they are socially connected to them or not. Although social connections increase the performance of connected workers, they find that favoring connected workers is detrimental for the firm’s overall performance.

Journal Editorship: Maitreesh Ghatak

2008-11-01T11:14:00.000Z

Starting November 2008, Maitreesh Ghatak will be taking up the position of Co-Editor of Journal of Development Economics.

Policy Paper: Maitreesh Ghatak 'Where is Credit Due?'

2008-10-28T11:13:00.000Z

Maitreesh Ghatak, in this article in Financial Express, analyses the role and functioning of credit markets in developing countries, a subject that evokes much dispute among economists. Are firms credit-constrained? How does one best measure returns to firms: as return to ability of entrepreneur or return to capital stock?

For further details see

http://www.financialexpress.com/news/where-is-credit-due/378205/

EOPP welcomes its new members!

2008-10-27T11:08:00.001Z

We would like to extend a very warm welcome to Dr Greg Fisher, who completed his PhD from MIT, and has joined our faculty this year.

We would also like to welcome all our new student members - Philippe Bracke, Nathan Foley-Fisher, Aki Ishihara, Justin Kueh, Ines Moreno-de Barreda, Sarah Sandford, Miriam Sinn, Daniel Stein, Oliver Vanden-Eynde.

We hope you all have a very enjoyable and productive stay here!

CEPR Annual Symposium at STICERD, LSE

2008-10-04T11:07:00.001+01:00

The Centre for Economic Policy Research (CEPR) annual symposium of the Development Economics Programme was held at the LSE, on October 3 and 4, 2008 in R505 in STICERD, which is on the 5th floor of the Lionel Robbins Building.

For more information visit the CEPR symposium website pages

Henrik Kleven (joint with Claus Thustrup Kreiner and Emmanuel Saez): ''The Optimal Taxation of Couples,'' forthcoming Econometrica

2008-09-01T11:07:00.000+01:00

A paper by Henrik Kleven (joint with Claus Thustrup Kreiner and Emmanuel Saez) The Optimal Income Taxation of Couples is forthcoming in Econometrica.

This paper explores the optimal income taxation of couples, where each couple is modeled as a unitary agent supplying labor along two dimensions: the labor supply of a primary earner and the labor supply of a secondary earner. The authors show that, if second-earner labor force participation is a signal of the couple being better off (as when second-earner entry reflects high labor market opportunities), optimal tax schemes display positive tax rates on secondary earnings along with negative jointness whereby the tax rate on one person decreases with the earnings of the spouse. Conversely, if second-earner participation is a signal of the couple being worse off (as when second-earner entry reflects low home production ability), they obtain a negative tax rate on the secondary earner along with positive jointness: the second-earner subsidy is being phased out with primary earnings. These results imply that, in either case, the tax distortion on the secondary earner is declining in primary earnings, which is therefore a general property of an optimum. The authors also prove that the second-earner tax distortion tends to zero asymptotically as primary earnings become large.

Timothy Besley (joint with Torsten Persson): 'The Origins of State Capacity: Property Rights, Taxation and Politics', forthcoming in AER

2008-09-01T11:05:00.004+01:00

A paper by Timothy Besley (joint with Torsten Persson) The Origins of State Capacity: Property Rights, Taxation and Politics is forthcoming in the American Economic Review.

Economists generally assume that the state has sufficient institutional capacity to support markets and levy taxes, assumptions which cannot be taken for granted in many states, neither historically nor in today's developing world. In this paper the authors develop a framework where "policy choices" in market regulation and taxation are constrained by past investments in the legal and fiscal capacity of the state. They study the economic and political determinants of such investments and find that legal and fiscal capacity are typically complements. Their theoretical results show that, among other things, common interest public goods, such as fighting external wars, as well as political stability and inclusive political institutions, are conducive to building state capacity of both forms. Their preliminary empirical results uncover a number of correlations in cross-country data which are consistent with the theory.

Oriana Bandiera and Andrea Prat (joint with Tommaso Valletti): 'Active and Passive Waste in Government Spending: Evidence from a Policy Experiment'

2008-09-01T11:05:00.003+01:00

A paper by Oriana Bandiera and Andrea Prat (joint with Tommaso Valletti) Active and Passive Waste in Government Spending: Evidence from a Policy Experiment is forthcoming in the American Economic Review.

The authors propose a distinction between active waste and passive waste as determinants of the cost of public services. Active waste entails utility for the public decision maker (as in the case of bribery) whereas passive waste does not (as in the case of inefficiency due to red tape). To assess the empirical relevance of both forms of waste, the authors analyze purchases of standardized goods by Italian public bodies and exploit a policy experiment associated with a national procurement agency. A revealed preference argument implies that if public bodies with higher costs are more likely to buy from the procurement agency rather than from traditional suppliers, cost differences are more likely to be due to passive waste. The authors find that: (i) Some public bodies pay systematically more than others for observationally equivalent goods and such price differences are sizeable; (ii) Differences are correlated with governance structure: the central administration pays at least 22 per cent more than semi-autonomous agencies (local government is at an intermediate level); (iii) The variation in prices across public bodies is principally due to variation in passive rather than active waste; (iv) Passive waste accounts for 83 per cent of total estimated waste.

Elected to BREAD Board: Robin Burgess and Maitreesh Ghatak

2008-06-24T11:04:00.000+01:00

Robin Burgess and Maitreesh Ghatak have recently been elected to the Board of Directors of BREAD (Bureau for Research and Economic Analysis of Development). Together with Tim Besley, LSE now has the maximum number of faculty members (three) in the BREAD Board. The only other institution to have three BOARD members is Harvard University.

Andrea Prat (joint with Amil Dasgupta) ''Information aggregation in financial markets with career concerns'', forthcoming in JET

2008-05-13T11:02:00.001+01:00

A paper by Andrea Prat (joint with Amil Dasgupta) Information aggregation in financial markets with career concerns, is forthcoming in the Journal of Economic Theory.

Abstract: What are the equilibrium features of a dynamic financial market in which traders care about their reputation for ability? The authors modify a standard sequential trading model to include traders with career concerns. They show that this market cannot be informationally efficient: there is no equilibrium in which prices converge to the true value, even after an infinite sequence of trades. They characterize the most revealing equilibrium of this game and show that an increase in the strength of the traders’ reputational concerns has a negative effect on the extent of information that can be revealed in equilibrium but a positive effect on market liquidity.

Oriana Bandiera (joint with Iwan Barankay and Imran Rasul) ''Social Capital in the Workplace: Evidence on its Formation and Consequences''

2008-05-13T11:00:00.002+01:00

A paper by Oriana Bandiera (joint with Iwan Barankay and Imran Rasul) "Social Capital in the Workplace: Evidence on its Formation and Consequences" is forthcoming in Labour Economics.

Abstract: The existence of social ties between co-workers affect many aspects of firm and worker behavior, such as how workers respond to a given set of incentives, the optimal compensation structures for workers at different tiers of the firm hierarchy, and the optimal organizational design for the firm. This paper presents evidence on the social capital in one particular firm, as embodied in the friendship ties among its workers. The authors describe the structure of the friendship network as a whole and present evidence on the determinants of social ties. Finally, they review evidence from a field experiment they conducted in the firm to highlight one particular mechanism through which social capital significantly affects worker performance.

Tim Besley delivers the Richard Ely Distinguished Lecture Series 2008

2008-04-11T10:58:00.000+01:00

Tim Besley has been invited to give 3 lectures in the prestigious Richard Ely Distinguished Lecture Series during the week of 14th April 2008 at Johns Hopkins University. More details can be found at www.econ.jhu.edu.

Status Incentives by Timothy Besley and Maitreesh Ghatak

2008-04-01T10:57:00.000+01:00

"Status Incentives" by Tim Besley and Maitreesh Ghatak will be published in the American Economic Review, Papers and Proceedings, in May 2008.

Abstract: When economists study incentives in organizations, the main focus has been on using monetary payments in exchange for performance on specific measurable dimensions. But organizations use a wide variety of means to motivate their workers. One such method which has not been studied much to date, is the explicit creation of status rewards attached to good performance. In this paper, the authors consider the role of such status awards as an incentive device.

Lord Stern's Maiden Speech in the House of Lords

2008-03-10T10:56:00.000Z

The text and video link to Lord Stern of Brentford's Maiden Speech last Thursday, 6 March is now available.

Polarisation and Conflict Conference at LSE

2008-03-07T14:33:00.000Z

The final meeting of the Polarisation and Conflict (PAC) Project, sponsored by the Community Sixth Framework was held at STICERD on 7 and 8 March 2008. Participants include Gerald Schneider, Eliana La Ferrara, Oeindrila Dube, Timothy Besley, James Fearon, Marta Reynal-Querol, Saumitra Jha, Benjamin Olken, Edward Miguel, Kalle Moene.

In addition there was a presentation of PAC findings by Joan Esteban and Gerald Schneider and a Roundtable with James Fearon, Anke Hoeffler and Edward Miguel.

Robin Burgess (joint with Philippe Aghion, Stephen Redding et al): ''The Unequal Effects of Liberalization: Evidence from Dismantling the License Raj"

2008-01-22T14:32:00.001Z

A paper by Robin Burgess (joint with Philippe Aghion, Stephen Redding and Fabrizio Zilibotti) "The Unequal Effects of Liberalization: Evidence from Dismantling the License Raj in India," has recently been accepted for publication in the American Economic Review 2008

The authors study whether the effects on registered manufacturing output of disman- tling the License Raj - a system of central controls regulating entry and production activity in this sector - vary across Indian states with different labor market reg- ulations. The effects are found to be unequal across Indian states with different labor market regulations. In particular, following delicensing, industries located in states with pro-employer labor market institutions grew more quickly than those in pro-worker environments.

Henrik Kleven: 'Evaluation of Four Tax Reforms in the United States: Labour Supply and Welfare Effects for Mothers', Journal of Public Economics

2008-01-22T14:30:00.001Z

A paper by Henrik Kleven, (joint with Nada Eissa and Claus Thustrup Kreiner) "Evaluation of Four Tax Reforms in the United States: Labour Supply and Welfare Effects for Mothers," has recently been published in the Journal of Public Economics,92, 2008, pp.795-816.

An emerging consensus is that labor force participation is more responsive to taxes and transfers than hours worked. To understand the implications of participation responses for the welfare analysis of tax reform, this paper embeds this margin of labor supply in an explicit welfare theoretic framework. The authors apply the framework to examine the welfare effects on single mothers in the United States following four tax acts passed in 1986, 1990, 1993, and 2001. They propose a simulation method combining features of fully structural microsimulation studies and simple deadweight loss calculations. Their approach accounts for the observed heterogeneity in the microdata, but is simple to implement because we do not need to specify utility functions and estimate utility parameters. They find that each of the four tax acts created substantial welfare gains, and that the gains were concentrated almost exclusively on the participation margin. Their results imply that standard approaches not modeling the participation decision can make large errors.

Gerard Padro-i-Miquel: The Control of Politicians in Divided Societies: The Politics of Fear, Review of Economic Studies, October 2007

2008-01-22T14:27:00.000Z

A paper by Gerard Padró-i-Miquel, "The Control of Politicians in Divided Societies: The Politics of Fear," has recently been published in The Review of Economic Studies, October 2007

Autocrats in many developing countries have extracted enormous personal rents from power. In addition, they have imposed ineficient policies including pervasive patronage spending. The author presents a model in which the presence of ethnic identities and the absence of institutionalized succession processes allow the ruler to elicit support from a sizeable share of the population despite large reductions in welfare. The fear of falling under an equally ineficient and venal ruler that favors another group is enough to discipline supporters. The model predicts extensive use of patron- age, ethnic bias in taxation and spending patterns and unveils a new mechanism through which economic frictions translate into increased rent extraction by the leader. These predictions are consistent with the experiences of bad governance, ethnic bias, wasteful policies and kleptocracy in post-colonial Africa.

Tim Besley elected to serve as President of the European Economic Association

2008-01-18T14:26:00.000Z

Tim Besley, Kuwait Professor of Economics and Political Science, has been elected to serve as President of the European Economic Association for the period 2008-2011. Serving on the EEA's Executive Committee for a total of four years, Tim will undertake the roles of Vice President in January 2008, and then President - Elect in 2009 followed by President in 2010.

Tim will be succeeding Nick Stern who will be President in 2009.

Oriana Bandiera has been awarded the IZA Young Labour Economist Award 2007

2008-01-18T14:25:00.000Z

Dr Oriana Bandiera has been awarded the IZA Young Labor Economist Award (2007) during an IZA reception held at the Annual Meetings of the Allied Social Science Associations (ASSA) in New Orleans. The award honors Dr Bandiera along with her co-authors, Iwan Barankay (University of Warwick) and Imran Rasul (University College London), for their joint paper "Social Preferences and the Response to Incentives: Evidence from Personnel Data" (Quarterly Journal of Economics, 2005).

The IZA Young Labor Economist Award is presented to young researchers who have written and published an outstanding paper in labor economics. Nominations for the award are sent by IZA Research Fellows, these are then screened by the IZA Program Directors, who each propose three papers. On the basis of these proposals, the prize-winner(s) are selected.

More information on the award can be found at http://www.iza.org/ylea.

Journal Editorship: Oriana Bandiera

2008-01-01T14:23:00.000Z

Starting January 2008, Oriana Bandiera will be taking up the position of Co‐Editor of BE Journal of Economic Analysis and Policy and the position of Associate Editor, Economic Journal

Sir Nicholas Stern awarded the Political Publication of the Year Award

2007-11-28T14:22:00.000Z

Sir Nicholas Stern has been awarded the Political Publication of the Year award by the Political Studies Association’s (PSA) for the Stern Review on the Economics of Climate Change, commissioned by Gordon Brown, UK prime minister, and published in October 2006.This is the first time that the judges have awarded the Political Publication of the Year to a report.

For more details click here.

Professor Sir Nicholas Stern to be appointed to the House of Lords.

2007-11-26T14:19:00.000Z

Professor Sir Nicholas Stern was appointed to the House of Lords as a non-party-political peer on Thursday, 18 October 2007, and and will be introduced into the House of Lords on 17 December, 2007

BREAD/CEPR Conference on Development Economics at LSE

2007-10-05T14:16:00.000+01:00

The Centre for Economic Policy Research (CEPR) Development Economics Program and the Bureau for Research and Economic Analysis of Development (BREAD) are organizing a joint conference on 5th-6th October, 2007 at the London School of Economics. The conference will take place in R505 in STICERD, which is on the 5th floor of the Lionel Robbins Building.

For more information, see the website of the conference.

World Bank Conference - Lecture by Maitreesh Ghatak on ''Provision of Public Services by Non-state Actors''

2007-09-12T08:43:00.000+01:00

Maitreesh Ghatak delivered a lecture on "The Provision of Public Services by Non-state Actors" at the World Bank's Annual Bank Conference on Development Economics (ABCDE) held at Bled, Slovenia in May 2007.

To watch video, click here.

"Retailing public goods: The economics of corporate social responsibility" forthcoming Journal of Public Economics

2007-08-29T16:48:00.000+01:00

A paper by Tim Besley and Maitreesh Ghatak entitled "Retailing public goods: The economics of corporate social responsibility" is forthcoming in the Journal of Public Economics.

"Electoral Bias and Policy Choice: Theory and Evidence'' forthcoming QJE, November 2007

2007-06-20T16:47:00.000+01:00

A paper by Timothy Besley and Ian Preston entitled ''Electoral Bias and Policy Choice: Theory and Evidence'' is forthcoming in Quarterly Journal of Economics, Vol 122:4 (November 2007).

"Contract Duration and Investment Incentives: Evidence from Land Tenancy Agreements" forthcoming JEEA, September 2007

2007-06-19T08:17:00.000+01:00

A paper by Oriana Bandiera titled "Contract Duration and Investment Incentives: Evidence from Land Tenancy Agreements" is forthcoming in Journal of the European Economic Association in the September 2007 issue. The paper analyses the empirical determinants of contract length, a key and yet neglected dimension of contractual structure. The author estimates contract length and contract type jointly using original data on tenancy agreements signed between 1870 and 1880 in the district of Siracusa, Italy. The findings indicate that the choice of contract length is driven by the need to provide incentives for non observable investment, taking into account transaction costs and imperfections in the credit markets that make incentive provision costly. The results also illustrate that since both length and the compensation scheme are used to provide incentives within the same contract, joint analysis is important for a correct interpretation of the evidence.

"Incentives for Managers and Inequality Among Workers: Evidence from a Firm-level Experiment" QJE May 2007

2007-06-18T16:33:00.000+01:00

A paper by Oriana Bandiera, Iwan Barankay, and Imran Rasul entitled 'Incentives for Managers and Inequality Among Workers: Evidence from a Firm-Level Experiment' has been published in the Quarterly Journal of Economics, Vol 122:2 (May 2007). The authors present evidence from a firm level experiment that engineered an exogenous change in managerial compensation from fixed wages to performance pay based on the average productivity of lower-tier workers. They find that the introduction of managerial performance pay raises both the mean and dispersion of worker productivity. Analysis of individual level productivity data shows that managers target their effort towards high ability workers, and the least able workers are less likely to be selected into employment. These results highlight the interplay between the provision of managerial incentives and earnings inequality among lower-tier workers.

Microeconomics of Growth Research Group Conference - Washington DC, June 7-8 2007

2007-06-16T17:12:00.000+01:00

The Microeconomics of Growth Research Group, jointly headed by Robin Burgess and Chang-Tai Hsieh (University of California, Berkeley), organized a conference in Washington D.C. on June 7&8, 2007 on issues ranging from competitive rent preservation, impact of corruption, competition and property rights, cross country differences in productivity to credit limit constraints on the financial sector and economics of extortion and many others. For more details and papers, see Agenda: Microeconomics of Growth Conference.

CentrePiece - Summer (June) 2007

2007-06-15T16:15:00.000+01:00

Culture Clash or Culture Club? The identity and attitudes of immigrants in Britain
Does Britain face a real threat from immigrants and minorities - particularly Muslims - who refuse to think of themselves as British? Alan Manning and Sanchari Roy have analysed data on the national identity and values of both immigrants and British-born people - and they conclude that fears of a 'culture clash' are seriously exaggerated. Read this article

See also: Culture Clash or Culture Club? The Identity and Attitudes of Immigrants in Britain CEP Discussion Paper No.790

"Language and Theory of the Firm", Quarterly Journal of Economics 122(1): 373-407, February 2007

2007-06-15T13:23:00.000+01:00

A paper by Andrea Prat (joint with Jacques Cremer and Luis Garicano) titled "Language and Theory of the Firm" has been published in the QJE 122(1): 373-407, February 2007. The authors characterize efficient technical languages and study their interaction with the scope and structure of organizations. Efficient languages use precise words for frequent events and vague words for unusual ones. A broader organizational scope allows for more synergies to be captured, but reduces within-unit efficiency, since it requires a more generic language. A manager working as specialized translator may also be used to achieve between-unit coordination while maintaining separate languages. Their theory reconciles two recent well-documented phenomena within organizations: the recent increase in information centralization and the reduction in hierarchical centralization.

EOPP to launch new website

2007-06-14T18:54:00.001+01:00

You can preview the new EOPP website at http://sticerd.lse.ac.uk/eopp/_new/

Comments and suggestions are welcome and can be posted on this blog.

Welcome to the EOPP Blog.

2007-06-14T14:51:00.001+01:00

We would welcome any postings and comments related to development economics, political economy and public economics. If you know of any seminars, conferences or calls for papers please post these here too.