Recent Publications

Book Launch - 5th July 2011
Family Futures

Date and Time: Tues 5th July 2011, 6.30-8pm, followed by an informal reception

Location: Wolfson Theatre, New Academic Building, 54 Lincoln's Inn Fields, London School of Economics, London, WC2A 3LJ

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Speakers:

Rt Hon Margaret Hodge Member of Parliament for Barking.

Anne Power, Professor of Social Policy, London School of Economics.

Dr Katherine Rake Chief Executive, Family and Parenting Institute.

Jane Waldfogel, Professor of Social Work and Public Affairs at Columbia University School of Social Work and a visiting professor at the Centre for Analysis of Social Exclusion at the London School of Economics.

David Piachaud, Professor of Social Policy, London School of Economics (Chair).

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Podcast and Presentations:

• Listen to the Podcast of the event

• Anne Power: Family Futures
  
  
• Jane Waldfogel: Lessons from Family Futures

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Outline
Family futures is about family life in areas of concentrated poverty and social problems where surrounding conditions make bringing up children more difficult and family life more fraught and limited. Home and neighbourhood carry special meaning for families, because where they live, how they fit in with their neighbours, and how their children grow up all intertwine, to build a sense of community. This timely book, by acclaimed author Anne Power and her team, is based on a unique longitudinal study of over 200 families interviewed annually over the last decade. It answers three important questions in the words of families themselves:

• What challenges face families in poor areas?
• How are the challenges being met?
• Have government efforts helped or hindered progress over the past decade?

This event will have wide appeal to people who work with, live in and care about families and low-income areas.

Copies of the book can be purchased from Policy Press http://www.policypress.co.uk/

For further information about this event, please contact

• Nicola Serle at LSE, Email: N.Serle@lse.ac.uk; Tel: +44 (0)20 7955 6330

Report Launch
Cutting Carbon Costs: Learning from Germany's Energy Saving Program

A new report by Anne Power and Monika Zulauf has been published by The Brookings Institution

Download the full report Cutting Carbon Costs: Learning from Germany's Energy Saving Program in Adobe PDF

Download the executive summary here

Summary:

Energy shortages, unpredictable and high energy prices, waste, pollution, and fears of climate change all drive a sense of urgency in the West about reducing its energy dependence on unreliable sources. Europe imports over half its total energy from volatile producers around the globe. While the United States is able to meet somewhat more of its energy demand from domestic sources, its per capita energy consumption level is twice that of Europe's.

• The cheapest and most cost-effective path to greater energy security is energy saving, and the biggest, most certain place to do that is in our built environment, which in developed Western countries uses half of all energy and generates half of all greenhouse gases. Most of this energy usage is wasted by leaking out through walls, windows, roofs, floors, doors, and through inefficient equipment.
  
  
• All members of the European Union (27 countries) have adopted highly ambitious production targets for renewable energy, and equally ambitious reduction targets for CO2 emissions, down at least 20 percent from 1990 levels.
  
  
• Germany is leading the way in developing "green" technologies and has the most ambitious energy-saving program in Europe, aiming for a 30 percent reduction in energy usage by 2020, and a 30-percent renewable energy share, consisting mainly of biomass, wind, and solar.
  
  
• Germany's energy saving program is based on three pillars:
  • A clear legal framework and tight regulation at the national level, requiring energy efficiency upgrades to buildings and increased use of renewable energy sources among electricity providers;
    
    
  • Strong financial incentives through subsidies and loans to reduce energy consumption in the built environment at all levels of government (at the national level, these are provided via a public investment bank sponsored by the German government); and
    
    
  • Information, promotion, and behavior change, working through regional and local bodies, developing enforceable standards through Energy Performance Certificates, and supporting model projects all over Germany.
  
  
  
• Since 2006, Germany has created nearly half a million new jobs in renewable energy, and over four years, around nearly 900,000 jobs in retrofitting homes and public buildings, such as schools. Green investment, new green technology development, and renewable energy exports are all major growth areas in Europe's strongest economy. By having taken these steps, Germany remains on track to meet aggressive greenhouse gas reduction targets by 2020 and 2050.
  
  
• Germany's experience - its successes and lessons learned - provide a solid evidence base from which nations like the United States can "leapfrog" Europe, and tackle even more pressing energy and climate change demands through deliberate public and private action.

Download the full report Cutting Carbon Costs: Learning from Germany's Energy Saving Program in Adobe PDF

Download the executive summary here

Report Launch
The KfW (Kreditanstalt für Wiederaufbau) Experience in the Reduction of Energy Use and In CO2 Emissions from Buildings: Operation, Impacts and Lessons for the UK

Mark Schröder, Paul Ekins and Robert Lowe (UCL Energy Institute, University College London) and Anne Power and Monika Zuklauf (LSE Housing and Communities, London School of Economics)

The widespread devastation of the German housing stock at the end of the Second World War resulted in the creation, as part of the Marshall Plan, of a remarkable bank: the Kreditanstalt für Wiederaufbau (KfW). The bank proved a most effective vehicle for lending, recovering and re-lending Marshall Plan funds for the reconstruction of German infrastructure and buildings. In subsequent decades the bank expanded and diversified its activities.

The UK has a number of new policy initiatives related to the improvement of home energy efficiency, including the Green Deal, Energy Company Obligation (ECO) and, less directly, the Green Investment Bank. While the particular history and experiences of KfW mean that its approaches to home energy efficiency could not be transferred directly to the UK, nevertheless a comparison between conditions in the two countries shows that there are a number of important lessons from the activities of KfW that are relevant to what the UK is hoping to achieve.

The Green Deal, Energy Company Obligation (ECO) and the Green Investment Bank are all welcome new policies in the right direction. But on the basis of the KfW experience, they do not go far enough on any of the key dimensions: the regulatory framework, the level of the financial incentive or the clarity of the message about integrating home energy efficiency and micro-generation using renewables for both electricity and heat. More will need to be done. In considering this, much can be learnt from what the KfW bank has achieved, how it has achieved it, and the overall policy framework that has supported these achievements.

The full report can be downloaded in Adobe pdf, and a brief summary is available here

Report Launch
CASEreport 66: Obstacles and Opportunities

Obstacles and Opportunities is a short report based on what 200 parents told us over a ten year period of visiting them in their homes in low-income urban areas. We have produced three books based on this research: EastEnders: Family and Community in Urban Neighbourhoods; City Survivors: Bringing Up Children in Disadvantaged Neighbourhoods; and Family Futures: Childhood and poverty in urban areas (to be published by Policy Press in July 2011). The research that went into the three books informs this report but here we pull together a unique body of evidence and quotations. The particular focus of this report is on the opportunities and obstacles facing children and young people growing up in disadvantaged areas and the struggles of parents to overcome these barriers and build a better future for their families. We hope that this report will underline the sense of urgency about providing more, not less, for children and young people in disadvantaged areas. For these areas are still remarkably different from the average and the future of our society hinges on them becoming more equal and more integrated.

The report is written by Anne Power, Nicola Serle, and Helen Willmot and is now available to download in Adobe PDF format.

Recent Publications
Maitreesh Ghatak: Implementing Health Insurance for the Poor: The Rollout of RSBY in Karnataka

This paper joint with D. Rajasekhar, Erlend Berg, R. Manjula, and Sanchari Roy is forthcoming in the Economic and Political Weekly of India

Abstract:

The National Health Insurance Scheme (Rashtriya Swasthya Bima Yojana, RSBY) aims to improve poor people’s access to quality health care in India. This paper looks at the implementation of the scheme in Karnataka, drawing on a large survey of eligible households and interviews with empanelled hospitals in the state. Six months after initiation, an impressive 85% of eligible households in the sample were aware of the scheme, and 68% had been enrolled. However, the scheme was hardly operational and utilisation was virtually zero. A large proportion of beneficiaries were yet to receive their cards, and many did not know how and where to obtain treatment under the scheme. Moreover, hospitals were not ready to treat RSBY patients. Surveyed hospitals complained of a lack of training and delays in the reimbursement of their expenses. Many were refusing to treat patients under the scheme until the issues were resolved, and others were asking cardholders to pay cash. As is typical for the implementation of a government scheme, many of the problems discussed can be related to a misalignment of incentives.


Link to article.

Recent Publications
Johannes Spinnewijn: Capital Income Taxes with Heterogeneous Discount Rates (with Peter Diamond)

This paper 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.

Link to article.

EOPP: Recent Publications
Tim Besley: The Logic of Political Violence

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.

Link to article.

EOPP: Recent Publication
Henrik Kleven: Unwilling or Unable to Cheat? Evidence from a Tax Audit Experiment in Denmark

This paper 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 subject to third-party reporting, but substantial for self-reported income. Since most income is subject 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.

Link to article.

EOPP Recent Publications
Henrik Kleven: Transfer Program Complexity and the Take Up of Social Benefits

This paper 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.

Link to article.

EOPP: Recent Publications
Maitreesh Ghatak: Thanks for Nothing? Not-for-Profits and Motivated Agents.

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.

Link to article.

Report Launch
CASEreport 63, Housing Futures: our homes and communities. A report for the Federation of Master Builders

Small Land Sites Could Solve Housing Crisis

Reusing small empty sites of up to two acres could more than meet the UK's housing demand without building on green field land. This must be coupled with upgrading existing buildings, reclaiming and remodeling empty buildings, converting and upgrading homes to make existing neighbourhoods attractive. These are key findings from a new research report commissioned by the Federation of Master Builders (FMB) from the London School of Economics (LSE). This approach would generate local jobs but requires new skills, more training and apprenticeships, the report argues.

The report, 'Housing Futures: Our Homes and Communities', written by Professor Anne Power and Laura Lane of the Centre for Analysis of Social Exclusion (CASE) at the LSE examines the four big pressures - supply and affordability of homes; environmental limits; social cohesion; and economic change - driving the future of housing policy in the UK.

The report highlights that there is capacity within existing communities to create all the new homes we need. Small available sites of under two hectares within built up areas are rarely counted and micro-sites of half an acre of less are literally too numerous to count. Yet it is estimated that even in inner London, where population density is highest and land scarcest, there are enough micro-sites to supply all the new homes we need.

If we make our existing homes greener and more energy efficient, the research found that the building industry had enough work in this field to keep every small and medium sized builder running to stay on top for the next 30 years. The retrofitting market for small builders offers, the report says, 'a very rosy future painted green', as homeowners realize the savings that could be made through making their homes more energy efficient. To capitalize on this growth market, the report calls for higher standards within the building industry, particularly the 200,000 Small to Medium sized Enterprises (SMEs) which make up 99 percent of building industry. A 'Code for Sustainable Existing Homes' would drive up the energy efficiency standards of our existing homes and conversions. Accreditation and Competent Person Schemes enhance the status of the building industry, as long as they are linked to real experience and hands-on training.

Professor Anne Power, Professor of Social policy at the LSE said:
"We need to modernize our housing stock, reclaim and remodel empty buildings, fit new homes into small spaces within existing communities, and do all this with a fraction of the energy, materials and waste of the current building industry. This approach should generate many new jobs and skills in existing neighbourhoods; it should support training, apprenticeships and accreditation schemes; it should foster a new eco-retrofit supply chain. It will be quickly embraced by go-ahead small builders who know which side their bread is buttered on!"

Richard Diment, Director-General of the FMB said:
"Retrofitting is becoming an important part of any small builder's workload but this can only increase if SMEs can demonstrate the value and skill of their work which is why the FMB is investigating the need to start its own competent person scheme. We hope to use this to further improve the reputation of members that join the FMB, through regular on-going training and a clear grading system. Construction SMEs carry out almost 50 percent of all construction work in the UK, yet builders are often viewed with suspicion. In many other countries building is a respected trade, almost on a par with the professions and this is mainly due to accreditation and competency schemes. We recognise the important role such schemes will play in improving the reputation of the UK building industry."

Download the report: CASEreport 63, Housing Futures: our homes and communities. A report for the Federation of Master Builders by Anne Power and Laura Lane, June 2010.

For further information please visit the Federation of Master Builders website

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

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.

CASE Book Launch
The Guardian: Britain leads in war on poverty, according to US academic

Despite claims that Britain is "broken", a book released today in New York highlights that by most measures things have improved for more than a decade.

Jane Waldfogel, professor of social work at Columbia University, spent a year examining Labour's record and found it had turned the tide of child poverty in a way that was "larger and more sustained than in the United States". Her book, Britain's War on ­Poverty, shows that the number of children in"absolute poverty" had fallen by 1.7 million since 1999. Latest figures show 13.4% of British children remained in"absolute poverty" whereas in the US the figure was approaching 20%.

Related Links:

• Britain leads in war on poverty, according to US academic, The Guardian, Wednesday 24 March 2010
  
  
• LSE Press Release: US can learn from Britain's battle against child poverty
  
  
• Professor Waldfogel's Staff Biography
  
  
• Britain's War on Poverty is published by the Russell Sage Foundation. An introduction and summary is available. (in PDF)

EOPP: Recent Publications
Robin Burgess: Can Openness Mitigate the Effects of Weather Shocks? Evidence from India's Famine Era

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

Rural citizens of developing countries are often highly exposed to weather shocks that affect the incomes they earn and the food they eat, often resulting in widespread hunger and loss of life. There exists intense debate over what role openness to trade in food might play in mitigating or exacerbating the mortality impact of weather and death. However there exists a fundamental ambiguity in this regard as openness makes nominal incomes more responsive to production shocks (due to both increased specialization and dampened offsetting price movements), but consumer prices less volatile, such that the net effect on real incomes is unclear. This paper employs a colonial era Indian district-level database for the period 1875 to 1919 to provide some preliminary insights into the weather-trade-death relationship. The results suggest that the arrival of railroads in Indian districts dramatically constrained the ability of rainfall shocks to cause famines in colonial India.

EOPP: Recent Publications
Oriana Bandiera: Heterogeneous Class Size Effects: New Evidence from a Panel of University Students

A paper by 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.

Over the last decade, many countries have experienced dramatic increases in university enrolment, which, when not matched by compensating increases in other inputs, have resulted in larger class sizes. Using administrative records from a leading UK university, this paper presents evidence on the effects of class size on students' test scores. The authors observe the same student and faculty members being exposed to a wide range of class sizes from less than 10 to over 200. They therefore estimate non-linear class size effects controlling for unobserved heterogeneity of both individual students and faculty. The authors find that -(i) at the average class size, the effect size is -.108; (ii) the effect size is however negative and significant only for the smallest and largest ranges of class sizes and zero over a wide range of intermediate class sizes from 33 to 104; (iii) students at the top of the test score distribution are more affected by changes in class size, especially when class sizes are very large. This paper presents evidence to rule out class size effects being due solely to the non-random assignment of faculty to class size, sorting by students onto courses on the basis of class size, omitted inputs, the difficulty of courses, or grading policies. The evidence also shows the class size effects are not mitigated for students with greater knowledge of the UK university system, this university in particular, or with greater family wealth.

EOPP: Recent Publications
Oriana Bandiera, Robin Burgess, Selim Gulesci and Munshi Sulaiman: Participation in Adolescent Training Programs

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

Almost one third of the population in less developed countries is under age 15. Hence improving the effectiveness of policy interventions that target adolescents might be especially important. This paper analyzes the intention to participate in training programs of adolescent girls in Uganda, a country with perhaps the most skewed age distribution anywhere in the world. The training program the authors focus on is BRAC's Adolescent Development Program, which emphasizes the provision of life skills training, entrepreneurship training, and microfinance. The paper presents evidence on the individual and household determinants of the intention to participate of adolescent girls into this program. In particular, it is shown how: (i) individual demographics, skills, beliefs, and life satisfaction; and, (ii) household resources and experiences with NGOs in the past, determine the intent to participate. We discuss how these factors vary across and within villages, and whether and how they affect the likelihood to attend per se, and the intended frequency of attendance. The results have implications for the design, management, and evaluation of similar programs throughout East Africa.

EOPP: Recent Publications
Tim Besley, Daniel Sturm and Torsten Persson: Political Competition, Policy and Growth: Theory and Evidence from the United States

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

This paper develops a simple model to analyze how a lack of political competition may lead to policies that hinder economic growth. The authors test the predictions of the model on panel data for the US states. In these data, the authors find robust evidence that lack of political competition in a state is associated with anti-growth policies: higher taxes, lower capital spending and a reduced likelihood of using right-to-work laws. The paper also documents a strong link between low political competition and low income growth.

Recent Publications
Tim Besley: Estimating the Peace Dividend: The impact of violence on house prices in Northern Ireland

This paper joint with Hannes Mueller is forthcoming in the American Economic Review

LSE Housing, LSE Cities and Joseph Rowntree Foundation Lecture, Debate and Book Launch
Phoenix Cities - surviving financial, social and environmental turmoil in Europe and the US?

Date:	Tuesday 16th March 2010 18.00-19.45
Location:	Sheikh Zayed Theatre, Lower Ground Floor, New Academic Building, London School of Economics
Cost:	The event is free but a ticket is required
For tickets and further information please see: http://www2.lse.ac.uk/publicEvents/events/2010/20100316t1800vSZT.aspx, or contact Anna Tamas, Email: a.tamas@lse.ac.uk.

Summary:

This lecture and debate mark the launch of a new book Phoenix Cities: The fall and rise of great industrial cities.

• Lord Richard Rogers, international prize-winning architect, will offer his vision what the urban renaissance means for the 21st century;
• Bruce Katz, Head of the Metropolitan Program and Vice-President of the Brookings Institution, Washington DC, will report on the future of divided US cities in Obama’s America;
• Anne Power, Professor of Social Policy at the London School of Economics will outline the dramatic decline, turnaround and prospects of seven struggling European cities;
• Julia Unwin, Chief Executive of the Joseph Rowntree Foundation, will round-up the event.

This event will debate where next for Phoenix Cities, given the economic shocks, the pressures of climate change and the social inequalities that sharply divide struggling cities. A panel of city reformers from European cities will give their reactions to these questions and Sir Howard Davies, Director of the London School of Economics, will Chair the lecture.

For tickets and further information please see:
http://www2.lse.ac.uk/publicEvents/events/2010/20100316t1800vSZT.aspx, or contact Anna Tamas, Email: a.tamas@lse.ac.uk. Phoenix Cities will be available to purchase at the event at a discounted rate of £20. Registration and refreshments will be from 5.15pm and a reception will follow the event 7.45-8.30pm.

For more details please see the Phoenix Cities flyer (in Adobe PDF format)

Report Launch
A Anatomy of Economic Inequality in the UK - Report of the National Equality Panel

Wednesday, 27 January 2010: 3.15pm - 4.50pm

New Academic Building, Wolfson Theatre
London School of Economics

Chair: David Piachaud, London School of Economics

Presentations from:

• John Hills, LSE and Chair, National Equality Panel
• Stephen Jenkins, Essex University and member of National Equality Panel

Responses from:

• Tony Atkinson, Visiting Professor, LSE
• Lisa Harker, Co-Director, Institute for Public Policy Research
• Max Wind-Cowie, Progressive Conservatism Project, DEMOS

The National Equality Panel was set up in October 2008 at the invitation of Rt Hon Harriet Harman MP, Minister for Women and Equality, to investigate how inequalities in people's economic outcomes (such as earnings, income and wealth) are related to their characteristics of circumstances (such as gender, age and ethnicity). The Panel's report is published on 27th January 2010.

This seminar will present and discuss the main findings of the report.

The full report, summary and executive summary, charts and statistical annex are available to download from the CASE publications website at http://sticerd.lse.ac.uk/case/_new/publications/NEP.asp

Recent Publications: The Financial Express
What crisis has taught economics

In his latest article for the Financial Express, Maitreesh Ghatak looks at the legacy of Paul Samuelson, who pioneered the use of formal models in economics.

Read the articles:
What crisis has taught economics, published Jan 09, 2010

Recent Publications
Tim Besley: State Capacity, Conflict and Development

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.

Recent Publications: The Financial Express
Buying Land and Selling Kidneys

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

Recent Publications: Policy Papers
Maitreesh Ghatak

Recent Publications
The Lionel Robbins's Essay on the Nature and Significance of Economic Science - 75th Anniversary Conference Proceedings

The Lionel Robbins's Essay on the Nature and Significance of Economic Science - 75th Anniversary Conference Proceedings have now been published. You may download the publication in Adobe PDF format.

The conference aimed to renew the considerations of Robbins's theme, to reflect on the current nature and significance of economic science and examine Robbins's own position from a historical perspective.

You may also view the presentations and papers on the conference website

Recent Publications: Policy Papers
Maitreesh Ghatak

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.

Recent Publications: Policy Papers
Maitreesh Ghatak - Small is smart

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.

Report Launch
Soup Runs in Central London: The right help in the right place at the right time?

This report - written by Laura Lane and Anne Power of LSE Housing and CASE - aims to provide an independent and objective perspective on soup runs in the London Borough of Westminster. A broad understanding of soup run has been used throughout - to include any mobile food distribution service operating primarily to serve the homeless within the borough.

The issue of soup runs in Westminster has become a contentious and controversial issue with strong advocates both for and against their operation. For some, soup runs are a valuable, life-saving resource that help to feed and support rough sleepers and other vulnerable people. For others, soup runs represent an outdated, poorly targeted and uncoordinated service that supports and sustains damaging street lifestyles. We wanted to find out whether and how soup runs in Westminster fitted into the commitment of the Government to provide 'the right help, in the right place at the right time'.

Soup runs in Central London:'The right help in the right place at the right time?' By Laura Lane and Anne Power, July 2009.

Read the executive report (in Adobe PDF)

Read the full report (in Adobe PDF)

Recent Publications:
Gerard Padró i Miquel

Report Launch
Growing up in Social Housing in Britain: A profile of four generations 1946 to the present day

Ruth Lupton, Rebecca Tunstall, Wendy Sigle-Rushton, Polina Obolenskaya, Ricardo Sabates, Elena Meschi, Dylan Kneale and Emma Salter

The future role of social housing, and its contribution to life chances is currently the subject of much debate.  This new report, produced for the Tenant Services Authority, Joseph Rowntree Foundation and Scottish Government, draws on four British birth cohort studies to provide a rich historical context for current policy proposals.
It describes social housing’s changing role for four generations of families since the second world war and explores the relationship between childhood housing tenure, family circumstances and later adult outcomes across five domains of life: health, well-being, education, employment and income.

The report was produced jointly by academics at CASE and the Institute of Education and launched on 18th June 2009 at the Chartered Institute of Housing Conference.

Link to the report.

Recent Publications: Policy Papers
Anger in the Wake of Aila

Maitreesh Ghatak's latest article in Financial Express is on the role of media in democracy.

Recent Publications
Oriana Bandiera: Social Incentives in the Workplace

Recent Publications: Policy Papers
Maitreesh Ghatak - Poor Man's Capitalism

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

Book Launch
Towards A More Equal Society? Poverty, inequality and policy since 1997

Edited by John Hills, Tom Sefton and Kitty Stewart.

When New Labour came to power in 1997, its leaders asked for it to be judged after ten years on its success in making Britain "a more equal society". As it approaches the end of an unprecedented third term in office, this book asks whether Britain has indeed moved in that direction.

The highly successful earlier volume A more equal society? was described by Polly Toynbee as "the LSE's mighty judgement on inequality". Now this second volume by the same team of authors provides an independent assessment of the success or otherwise of New Labour's policies over a longer period.

It provides:

• consideration by a range of expert authors of a broad set of indicators and policy areas affecting poverty, inequality and social exclusion;
  
  
• analysis of developments up to the third term on areas including income inequality, education, employment, health inequalities, neighbourhoods, minority ethnic groups, children and older people;
  
  
• an assessment of outcomes a decade on, asking whether policies stood up to the challenges, and whether successful strategies have been sustained or have run out of steam; chapters on migration, social attitudes, the devolved administrations, the new Equality and Human Rights Commission, and future pressures.

The book is essential reading for academic and student audiences with an interest in contemporary social policy, as well as for all those seeking an objective account of Labour's achievements in power.

Book Launch

A special CASE Social Exclusion Seminar will be held on Wednesday 25th February (16:30 - 18:00) , R505 Michio Morishima Room 5th Floor, LSE Research Laboratory, to launch Towards a More Equal Society? Poverty, Inequality and Policy since 1997 Booking is Essential. Please contact Anna Tamas, Email: a.tamas@lse.ac.uk, Tel: +44(0)20-7955-6562 to reserve a place.

Towards a more equal society? Poverty, inequality and policy since 1997
Edited by John Hills, Tom Sefton and Kitty Stewart.
Policy Press 2009

Paperback ISBN 9781847422019

Hardback   ISBN 9781847422026

Publication Date : 25 Feb 2009

Recent Publications:
Tim Besley and Maitreesh Ghatak

Recent Publications: Policy Papers
Maitreesh Ghatak: ''Barefoot Businessmen''

Forthcoming Publications
Understanding the Finance of Welfare: What Welfare costs and How to Pay for it. 2nd Edition

Author: Howard Glennerster, Department of Social Policy, London School of Economics and Political Science.

Much has happened to the funding of social policy and the economy since the first edition of this book, especially in pensions and social care. In response, much of the book has been revised and all the figures and tables have been updated.

The second edition of this best-selling textbook begins by reviewing the range of ways in which basic human needs can be met and summarises in an accessible way the economic literature on why markets and even governments can fail in this respect.

The fully revised and updated edition of Understanding the Finance of Welfare

• describes and assesses in detail the ways in which health care, personal social services, education, housing, pensions and social security are funded in the UK
• in each case, the book contrasts the UK's position with funding arrangements in other advanced economies
• is designed to fit the needs of social policy student syllabuses where it has become an essential text
• is written by the leading and most highly respected academic in the field of social welfare.

Contents

Meeting basic human needs; Market failure and government failure; How to pay for social programmes? The tax constraint; Financing healthcare; Financing social care; Financing education; Financing income security; Financing housing; Rationing scarce resources: managing rising expectations; Do welfare states have a future?

Understanding the Finance of Welfare: What Welfare costs and How to Pay for it. 2nd Edition.
Howard Glennerster
Policy Press 2009

Paperback ISBN 978 1 84742 108 1   £21.99

Hardback   ISBN 978 1 84742 109 8   £65.00

New edition out : 2 Feb 2009

CASE Publication
Tale of 7 Cities: A practitioner's guide to city recovery by Anne Power, Astrid Winkler, Jörg Plöger and Laura Lane

This documentary booklet based on authors' photographs and local eye-witness comments traces radical social and economic change in seven European post-industrial cities.

Their cataclysmic decline and rebuilding has put them at the heart of national and international political ferment, spurring them on to uncover new ways of doing things. They showcase how former industrial heartlands across Europe can recover. Global population pressures and continuing migration, loss of investment and global fi nancial upheaval, climate change and resource limits, pose unknown threats to the future of cities, but these cities are at the cutting edge of new solutions.

Existing infrastructure, transport connections and dense services, a tradition of invention and innovation, are leading them to pioneer exciting new ideas. Big resources are tied into these places.

In our crowded continent, existing assets are constantly redeployed to cope with new shortages. Space, energy and the natural environment are three resources that drove growth in these cities. Innovative reuse of these fi nite resources propels 'clapped out' cities back to life, while the infectious spread of new ideas drives successful experiments in urban recovery.

The seven cities share an uncertain future with the rest of the globe but Tale of 7 Cities illustrates building blocks of recovering places that may survive and indeed flourish in a more sustainable world.

Download Tale of 7 Cities , in Adobe PDF format.

You may also like to download a flyer for the publication, or read a review by Time Magazine

CASEreport 57
Time and Income Poverty, Tania Burchardt

Time and money are two of the main constraints on what people can achieve in their lives. The income constraint is widely recognised by policymakers and social scientists in their concern with poverty. Analysis of the time constraint is more limited and research has often concentrated on dual-earner households, who are more likely to have relatively high incomes.

Integrating analysis of time and income reveals some who are missed by traditional poverty measures (for example, those who have to work long hours to keep their families above the poverty line), and some who are classified as time poor but who could reduce their work hours without risking income poverty.

The focus of this study is individuals who are significantly limited by time and income constraints, for example, those who could escape income poverty only by incurring time poverty, or vice versa.

A better understanding of the joint operation of these constraints has implications across a wide range of policy areas, including the drive to abolish child poverty and welfare reform, as well as employment regulations and the work/life balance.

The report is available to download at http://sticerd.lse.ac.uk/dps/case/cr/CASEreport57.pdf

Tania will also present Time Poverty and Income Poverty at the CASE Social Exclusion Seminar on Wednesday 26 November 2008, 16:30-18:00 in R505, Michio Morishima Room, 5th Floor, LSE Research Laboratory.

Recent Publications:
Timothy Besley (joint with Neil Meads and Paulo Surico) ''Insiders versus Outsiders in Monetary Policymaking'' forthcoming American Economic Review (Papers and Proceedings)

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)

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

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.

EOPP Recent Publications: Policy Papers
Maitreesh Ghatak 'Where is Credit Due?'

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/

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

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.

Recent Publications
Timothy Besley (joint with Torsten Persson): 'The Origins of State Capacity: Property Rights, Taxation and Politics', forthcoming in the American Economic Review.

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.

Recent Publications
Oriana Bandiera and Andrea Prat (joint with Tommaso Valletti): 'Active and Passive Waste in Government Spending: Evidence from a Policy Experiment', forthcoming in the American Economic Review.

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.

Recent Publications:
Social Justice and Public Policy: Seeking fairness in diverse societies

Edited by Gary Craig, Tania Burchardt and David Gordon

Social justice is a contested term, incorporated into the language of widely differing political positions. Those on the left argue that it requires intervention from the state to ensure equality, at least of opportunity; those on the right believe that it can be underpinned by the economics of the market place with little or no state intervention. To date, political philosophers have made relatively few serious attempts to explain how a theory of social justice translates into public policy. This important book, drawing on international experience and a distinguished panel of political philosophers and social scientists, addresses what the meaning of social justice is, and how it translates into the everyday concerns of public and social policy, in the context of both multiculturalism and globalisation.

Contents: Introduction ~ Tania Burchardt and Gary Craig; Social justice and public policy: a view from political philosophy ~ Jonathan Wolff; Social justice and public policy: a social policy perspective ~ David Piachaud; Multiculturalism, social justice and the welfare state ~ Will Kymlicka; Structural injustice and the politics of difference ~ Iris Young; Recognition and voice: the challenge for social justice ~ Ruth Lister; Globalisation, social justice and the politics of aid ~ Chris Bertram; Social justice and the family ~ Harry Brighouse and Adam Swift; Children, policy and social justice ~ David Gordon; Social justice in the UK: one route or four? ~ Katie Schmuecker; Monitoring inequality: putting the capability approach to work ~ Tania Burchardt; The limits of compromise? Social justice,’ race’ and multiculturalism ~ Gary Craig; Understanding environmental justice: making the connection between sustainability, development and social justice ~ Maria Adebowale.

www.policypress.org.uk

PB £19.99 ISBN 978 1 86134 933 0 * HB £65.00 ISBN 978 1 86134 934 7 * 296 pages * June 2008

CASEreport 55
Report to Incommunities on the About Turn Project, Anne Power, Laura Lane and Nicola Serle

CASEreport55 is an independent account of the work of the Incommunities About Turn project to support households in difficulty with their tenancy.

The project has run for 3 years and has a track record in dealing with difficult tenancies. LSE Housing examined tenancy records, evidence from staff interviews and family development, in order to highlight how much progress has been made, what barriers and difficulties are faced now and how this work fits within the wider Bradford city and national context.

The aim of the report is to present an overview of the costs and benefits of this project from the perspective of new social priorities in the housing world and its difficulties with the most marginal tenants.

The report is available to download at http://sticerd.lse.ac.uk/dps/case/cr/CASEreport55.pdf

Recent publication
Andrea Prat (joint with Amil Dasgupta) ''Information aggregation in financial markets with career concerns'', forthcoming in the Journal of Economic Theory.

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.

 

Recent publication
Oriana Bandiera (joint with Iwan Barankay and Imran Rasul) ''Social Capital in the Workplace: Evidence on its Formation and Consequences'', forthcoming in Labour Economics

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.

Joseph Rowntree Foundation Report on the threat to child poverty
The impact of benefit and tax uprating on incomes and poverty

A research team including LSE's John Hills has analysed the long-term impact of current policies to uprate benefit payments and tax allowances. Far from helping to meet the government's goal of eradicating child poverty, the existing uprating rules on their own could result in child poverty rising to unprecedented levels within 20 years. For more information about this and other long term implications of this aspect of government policy see the Press release (http://www.jrf.org.uk/pressroom/releases/090408.asp), Findings (http://www.jrf.org.uk/knowledge/findings/socialpolicy/2218.asp) and full report on the Joseph Rowntree Foundation's website http://www.jrf.org.uk/bookshop/details.asp?pubID=950

Recent Publications
Status Incentives by Timothy Besley and Maitreesh Ghatak

"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.

Book Launch
DIY Community Action: Neighbourhood Problems and Community Self-Help

Liz Richardson will launch her new publication 'DIY Community Action' - as part of the ESRC Festival of Social Science - with a seminar at LSE on -

Wednesday 12th March     4.30pm to 6.00pm

- in the Michio Morishima Conference Room (R505), 5th Floor, Research Laboratory, 10 Portugal Street, London WC2A 2HD.

This event is FREE but booking is essential.

An informal drinks reception will follow this event.

To request a seat for this event, please contact
Anna Tamas Email: a.tamas@lse.ac.uk; Tel: +44(0)20-7955-6562.

About the Book
How people can be persuaded to take more control of their own lives continues to be a subject of policy and academic debate, and the contribution of active citizens to improving societal well-being is high across different policy agendas. But the promotion of community self-help raises a wide range of questions for people working in neighbourhoods, for policy makers, for politicians, and for residents themselves about how we promote engagement, what would motivate people to become active, and more fundamentally about the ongoing relevance and value of community activity.

DIY Community Action offers thought-provoking answers to these questions, based on detailed real-life evidence from over 100 community groups, each trying to combat neighbourhood problems. It presents a lively challenge to the existing thinking on contested debates, and proposes ways forward for community building.

This timely publication is an engaging resource for policy makers, practitioners, academics, students and general readers interested in exploring community engagement and active citizenship.

Liz Richardson: DIY Community Action: Neighbourhood problems and community self-help. Bristol: Policy Press.

Paperback £23.99 ISBN 9781847420848 ---- Hardback £65.00 ISBN 9781847420855

To order this book please see www.policypress.org.uk

CASE Publications
City Reports now out: Bilbao, Bremen, Leipzig, Saint-Étienne, Sheffield and Torino

The London School of Economics' Centre for Analysis of Social Exclusion (CASE) with the Brookings Metropolitan Institute developed a programme to uncover the problems besetting former industrial cities, the recovery measures under way to help these cities and their impact.

Generously funded by the Joseph Rowntree Foundation, CASE researchers identified seven cities across Europe, embarking on impressive recovery actions to reverse decline. We wanted to establish the common ground and differences between a group of comparable cities, exploring their progress and ongoing challenges. Seven cities in five countries became partners in our work: Bremen, Saint-Étienne, Leipzig, Torino, Bilbao, Sheffield and Belfast. The five countries - Germany, Italy, France, Spain and the UK - represent nearly three quarters of the EU's population.

To download and read these city reports please go to the CASEreport site

Recent Publications
Robin Burgess (joint with Philippe Aghion, Stephen Redding and Fabrizio Zilibotti): ''The Unequal Effects of Liberalization: Evidence from Dismantling the License Raj in India'', forthcoming American Economic Review 2008

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.

Recent Publications
Henrik Kleven: 'Evaluation of Four Tax Reforms in the United States: Labour Supply and Welfare Effects for Mothers', Journal of Public Economics, 92, 2008, pp.795-816

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, 2008

Summary:
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. We 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.We propose a simulation method combining features of fully structural microsimulation studies and simple deadweight loss calculations. Our 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.We find that each of the four tax acts created substantial welfare gains, and that the gains were concentrated almost exclusively on the participation margin. Our results imply that standard approaches not modeling the participation decision can make large errors.

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

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.

Book Launch
City Survivors: Bringing up children in disadvantaged neighbourhoods

Anne Power will launch her new publication City Survivors with a seminar at LSE on -

Thursday 22nd November

4.30pm to 6.00pm

- in the CEP Conference Room (R405), 4th Floor, Research Laboratory, 10 Portugal Street, London WC2A 2HD.

This event is FREE but booking is essential.

An informal drinks reception will follow the seminar.

To request a seat for this event, please contact:
Anna Tamas email: a.tamas@lse.ac.uk, tel: +44(0)20-7955-6562.

About the book:
City Survivors is based on yearly visits over seven years to two hundred families living in four highly disadvantaged city neighbourhoods, two in East London and two in Northern inner and outer city areas. Twenty four families explain over time from the inside, how neighbourhoods in and of themselves directly affect family survival. These stories convey powerful messages from parents about the problems they want tackled, and the things that would help.

The book offers original and in-depth, qualitative evidence in a readable and accessible form that will be invaluable to policy-makers, practitioners, university students, academics and general readers interested in the future of families in cities.

Anne Power: City Survivors: Bringing up children in disadvantaged neighbourhoods. Bristol: Policy Press.

Paperback £21.99 ISBN 9781847420497 ---- Hardback £60.00 ISBN 9781847420503

To order this book please see www.policypress.org.uk

CASE Book Launch
Making Social Policy Work

Edited by John Hills, Julian Le Grand and David Piachaud

"A treasure trove of insights into what makes social policy work from a constellation of stellar academic stars. From first principles through to final delivery the book looks across the spectrum. Key specialists from the different fields - family, schools, higher education, health, social care, welfare, neighbourhood renewal, pensions, redistribution - examine what has worked and what might work better". Malcolm Dean, The Guardian

Social policy is now central to political debate in Britain. What has been achieved by efforts to improve services and reduce poverty? What is needed to deliver more effective and popular services to all and increase social justice? How can we make social policy work? These are some of the questions discussed in this collection of essays by a distinguished panel of leading social policy academics.

The book covers key issues in contemporary social policy, particularly concentrating on recent changes. It examines the history and goals of social policy as well as its delivery, focusing in turn on the family and the state, schools, higher education, healthcare, social care, communities and housing. Redistribution is also examined, exploring child poverty, pension reform and resources for welfare.

The essays in this collection have been specially written to honour the 70th birthday of Howard Glennerster whose pioneering work has been concerned not only with the theoretical, historical and political foundations of social policies but, cruciallly, with how they work in practice. It is a collection for those working in and interested in policy and politics in a wide variety of fields and for students of social policy, public policy and the public sector.

Contents: Introduction - John Hills, Julian Le Grand and David Piachaud; Part One: The aims of social policy: Principles, Poor Laws and welfare states - Jose Harris; Welfare; what for? Tania Burchardt; Part Two: Delivering social policy: Families, individuals and the state - Jane Lewis; Schools, financing and educational standards - Anne West; Financing higher education: tax, graduate tax or loans? - Nicolas Barr; Quasi-markets in healthcare - Julian Le Grand; social care: chocie and control - Martin Knapp; Neighbourhood renewal, mixed communities and social integration - Anne Power; Part Three: Redistribution: between households; over time; between areas: The restructuring of redistribution - David Piachaud; Pensions, public opinion and policy - John Hills; Distributing resources - Tony Travers.

PB £25.00 ISBN 978 1 86134 957 6. HB £65.00 ISBN 978 1 86134 958 3. 304 pages.

Launch price £20.00 - buy your copy today or order at www.policypress.org.uk before 16 November. When ordering on the website, please use promotional code POBM110 at the checkout.

Published 31 October 2007 by The Policy Press.

Recent Publications
Tim Besley and Maitreesh Ghatak: Retailing public goods: The economics of corporate social responsibility

Recent Publications
Maitreesh Ghatak (joint with Pranab Bardhan and Alexander Karaivanov): ''Wealth Inequality and Collective Action''

Recent Publications
Maitreesh Ghatak (joint with Massimo Morelli and Tomas Sjostrom): 'Entrepreneurial Talent, Occupational Choice, and Trickle Up Policies' Journal of Economic Theory, vol.137, no.1, November 2007

A paper by Maitreesh Ghatak (joint with Massimo Morelli and Tomas Sjostrom) entitled Entrepreneurial Talent, Occupational Choice, and Trickle Up Policies has been published in the Journal of Economic Theory, Volume 137, No. 1, November 2007. The authors study market inefficiencies and policy remedies when agents choose their occupations, and entrepreneurial talent is subject to private information. Untalented entrepreneurs depress the returns to entrepreneurship because of adverse selection. The severity of this problem depends on the outside option of entrepreneurs, which is working for wages. This links credit, product and labour markets. A rise in wages reduces the adverse selection problem. These multimarket interactions amplify productivity shocks and may generate multiple equilibria. If it is impossible to screen entrepreneurs then all agents unani mously support a tax on entrepreneurs that drives out the less talented ones. However, if screening is possible, e.g., if wealthy entrepreneurs can provide collateral for their loans, then wealthy entrepreneurs do not support surplus enhancing taxes.

Recent Publications
Oriana Bandiera: 'Contract Duration and Investment Incentives: Evidence from Land Tenancy Agreements' Journal of the European Economic Association, September 2007

A paper by Oriana Bandiera titled "Contract Duration and Investment Incentives: Evidence from Land Tenancy Agreements" has been published in Journal of the European Economic Association, September 2007. 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.

Recent Publications
Timothy Besley (joint with Ian Preston): 'Electoral Bias and Policy Choice: Theory and Evidence', Quarterly Journal of Economics, Vol 122:4, November 2007

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

Recent Publications
Oriana Bandiera (joint with Iwan Barankay and Imran Rasul): 'Incentives for Managers and Inequality Among Workers: Evidence from a Firm-Level Experiment' Quarterly Journal of Economics Vol 122:2, May 2007

A paper by Oriana Bandiera (joint with Iwan Barankay and Imran Rasul), "Incentives for Managers and Inequality Among Workers; Evidence from a Firm-Level Experiment " has been published in the Quarterly Journal of Economics, vol.122, no.2, May 2007.

Abstract: The authors present evidence from a firm level experiment in which they 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.

Book Launch
Jigsaw cities: Big Places, Small Spaces

Jigsaw cities: Big places, small spaces

14 March 2007

by Anne Power and John Houghton

This new book explores Britain's intensely urban and increasingly global communities as interlocking pieces of a complex jigsaw; they are hard to see apart yet they are deeply unequal. How did our major cities become so divided? How do they respond to housing and neighbourhood decay?

Jigsaw Cities examines these issues using Birmingham, Britain's second largest city, as a model of pioneering urban order and as a victim of brutal Modernist planning.

Through a close look at major British cities, using Birmingham as a case study, the book explores:

• the origins of Britain's acute urban decline and sprawling exodus;
• the reasons why "one size doesn't fit all" in cities of the future;
• the potential for smart growth, mixed communities and sustainable cities.

Based on live examples and hands-on experience, this extremely accessible book offers a unique 'insider' perspective on policy making and practical impacts. It will attract policymakers in cities and government as well as students, regeneration bodies, community organisations and environmental specialists.

Anne Power is Professor of Social Policy at the London School of Economics and Political Science; Sustainable Development Commissioner responsible for regeneration and sustainable communities; member of the Government's Urban Task Force; author of books on cities, communities and marginal housing areas in the UK and abroad.

John Houghton was head of the Communities Division at the Neighbourhood Renewal Unit; a visiting research associate at CASE; and currently a Harkness scholar at the University of Minnesota. John Houghton worked as Anne Power's assistant during 2002-03 while Anne was Chair of the Independent Commission on the Future of Housing in Birmingham.

Read more at the Policy Press and download free sample chapters in Adobe PDF.

Report Launch
Ends and Means: The future roles of social housing in England

Launch of a report on the assessment of the aims of social housing on 20 February 2007:

Ends and Means: The future roles of social housing in England by John Hills

This report was commissioned to help the Secretary of State for Communities and Local Government "stand back and ask what role social housing can play in 21st Century housing policy". Its aim is to provide the background and analytical framework against which the implications of different answers to such a fundamental question can be debated both inside and outside government. Amongst other issues the report covers key questions raised by the terms of reference, in particular:

• What can social housing do in helping create genuinely mixed communities?
  
  
• Can the way we run it encourage social mobility and opportunities, including in the labour market, for people to get on in their lives?
  
  
• Can social housing and other support be more responsive to changing needs and enable greater geographical mobility?

The report looks at the possible trade-offs between these and other objectives - but also, more encouragingly, at the ways in which achieving some of them may reinforce each other. The report assesses different objectives and implications for the direction of travel on reform, rather than making detailed policy recommendations. As will become evident from the evidence presented here and the conclusions which they lead to, there are important issues, affecting a crucial part of the lives of nearly four million households in England and the use of assets worth more than £400 billion, that require urgent debate. Specific policy responses would require careful design and consultation. This report is designed to contribute to the beginning of such a process, rather than be the conclusion of it.

The full report (CASEreport 34) and a summary are available to download free from the website:

• CASEreport 34 in Adobe PDF Size: 868 Kb
  
  
• CASEreport 34 zipped PDF file Size: 680 Kb
  
  
• CASEreport 34 Summary in Adobe PDF Size: 320 Kb

Recent Publications
Andrea Prat (joint with Cremer and Luis Garicano): ''Language and Theory of the Firm'', Quarterly Journal of Economics 122(1): 373-407, February 2007

A paper by Andrea Prat (joint with Jacques Cremer and Luis Garicano) titled "Language and Theory of the Firm" has been published in the Quarterly Journal of Economics 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.

Book Launch
Twenty-five years on twenty estates: Turning the Tide?

The Policy Press has just published a new report in association with the Joseph Rowntree Foundation: Twenty-five years on twenty estates, by Rebecca Tunstall and Alice Coulter.

The report covers developments in 20 less popular and more problematic English council estates, based on four waves of research since 1980. It presents unique evidence of the impact of 25 years of social change and policy from Thatcher to Blair, a period in which the number of British council homes has halved, and social inequality and the standard of public services have become key political issues.

Read more at the Policy Press or download a FREE pdf version from the Joseph Rowntree Foundation.

Policy Press titles can also be ordered from:

Marston Book Services
PO Box 269
Abingdon
Oxon
OX14 4YN
Tel: +44 (0)1235 465500
Email: direct.orders@marston.co.uk

Book Launch
The education and employment of disabled young people: Frustrated ambition

Improving educational attainment and raising employment rates among disadvantaged groups are key targets for the current government. This report shows that for one important group - disabled young people - these goals are far from being achieved.

The report highlights the need for a new direction in careers advice and welfare to work programmes for disabled young people.

A FREE pdf version is available online from The Joseph Rountree Foundation

To purchase the publications please see https://www.policypress.org.uk/catalog/product_info.php?products_id=1173

Improving educational attainment and raising employment rates among disadvantaged groups are key targets for the current government. This report shows that for one important group - disabled young people - these goals are far from being achieved.

The report analyses nationally representative data to show that:

• parental background is more important than disability status in shaping young people's aspirations;
• despite high aspirations, educational and occupational outcomes are significantly worse for disabled young people;
• the gap between disabled and non-disabled young people's experiences widens as they get older.

The report argues that while mainstream and comprehensive education may have succeeded in raising aspirations for disabled young people, this has not been translated into real opportunities in early adult life. It also highlights the need for a new direction in careers advice and welfare to work programmes.

Frustrated ambition: The education and employment of disabled young people is essential reading for academics, policymakers and practitioners with an interest in the role aspirations play in education and employment.

Tania Burchardt is a senior research fellow at the ESRC Research Centre for Analysis of Social Exclusion, at the London School of Economics.

Book Launch
A More Equal Society? New Labour, Poverty, Inequality and Exclusion

A more equal society? New Labour, poverty, inequality and exclusion Edited by John Hills and Kitty Stewart

New Labour has taken poverty and social exclusion very seriously and made genuine progress in reducing disadvantage, especially among families with children. But an independent, in-depth assessment of the Government's record on social exclusion since it came to power warns that although the tide has turned in key areas, Britain remains a very unequal society. The new study, by a team of members and associates of the Centre for Analysis of Social Exclusion (CASE) at the London School of Economics, was launched at a seminar at 11 Downing Street. Its detailed review of policy areas includes education, employment, health and neighbourhood renewal, as well as economic disadvantage. It draws on more than 500 separate sources from evaluations of policy initiatives, government reports and statistics, and academic studies.

A More Equal Society? observes that in 1997, when New Labour was first elected, poverty and inequality had reached levels unprecedented in post-war history. The Government's commitment to tackling social exclusion has been in contrast to its predecessors and includes high-profile targets for cutting child poverty and ensuring 'over 10 to 20 years' that no one will be seriously disadvantaged by the place where they live. Where Government has concentrated its efforts, the study suggests there is now clear evidence of progress. Child poverty has been reduced by its tax and benefit reforms. New analysis of spending patterns also shows that low-income families with children, who have benefited most from the reforms, have increased spending on goods for children, such as clothing, footwear, games and toys, as well as on food (but not alcohol and tobacco). But the study argues that there are gaps in the Government's strategy in other areas. For instance, the latest available figures show that poverty among working-age adults without children has reached record levels. While some vulnerable groups have been the target of special initiatives, others have not. And in the case of asylum seekers, government policies have actively increased social exclusion, especially in relation to employment, income and housing.

Prof John Hills , Director of the Centre for Analysis of Social Exclusion and co-editor of the study, said: 'There are substantial differences between the policies pursued in the years since 1997 and those followed previously. In some of the most important areas, the tide has turned and policy has contributed to turning that tide. This is no mean achievement. However, it does not follow that policy has already succeeded, or that Britain has yet become a more equal society. In virtually all of the areas discussed there is still a very long way to go to reach an unambiguous picture of success. Sustained and imaginative effort will be needed to make further progress and to reach groups not touched by policy so far.'

The study, published by The Policy Press, and its contributing research were supported by the Joseph Rowntree Foundation and the Economic and Social Research Council. A summary of findings is available from the Joseph Rowntree Foundation. Also published, to celebrate the Joseph Rowntree Foundation centenary, is One Hundred Years of Poverty and Policy, which can be purchased or downloaded from the JRF website.

Further details and order information is available from the Policy Press.