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Microeconomic Insights

The Microeconomic Insights blog posts summaries of high quality microeconomic research to inform its audience about global microeconomic issues. Its topics cover all areas of microeconomics, including development, health economics, environmental economics and international trade.

Kidney Exchange: An Operations Perspective

Summary Kidney failure is a leading cause of death around the world. The best treatment is transplantation, but no country is presently able to supply all the transplants required by its patient population; most people with kidney failure will die without receiving a transplant. Kidneys have to be compatible with the recipient, so not everyone healthy enough to donate a kidney can donate one to whom they...

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Competitive labor markets boost wage growth

Summary Empirical evidence suggests that labor markets have become more concentrated since the late 20th century, shifting from a large number of small employers toward a smaller number of larger employers. Recent academic work has also documented that wages are lower, on average, in more concentrated labor markets. A new paper uses a decade of US hospital mergers to examine whether this negative...

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Earnings Dynamics, Changing Job Skills, and STEM careers

Summary The US labor market is particularly dynamic for Science, Technology, Engineering, and Math (STEM) jobs, with new technologies proliferating throughout workplaces every year. This technological change is the engine of long-run productivity growth, but it also means that workers in technology-intensive occupations must constantly learn on the job, or risk becoming obsolete. This paper considers the...

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Can Integration Change Gender Attitudes?

Summary Can integration of men and women change gender attitudes even in a traditionally male-dominated environment? This research carried out a randomized experiment in the Norwegian military, to study the effects of mixed-gender training squads on male squad members. This casts some light on what social psychologists call the “contact hypothesis”, which predicts that exposure to members of a minority...

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Face-to-Face Communication in Organizations

Summary The COVID-19 pandemic has meant that many of us have now been working at home for most of the last year. The results of this global experiment have sometimes been positive, or at least not as negative as feared. Engagement and productivity have not nosedived, and many workers seem to prefer the new arrangements. There are, however, potential drawbacks. Not interacting with colleagues in person on...

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Moral Values and Voting

Summary What roles do moral values play in elections, and how do politicians appeal to them? To examine these questions, this research introduces a core idea of modern moral psychology into the study of political economy. People may endorse “universalist” values, such as individual rights, justice, and impartial fairness, or more “communal” concepts, such as community, loyalty, betrayal, respect, and...

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Geography, transportation, and endogenous trade costs

Summary Whether by sea, land or air, the entirety of trade is carried out by the transportation sector. We know surprisingly little, however, about the role of transportation in shaping trade networks. How do transport markets interact with the markets for world trade in goods? How does the behavior of profit-maximizing transport agents influence transport costs, and thus global imports and exports?...

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Second chance: the social benefits of diversion in the criminal justice system

Summary Public officials have made substantial efforts over the past decade to reform criminal justice policy. The general trend in the US has been towards more leniency, especially for first-time and low-risk defendants, with ‘diversion’ emerging as a popular option. Diversion is a practice where a police officer, prosecutor, or judge provides an opportunity for an individual charged with a criminal...

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What Goes Up May Not Come Down: Asymmetric Incidence of Value-Added Taxes

Summary Value-Added Taxes (VATs) raise the most revenue of any tax in OECD countries and some form of VAT has been adopted by almost all countries in the world. While it is commonly assumed that their incidence is borne by consumers, there is limited empirical evidence on this question. New evidence from Finland analyzes the effect of a large—14 percentage point—VAT decrease in the hairdressing sector in...

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Age of marriage, weather shocks, and the direction of marriage payments

Summary Child marriage, defined as marriage before the age of 18, has been associated with a wide array of poor economic, social, and health outcomes for women and their children. It was estimated in 2014, however, that around half of all prime-aged women living in South Asia and in Sub-Saharan Africa were married as children.  This post summarizes a recent article, which has demonstrated that aggregate...

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