Congratulations: IZA Fellows Bloom and Van Reenen Receive 2014 EIB Prize

EIB Prize LOGOOn September 25 the 2014 European Investment Bank Prize for Excellence in Economic and Social Research will be awarded to IZA Research Fellows Nicholas Bloom (Stanford University) and John Van Reenen (Centre for Economic Performance and London School of Economics). The prestigious prize, for the first time awarded last year to IZA Director Klaus F. Zimmermann, honors the outstanding academic excellence and the impact of the prize winner’s research on public policy.

This year the EIB Institute acknowledged the highly influential work of Bloom and Van Reenen in the field of “Innovation, Market Structure and Competitiveness.” According to the EIB Prize jury both authors have been pioneers in analyzing the effects of innovation on economic performance and inequality.

Klaus F. Zimmermann congratulated Bloom and Van Reenen: “The European Investment Bank could not have taken a better decision as to honor the work of Bloom and Van Reenen that is of eminent importance in times of European recession and Euro crisis”.

The 2014 EIB Prize will be awarded at the Free University of Berlin, at which Zimmermann acts as an Honorary Professor of Economics.

Read more:

2014 EIB Prize Press Release

2013 EIB Prize

Article by Klaus F. Zimmermann on the occasion of the 2013 EIB Prize

This article is available as IZA Policy Paper No. 69

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Ethnically diverse co-authors produce better research papers

scienceThinking about a new research paper? You may want to start searching for co-authors of different ethnicity. Statistically, this will increase the chances to get your paper accepted in a top journal. That’s what a new IZA Discussion Paper (written by an ethnically diverse author duo) suggests.

Using data from the Thomson-Reuters Web of Science, the study by Harvard economists Richard B. Freeman and Wei Huang examines the ethnic identity of authors in over 2.5 million papers written by U.S.-based authors from 1985 to 2008. In this period the frequency of English and European names among authors fell relative to the frequency of names from China and other developing countries. In 1985, 57 percent of authors had “English” names. This share dropped below 50 percent in 2008. Over the same period, the proportion of Chinese named authors tripled from 4.8 to 14 percent.

To determine whether a name is English, Korean or Russian, the authors used a name-ethnicity matching program, which combines information on the distribution of names by ethnicity (e.g. Kim is typically Korean, while Zhang is most likely Chinese) and the metropolitan areas in which particular ethnicities are disproportionately represented.

The analysis shows that persons of similar ethnicity co-author together more frequently than predicted by their proportion among authors. Freeman and Huang compare the distribution of observed co-authorships with the distribution that would arise if authors were matched randomly. For example, one would expect 1.522 percent of all two-author papers to be written by two Chinese researchers, but their actual share is 4.157 percent.

They also find that greater homophily is associated with publication in lower impact journals and with fewer citations, even holding fixed the authors’ previous publishing performance. By contrast, papers with authors in more locations and with longer reference lists get published in higher impact journals and receive more citations than others.

Greater diversity thus seems to contribute to the quality of the scientific papers that a research team produces. This may be because diversity raises productivity by widening ideas. Papers from more diverse collaborations should then contain a wider range of scientific terms, use more varied equipment, procedures, or data and reference a wider range of previous work than papers from more homogeneous groups. Another potential explanation is that having co-authors of different ethnicity increases citations through network effects rather than through novel ideas.

Read abstract or download discussion paper.

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Flexible working hours improve job satisfaction

home officeTemporal and locational flexibility (TLF) is an important element in current policy debates about working conditions and the combination of work and private life. More flexibility provides employees with a greater scope to reconcile their professional, private, and family lives. Furthermore, TLF is expected to increase female labor participation and reduce skilled labor shortages.

From a theoretical point of view, many advantages are conceivable: TLF provides employees with more control over their working life, leads to a better match between paid work and other activities, decreases the amount of stress experienced by employees, and signals to workers that their employer cares about their well-being and their responsibilities outside work.  Since higher job satisfaction translates into fewer job quits and lower absenteeism, it is not only beneficial to employees, but should also be a key concern for employers.

In a new IZA Discussion Paper Daniel Possenriede and Janneke Plantenga analyze whether flexibility in the work schedule (flexi-time), location (telehomework) and duration (part-time) improves the work/leisure balance and increases employee’s overall job satisfaction. They use panel data on Dutch households with self-reported measures of job satisfaction. In the sample, 39% of the employees report freedom to determine the start and end times of their work, and 17% work at home at least once a week.

The analysis finds that a flexible work schedule is positively associated with both working-time fit and job satisfaction. Surprisingly, the effects are not stronger for employees with family responsibilities, who would be expected to struggle more with the combination of work and private life than other groups of workers.

Telehomework or location flexibility is also related to higher job satisfaction, although to a smaller extent than flexible working times. Part-time work increases working-time fit similarly to flexi-time, but it sometimes even has a negative effect on job satisfaction for women – contrary to some previous empirical findings. Overall, the results indicate that schedule flexibility may be a superior alternative to duration flexibility.

Read abstract or download discussion paper.

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Peter Kuhn on the internet as a labor market matchmaker

Since the internet’s earliest days, firms and workers have used various online methods to advertise and find jobs. Until recently there has been little evidence that any internet-based tool has had a measurable effect on job search or recruitment outcomes. However, recent studies, and the growing use of social networking as a business tool, suggest workers and firms are at last developing ways to use the internet as an effective matchmaking tool. In addition, job boards are also emerging as important for the statistical study of labor markets, yielding useful data for firms, workers, and policymakers.

Read more in an article for IZA World of Labor watch this video interview with author, Peter Kuhn (IZA Visiting Research Fellow from UC Santa Barbara).

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Chinese imports push low-skilled Norwegians into unemployment

factoryChina’s rise to global economic power has had a major impact on the recent globalization process. In 2009, China became the world’s largest exporter. This evolution affects local labor markets all over the planet. Many nations complain that Chinese competition increases domestic unemployment and depresses wages. But how large is this effect really?

In a recent IZA Discussion Paper Ragnhild Balsvik, Sissel Jensen and Kjell G. Salvanes explore the impact of import shocks from China on the Norwegian labor market from 1996 to 2007. In this time range, the amount of imports from China increased more than sixfold while employment in the manufacturing sector declined.

The researchers find that this negative employment effect is especially pronounced for low-skilled workers who are pushed into unemployment, or even leave the labor force entirely. For workers without college education, an increase in import exposure of about 1,600 U.S. dollars per worker reduces manufacturing employment by about 0.8%. At the same time, employment in other private sectors rises by 0.5%. Unemployment rises by 1.8%, and labor force exits by 0.3%.

This outcome is related to the import of intermediate goods rather than products for final consumption. Also, the decline in employment is mainly due to imports from China to Norway’s domestic market, not to increased competition in Norwegian export markets.

Consistent with features of the Nordic welfare state, such as generous unemployment benefits or disability pensions and a centralized wage bargaining process that makes wages rather sticky, the authors find no significant change in earnings. Overall, about 10% of the reduction in the manufacturing employment share can be attributed to import competition from China. This is roughly half the size of the effect found for the U.S. in another IZA paper.

Read abstract or download discussion paper.

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Italy’s reform challenge: The need for evidence-based labor market reforms

italianflagIn many respects Italy is facing the same reforms needs as Germany did in the early 2000s. The German experience has shown that economic difficulties are the friend of labor market reforms. For Italy to succeed as well, there are a number of lessons to be learned from the German case. One of the lessons is that the right policy mix should not be determined by partisan or ideological affiliation but rather be based on solid evidence.

This is the key message of IZA Director Klaus F. Zimmermann‘s plenary lecture on “The Economics of Labor Market Reforms” at the 29th National Conference of Labour Economics organized by the Italian Association of Labour Economists (AIEL) on September 11, 2014.

In his presentation, Zimmermann calls for evidence-based policy making rather than dreaming of a one-size-fits-all solution. While the interests of politicians are often centered on gaining votes, policymakers should be provided with the tools to make their decisions based on solid empirical grounds. A key tool in this respect is the innovative online resource IZA World of Labor.

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It’s all about data – a data vignette with the Toll Index


Toll Index 2007-2014

In mid August I was writing that against the gloom and doom German economic journalism was spreading at the time “we feel confident going out on a limb to say that the real industrial production number for July (to be published by the BMWi in mid September) will have to reflect the positive Toll Index picture somehow” because “it ought to be highly unlikely that all these heavy trucks drive around empty”. I was also a bit ironically forecasting that this would force “professional forecasting departments in the banking sector and elsewhere to postcast July in order to explain why they did not see it coming…”. 

Well now the numbers are out by the BMWi and I can say “we told you so”. German industrial production in July “surprisingly” went up by 2.6% compared to the month before (seasonally etc adjusted of course) and even for June the number was adjusted upwards by .3 percentage points (what had caused the pessimistic hysteria in the German press was a first reading of -.2% of GDP in 2014Q2). If you follow the Toll index you are of course not surprised. Elsewhere I was commenting that the numbers on which pessimistic economic journalism bases their gloomy outlook (which is border line irresponsible) “will be revised later and may in fact be wrong”. These numbers “ought to be well within the revision error” so that they  “should not be any more worth of a headline than the ink needed to print it”. To top it all off the BMWi announced Monday that German exports broke the monthly ceiling of 100 billion euros this July, just like the Toll Index had seen it.

The only way to eliminate bad quality economic reporting is to change the way we measure things. We need to part from the ways of a bygone era of scarce computing resources and realize that we can timely measure and analyze the entirety of most observational universes. The Toll Index is an example of this type of thing. Although the government failed to realize its full potential it still allows us an accurate, fast and timely look into the entirety of the fleet of heavy trucks roaming the German highways and hence a sneak peak into economic activity. Had the government utilized the full potential of the MAUT we could have a complete dump of heavy transport (and hence its associated economic activity) at the much higher frequency of every 3 days or so. Economic measurement has a long way to go before it is up to date with the current state of technology.

More on the Toll Index:
– Website of the IDSC of IZA
– Article in Journal of Forecasting

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