Substance use reduces the academic performance
of university students
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
Immigrants initially earn less than natives;
the wage gap falls over time, but for many immigrant groups it never
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
Where STEM immigrants were educated strongly
influences their economic success and possibly their impact on
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.
The institutional structure of pension systems
should follow population developments
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
The right policies can help the self-employed to boost
their earnings above the poverty level and earn more for the work they do
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.
Enforcement improves legal compliance, but its
impact on welfare is country specific and unclear
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.
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.
Countries give basic education and health
care to everyone, and for good reasons—why not basic income?
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.
Do structural reforms or educational expansion
drive higher employment and participation rates?
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.
Increased competition affects the pay incentives
firms provide to their managers and may also affect overall pay
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.