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This paper examines the causal effect of smoking on body weight in Italy. We take advantage of the discontinuity in smoking habits introduced by the Italian smoking ban in 2005. Our estimates indicate that the ban reduced smoking intensity by half a cigarette per day and smoking participation rate by 2 percentage points. We estimate a significant effect on body weight of about 1 kg. Heterogeneous...
Addressing extensive labour supply responses, the literature has established a case for larger transfers to the working poor than to even poorer non‐working people. This paper casts new light on this result. I argue that the result hinges crucially on the labour supply responses of people in income brackets above that of the working poor. Then, distinguishing between more and less poor working people,...
Considering a model of price and misleading advertising competition between two brands producing horizontally and vertically differentiated brands, we investigate allocative implications of misinformation and related regulatory policies. Although misinformation distorts consumers' decision‐making, misinformation can correct inefficiencies resulting from misallocation of goods, thereby increasing welfare...
Unemployment has been robustly shown to strongly decrease subjective wellbeing. Using panel quantile regression techniques, we analyse to what extent the negative impact of unemployment varies along the (conditional) subjective wellbeing distribution. In our analysis of British Household Panel Survey data (1996–2008), we find that individuals with high life satisfaction suffer less from becoming unemployed...
This paper proposes a theory according to which entrepreneurial ability to deal with the adoption of new technology is a key determinant of value creation in entrepreneurship. In a single conceptual framework, we demonstrate that a bimodal pattern of entrepreneurial entry emerges: both individuals possessing high job‐related human capital and individuals with low job‐related human capital enter entrepreneurship...
Early work on the national minimum wage (NMW) suggested that policymakers in the UK had succeeded in raising the pay of low‐paid workers without impairing their employment prospects. This paper shows that when we focus on the most vulnerable workers, part‐time females, the NMW appears to be associated with reductions in employment retention. These negative impacts were evident when the NMW was introduced...
This paper formalizes the use of flexible labour contracts in an efficiency wage framework, and derives market dualism as an endogenous outcome. By allowing temporary contracts to be either renewed or converted into permanent contracts, we obtain new theoretical insights into the market equilibrium. The conversion rate is itself an incentive device that acts as a substitute for the wage, and firms...
The recent global financial crisis has led to an unprecedented increase in public debt across the world, raising serious concerns about its economic impact. This paper examines the impact of high public debt on long‐run economic growth in a large panel of countries over the last four decades. High initial public debt is found to be significantly associated with slower subsequent growth. Non‐linearities,...
It is well documented that graduates enter different occupations in recessions than in booms. In our paper, we examine the impact of the resulting change in the allocation of talent for long‐term productivity and output in a sector. In a setting where output can be quantitatively and qualitatively measured, we find evidence that talent flows to stable sectors in recessions and to cyclical sectors...
Recent studies have reported positive associations between democracy and economic growth. They have also explored how associations could differ across regions or income levels. However, might the effects of democracy on growth also depend on factors such as institutions promoting law and order? Using a panel specification, we employ a democracy–law and order interactive term to examine if the effects...
This paper provides clear‐cut evidence that the ECB follows an asymmetric monetary policy rule concerned more with inflation rather than sustaining economic growth. The driving force of interest rate cuts is the fall of the inflation rate below its target level. The paper evaluates the implications of the above policy on real activity by simulating a small New Keynesian model. This clearly indicates...
In this paper we explore the cross‐country variation in the output impact of the global financial crisis in 2008–9. We use the extensive dataset of Rose and Spiegel but control for the problems of model uncertainty and outliers by using a variety of Bayesian model averaging techniques. We find first that cross‐country differences in crisis intensity can be explained by macroeconomic vulnerabilities...
29% of the 1.4 million eligible children do not participate in the UK's Free School Meals programme. Like other welfare benefits, take‐up of free school meals is affected by stigma and lack of information. This paper uses a fixed‐effect instrumental variables strategy to evaluate the role of peer‐group participation in overcoming these barriers. Identification of endogenous peer effects is achieved...
This paper studies the relationship between geographic patterns of industry and economic growth without scale effects. Facing transport costs and imperfect knowledge diffusion, firms locate production, process innovation and product development in their lowest cost regions, leading to the partial concentration of production and full agglomeration of innovation in the region with the largest market...
This paper examines the determinacy implications of forecast‐based monetary policy rules that set the interest rate in response to expected future inflation in a Neo‐Wicksellian model that incorporates real balance effects. We show that the presence of such effects in closed economies restricts the ability of the Taylor principle to prevent indeterminacy of the rational expectations equilibrium. The...
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