NIESR Discussion Paper

Real Devolution: The Power to Borrow

Two points are clear from the Scottish referendum debate. First, there are certain capabilities which the UK provides that are invaluable to all constituent nations. In particular, a successful currency union and a seat at the top table of the world’s leading international forums, such as the European Union and NATO. There may be other centrally provided capabilities which are highly valued, such as security and diplomacy. Second, there is a clear wish for genuine power to be transferred away from central government to local decision making.

It's Where You Work: Increases in Earnings Dispersion across Establishments and Individuals in the U.S

This paper links data on establishments and individuals to analyze the role of establishments in the increase in inequality that has become a central topic in economic analysis and policy debate.  It decomposes changes in the variance of ln earnings among individuals into the part due to changes in earnings among establishments and the part due to changes in earnings within-establishments and finds that much of the 1970s-2010s increase in earnings inequality results from increased dispersion of the earnings among the establishments where individuals work.  It also shows that the divergence

A review of the economic theories of poverty


This paper critically analyses the views of poverty adopted by different economic schools of thought which are relevant to the UK, as well as eclectic theories focused on social exclusion and social capital. We contend that each of the economic approaches has an important contribution to make to the understanding of poverty but that no theory is sufficient in itself; a selective synthesis is needed. Furthermore, economics by its nature omits important aspects of the nature and causes of poverty.

Scotland's Lender of Last Resort Options

Scotland’s lender of last resort options depends on its choice of currency. If Scotland becomes independent, there is no question that it could use sterling. But this looks likely to be without the backing of the UK government and therefore without the Bank of England. Using sterling in these circumstances would constitute an informal currency union or ‘dollarization’.

The Performance Pay Premium: How Big Is It and Does It Affect Wage Dispersion?

Using nationally representative linked employer-employee data we find one-quarter of employees in Britain are paid for performance. The log hourly wage gap between performance pay and fixed pay employees is .36 points.  This falls to .15 log points after controlling for observable demographic, job and workplace characteristics. It falls still further to .10 log points when comparing "like" employees in the same workplace, indicating that performance pay contracts are used in higher paying workplaces.

Pay Equity After the Equality Act 2010: Does Sexual Orientation Still Matter?

Using nationally-representative linked employer-employee data for Britain I find bisexual men earn around 31% less per hour than heterosexual men, a differential that falls to 20% having controlled for demographic, job and workplace characteristics.  The gap is apparent within workplaces and within detailed occupational classifications.

Skills and training for a more innovation-intensive economy

There is now intense interest in developing a new industrial policy for the UK which, among other aims, will encourage more UK-based firms to shift towards higher value added activities in a range of industries.  In this paper we argue that, if any such industrial policy is to be effective in improving UK economic performance, it needs to stimulate higher levels of innovation by firms. In particular, the policy must encourage a sizeable number of firms who do not currently engage in innovation to start doing so.

Patents as Quality Signals? The Implications for Financing Constraints on R&D

Information about the success of a new technology is usually held asymmetrically between the research and development (R&D)-performing firm and potential lenders and investors. This raises the cost of capital for financing R&D externally, resulting in financing constraints on R&D especially for firms with limited internal resources. Previous literature provided evidence for start-up firms on the role of patents as signals to investors, in particular to Venture Capitalists.

Issues in the Design of Fiscal Policy Rules

Theory suggests that government should as far as possible smooth taxes and its recurrent consumption spending, which means that government debt should act as a shock absorber, and any planned adjustments in debt should be gradual. This suggests that operational targets for governments (e.g. for 5 years ahead) should involve deficits rather than debt, because such rules will be more robust to shocks. Beyond that, fiscal rules need to reflect the constraints on monetary policy, and the extent to which governments are subject to deficit bias.

What Accounts for the Union Member Advantage in Voter Turnout? Evidence from the European Union, 2002-2008

Across countries, union membership and voter turnout are highly correlated. In unadjusted terms union members maintain a roughly 0.10 to 0.12 point gap in voting propensity over non-members. We propose a model – with three causal channels -- that explains this correlation and then empirically tests for the contribution of each channel to the overall union voting gap.