• Does substance use affect academic performance?

    Substance use reduces the academic performance of university students

    Daniel I. Rees, April 2019
    A non-trivial portion of traffic fatalities involve alcohol or illicit drugs. But does substance use—which is linked to depression, suicide, and criminal activity—also reduce academic performance? Recent studies suggest that the consumption of alcohol has a negative effect on the grades of university students. Likewise, there is evidence that marijuana use reduces the academic performance of university students. Although students who use illicit substances are more likely to drop out of high school than those who do not, this may reflect the influence of other, difficult-to-measure factors at the individual level, such as personality.
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  • Can immigrants ever earn as much as native workers?

    Immigrants initially earn less than natives; the wage gap falls over time, but for many immigrant groups it never closes

    Immigrants contribute to the economic development of the host country, but they earn less at entry and it takes many years for them to achieve parity of income. For some immigrant groups, the wage gap never closes. There is a wide variation across countries in the entry wage gap and the speed of wage assimilation over time. Wage assimilation is affected by year of entry, immigrant skill, ethnicity, and gender. Policies that facilitate assimilation of immigrant workers provide support for education, language, and employment. Such policies can also reduce barriers to entry, encourage naturalization, and target selection of immigrants.
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  • Why do STEM immigrants do better in one country than another?

    Where STEM immigrants were educated strongly influences their economic success and possibly their impact on innovation

    Garnett Picot Feng Hou, April 2019
    Canada, the US, and most Western countries are looking to STEM (science, technology, engineering, and mathematics) immigrants to boost innovation and economic growth. Canada in particular has welcomed many STEM immigrants over the past quarter of a century. In the US, there is an ongoing debate about whether the H–1B visa program is being used effectively to attract more STEM immigrants. Interestingly, significant differences exist between the two countries in earnings and likely the innovation activity of highly educated immigrants, which highlights the likely role of immigration policy in determining such outcomes.
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  • Redesigning pension systems

    The institutional structure of pension systems should follow population developments

    Marek Góra, April 2019
    For decades, pension systems were based on the rising revenue generated by an expanding population (the so-called demographic dividend). As changes in fertility and longevity created new population structures, however, the dividend disappeared, but pension systems failed to adapt. They are kept solvent by increasing redistributions from the shrinking working-age population to retirees. A simple and transparent structure and individualization of pension system participation are the key preconditions for an intergenerationally just old-age security system.
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  • Self-employment and poverty in developing countries

    The right policies can help the self-employed to boost their earnings above the poverty level and earn more for the work they do

    Gary S. Fields, March 2019
    A key way for the world’s poor to escape poverty is to earn more for their labor. Most of the world’s poor people are self-employed, but because there are few opportunities in most developing countries for them to earn enough to escape poverty, they are working hard but working poor. Two key policy planks in the fight against poverty should be: raising the returns to self-employment and creating more opportunities to move from self-employment into higher paying wage employment.
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  • Enforcement of labor regulations in developing countries

    Enforcement improves legal compliance, but its impact on welfare is country specific and unclear

    Lucas Ronconi, March 2019
    More than half of private sector employees in the developing world do not receive legally mandated labor benefits. These regulations have typically been enacted by democratically elected governments, and are valued by both formal and informal workers. Increasing public enforcement (e.g. inspections, fines, and workers’ access to the judiciary) can be a powerful tool to reduce violations (e.g. increase the number of employees earning above the minimum wage). Which factors determine enforcement, and whether enforcement produces more social benefits than costs, are, however, unanswered questions.
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  • Does accession to the EU affect firms’ productivity?

    State capture and uneven infrastructure development due to foreign direct investment can outweigh productivity gains

    Firms in the new EU member states of Eastern Europe are more productive than those in other transition economies, but with a diminishing advantage. The least productive firms benefit the most from membership, although the situation is reversed in the case of foreign-owned firms. Foreign direct investment fails to promote knowledge and technology spillovers beyond the receiving firms. The dominance of multinational enterprises in the new EU member states enhances the threat of corporate state capture and asymmetric infrastructure development, whilst access to finance remains a constricting issue for all firms.
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  • Is unconditional basic income a viable alternative to other social welfare measures?

    Countries give basic education and health care to everyone, and for good reasons—why not basic income?

    Ugo Colombino, March 2019
    Globalization and automation have brought about a tremendous increase in productivity, with enormous benefits, but also a dramatic reallocation of jobs, skills, and incomes, which might jeopardize the full realization of those benefits. Current social policies may not be adequate to successfully redistribute the gains from automation and globalization or to advance the reallocation of jobs and skills. Under certain circumstances, an unconditional basic income might be a better alternative for achieving these goals. It is simple, transparent, and has low administrative costs, though it may require higher taxes or a cut/reallocation of other public expenditures.
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  • Improvement in European labor force participation

    Do structural reforms or educational expansion drive higher employment and participation rates?

    Daniel Gros, February 2019
    Employment and labor force participation (LFP) rates have increased throughout Europe since the 1990s, with little interruption from the Great Recession. While many credit labor market reforms for this progress, ongoing educational expansion might actually be more important. This implies that the overall employment rate of an economy can change if the share of the population with tertiary education increases, even in the absence of any labor market reforms or effects of the business cycle. Taking this compositional effect into account makes it possible to disentangle the impact of reforms.
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  • Market competition and executive pay

    Increased competition affects the pay incentives firms provide to their managers and may also affect overall pay structures

    Priscila Ferreira, February 2019
    Deregulation and managerial compensation are two important topics on the political and academic agenda. The former has been a significant policy recommendation in light of the negative effects associated with overly restrictive regulation on markets and the economy. The latter relates to the sharp increase in top executives’ pay and the nature of the link between pay and performance. To the extent that product-market competition can affect the incentive schemes offered by firms to their executives, the analysis of the effects of competition on the structure of compensation can be informative for policy purposes.
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