Book Chapter

Since the Second World War, western Europe has experienced an unprecedented period of growth, but its performance relative to Asia and the United States has seemed less impressive in recent decades than in the early post-war period. eastern Europe did much less well, as communism was unable to sustain similar improvements over the long run and the initial years of transition to market economies proved difficult; but the region has seen rapid growth in recent years. Against this background, variations in the performance of individual countries also catch the eye: for example, the “Celtic Tiger” phase of growth in Ireland and the long period of relative economic decline in the UK. The objective of this chapter is to describe Europe's post-war growth performance, understand its main causes and, in the process, also explore what economists, historians, and policy makers can learn about modern economic growth from European successes and failures. Our analysis is informed by two conceptual approaches. The first of these focuses on the microfoundations of growth in terms of incentives to invest and innovate, and draws on endogenous growth theory. The key ideas are captured in Figure 12.1 which is adapted from Carlin and Soskice 2006. Here the downward-sloping (Solow) line represents the well-known inverse steady-state relationship between technological progress (x) and the capital intensity of the economy (k) for a given savings rate in the neoclassical growth model.

While there has been intense debate in the empirical literature over the evolution of the college wage premium in the United States, its evolution in Europe has received little attention. This paper investigates the causes of the evolution of the college wage premium in 12 European countries from 1994 to 2009, assessing the relevance of the supply factor as a determinant of the college wage premium. I use cross-country variation in relative supply, demand, and labour market institutions to examine their effects on the trend in wage inequality. I address possible concerns of endogeneity of the relative supply using an IV strategy exploiting the differential legislations of university autonomy and their variations over time. Results show that the strong increase in the relative supply that European countries have experienced has decreased the college wage premium. The most relevant institution is the minimum wage, which significantly decreases college wage premium.

This chapter discusses different approaches pursued to explore three broad questions related to technology diffusion: what general patterns characterize the diffusion of technologies, and how have they changed over time?; what are the key drivers of technology?; and what are the macroeconomic consequences of technology? We prioritize in our discussion unified approaches to these three questions that are based on direct measures of technology.

Incarceration rates in the United States have more than tripled in recent decades as rehabilitation has gradually taken a back seat to a policy agenda emphasizing punishment and incapacitation. This raises important questions about the effectiveness of state and federal prisons in the United States, and about whether the resources required for long prison sentences would be better spent improving prison conditions and expanding rehabilitation programs. Contrary to the widely embraced “nothing works” doctrine, we review recent empirical evidence from Norway demonstrating that a well-designed prison system can reduce recidivism and allow for successful re-entry into the labor market. We suggest several possible policy reforms that could be adopted in the United States, which, when combined with shorter prison sentences, would not require an increase in expenditures.

Rarely these days does a news cycle pass without new stories of political dysfunction in Washington, D.C. Reports of stalemates, fiscal cliffs, and failed grand bargains have begun to erode the public confidence in the ability of our representative institutions to govern effectively. In May 2013, only one American in six approved of the way Congress has handled its job. Sadly, that level of support was a major improvement from the previous summer, when wrangling over the usually routine matter of raising the debt ceiling drove congressional approval down to 10%. The most common diagnoses of Washington's ailments center on the emergence of excessive partisanship and deep ideological divisions among political elites and officeholders. In short, “polarization” is to blame. Consequently, the reform-minded have taken up the mantle of reducing polarization or mitigating its effects. In recent years, proposals for electoral reform to change electoral districting, primary elections, and campaign finance have been presented as panaceas. Other reformers have focused on changing legislative procedures such as those related to the filibuster, appropriations, and confirmation process to limit the opportunities for polarization to undermine government. Although there has been intense public discussion about the causes of polarization, its consequences, and possible cures, social science research has only recently begun to help shape those discussions. The intent of this chapter is to provide a more evidence-based foundation for these debates.

Six years after the Global Crisis, the recovery is still anaemic despite years of near-zero interest rates and extraordinary central bank manoeuvres. This eBook gathers the thinking of leading economists - including Larry Summers, Paul Krugman, Robert Gordon, Olivier Blanchard, Richard Koo, Barry Eichengreen, Ricardo Caballero, Ed Glaeser and a dozen others - on whether ‘secular stagnation’ to blame.

The future of work has recently attracted much attention from a variety of institutions, from governments to universities to private companies and news outlets: a simple Google search of the term future of work produces more than two billion results. Our world of work—both in rich and poor countries—is changing fast. Technology, globalization, environmental changes, and shifting demographics are impacting workplace environments and the types of jobs that will be available in the future. Everyone can relate to these issues, since people depend on work for their livelihoods. This volume presents a summary of the future of work discussion in developing countries and provides insights from four country case studies: Brazil, India, Kazakhstan and Nigeria.

This paper will look at the various predictions that have been made about AI and propose decomposition schemas for analyzing them. It will propose a variety of theoretical tools for analyzing, judging, and improving these predictions. Focusing specifically on timeline predictions (dates given by which we should expect the creation of AI), it will show that there are strong theoretical grounds to expect predictions to be quite poor in this area. Using a database of 95 AI timeline predictions, it will show that these expectations are borne out in practice: expert predictions contradict each other considerably, and are indistinguishable from non-expert predictions and past failed predictions. Predictions that AI lie 15 to 25 years in the future are the most common, from experts and non-experts alike.