economics research study 2023

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Economics Nobel Prize goes to Claudia Goldin, an expert on women at work

Scott Horsley

The 2023 Nobel Prize in Economics was awarded to Harvard University economist Claudia Goldin. The committee cited her research on generations of women in the labor market. George Freston/Getty Images hide caption

The 2023 Nobel Prize in Economics was awarded to Harvard University economist Claudia Goldin. The committee cited her research on generations of women in the labor market.

Harvard University's Claudia Goldin has won the 2023 Nobel Prize in Economics for her research on women in the labor market. She studies the changing role of working women through the centuries, and the causes of the persistent pay gap between men and women.

The award — formally known as The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel — comes with a prize of 11 million kronor, or about $1 million. Goldin is the third woman to receive the prize.

"Claudia Goldin's discoveries have vast society implications," said Randi Hjalmarsson, a member of the Nobel committee. "She has shown us that the nature of this problem or the source of these underlying gender gaps changes throughout history and with the course of development."

Goldin's research showed that women's role in the job market has not moved in a straight line, but has waxed and waned in line with social norms and women's own ideas about their prospects in the workplace and the home. Some of these ideas are shaped early in life and are slow to change.

"She can explain why the gender gap suddenly started to close in the 1980s and the surprising role of the birth control pill and changing expectation," Hjalmarsson said. "And she can explain why the earnings gap has stopped closing today and the role of parenthood."

Tracing the history of women in the workplace was easier said than done. The Nobel committee said Goldin often had to contend with spotty records.

Gender pay gap remains

Women currently fill nearly half the jobs in the U.S. but typically earn less. They briefly outnumbered men on payrolls in late 2019 and early 2020, but women dropped out of the workforce in large numbers early in the pandemic, and their ranks have only recently recovered .

In a 2021 interview with NPR , Goldin offered a recipe for narrowing the pay gap between men and women: more government funding of child care and more jobs in which people could share duties rather than what she termed "greedy jobs".

Enough Already: How The Pandemic Is Breaking Women

The american government once offered widely affordable child care ... 77 years ago.

"The solution isn't a simple one, but part of it is reducing the value of these 'greedy jobs,' getting jobs in which individuals are very good substitutes for each other and can trade off," she said. "And I know there are people who will tell me this is impossible. But in fact, it's done in obstetrics. It's done in anesthesiology. It's done in pediatrics. It's done in veterinary medicine. It's done in various banking decisions. And if it can be done in all of that with all the amazing IT that we have, we could probably do it elsewhere as well. "

Nobel Peace Prize winner's husband speaks of her dedication to human rights

Some forecasters think women's role in the workplace will continue to grow as they surpass men on college campuses and as service-oriented fields such as health care expand.

"Understanding women's role in labor is important for society," said Jakob Svensson, chair of the prize committee. "Thanks to Claudia Goldin's groundbreaking research, we now know much more about the underlying factors and which barriers may need to be addressed in the future."

Nobel Prize in Economics

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01 Apr 2024
In Practice

Navigating the Mood of Customers Weary of Price Hikes

Price increases might be tempering after historic surges, but companies continue to wrestle with pinched consumers. Alexander MacKay, Chiara Farronato, and Emily Williams make sense of the economic whiplash of inflation and offer insights for business leaders trying to find equilibrium.

29 Jan 2024
Research & Ideas

Do Disasters Rally Support for Climate Action? It's Complicated.

Reactions to devastating wildfires in the Amazon show the contrasting realities for people living in areas vulnerable to climate change. Research by Paula Rettl illustrates the political ramifications that arise as people weigh the economic tradeoffs of natural disasters.

10 Jan 2024

Technology and COVID Upended Tipping Norms. Will Consumers Keep Paying?

When COVID pushed service-based businesses to the brink, tipping became a way for customers to show their appreciation. Now that the pandemic is over, new technologies have enabled companies to maintain and expand the use of digital payment nudges, says Jill Avery.

17 Aug 2023

‘Not a Bunch of Weirdos’: Why Mainstream Investors Buy Crypto

Bitcoin might seem like the preferred tender of conspiracy theorists and criminals, but everyday investors are increasingly embracing crypto. A study of 59 million consumers by Marco Di Maggio and colleagues paints a shockingly ordinary picture of today's cryptocurrency buyer. What do they stand to gain?

15 Aug 2023

Why Giving to Others Makes Us Happy

Giving to others is also good for the giver. A research paper by Ashley Whillans and colleagues identifies three circumstances in which spending money on other people can boost happiness.

13 Mar 2023

What Would It Take to Unlock Microfinance's Full Potential?

Microfinance has been seen as a vehicle for economic mobility in developing countries, but the results have been mixed. Research by Natalia Rigol and Ben Roth probes how different lending approaches might serve entrepreneurs better.

23 Jan 2023

After High-Profile Failures, Can Investors Still Trust Credit Ratings?

Rating agencies, such as Standard & Poor’s and Moody's, have been criticized for not warning investors of risks that led to major financial catastrophes. But an analysis of thousands of ratings by Anywhere Sikochi and colleagues suggests that agencies have learned from past mistakes.

29 Nov 2022

How Much More Would Holiday Shoppers Pay to Wear Something Rare?

Economic worries will make pricing strategy even more critical this holiday season. Research by Chiara Farronato reveals the value that hip consumers see in hard-to-find products. Are companies simply making too many goods?

21 Nov 2022

Buy Now, Pay Later: How Retail's Hot Feature Hurts Low-Income Shoppers

More consumers may opt to "buy now, pay later" this holiday season, but what happens if they can't make that last payment? Research by Marco Di Maggio and Emily Williams highlights the risks of these financing services, especially for lower-income shoppers.

01 Sep 2022
What Do You Think?

Is It Time to Consider Lifting Tariffs on Chinese Imports?

Many of the tariffs levied by the Trump administration on Chinese goods remain in place. James Heskett weighs whether the US should prioritize renegotiating trade agreements with China, and what it would take to move on from the trade war. Open for comment; 0 Comments.

05 Jul 2022

Have We Seen the Peak of Just-in-Time Inventory Management?

Toyota and other companies have harnessed just-in-time inventory management to cut logistics costs and boost service. That is, until COVID-19 roiled global supply chains. Will we ever get back to the days of tighter inventory control? asks James Heskett. Open for comment; 0 Comments.

09 Mar 2022

War in Ukraine: Soaring Gas Prices and the Return of Stagflation?

With nothing left to lose, Russia's invasion of Ukraine will likely intensify, roiling energy markets further and raising questions about the future of globalization, says Rawi Abdelal. Open for comment; 0 Comments.

10 Feb 2022

Why Are Prices So High Right Now—and Will They Ever Return to Normal?

And when will sold-out products return to store shelves? The answers aren't so straightforward. Research by Alberto Cavallo probes the complex interplay of product shortages, prices, and inflation. Open for comment; 0 Comments.

11 Jan 2022
Cold Call Podcast

Can Entrepreneurs and Governments Team Up to Solve Big Problems?

In 2017, Shield AI’s quadcopter, with no pilot and no flight plan, could clear a building and outpace human warfighters by almost five minutes. It was evidence that autonomous robots could help protect civilian and service member lives. But was it also evidence that Shield AI—a startup barely two years past founding—could ask their newest potential customer, the US government, for a large contract for a system of coordinated, exploring robots? Or would it scare them away? Harvard Business School professor Mitch Weiss and Brandon Tseng, Shield AI’s CGO and co-founder, discuss these and other challenges entrepreneurs face when working with the public sector, and how investing in new ideas can enable entrepreneurs and governments to join forces and solve big problems in the case, “Shield AI.” Open for comment; 0 Comments.

06 May 2021

How Four Women Made Miami More Equitable for Startups

A case study by Rosabeth Moss Kanter examines what it takes to break gender barriers and build thriving businesses in an emerging startup hub. Open for comment; 0 Comments.

20 Apr 2021
Working Paper Summaries

The Emergence of Mafia-like Business Systems in China

This study sheds light on the political pathology of fraudulent, illegal, and corrupt business practices. Features of the Chinese system—including regulatory gaps, a lack of formal means of property protection, and pervasive uncertainty—seem to facilitate the rise of mafia systems.

02 Feb 2021

Nonprofits in Good Times and Bad Times

Tax returns from millions of US nonprofits reveal that charities do not expand during bad times, when need is the greatest. Although they are able to smooth the swings of their activities more than for-profit organizations, nonprofits exhibit substantial sensitivity to economic cycles.

01 Feb 2021

Has the New Economy Finally Arrived?

Economists have long tied low unemployment to inflation. James Heskett considers whether the US economic policy of the past four years has shaken those assumptions. Open for comment; 0 Comments.

06 Jan 2021

Aggregate Advertising Expenditure in the US Economy: What's Up? Is It Real?

We analyze total United States advertising spending from 1960 to 2018. In nominal terms, the elasticity of annual advertising outlays with respect to gross domestic product appears to have increased substantially beginning in the late 1990s, roughly coinciding with the dramatic growth of internet-based advertising.

11 Dec 2020

Economic Jitters Push Pandemic Job Seekers to Big Companies, Not Startups

Small companies are receiving fewer applications, particularly from experienced professionals, according to research by Shai Bernstein and colleagues. How can startups overcome pandemic fears and compete for talent? Open for comment; 0 Comments.

Major economic developments of 2023 and how they’ll evolve in 2024

Subscribe to the economic studies bulletin, chloe east , chloe east nonresident fellow - economic studies , the hamilton project @chloeneast ben harris , ben harris vice president and director - economic studies , director - retirement security project @econ_harris sanjay patnaik , sanjay patnaik director - center on regulation and markets , bernard l. schwartz chair in economic policy development, senior fellow - economic studies @sanjay_patnaik louise sheiner , louise sheiner the robert s. kerr senior fellow - economic studies , policy director - the hutchins center on fiscal and monetary policy @lsheiner tara watson , and tara watson director - center for economic security and opportunity , senior fellow - economic studies @taraelizwatson marta wosińska marta wosińska senior fellow - economic studies , center on health policy @mwosinska.

December 21, 2023

17 min read

With 2023 winding down, we asked six Brookings experts to take a moment to look back on some of the biggest economic policy developments of 2023 and the ways they expect them to evolve in 2024. Explore their reflections on fiscal policy, the social safety net, climate economics, and more below.

On some dimensions, the U.S. labor market appears to have mostly recovered from the COVID-19 shock and to be stronger than before. By early 2022, the unemployment rate fell back to the very low levels seen right before the pandemic, and it has remained relatively stable throughout 2023 despite slowing job growth and rising interest rates. Median real weekly earnings among workers are now slightly higher than they were at the end of 2019. However, these encouraging points do not paint the full picture. The percent of the population out of the labor force is still much higher than before the pandemic. And half a million workers went on strike in 2023 demanding higher wages and improved working conditions. All of this comes against the backdrop of high, albeit falling, rates of inflation over 2023. The question remains of how workers have fared in the labor market overall.

In a Hamilton Project piece with Wendy Edelberg and Noadia Steinmetz-Silber, we reviewed evidence about how workers’ real pay has changed over the last few years in the U.S. We considered multiple measures of pay for different types of workers and used different measures of inflation, in comparison to various reference periods. Overall, we see some reasons for optimism. All pay measures that we examine have increased slightly relative to the end of 2022 and the end of 2019. Comparing to longer-run trends, most pay measures, adjusted for inflation using PCE, are recently showing gains that are somewhat above the levels predicted by historical trends. And the measures generally show that workers in lower-wage occupations and industries and those with lower earnings have seen larger gains since 2019.

However, not all of the news about real pay is as positive. First, even with recent gains, pay at the bottom of the distribution is still quite low and puts many households at or below the poverty line. Additionally, this trend of rising real pay at the bottom of the distribution appears to be weakening in recent quarters. Second, workers in the middle of the distribution saw more mixed changes in pay than those at the bottom or the top—some metrics show small gains and some show small losses for those in the middle. And finally, when pay is adjusted using CPI instead of PCE, which reflects the prices that are most salient to the average consumer, pay changes are weaker and, in some cases, were even negative.

Going forward I will be looking out for several key indicators of workers’ well-being. First, it is important to continue to pay attention to how real pay is changing, especially for different types of workers rather than just in the aggregate or for the average worker. Second, it will be crucial to focus on metrics of working conditions and worker compensation that are less traditionally studied, such as schedule reliability and access to benefits, particularly as alternative work arrangements like contractor and gig work become more common.

Sanjay Patnaik

Related to climate change, one of the most important developments in the domestic policy space was the implementation of the Inflation Reduction Act , the U.S.’ first major legislation to address climate change. A major issue the Center on Regulation and Markets has focused on is permitting reform, a topic that is often neglected but without which the expected climate benefits of the IRA are unlikely to materialize . In addition to regularly engaging with a wide range of stakeholders on this topic, we published an article on how permitting could be reformed in the U.S. to make it more streamlined and allow necessary infrastructure to be built faster.

Another essential aspect of the IRA we focused on was the potential impact of the IRA on U.S. greenhouse gas emissions, which was modeled and estimated by several research groups ahead of the passage of the IRA. However, the U.S. currently does not have an independent government office that could estimate the carbon impact of certain legislation in a non-partisan and independent manner. We therefore launched a Brookings task force on creating the blueprint for a federal Office of Carbon Scoring in the U.S., “to provide the institutional, analytical, and policy foundation for establishing a federal Office of Carbon Scoring (OCS) that would analyze the potential impact of proposed legislation on greenhouse gas emissions and other relevant climate metrics.” We also published a commentary on how carbon scoring could help Congress make real progress on climate change , further outlining our idea of carbon scoring in greater detail.

Another timely topic we focused on in the climate space was the behavior of firms in carbon markets, which are becoming increasingly important around the world, not only though mandatory carbon pricing regulations but also through voluntary carbon markets. On this topic, I published a working paper on how carbon permit markets can lead firms to capture surplus rents by drawing on empirical evidence from the European Union Emissions Trading Scheme (EU ETS). Similarly, we advanced our work on climate risk management, which is increasingly becoming important for governments, corporations, and consumers. In our most recent working paper on this topic , we propose a new framework for how firms can manage their climate risk exposure.

One important trend to watch out for in 2024 relates to a potential carbon border tariff in the U.S., as several bills related to a carbon tax in the U.S. were released recently , undoubtedly in response to the EU’s Carbon Border Adjustment Mechanism (CBAM). Three of the bills were bipartisan, which is a strong indication that there is potential room for the U.S. to institute some kind of carbon border fee, which would align it more closely with the EU.

Rayan Sud, Sanjay Patnaik, Robert L. Glicksman

February 14, 2023

March 16, 2023

Louise Sheiner

In 2023, investors began worrying about federal budget deficits again. Interest rates on U.S. Treasuries moved up sharply, despite the fact that budget analysts have been warning about the challenges of debt sustainability for decades. Why all the renewed attention to the deficit? A few possible reasons include:

The budget deficit increased sharply in fiscal year 2023. After adjusting for the announcement and subsequent cancellation of Biden’s student loan forgiveness program, the deficit doubled from about $1 trillion in FY 2022 to $2 trillion in FY 2023.
The standoff over the debt limit, the threat of a government shutdown, and the downgrading of U.S. debt by Fitch all increased concern about political dysfunction in Washington—perhaps suggesting to investors that it would take longer than they had anticipated for the government to start addressing the long-run budget challenges.
The increase in interest rates—perhaps caused by renewed deficit worries, perhaps not—also led to increased concern over the deficit. The higher are interest rates, the faster the rise in the debt for any given set of tax and spending policies.

But in my view, nothing fundamental changed in 2023. A detailed breakdown shows that the jump in the deficit in 2023 reflected temporary and/or one-time factors that don’t imply that future deficits will be higher. And even before the recent political events, it didn’t seem likely that Congress was going to address our long-term fiscal challenges any time soon.

Since nothing fundamental changed in 2023, it is hard to understand the recent increase in rates: Were markets just not paying attention to fiscal issues until recently? Did they misinterpret the jump in the FY 2023 deficit as signaling larger deficits in the future? Or perhaps the recent increase isn’t about fiscal issues—perhaps it reflects changes in expectations about Federal Reserve policy or even increased productivity growth because of artificial intelligence. A surge in productivity growth, should it materialize, could greatly improve our fiscal outlook, offsetting the effects of higher interest rates.

Recent data suggest that at least part of the surge in rates was temporary: After hitting a post-2007 peak in October 2023, interest rates on Treasuries have been drifting down. Still, the rate on 10-year inflation-protected Treasuries on December 19, 2023 was about 1½ percentage points higher than its average in 2019. Will rates continue to decline, or will they settle at this higher level? Will the focus on the deficit continue—or will it fade away? These are issues I will be watching in 2024.

September 20, 2023

Louise Sheiner, Alexander Conner

November 22, 2023

Tara Watson

I’ve been watching the evolution of the U.S. safety net retreat back to a “new normal” after massive expansion in the COVID era. Food assistance—SNAP (the Supplemental Nutritional Assistance Program)—temporarily increased benefits and added an emergency allotment, changes that had phased out by early 2023. In 2021, the temporary expansion of the federal Child Tax Credit (CTC) made an enormous difference, especially for lower-income families. We saw child poverty fall by almost half for that one year.

Despite the end of SNAP emergency allotments and the expanded CTC, we are not quite returning to the pre-COVID safety net. In 2021, the federal government updated the Thrifty Food Plan, a change that was already in the works and boosted the amount of food assistance SNAP provides. Even with the end of the temporary measures, food assistance will remain above 2019 levels.

And states were also making changes to their safety net supports. The safety net is actually not one safety net, but at least 51 safety nets comprised of a patchwork of federal, state, and local programs. Over the last decade, many states were creating or expanding state Earned Income Tax Credits . Many states increased their TANF cash assistance programs before and during COVID, whereas others let the value of TANF benefits continue to erode. Even though the federal government helps equalize support across states, striking differences remain.

Looking ahead, there are a few safety net issues that will be important in the coming year or two:

First, there will be continued discussion about the CTC. There was momentum around getting the 2021 expansions made permanent, an effort which ultimately failed. But the more modest current version, which was part of the 2017 Trump tax law, will expire in 2025. There are debates about how much if any should go to non-earners, and how high up in the income distribution the credit should go. My colleagues proposed one compromise version .

Second, there is a bipartisan support for long-overdue reforms to the Supplemental Security Income program for low-income Americans with disabilities—raising the asset limits. Right now if single individuals have more than $2,000 in the bank they can’t qualify for benefits, which is a strong disincentive to save. There’s an opportunity to fix that in 2024.

Third, it will be interesting to see how states continue to use their income tax systems to help support children and families. When the expanded federal CTC ended at the end of 2021, some states opted to build on that success by developing their own CTCs. As states continue to experiment, it could widen the significant differences across states in safety net support.

Gabriela Goodman, Tara Watson

November 28, 2023

Lauren Bauer

August 19, 2021

Marta Wosińska

For over two decades, drug shortages have plagued various parts of the healthcare system, mostly in the hospital setting—only occasionally hitting the national headlines. 2023 was yet another year with over 100 unique drugs on FDA’s drug shortage list . The persistent nature of shortages may have gone unnoticed yet again were it not for some high-profile shortages, the most prominent and unnerving of which have been shortages of inexpensive, standard-of-care cancer treatments.

Drug shortages are primarily driven by economic forces. Most shortages occur with generic drugs where the fierce price competition that drives spending down for consumers and payers also turns up the dial on cost cutting. Companies making generic drugs have little incentive to invest in quality oversight and in buffering their supply chains, which raises the risk of manufacturing disruptions that then turn into shortages. This dynamic is particularly consequential for the hard-to-manufacture sterile injectable drugs. Companies also have a strong incentive to purchase cheaper inputs and off-shore production to lower cost environments, which can expose our drug supply chains to geopolitical risks.

With cancer shortages in the headlines, several Congressional committees held hearings on the issue including HSGAC , House Energy & Commerce and Senate Finance . Proposals for administrative and legislative actions abound , but there continues to be lack of appreciation for what actions will address root causes, what actions might help but might also be potentially wasteful, and what actions might frankly make things worse. The inability of policymakers to sort through the various ideas is particularly concerning because addressing shortages will require greater government spending, for which there is currently limited appetite.

To inform executive branch actions and legislation, colleagues and I have put forward a number of analyses coupled with policy recommendations, which I had the opportunity to highlight recently in my testimony with the Senate Finance committee. In a June report , Richard Frank and I proposed what the Medicare program and FDA can do to prevent and mitigate shortages of generic sterile injectable drugs caused by manufacturing quality lapses. To address the risk of future shortages due to geopolitical and climate change risks, colleagues and I developed a framework for how the federal government should assess which supply chains are most vulnerable to disruption—a key step in prioritizing government support. Other work includes recommendations on CMS’s proposal for building buffer hospital inventories and for implementing the IRA drug shortage provisions . Most recently, I had the opportunity to reiterate many of these recommendations in my testimony with the Senate Finance committee.

There is currently motivation in Congress to address drug shortages, but this may subside once the cancer drug shortages disappear from national news. Our Brookings team will continue to be actively engaged in educating policymakers and stakeholders on the issue, working to ensure that the suffering so many patients endured this year from drug shortages will cease to be the norm.

December 5, 2023

Marta Wosińska, Richard G. Frank

June 21, 2023

Marta Wosińska, T. Joseph Mattingly II, Rena M. Conti

September 13, 2023

The Brookings Institution is financed through the support of a diverse array of foundations, corporations, governments, individuals, as well as an endowment. A list of donors can be found in our annual reports published online here . The findings, interpretations, and conclusions in this report are solely those of its author(s) and are not influenced by any donation.

Economic Studies

Robin Brooks

April 11, 2024

Tara Watson, Simran Kalkat

April 10, 2024

April 4, 2024

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What’s the Latest Research in Development Economics? A Roundup from NEUDC 2022

Almedina music, david evans.

What’s the latest in international economic development research? Last weekend was the North East Universities Development Consortium annual conference , often called NEUDC. With more than 135 papers presented (and almost all of them available for download ), it’s a great way to see recent trends in the international development research by economists and to learn about new findings.

The studies come from all over the world, as you can see in Figure 1 below. Just like last year , the plurality of studies take place in India (30 studies). Kenya is next (12), then Bangladesh (8), Brazil (7), China (7), and Indonesia (7). More than 40 countries are represented overall, from almost all regions of the world.

Figure 1: Where are recent development economics studies focused?

Source: This map draws on a sample of 139 studies from the NEUDC 2022 conference. Studies that covered more than three countries (often broad global or regional analyses) were excluded.

Researchers draw on a wide range of empirical methods. Nearly a third of studies reported on the results of a randomized controlled trial (43 studies). Other commonly used methods include difference-in-differences, fixed effects, and instrumental variables.

Figure 2: What empirical methods do recent development economics papers used?

Source: This chart draws on a sample of 139 studies from the NEUDC 2022 conference. Some studies used more than one method.

Below, we provide a quick takeaway from every paper in the conference for which we could find a digital copy. As you read our takeaways, keep the following in mind. First, we can’t capture all the nuance of a paper in a couple of lines. Second, our takeaway may not be the authors’ takeaway. Third, some of the papers are marked as preliminary and not ready for formal citation (you can see which if you follow the paper links). Fourth, we largely take the findings of these papers at face value: most have not yet been through peer review, so feel free to dig into the data and analysis to decide how confident you are in the results.

Our takeways are sorted by topic. If your principal interest is in a country or region, you can also read the takeaways sorted by country . We provide some indication of the empirical method used (for empirical papers) with hashtags at the end of the takeaways. Some papers fit into more than one category: for example, is a paper about the impact of free childcare on mothers’ careers about labor or about gender? It’s about both! In those cases, we’ve repeated studies in multiple sections below so if you’re focused on health, you’ll find all the health-related papers in the health section. The second or third time a paper appears, we put an asterisk after the summary so you can skip it if you’re reading straight through.

Happy learning!

Guide to the methodological hashtags: #DID = Difference-in-differences, #FE = Fixed effects, #IV = Instrumental variables, #LIF = Lab in the field, #PSM = Propensity score matching, #RCT = Randomized controlled trial, #RD = Regression discontinuity, #Other = Other

Households and human capital

Education and Early Childhood Development

· How critical are family conditions in early years for child development? Better weather (which means more agricultural income and better nutrition) at age 2 in Indonesia leads to higher adult cognitive ability. When households face hard times at earlier ages, they compensate with prolonged breastfeeding. ( Webb ) #FE

· Data from Indonesia suggest that parental education and parental income are the main drivers of differences in skills once kids grow up. ( Thomas ) #Other

· “Many teachers [in India and Bangladesh] underestimate the share of low performers in their classrooms, and...they believe that those students will perform better than they actually do. These results are not driven by less educated, trained, or experienced teachers or explained by biases against female, low-income, or lower caste students.” ( Djaker, Ganimian, and Sabarwal ) #Other

· A 1985 change in Indian law discouraging the payment of dowries led to a 24 percent drop in dowry payments, but it also led to an 18 percent reduction in girls' education attainment (with no impact on boys' education). ( Jha ) #DID

· Providing information about a learning app in Bangladesh didn't lead more people to use it, but it did lead some parents to arrange more tutoring, resulting in "lasting math learning gains, concentrated among richer households." ( Beam, Mukherjee, and Navarro-Sola ) #RCT

· Students in Kenya often apply to secondary schools with little information about the available schools. Providing information to students "led them to apply to" schools that were closer to home "without compromising school quality." Adding parents to those information meetings "led students to enroll in lower cost schools." ( Bonds ) #RCT

· Among students in 9th grade in India, student test scores rose similarly whether they were exposed to "rigidly defined remedial lessons that take time away from the curriculum" and "teacher determined remedial lessons," which allow teachers more flexibility. ( Beg et al. ) #RCT

· Parental aspirations for their children matter, but they may not be enough on their own. “In rural Gambia, families with high aspirations for their children’s future education and career, measured before children start school, go on to invest substantially more than other families in the early years of their children’s education. Despite this, essentially no children are literate or numerate three years later. When villages receive a highly-impactful, teacher-focused supply-side intervention, however, children of these families are 25 percent more likely to achieve literacy and numeracy than other children in the same village.” ( Eble and Escueta ) #RCT

· A ten day increase in the overlap between school days and peak farming periods in Malawi translates to children losing about a third of a year of schooling. ( Allen ) #IV

· Eliminating school fees for secondary school in Tanzania led not only to increased secondary school enrollments; it also increased primary school pass rates. ( Sandholtz ) #DID

· Indonesia's major school construction program from the 1970s led to eight percent overall higher national output forty years later, and much of that comes through migration from rural to urban areas. ( Hsiao ) #DID

· Phone call tutorials during COVID-19 were effective at boosting learning in India, Kenya, Nepal, Philippines, and Uganda, whether implemented by government teachers or non-government organization instructors. ( Angrist et al. ) #RCT

· An affirmative action policy in Brazil was effective at redistributing university spots to low-income students, with little drop in average achievement. "The policy also reduced the gap in applications to selective majors" between poor and rich students by more than 50 percent, but note that those are applications: many of those major-choice changes were among students unlikely to be accepted into a highly selective major. The policy worked, but it could work even better. ( Melo ) #DID

· Peru shut down a bunch of low-quality universities in 2015. Graduates from surviving universities experienced an increase in wages and higher employment rates. ( Vivar, Flor-Toro, and Magnaricotte ) #DID

· An influx of Syrian refugees in Jordan reduced school enrollment among Jordanians, particularly boys and kids with less-educated parents. More young Jordanians went to work instead. ( Almuhaisen ) #DID

· An edutainment program in Bangladeshi schools to trace school-to-home transmission of handwashing find that children are induced to wash more at school but less at home, yielding a net negative effect of the program ( Hussam and Oh ) #RCT

· Removing English language study from pubic primary schools in West Bengal, India, increased private school enrollment and---for those still in public schools---increased private tutoring among the richest households. ( Nandwani and Sen ) #FE

· In utero exposure to high ocean salinity levels (induced by climate change) reduces a child’s height-for-age z-score in Bangladesh, and increased prevalence of stunting and severe stunting due to nutritional deficiencies by age five. ( Guimbeau et al. ) #FE

· In Indonesia, “remittances increase household consumption, reduce poverty, and stimulate growth. Households send more children to school, and district governments increase public schools at the primary and junior secondary levels.” ( Hilmy ) #FE

· The tariff reduction from the U.S-Vietnam Bilateral Trade Agreement decreased school attendance and increased children’s work, mainly in non-wage and household business jobs. Effects were stronger for boys, older children and households where the head had little education. ( Nguyen ) #DID

· Giving a widely known award "to top performers on a mandatory nationwide exam in Colombia" boosts their earnings by between 7 and 12 percent, and the effect endures for 5 years after graduation. It helps students graduating from low-reputation colleges the most. ( Busso, Montaño, Muñoz-Morales ) #RD

Health (including mental health)

· A national vaccine program in Burkina Faso in 1984 boosted the country’s child vaccination rate (against measles, yellow fever, and meningitis) from 17 percent to 77 percent in a few months. Child mortality fell, primary school completion rose, and—when the children reached adulthood—employment and agricultural productivity rose. ( Daramola et al. ) #DID

· School-based deworming in western Kenya—nearly a quarter of a century later—reduced under-5 mortality of the beneficiaries’ children by 24 percent! ( Walker et al. ) #RCT

· In Ecuador, letting employees use work time to get a flu vaccine boosted vaccination rates, but employees got sick about as much. Why? Some evidence suggests that employees engaged in “riskier health behaviors after getting vaccinated.” ( Hoffman, Mosquera, and Chadi ) #RCT

· In Kenya, “both patient subsidies and pharmacy incentives for diagnostic testing significantly increase usage of testing and may encourage malaria positive individuals to purchase high quality antimalarials.” ( Dieci ) #RCT

· Women who were babies in utero during a cholera epidemic in Peru in the 1990s were nearly 20 percent more likely to die of COVID-19. ( Ritter and Sanchez ) #DID

· After four years of using iron and iodine fortified salt in school lunches in India, children have lower likelihood of anemia, higher hemoglobin levels, but no differences in cognitive or educational outcomes. ( Grafenstein et al. ) #RCT

· Gold mining in the Philippines created new bodies of stagnant water, which boosted malaria cases by nearly a third (relative to provinces without gold deposits). ( Pagel ) #DID

· Giving households a flyer about mobile health services in rural Bangladesh didn't get them to use it more, but offering to save the access numbers in the participants' phone boosted take-up by 22 percent in the succeeding 2 months and reduced health expenditure, since households were less likely to go to "informal providers who usually overprescribe medicines." ( Sardar ) #RCT

· A drug procurement program in China "brought down the prices of 10 chronic condition drugs by an average of 78" percent. As a result, "drug adherence was improved for the uninsured who had poorer adherence" before the price reduction. ( He and Yang ) #DID

· In Dakar, Senegal, it can be hard to find someone to desludge your septic pit. Providing subsidies to use a government run call center to connect households with desludgers increases use, and that use continues for a while after the subsidies end. Later, a city-wide subsidy increased adoption most in those communities that had received subsidies earlier. ( Deutschmann ) #RCT

Fertility and family planning

· "Learning about government mistreatment of citizens undermines trust in institutions. In Perú, “disclosure of information about illegal sterilization reduced usage of contraceptive methods, prenatal and delivery services, and the demand for medical services, resulting in worsened child health."" ( León-Ciliotta, Zejcirovic, and Fernandez ) #DID

· During the colonial period in the Congo, greater exposure to Catholic nuns increased women’s fertility (as opposed to exposure to Protestant or male Catholic missionaries). Catholic nuns likely promoted the image of an ideal Christian woman which explains the results. ( Guirkinger and Villar ) #DID

Households and marriage

· Households in Bangladesh reduced their monthly residential electricity use by 15.8 percent (≈37 kWh) when they switched from postpaid electricity metering system to prepaid metering. ( Das ) #IV

· A new method to infer causal effects on choices that exploits relationships between choices and hypothetical evaluations “can recover treatment effects even if the treatment is assigned endogenously and standard estimation methods are poorly suited, or if the treatment does not vary.” ( Bernheim, et al. ) #Other

· In the Democratic Republic of the Congo, 73 percent of households provided with access to childcare centers use them. Both parents “increase their engagement in commercial activities, leading to gains in agricultural productivity, household income and women’s subjective well-being." Women reported increases in their concentration and sense of control. Using the centers also led to significant gains in early childhood development outcomes, particularly for younger children. ( Donald and Vaillant ) #RCT

· Can commitment-saving ahead of a lean season alter consumption downfalls among the ultra-poor? In Bangladesh, a temporary savings subsidy doubled formal savings, and resulted in increased food and non-food expenditure by 8.6-12.6 percent during the lean season, with no lasting post-lean season impact. ( Takahashi et al. ) #RCT

· An “edutainment” intervention designed to reduce child marriage in rural Pakistan, significantly reduces marriage of girl adolescents. Targeting men alone reduced child marriage in sample households, while targeting women or men & women jointly reduces child marriage at the village level. ( Cassidy et al. ) #RCT

· In Kenya, workshops and couples’ therapy sessions to decrease alcohol consumption lowered prevalence of sexual intimate partner violence (IPV) by 0.21 standard deviations, with smaller or no effects on physical and emotional IPV. ( Castilla, Aqeel, and Murphy ) #RCT

Migration and refugees

· Can temporary foreign work permits “throttle human smugglers’ businesses? “Combining internal and external controls with a regulated market for temporary visas alleviates the policy trade-off between migration control and ending human smuggling.” Data from migration between Senegal & Spain and the Democratic Republic of the Congo & South Africa. ( Auriol, Mesnard, and Perrault ) #Other

· Massive exodus of Venezuelans in Colombia had a larger negative effect on the lower tail of the natives’ wage distribution, increasing inequality in the host economy. Due to formal restrictions, immigrants ended up working in more routine and low-paying jobs. “A large-scale amnesty program reduced the magnitude of downgrading, mitigating the unequalizing impact of the exodus.” ( Lombardo et al. ) #IV

· In Mexico, children in households with return migrants (from the U.S.) “benefit from an increase in school attendance and a decrease in the probability of schooling delay relative to children in non-migrant households.” However, females in return migrant households are likely to complete a lower grade relative to non-migrant households. ( Chakraborty, Bucheli, and Fontenla ) #IV

· An evaluation of a large-scale migration loan program in Bangladesh revealed that capacity constraints at scale lead effort to be directed toward those already planning to migrate without a loan. ( Mitchell et al. ) #RCT

· A Zambian fertilizer subsidy program led to “some households to intensify their agricultural activity, and others to out-migrate.” The subsidy increased the share of households with outmigrants by 40 percentage points and doubled the number of outmigrants net of in-migrants. ( Diop ) #DID

· Clearance of slums in Santiago, Chile, and families’ relocation to public housing in low-income areas led to displaced children having 10 percent lower earnings and 0.5 fewer years of education as adults than non-displaced. ( Rojas-Ampuero and Carrera ) #FE

· In refugee camps and surrounding communities in Uganda and Kenya, refugee children can be up to three times more likely to be poor than adults. Child’s age, household composition, and access to sanitation and clean water, predict child poverty in refugee settlements well, often better than per-capita household expenditure. ( Beltramo et al. ) #ML

· During WWII, nine ethnic groups were entirely deported from the Soviet Union to Central Asia. In the 50s, five returned to their former homeland, while the other four remained marginalized in internal exile. Locals in host regions had significantly higher levels of education two generations later. “A strong positive effect on higher education is found among returnees to origin regions, suggesting that these ethnic groups hedged against further negative shocks.” ( Zimmermann ) #IV

· Pairing employers in Uganda with a refugee and providing an incentive to offer a free internship to that refugee "improves employers’ beliefs about refugees’ skills, but it does not change their willingness to hire new refugees," but certain types of matches (depending on employer and refugee characteristics) do result in more refugee hires. ( Loiacono and Silva-Vargas ) #RCT

· In India, Hindu women are subject to caste “purity” norms, while Adivasi, or Indigenous, women are not. “Having more Adivasi neighbors leads to: (i) higher rates of Hindu women’s paid work and lower perceived stigma of such work; and (ii) lesser adherence to a range of purity norms, including the practice of untouchability towards Adivasis.” ( Agte and Bernhardt ) #FE

· Does free childcare improve mothers’ careers? Yes. In Sao Paulo, Brazil, mothers in sub-districts with above median childcare availability have a persistent increase of 8 percent in earnings, driven by 1 percentage point higher labor force participation and 4 percent longer hours. ( Garcia, Latham-Proença, and Mello ) #FE

· Can cash transfers influence gender roles? In Chad, cash transfers increased women’s business profits (0.6 SD) as well as marital separation. The program also “led to large improvements (0.3-0.7 SD) in a broad set of women’s subjective well-being, including self-efficacy, depressive symptoms, and perceived social status.” ( Kandpal, Schnitzer, and Dayé ) #RD

· In Nigeria, women prefer to defer budget allocation decisions to their husband even when deferral is costly and is not observed by the husband; the reverse is true for husbands. A randomized cash transfer receipt increases women’s demand for agency: if the decision is hidden from the husband, women want to make their own budget decisions, even if it is the same as their husband’s. ( Bakhtiar et al. ) #LIF

· Showing teachers in Pakistan a pro-women’s rights award-winning movie (the 2011 film Bol) increased their own and students’ support for women’s rights, being unbiased in gender Implicit Association Tests, and willingness to petition parliament for greater gender equality. ( Mehmood, Naseer, and Chen ) #RCT

· Profiles for women who signal on an online Indian matchmaking site that they want to work after marriage receive up to 22 percent less interest from men than those of women who have never worked. Women willing to give up work after marriage face a lower penalty. ( Dhar ) #RCT

· In Chile, informing outstanding students in mathematics and science about their relative performance and presenting STEM majors as a feasible option, led to women applying more, but only in health-related majors, and not in STEM majors. ( Ramirez-Espinosa ) #RCT

· In Brazil, union bargaining that prioritized women’s needs increased female-centric amenities (like longer maternity leave with job protection) at work. These led to women queueing for jobs at treated establishments and separating from them less, which are both indicators of firm value. ( Corradini, Lagos, and Sharma ) #DID

· While both gender barriers to occupational choices and wage penalties persist across countries, the “reduction in wage gaps between 1980-2000 was primarily driven by economic channels while the more recent decline between 2000-2015 was driven by changes in gender barriers.” ( Chiplunkar and Kleineberg ) #Other

· “A program targeting ultra-poor women in Uganda” paired “business and entrepreneurship skills development with psychological empowerment.” It increased profits by 105 percent. ( Lang and Seither ) #RCT

· Expansion of the coffee mills in Rwanda led to increased “women’s paid employment, women’s and their husbands’ earnings and decreases domestic violence.” Decline in violence is driven by women’s increased bargaining power and their contribution to household earnings, not exposure reduction between couples. ( Sanin ) #DID

· Sharing a hyperlocal digital job search platform with couples as well as the wives' social networks in Delhi, India, increased husband's labor market outcomes (including working hours and total earnings), but only home-based self-employment among the women, potentially due to social norms. ( Afridi et al. ) #RCT

· New data from more than 90 countries demonstrates three things: (1) the shift out of agriculture that happens as countries grow richer is driven by whole households (not just individuals within households), (2) "in the poorest countries, the gap between female and male market employment is only large for married urban women," and (3) "countries where employment rates of urban married women are low relative to their rural counterparts also see low urbanization rates of married men." ( Doss et al. ) #Other

Working and saving

Banking and credit

· In India "delinquent borrowers who are offered a debt moratorium by their lender are 4 percentage points (6.9 percent) less likely to default on their loan, while forbearance has no effect on repayment if it is granted by the regulator.” ( Fiorin, Hall, and Kanz ) #RCT

· What are the household welfare gains from financial inclusion? Applying a new approach using demand estimates from three RCTs (on retirement savings in the United States, commitment savings in the Philippines, and microfinance in Mexico) , welfare gains per dollar lent or saved are small as compensated demand elasticities are large, but still correspond to large aggregate welfare gains from financial inclusion. ( Loeser ) #Other

· In Ghana, microenterprises receiving joint liability loans reported higher profits six to ten months after borrowing. Effects are driven by borrowers whose applications were not endorsed by political party operatives. ( Boso, Burlando, and Abdul-Rahaman ) #FE

· A self-help group lending program in rural Bihar, India, “significantly improved risk-sharing in regions where the program had greater institutional capacity and was better implemented.” ( Attanasio et al. ) #FE #IV

· In Kenya, “performance-contingent microfinance contracts can encourage investment and increase profits – and, as a result, increase household consumption.” ( Cordaro et al. ) #RCT

· In India, “plants exposed to banking shocks redistribute this liquidity through the supply chain. As a result, firms extending trade credit can increase their own sales as their customers are able to purchase on credit. Downstream firms are able to increase their own sales, employment, and productivity.” ( Chakraborty et al. ) #DID

· In India, “risk pooling creates a distortion in consumption such that food consumption is better protected from aggregate village shocks than nonfood consumption.” ( Fafchamps and Shrinivas ) #Other

Cash transfers

· Can cash transfers influence gender roles? In Chad, cash transfers increased women’s business profits (0.6 SD), and marital separation. The program also “led to large improvements (0.3-0.7 SD) in a broad set of women’s subjective well-being, including self-efficacy, depressive symptoms, and perceived social status.” ( Kandpal, Schnitzer, and Dayé ) #RD *

Firms and microenterprises

· In India, “larger cultural proximity [by way of caste and religion] between a pair of firms reduces prices and fosters trade at both the intensive and extensive margins.” ( Fujiy, Khanna, and Toma ) #FE

· After close elections in India, entrepreneurs from the same social group as the winning candidate are more likely to start businesses. ( Bhalla et al. ) #FE

· Politically connected firms in India were more likely to get access to short-term credit from banks and to be able to delay short-term payments to suppliers and creditors during the surprise demonetization of 2016. ( Chen et al. ) #Other

· Variation of COVID lockdowns over time and across parts of India reveal that inputs delivered by suppliers within the same industry are complements (rather than substitutes), which means that "shocks propagate through supply chains," increasing the shock to overall GDP. ( Fujiy, Ghose, and Khanna ) #FE

· "Starting in 1997, India dismantled its policy of product reservation whereby hundreds of products had been reserved for exclusive production by small firms." The effect? "entry in the downstream product market increases with no observable decline in quality of entrants." ( Rastogi ) #Other

· Inviting Zambian farmers to participate in a simple budgeting exercise (i.e., think through their budget and formulate a spending plan) increased how much they expected to spend for the coming year by 20-60 percent and lowered their willingness to pay for a nonessential item of clothing by 34 percent. By the end of the year, farmers decreased their expenditures by 15 percent and ended up with one additional month of savings. ( Augenblick et al. ) #RCT

· A new way to measure productivity of retailers in low- or middle-income countries captures their three-fold need to attract customers, manage a storefront, and maintain inventory across many products. In Malawi, "the three dimensions of productivity are correlated with one another" but not perfectly, so that a training that focuses on just one may fail to boost overall productivity. ( Huntington ) #Other

· In Mexico, a rise in gas prices led to an increase in mom-and-pop shops but "their average size and quality fell." ( Ramos-Menchelli and Sverdlin-Lisker ) #IV

· Waiving competitive bidding for small-value purchases in Brazil led to 23 percent more expensive purchased products. At least half of this overpricing is explained by discretion allowing agencies to purchase higher-quality products. ( Fazio ) #FE

Labor (including child labor)

· A late 1990s labor market reform in China led to tens of millions of layoffs in a short period. That led to a drop in employment for workers who did not finish high school—by 20 percent in the industrial sector—and a 5 percent increase in the high school completion rate. ( Zhao ) #DID

· “A 2014 Bolivian law that recognized the work of children as young as 10 years old, whose age placed them below the minimum working age of 14 years old, enabling them to legally work (subject to a work permit) while simultaneously extending benefits and protections to child workers” (such as adult minimum wages) actually decreased work for children under 14. ( Lakdawala, Martínez Heredia, and Vera-Cossio ) #Other

· A federal policy that set minimum fares for drivers of motorcycle taxis on a ridesharing app in Indonesia led to higher trip prices but not driver earnings, both because more drivers signed on for any given day AND drivers logged onto the app for more hours, meaning that each driver got fewer rides. ( Nakamura and Siregar ) #DID #SC

· Providing mentorship to vocational students in Uganda to help with their training-to-work transition increased their likelihood of working a few months later by more than a quarter and also boosted their incomes after a year. Why? It's mostly through info about how the entry-level job market works (not through referrals): As a result, mentored youth "turn down fewer job offers." ( Alfonsi, Namubiru, and Spaziani ) #RCT

· College students in Mumbai, India, were less likely to share information about jobs if they knew they'd have to compete for them, and the men in particular tended not to share the information with the peers they viewed as having high abilities. ( Chiplunkar, Kelley, and Lane ) #RCT

· Why do "workers in richer countries experience faster rates of wage growth over their lifetimes than workers in poorer countries"? Cross-country data suggest that workers in rich countries received more training from the firms they work for, and that this is a major component of workers' skills. "Firm-provided training accounts for 38% of cross-country wage growth differences." ( Ma, Nakab, Vidart ) #Other

· Many interventions help workers with job searches. Doing that without increasing the number of jobs could limit the effectiveness of those interventions. On the other hand, "making it easier for firms to find qualified workers could reduce the cost of hiring" and generate more jobs. With an intervention to subsidize job searches for people in Ethiopia, the lack of jobs ends up limiting the effectiveness. ( Van Vuren ) #RCT

· A survey in Accra, Ghana, showed that lots of job vacancies were not widely circulated, and---as a result---many employers are unable to find qualified workers during six months. But publishing detailed advertisements on a state-operated online portal increases both the likelihood of finding workers and of those workers being suitable for the jobs. ( Lambon-Quayefio et al. ) #RCT

· The timing of when auctions for public procurement contracts end in Brazil is random, which permits comparison of winners and runners-up. "Winning a government contract increases wages." ( Carvalho, Galindo da Fonseca, and Santarrosa ) #IV

· In rural Kenya, a “future orientation” workshop that teaches participants techniques to imagine a positive future, lay out concrete short-term steps to achieve their vision, and plan for obstacles, lifted aspirations and expectations. It led to increased labour supply and spending on productive inputs. The “intervention is at least twice as cost-effective as an (unconditional) cash transfer.” ( Orkin et al. ) #RCT

· Does free childcare improve mothers’ careers? Yes. In Sao Paulo, mothers in sub-districts with above median childcare availability have a persistent increase of 8 percent in earnings, driven by 1 percentage point higher labor force participation and 4 percent longer hours. ( Garcia, Latham-Proença, and Mello ) #FE *

Poverty Measurement

· Poverty is often measured using annual income. But using monthly data from India shows that “experiences of poverty are substantially more common than annual measures suggest; entry into and exit from poverty are much less clear than typically assumed;” and the use of monthly poverty measures “is a stronger predictor of development outcomes – child weight and height – than conventional” annual measures. ( Merfeld and Morduch ) #Other

· Are poverty lines real? This study articulates social and theoretical underpinnings for such a distinction between the poor and the nonpoor. ( Dutta et al. )

· Many social programs identify their beneficiaries collaboratively with multiple community members together. Comparing the judgments that the same individuals make about who to target when they’re deciding collaboratively versus individually in Indonesia suggests that gains from collaborative targeting are negligible. “These results suggest that policymakers should think carefully before asking community members to invest valuable time in participating in [community-based targeting] exercises.” ( Trachtman ) #Other

Governments, institutions, and conflict

Conflict and crime

· A national-level electoral reform in Mexico that increased politicians’ cost of accepting bribes decreased the number of suspicious financial reports by around 4 percent ( ∼ 650 fewer reports), while the number of attacks by violent groups increased by approximately 2 percent ( ∼ 44 more attacks), in places with the presence of criminal organizations. ( Rámon Enríquez ) #DID

· How does ethnic violence and subsequent segregation shape children’s lives? In India, Muslims perform better in cities that were more susceptible to (Hindu) communal violence in terms of early education outcomes. ( Kalra ) #PSM

· In India, judges are more likely to convict offenders in cases of sexual crimes (excluding rape) if they are exposed to more media coverage about sexual crimes that are unrelated to the case on trial. A central mechanism behind this result is heightened judicial scrutiny in response to greater media coverage. ( Vasishth ) #DID

· In Colombia, close family connections in the public administration are pervasive and they weaken performance. “Connected bureaucrats receive higher salaries and are more likely to be hierarchically promoted but are negatively selected in terms of public sector experience, education, and records of misconduct.” A 2015 anti-nepotism legislation had limited effectiveness. ( Riaño ) #RCT

· In China, after a high-profile corruption inspection, labor “strikes experienced a twofold increase within six months and a threefold increase in two years.” ( Chen ) #Other

· Reducing corruption in China "induces positive selection for integrity and public-mindedness into the state sector, which remains present even when conditioning on ability and family background." ( Hong ) #DID

· Do autocrats favor their supporters during economic shocks? The Maduro regime was more likely to exempt regime-supporting regions affected by the Venezuelan blackout from later power rationing. In Sub-Saharan Africa, “droughts magnify differences in development, protests and state-coercion outcomes in favor of leaders’ home regions.” ( Morales-Arilla ) #FE

· In Brazil, a 1 percentage point increase in the share of Pentecostals increased Evangelical and far-right candidates’ vote share by 18 percent and 16 percent, respectively. These effects are larger in municipalities with less educated, poorer, and more rural populations. ( Solá Cámpora ) #DID

· During a social media ban at the climax of the Uganda 2021 election campaign, those maintaining access through the use of virtual private networks (VPNs)—who are more likely to be opposition partisans—came to view the dominant National Resistance Mmovement party relatively positively. This is driven by an increase in pro-NRM social media content during the ban. ( Bowles, Marshall, and Raffler ) #DID

Taxes and subsidies

· Simulations suggest that removing subsidies for electric vehicles in China would raise the effective marginal costs of vehicle production, reducing total welfare by 7.4 billion yuan (RMB) per quarter, amounting to 13.9 percent of the total subsidy expenditure. ( Kwon ) #IV

· In South Africa, "firms with paid tax practitioners exhibit sharper bunching, driven primarily by a lower lumpiness parameter rather than by a different income elasticity." ( Anagol et al. ) #Other

· In Liberia, creating a new property database and including identifying information from it (the name of the owner and a property photograph) in tax bills more than quadruples the tax payment rate, from 2 percent to almost 10 percent, when the notice also includes details on the penalties for noncompliance. Compliance goes up even more when the tax bill warns delinquent property owners that they’re in the “next batch” of properties designated for “intensive follow-up.” ( Okunogbe ) #RCT

· An increase in the subsidy for liquefied natural gas (LNG) in India leads to a surprising decrease in LNG purchases by poor households. Why? The subsidy goes up when the market price rises—i.e., the government keeps the price to consumers stable—but consumers only receive the subsidy as a refund a few days after they purchase the LNG, and “poor households may find it difficult to pay the higher unsubsidized price upfront.” ( Afridi, Barnwal, and Sarkar ) #FE

Regulation and government

· In Argentina, “serving in the military leads to stronger national identity and openness to fellow countrymen several decades after serving.” ( Ronconi and Ramos-Toro ) #FE

· In Pakistan, policymakers who received a special training in econometrics are twice as likely to actually choose policies for which there is evidence from randomized controlled trials. They triple the funding for those same policies. ( Mehmood, Naseer, and Chen ) #RCT

· In Brazil, state judges with higher grades on admission examinations perform better than their lower-ranked peers. ( Dahis, Schiavon, and Scot ) #FE

· In India, improving the maintenance of fee-funded community toilets improved delivery and reduced free riding, but excludes a share of residents from using the service. ( Armand et al. ) #RCT

· In, Kenya’s nationwide electrification program, imposing audits improved network size, voltage, household connectivity, and electricity usage at African Development Bank (AfDB) sites. (World Bank sites already had lots of inspections, so random audits didn’t affect those.) The World Bank’s procedures delayed construction at the average site by 9.6 months relative to AfDB sites but improved construction quality by 0.6 standard deviations. ( Wolfram et al. ) #RCT

· In Bihar, India, instituting a complaint filing system for politicians who run into bureaucratic obstacles in the implementation of their projects led to a 26 percent rise in the implementation of public projects in constituencies run by low-caste local politicians. ( Kumar and Sharan ) #RCT

· Informing government agents about illegal (gold) mining in Colombia, reduced illegal mining by 11 percent in the disclosed locations and surrounding areas. ( Saavedra ) #ML

· In India, switching the approving authority of economic development projects that require forest diversion from central to state government “leads to a modestly adverse impact on forest conservation while approving lower quality development work.” ( Chiplunkar and Das ) #DID

· When two districts in India share groundwater resources, extraction is more likely to be unsustainable and districts are more likely to have defunct wells. ( Bhogale and Khedgikar ) #DID

Agriculture, infrastructure, and the environment

Agriculture and land

· In Mozambique, contract farming has spillover effects: “both contracted farmers and non-contracted farmers from villages with contracted farmers earn approximately 11 percent more in price per kilogram of maize” than farmers in areas without contract farming. ( Ingram ) #FE

· The vanilla price boom in Madagascar led to increased asset accumulation and higher informal savings, improved performance on cognitive tests, well-being, and optimism. There were positive effects for smallholder vanilla farmers, but without spillover benefits on non-producing households. ( Boone, Kaila, and Sahn ) #FE

· In Rwanda, using text messages to remind agricultural extension workers of their self-set goals increased their performance by 0.08 SD. ( Abel et al. ) #RCT

· How do rural marketplaces shape local development? In Kenya, “while rural population quadrupled, two thirds of weekly markets operating in 1970 no longer do so today.” Population concentrated around markets that were active in 1970, and markets further from large cities saw the most population concentration. ( von Carnap ) #FE

· If you rely on farmer reports on what seeds they’re using in Ethiopia, you’ll see apparently small, negative returns to using new seed varieties. But that’s because farmers are including “older and genetically diluted varieties, for which” they “may be paying a premium.” If you just look at seed varieties with “higher-purity germplasm, drought-tolerant maize, and newly released varieties,” you do see positive returns. ( Michuda et al. ) #Other

· How much is one farmer in Uganda willing to pay for their neighbor to use a pest-control technology? A “novel incentive-compatible elicitation mechanism” finds that “a farmer’s willingness-to-pay for one other farmer [to use the technology] is equal to two days’ wage on average, about half the willingness-to-pay for self.” ( Lerva ) #RCT

· Maybe farmers don’t train their workers in modern planting technologies because they know they won’t get all the benefits of that training: the workers may go and use it somewhere else. In Burundi, providing a contract that guaranteed farmers the benefit from training their workers increased farmers’ willingness to train their workers by about 90 percentage points! ( Cefala et al. ) #RCT

· In Odisha, India, villages with more variation in castes have lower adoption of flood-resistant seeds. Adoption is more likely to spread within castes and less likely to spread to castes with lower status. ( de Janvry, Rao, and Sadoulet ) #RCT

· In India, bureaucrats who are assigned to their home states decrease protests or riots in opposition to land acquisition projects by 9-12 percent. ( Tóth ) #DID #RD

· Lake Chad shrunk by 90 percent between the 1960s and the late 1980s: the reduced water supply had negative effects for neighboring communities in Cameroon, Chad, Nigeria and Niger—25 percent of sub-Saharan Africa’s population—on fishing, in addition to farming and herding which outweighed any positive land supply effects. ( Jedwab et al. ) #DID

Climate and pollution

· Households from heavily damaged communities in Indonesia after the 2004 Indian Ocean Tsunami saw a 75 percent decline in real wealth immediately after the tsunami. The large adverse effects persisted 10 years after the tsunami. ( Lombardo et al.) #FE

· In India and Pakistan, the incidence of fires from crop burning drops by 10 percent when air pollution is likely to be borne by the bureaucrats’ own constituents. “Reduction in fires is present or larger when bureaucrats can better monitor (due to road proximity) or manage fires (due to changes in experience during a turnover), and when they have incentives to act (e.g., when pollution is most visible).” ( Dipoppa and Gulzar ) #DID

Infrastructure

· In Kenya and Ethiopia, the “impact of bundled road and electricity investments on reducing the sectoral employment share in agriculture is … 2.5 times larger than the impact of roads alone.” ( Dappe and Lebrand ) #FE #IV

· Aerial bundled cables (an infrastructure improvement) in Karachi, Pakistan, reduced utility losses and increased revenue recovery, with the greatest gains in the worst-performing areas pre-intervention. Gains come via two channels: the formalization of customers previously informally (illegally) connected and the improvement in payment behaviors among existing, formal consumers. ( Ahmad et al. ) #DID

· A large-scale roll-out of electric transmission infrastructure in Nigeria from 2009 to 2015 increased individuals’ likelihood of migrating by 6 percent and reduced household size by 0.8 individuals, mainly driven by young adults and older teenagers. ( Budjan ) #DID #IV

· How does transportation infrastructure investment affect spatial inequality of opportunity in Benin, Cameroon, and Mali? “On average only 6 of the top 10 aggregate opportunity-increasing roads also decrease inequality of opportunity.” ( Milsom ) #IV

Macroeconomics

Growth and inequality

· Gaining subnational capital status leads to an influx of public investments, an increased population, skilled migration and foreign investments, with positive spillovers to nearby cities. ( Bluhm, Lessmann, and Schaudt ) #FE #DID

· In China, state-level special economic zones (SEZs)—"geographically delimited areas targeted by governments to implement” policies like tax incentives, government innovation grants, and policies that favor human capital mobility—"have a positive and significant impact on patent output,” but SEZs established at geographic areas smaller than the state don’t have significant impacts. ( Wu, Lu, and Zhao ) #DID

· Initial foreign direct investment into China “was mainly driven by the Chinese diaspora,” particularly to prefectures in China that members of the diaspora came from. Later, foreign investment that didn’t come from the diaspora was more likely to enter those same prefectures. ( Chen, Xiong, and Zhang ) #DID

· “Countries are more likely to enter ‘nearby’ industries, i.e., industries that require fewer new occupations.” Also, “countries are more likely to diversify into products that require fewer new inputs,” which means that countries can get stuck on particular paths in their quest toward industrial development, “with certain routes leading to stagnation and others on a pathway to prosperity.” ( Diodato, Hausmann, and Schetter ) #Other

· “The construction process of many residential buildings in African cities proceeds very slowly and may take over a decade.” Data from Nairobi plus a new theoretical model suggest that “improvements in credit provision can (a) substantially speed up the expansion of the aggregate housing stock which facilitates rural-urban migration, and (b) increase the city’s density by enabling the construction of taller buildings.” ( Gomtsyan ) #Other

· Giving information about market prices and official border costs to traders in Kenya increases switches across markets and routes, leading to a large improvement in traders’ profits and significant formalization of trade. ( Wiseman ) #RCT

· Can temporary trade disruptions lead to a persistent change in domestic trade? Yes. In India, COVID-19 induced lockdowns led to a collapse in trade across states, driven by plants reorienting “trade towards their home states to ... insure against any future disruptions.” ( Chakrabati, Mahajan, and Tomar ) #DID

· The 2001 US-Vietnam Bilateral Trade Agreement reduced US import tariffs from Vietnam, leading to rapid Vietnamese export growth with “entry responses, driven by foreign and Vietnamese private firms. Entrants—rather than incumbents—drive the tariff-induced employment growth, particularly foreign entrants.” ( McCaig, Pavcnik, and Wong ) #FE

The order of authors on this blog was determined by a virtual coin flip. This blog post benefited from research assistance from Amina Mendez Acosta .

Senior Economist, Education Global Practice

Senior Fellow, Center for Global Development

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Local Projections for Applied Economics

Download PDF (588 KB)

2023-16 | July 1, 2023

The dynamic causal effect of an intervention on an outcome is of paramount interest to applied macro- and micro-economics research. However, this question has been generally approached differently by the two literatures. In making the transition from traditional time series methods to applied microeconometrics, local projections can serve as a natural bridge. Local projections can translate the familiar language of vector autoregressions (VARs) and impulse responses into the language of potential outcomes and treatment effects. There are gains to be made by both literatures from greater integration of well established methods in each. This review shows how to make these connections and points to potential areas of further research.

Article Citation

Jorda, Oscar. 2023. “Local Projections for Applied Economics,” Federal Reserve Bank of San Francisco Working Paper 2023-16. Available at https://doi.org/10.24148/wp2023-16

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Top 10 economic predictions for 2023

Executive Director and Asia-Pacific Chief Economist, S&P Global Market Intelligence

Director, Global Economics, S&P Global Market Intelligence

Principal Economist, S&P Global Market Intelligence

Senior Economist, IHS Markit

Below, we offer our top 10 economic predictions for 2023:

1. We expect COVID-19 to continue its transition to a global endemic and the status quo to prevail in Russia's war in Ukraine, with no material implications for the global economy.

Residual effects of the COVID-19 pandemic include episodic shortages that have complicated business planning and logistics and held prices higher than would otherwise have been the case. As the world moves into 2023 and continues the transition to an endemic, COVID-19-related shortages should become less frequent, helping prices in affected goods to ease further over the year.

Uncertainty around the course of the conflict in Ukraine remains and builds a premium into energy and other industrial commodity markets. We expect that the war in Ukraine will continue without major escalation through at least early summer, when a cease-fire may be achieved. That scenario will not end the conflict and economic sanctions and voluntary embargoes will remain. We do not expect renewed surges in commodity prices stemming from that conflict or the West's responses.

Looking ahead, softening global demand will be the dominant story and dampen inflation. While crude oil prices should ease over 2023, high energy costs will put a floor under the prices of processed materials and limit the decline in inflation.

2. Inflation will slow significantly in 2023, but achieving central bank targets will be a multiyear process.

After reaching multidecade highs in 2022, global inflation will moderate in response to tightening financial conditions, softening demand, and easing supply chain conditions.

Downward price pressures are already in the pipeline. S&P Global Market Intelligence's Materials Price Index, a comprehensive indicator of industrial commodity prices, has fallen nearly 30% from its record high in early March. Agricultural commodity prices are in the early stages of a correction and should decline through 2023, led by grain prices. Commodity price declines will filter downstream to intermediate and finished products, bringing some relief to businesses and consumers in 2023.

Yet, labor shortages and wage acceleration are contributing to the persistence of inflation, especially in services. In some sectors, such as machinery where price increases in 2022 did not keep up with input cost inflation, margin restoration will be a priority.

It could take several years to sustainably bring inflation rates down to central bank targets. Global consumer price inflation will likely ease to an average of 5% in 2023, finishing the year at a 3.5% year-on-year pace.

3. Global monetary policy tightening has further to go out heading to spring 2023 with much regional variation.

In the US, we expect the federal funds rate to peak near 5% next spring.

While the European Central Bank (ECB) moderated the size of its rate increases in December, its accompanying guidance was more hawkish than expected, suggesting the hiking cycle will continue well into 2023.

Many central banks in the region typically shadow ECB policy. The Bank of England (BoE) is an exception and faces US-style wage pressures. Still, with a recession already under way, recent fiscal tightening and concerns over a housing crash suggest the BoE will not go quite as far as the Fed. We expect a peak bank rate of 4% in spring 2023.

Monetary easing will likely begin earliest and be most pronounced in Latin America and emerging Europe. There, central banks tightened policy relatively early and substantially as inflation soared from 2021. We expect the Brazilian central bank to start lowering rates in mid-2023.

We do not expect the Fed to reverse course until it is confident that inflation will decline toward its 2% objective, implying rate cuts only from 2024 and disappointing futures market expectations of easing from late 2023. In broad terms, we see the same outlook for the ECB.

4. Mild recessions are forecast in the United States and Europe, but resilience in Asia Pacific will prevent a global recession.

In the US, persistently elevated inflation and extraordinarily tight labor markets have prompted a sharp monetary tightening that has resulted in higher Treasury term yields, wider spreads to yields on private bonds and mortgages, US dollar appreciation, a swoon in stock prices, a sudden reversal in house prices, and a notable increase in financial market volatility.

With a lag, and against the backdrop of waning pandemic-era fiscal relief, this broad and significant tightening of financial conditions will tip the US economy into a mild recession in the first half of 2023.

We forecast relatively short-lived and mild recessions in the EU/eurozone during the fourth quarter of 2022 and the first quarter of 2023, reflecting multiple headwinds and matching consistently with recent Purchasing Managers' Index™ (PMI™) data. The primary driver of expected real GDP contractions is private consumption given an acute squeeze on household real incomes due to exceptionally high inflation. A more severe, energy-driven recession will remain a potential risk beyond the current winter.

Asia Pacific is forecast to be the fastest-growing region of the global economy in 2023, acting as a counterweight to recessions in the US and the EU. This scenario reflects improving growth prospects in mainland China and continued economic expansion in other major Asia Pacific economies, including India and Southeast Asia. Australia, Indonesia, and Malaysia will continue to benefit from high commodity export revenues, particularly for oil, liquefied natural gas (LNG), and coal. Recessions in the US and the EU will dampen the region's economic performance since these economies purchase 27% of the region's exports.

Moderate expansions in Asia Pacific, the Middle East, and Africa will keep the global economy moving forward through 2023. Global real GDP growth is projected to slow from near 3% in 2022 to half that pace in 2023.

5. Housing markets will continue to weaken in the face of rising mortgage rates, but price declines may be tempered in some markets by still tight supplies relative to demographics.

In response to monetary tightening, mortgage rates will remain elevated through 2023. As a result, consumers who had previously locked in low rates will opt to remain in their current homes, and potential new homeowners will stay on the sidelines as purchasing a home is no longer affordable. Recession expectations and the cost-of-living crisis will further reduce demand and push prices lower in 2023, especially in overvalued markets.

We do not expect a market crash or full correction of price bubbles owing to the relative strength of labor markets. However, a need for even higher interest rates to counteract persistent above-target inflation or a significant increase in unemployment would increase the risk of a crash, leading to deeper and longer recessions. The highest risks are in Europe, the US, Canada, and Australia.

6. The US dollar has likely peaked and will retreat in 2023, but it will remain elevated compared with prior years.

Supported by favorable interest rate spreads and investors' flight to safety, the US dollar appreciated sharply over the first ten months of 2022, reaching unsustainable heights against the yen, the euro, and other major currencies before pulling back.

These forces will buoy the dollar through the first half of 2023. Subsequently, we expect the dollar to depreciate under the weight of large US current-account deficits and subdued economic growth.

The euro, which has weakened in response to the eurozone's vulnerability to the impacts of the Russia-Ukraine war and cautious monetary policies, will recover gradually. Meanwhile, some narrowing of US-Japan, long-term interest rate spreads and Japan's comparatively mild inflation rate will lead to some unwinding of the yen's sharp 2022 depreciation against the US dollar.

7. Emerging and developing economies (EMDEs) will remain resilient during 2023, but pockets of vulnerability will result in a two-tier growth path.

Higher interest rates in advanced economies, in combination with the expiration of most COVID-19 support measures in 2022, will have spillover effects for EMDEs.

The risks of higher default rates among domestic borrowers and sovereign debt restructuring have increased, but a wave of crises remains unlikely. Real GDP growth will be more vulnerable in EMDEs with slow policy responses, higher debt loads, and smaller external buffers, such as Zambia, Malawi, and Belarus.

The possibility of debt restructuring under the G-20 common framework, instead of disorderly defaults, is more likely for low-income, debt-distressed countries, especially in sub-Saharan Africa.

As a region, Asia Pacific has adopted more prudent policies since the Asian Crisis of the late 1990s and has more manageable debt levels and healthier external buffers. Asia Pacific will also benefit from lingering pent-up demand from the later lifting of COVID-19 lockdown measures, the resumption of pandemic-delayed infrastructure programs, relatively low inflation, and the modest recovery in mainland China's growth.

In contrast, emerging Europe will be severely affected by the slowdown in the eurozone and the continued impact of Russia's war in Ukraine.

8. Mainland China's easing of containment policies will propel a choppy economic recovery.

Given the likely outbreak waves in the wake of policy changes, the government will proceed to exit by balancing between alleviating public fatigue of containment measures and minimizing potential public health fallouts from the exit.

While financial markets may stage energetic rallies in response to the retreat of the policy, initial recovery of the real economy will be subdued, calling for accommodative economic policies to smooth the bumpy path.

9. Supply chain disruptions will ease markedly in 2023, but tensions from labor shortages will remain.

One of the lessons from the COVID-19 pandemic and its following recovery was that global supply was not geared to face the extreme demand shock that occurred upon the reopening of the world's major economies.

The recessions in Europe and North America that we anticipate in 2023 will help narrow the global supply-demand gap. That process has already started: S&P Global's PMI™ data show that global supplier delivery times in the manufacturing sector in November were down significantly from the peak in early 2022, with room to narrow further in some industries—equipment goods, mostly—as demand softens in 2023.

However, the easing of supply chain disruptions will likely be limited given labor shortages.

10. Labor shortages will remain a challenge in 2023 even as unemployment rates are predicted to rise modestly.

Economies that depended on migration for the provision of labor to keep their economies humming before the pandemic — the US, Canada, Western Europe, and Australia — will see migration flows improve, but probably not fast enough to head off capacity constraints.

In emerging markets, the wave of workers that moved from urban to rural areas during the worst of the pandemic will be slow to return, alongside a continued slow recovery of cross-country labor migration. Gulf Cooperation Council countries are an exception as migrants from East Africa and South Asia will remain crucial in supporting planned investments, given the insufficient local labor markets.

Another exception is emerging Europe — a significant share of Ukrainians and Russians who emigrated owing to the war in 2022 will remain abroad in 2023, boosting the population and potential labor force of other countries across Europe and Central Asia. Nevertheless, several countries face the risk of wage-price spirals amid skills mismatches and slow progress in containing inflation expectations.

Globally, hiring freezes will be more common than mass layoffs in 2023 as employers seek to retain talent. Job losses will be concentrated in sectors that are sensitive to credit conditions, such as real estate and finance.

This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.

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A New Decade of Research on the Economics of Climate Change

Addressing the climate crisis is one of the central sustainability challenges for our global societies. Economists have been thinking about the problem of environmental degradation at least since the 1960s ( Boulding 1965 , 1966 ). From the 1970s onwards, concerns about the effect of greenhouse gases on the global climate have gained ever more prominence in the debate, and economic analyses of the climate problem have mounted ( Nordhaus 1975 , 1977 ). [1] The publication of the Stern Review in 2006 designated the climate crisis as the “greatest market failure the world has ever seen” ( Stern 2007 ) and thereby critically shaped the perceived relevance of research on the economic characteristics of the climate problem. Seventeen years later, the number of publications in the field has increased tremendously, but still many important research questions remain open. One major research challenge is to embed the economics of climate change in a broader research agenda on a sustainable economic management of the interconnected dynamics of the atmosphere and the biosphere ( Dasgupta 2021 ). Future research on the economics of climate change should address the interplay between economic efficiency and the distribution of well-being between and within generations by taking into account (i) how climate mitigation and adaption can contribute to protecting a healthy biosphere and (ii) how a healthy biosphere benefits the climate. This editorial briefly introduces a selection of six key areas for a new decade of research on the economics of climate change and subsequently, briefly relates the articles of this Special Issue to these topics.

1 Social Discounting, Mitigation and Planetary Boundaries

The climate crisis is an intergenerational crisis: since CO 2 is a long-lived atmospheric pollutant, the costs of mitigating a ton of CO 2 today have to be evaluated against the cumulative damages that ton will impose on both today’s as well as on all succeeding future generations. As a consequence, economically optimal climate policy is very sensitive to the choice of the social discount rate used to value the intergenerational costs and benefits of climate change mitigation ( Hänsel et al. 2020 ). Seventeen years ago, the Stern review ( Stern 2007 ) initiated a debate on whether the determinants of the social discount rate should be chosen on ethical grounds as opposed to calibrating it based on historical returns observed on capital markets ( Nordhaus 2018 ). That discussion quickly also led to extensions of the standard discounting and welfare framework considering amongst others uncertainty ( Gollier 2010 , 2019 ) and environmental and non-market goods scarcity ( Drupp and Hänsel 2021 ; Hoel and Sterner 2007 ). One key question is how the welfare economics of climate change can be transformed into a welfare economics of planetary boundaries by considering the interrelations between the increasing scarcity of natural goods and services and climate change in the presence of risk and uncertainty?

2 Climate Impacts, Damages and Adaptation

While adaptation has the potential to reduce many of the adverse impacts of climate change, adaptive capacity varies widely across regions and affected systems ( Massetti and Mendelsohn 2018 ). Moreover, climate change and biosphere degradation affect many goods and services without real market prices, such as the recreational, cultural or spiritual values of natural areas or the existence value of particular species ( Dasgupta 2021 ). Thus, the benefits of adaptation policies are often difficult to quantify for these cases. Key questions that future climate economic research should address in that area include: What are efficient adaptation policies that consider heterogeneous climate damages, the role of non-market goods and services as well as equity impacts of alternative actions? What are the limits to adaptation and what are the trade-offs between investing public funds in adaptation versus mitigation?

3 Carbon Dioxide Removal Technologies, Economic Optimality and Social Acceptance

As climate action has been delayed since the publication of the Stern review, meeting the targets of the Paris agreement increasingly requires larger scale carbon dioxide removal (CDR) at least by around mid-century ( IPCC 2022 ). Key questions for climate economists in that area are: How to best incentivize an efficient development and deployment of different CDR technologies at the required scale ( Edenhofer et al. 2023 )? How to take into account the inter- and intra-generational distributional consequences of different policies and how to increase the required social acceptance?

4 Governance of the Commons, Climate Policies and Political Feasibility

Good governance of the global commons and distributional consequences for the current generations are increasingly perceived as key obstacles to the implementation of effective policy instruments that ensure a sustainable use of both the biosphere and atmosphere. For example, the fear of regressive distributional effects of carbon pricing on low-income households is considered as one of the main reasons for the failure to implement effective climate policies ( Edenhofer et al. 2021 ). Key question that future research should address are: How can national and international climate policies account for the trade-offs between equity and efficiency ( Hänsel et al. 2022 ), and increase trust in regulatory decisions? What are the distributional consequences of different policy instruments regimes, such as taxes, permits, standards or bans?

5 International Cooperation, Climate Treaties and Finance

Effective climate stabilization can only be achieved through international cooperation and climate treaties, which incentivize public and private investments to finance the transformation towards a carbon-neutral economy. That is because increasing levels of combined climate efforts actually raise the incentives for single states to reduce their contributions and to free-ride on the emissions reductions of other states. In game theory, this phenomenon is known as social dilemma: as the overall benefits from cooperating increase, individual countries are increasingly tempted to benefit from the collective action while avoiding costs themselves ( Edenhofer and Jakob 2019 ; Hirshleifer 1983 ). To enhance cooperation and discipline free-riders, reciprocal commitments and mutual trust are needed. This points to questions on how to implement self-enforcing international agreements: climate clubs, funds that provide conditional transfers, sectoral treaties or emerging social norms are promising candidates that may allow to overcome the cooperation problem between nation states.

6 Biodiversity Loss, Ecosystem-Services and Climate Change

Climate change and biodiversity loss are deeply interrelated ( IPBES 2019 ; Richardson et al. 2023 ). Biodiversity affects ecosystem productivity and thus the services that nature provides for human well-being ( Dasgupta 2021 ). For example the Amazon stores an amount of carbon equivalent to a decade of global human emissions. Understanding the synergies and trade-offs between climate and biosphere protection as well as repercussions with economic dynamics is thus key for sustainable development. What are the benefits for biodiversity of mitigating against dangerous climate change? What are the benefits of avoiding biodiversity loss on climate damages? How can people adapt to climate change and biodiversity loss?

7 Contributions in the Special Issue

Sureth et al. (2023) provide an article that can itself be understood as a research agenda on an economic perspective of the interconnected climate and biosphere crises and thus, contribute to the research areas 1 and 6. Specifically, they use a theoretical modelling framework to discuss how to integrate planetary boundaries, such as related to the climate or to biosphere integrity, into public economic cost-benefit and cost-effectiveness analyses. The article provides guidance on how to overcome shortcomings of current policy practice and discusses important directions for future research on planetary boundaries as global public goods.

Hofmann et al. (2022) contribute to the research area 5 by analyzing the role of commitment devices for the effectiveness of international cooperation. Specifically, they put forward a novel experimental format based on simulating international climate negotiations with “Model United Nations” associations in Germany and Switzerland. They test if international climate negotiations about a uniform common commitment, such as uniform carbon pricing, are more effective as compared to individual commitments as currently formalized by the Nationally Determined Contributions to reach the Paris Agreement. The article finds that negotiating a common commitment on uniform carbon pricing results in higher emission reductions as compared to individual commitments. This results is then discussed in the light of the current literature on climate negotiations, experiments on public good provision, political science and education with simulation games.

Funding source: Federal Ministry of Education and Research, Germany

Award Identifier / Grant number: 17220833

Article Note: This article is part of the special issue “A New Decade of Research on the Economics of Climate Change: Towards an Integrated View on a Sustainable Use of the Biosphere” published in the Journal of Economics and Statistics. Access to further articles of this special issue can be obtained at www.degruyter.com/jbnst .

Research funding: This study was funded by Federal Ministry of Education and Research, Germany (17220833).

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Engaging Economic Research Topics in 2023: Unraveling Economic Complexities

Are you searching for economic research topics? If yes, then have a close look at some of the best economic research topics to try in 2023.

Economic research is a fundamental component of modern economics, as it provides a framework for understanding the complexities of the global economy. It encompasses a wide range of topics, including macroeconomics, microeconomics, econometrics, and applied economics, each with its own unique set of research questions and methodologies.

Economic research can be conducted using a variety of methods, including theoretical modeling, empirical analysis, and experimental research, and can be used to inform policy-making, advance knowledge, and address real-world economic problems. In this article, we will explore some of the key topics in economic research, including their theoretical underpinnings, research questions, and implications for economic policy and practice.

Whether you are a student, researcher, policymaker, or simply interested in economics, this article will provide an overview of some of the most important and relevant topics in contemporary economic research.

Definition of economic research

Table of Contents

Economic research refers to the application of economic theories and methodologies to study economic issues and problems, such as market behavior, consumer preferences, economic growth, income distribution, and international trade. It involves the use of empirical data, statistical models, and econometric techniques to develop insights into economic phenomena.

Importance of economic research

Economic research is important for several reasons:

Informing policy-making

Economic research can provide insights into the causes and consequences of economic phenomena, and help policymakers identify effective policies and interventions to promote social welfare, economic growth, and sustainability.

Advancing knowledge

Economic research contributes to our understanding of how the economy works, and can help us identify new areas of inquiry and build on existing knowledge.

Supporting innovation

Economic research can inform innovation and entrepreneurship by providing insights into consumer behavior, market dynamics, and technological change.

Addressing real-world problems

Economic research can help address real-world economic problems, such as income inequality, unemployment, and climate change, by identifying effective solutions and policy interventions.

Driving economic growth

Economic research can inform strategies to promote economic growth and development, such as through investment in education, infrastructure, and innovation.

Assessing risks and opportunities

Economic research can help individuals and organizations assess risks and opportunities in the economy, and make informed decisions about investments, financial planning, and other economic activities.

Enhancing accountability

Economic research can help hold individuals and organizations accountable for their economic decisions and actions, by providing evidence and insights into their economic impact.

Informing public discourse

Economic research can help shape public discourse on economic issues, by providing a deeper understanding of the economic implications of policy decisions, technological change, and other factors.

Fostering collaboration

Economic research can foster collaboration between researchers, policymakers, and other stakeholders, by providing a common language and framework for understanding economic issues and identifying shared solutions.

Encouraging critical thinking

Economic research can encourage critical thinking and a deeper understanding of complex economic issues, by challenging assumptions and providing evidence-based insights.

Overall, economic research plays a critical role in informing decision-making and promoting a more just and sustainable global economy.

Economic Research Topics

Have a close look at some of the best economic research topics.

Macroeconomics

Macroeconomics is the study of the economy as a whole, focusing on the aggregate behavior of economic variables such as GDP, inflation, employment, and trade. It aims to understand the causes and consequences of fluctuations in the economy, and to develop policies to stabilize the economy and promote economic growth. It’s not a very easy subject for students to understand, so an A-level economics tutor to understand the concepts better.

Topics for economic research in macroeconomics:

Economic growth and development

Economic growth is the increase in the output of goods and services over time, while development refers to the improvement in the well-being of individuals and societies. Research in this area can focus on factors that contribute to economic growth, such as investment, technology, and human capital , as well as on policies that promote inclusive development.

Inflation and deflation

Inflation is the sustained increase in the general price level of goods and services, while deflation is the opposite, a sustained decrease in the general price level. Research in this area can examine the causes and consequences of inflation and deflation, including their impact on economic growth, employment, and income distribution.

Monetary and fiscal policy

Monetary policy involves the use of interest rates, money supply, and other tools by central banks to influence economic activity, while fiscal policy involves the use of government spending and taxation to achieve economic objectives. Research in this area can examine the effectiveness of these policies, their impact on the economy, and their interaction with each other.

International trade and globalization

International trade refers to the exchange of goods and services between countries, while globalization refers to the integration of economies and societies across borders. Research in this area can examine the effects of trade and globalization on economic growth, income distribution, and employment, as well as on the environment, culture, and political systems.

Unemployment and labor market dynamics

Unemployment is the state of being without a job, while labor market dynamics refer to the behavior of employers and employees in the labor market. Research in this area can examine the causes and consequences of unemployment, the effects of minimum wages and other labor market policies, and the impact of technological change and globalization on the labor market.

Income inequality and poverty

Income inequality refers to the unequal distribution of income among individuals or groups, while poverty refers to the lack of basic necessities of life. Research in this area can examine the causes and consequences of income inequality and poverty, the role of education, health, and social policies in reducing poverty and inequality, and the impact of globalization and technological change on income distribution.

Microeconomics

Microeconomics is the study of individual economic behavior and decision-making, focusing on how individuals and firms interact in markets. It examines the behavior of consumers and producers, the determination of prices and quantities, and the effects of government policies on market outcomes.

Topics for economic research in microeconomics:

Market structures and competition

Market structure refers to the number and size of firms in a market, the degree of product differentiation, and the ease of entry and exit. Research in this area can examine the effects of market structure on competition, innovation, and pricing behavior, as well as the role of antitrust policies in promoting competition.

Consumer behavior and demand

Consumer behavior refers to the choices made by individuals when purchasing goods and services, while demand refers to the quantity of a good or service that consumers are willing and able to buy at a given price. Research in this area can examine the determinants of consumer behavior, the effects of advertising and product differentiation on demand, and the impact of consumer preferences on market outcomes.

Production and cost analysis

Production refers to the process of transforming inputs into outputs, while cost analysis refers to the study of the costs incurred by firms in producing goods and services. Research in this area can examine the determinants of production and cost, the effects of economies of scale and scope on cost, and the impact of technological change on production and cost.

Pricing strategies

Pricing strategies refer to the methods used by firms to set prices for their products or services. Research in this area can examine the determinants of pricing behavior, the effects of price discrimination and bundling on market outcomes, and the impact of pricing strategies on consumer welfare.

Game theory and strategic behavior

Game theory is a branch of economics that studies the behavior of individuals or firms in strategic situations, where the outcome of their actions depends on the actions of others. Research in this area can examine the use of game theory to model strategic interactions, the impact of strategic behavior on market outcomes, and the role of government policies in regulating strategic behavior.

Behavioral economics

Behavioral economics is the study of how psychological and social factors influence economic decision-making. Research in this area can examine the role of cognitive biases and heuristics in economic behavior, the effects of social norms and peer pressure on economic outcomes, and the implications of behavioral economics for public policy.

Econometrics

Econometrics is the application of statistical methods to economic data in order to test economic theories, estimate economic relationships, and make economic forecasts. It is a key tool for empirical research in economics.

Topics for economic research in econometrics

Statistical inference and hypothesis testing

Statistical inference involves making conclusions about population parameters based on sample data, while hypothesis testing involves testing hypotheses about the values of population parameters. Research in this area can examine the use of statistical inference and hypothesis testing in econometric analysis, as well as the limitations and challenges associated with these methods.

Time series analysis

Time series analysis involves the analysis of data that is collected over time, such as economic indicators like GDP, inflation, and unemployment. Research in this area can examine the use of time series methods in econometric analysis, such as autoregressive models and moving average models, as well as the challenges associated with analyzing time series data.

Panel data analysis

Panel data refers to data that is collected on the same individuals or entities over time, such as data on firms or households. Panel data analysis involves using this data to estimate economic relationships and test economic theories. Research in this area can examine the use of panel data methods in econometric analysis, such as fixed effects models and random effects models, as well as the advantages and disadvantages of panel data analysis.

Causal inference and program evaluation

Causal inference involves determining whether a particular treatment or policy intervention caused a particular outcome, while program evaluation involves evaluating the effectiveness of policy interventions. Research in this area can examine the use of causal inference and program evaluation methods in econometric analysis, such as randomized controlled trials and difference-in-differences models, as well as the challenges associated with these methods.

Big data and machine learning in economics

Big data refers to the large volumes of data that are generated in the digital age, while machine learning involves using algorithms to analyze and make predictions based on data. Research in this area can examine the use of big data and machine learning methods in econometric analysis, as well as the challenges associated with analyzing large and complex data sets.

Spatial econometrics

Spatial econometrics is concerned with the analysis of spatially dependent economic variables, such as regional economic growth and urbanization. Research in this area can examine the use of spatial econometric models in econometric analysis, such as spatial autoregressive models and spatial panel models, as well as the challenges associated with analyzing spatial data.

Applied economics

Applied economics involves the application of economic principles and theories to real-world problems and issues. It is concerned with the practical implications of economic research, and often involves interdisciplinary collaborations with other fields, such as public policy, business, and social sciences.

Topics for economic research in applied economics:

Health economics

Health economics is concerned with the analysis of healthcare systems and the economic factors that affect the health of individuals and populations. Research in this area can examine topics such as healthcare financing and insurance, healthcare delivery and organization, healthcare technology and innovation, and the social determinants of health.

Education economics

Education economics is concerned with the analysis of educational systems and the economic factors that affect educational outcomes. Research in this area can examine topics such as education financing and funding, educational inequality and access, education quality and performance, and the impact of education on economic growth and development.

Environmental economics

Environmental economics is concerned with the economic analysis of environmental problems and the policies and mechanisms that can be used to address these problems. Research in this area can examine topics such as climate change, pollution and waste management, natural resource management, and environmental regulation and policy.

Urban economics

Urban economics is concerned with the economic analysis of cities and urban areas, including the economic factors that drive urban growth and development, the impact of urbanization on social and economic outcomes, and the policies and mechanisms that can be used to promote sustainable and inclusive urban development.

Agricultural economics

Agricultural economics is concerned with the economic analysis of the agricultural sector, including the factors that affect agricultural production and productivity, the impact of agricultural policies and programs on rural development and poverty reduction, and the role of agriculture in food security and nutrition.

Development economics

Development economics is concerned with the economic analysis of development processes and the policies and mechanisms that can be used to promote economic growth and development. Research in this area can examine topics such as poverty reduction and social welfare, trade and globalization, financial markets and development, and the role of institutions and governance in development.

In summary, economics research covers a wide range of topics and approaches, including macroeconomics, microeconomics, econometrics, and applied economics.

Some key topics for research in economics include economic growth and development, market structures and competition, statistical inference and hypothesis testing, health economics, education economics, environmental economics, urban economics, agricultural economics, and development economics.

As the world continues to face complex economic challenges, there is a growing need for rigorous and innovative research in economics to inform policy-making and address pressing issues such as inequality, climate change, and technological disruption.

Future research in economics will likely involve interdisciplinary collaborations with other fields such as data science, engineering, and behavioral sciences.

Additionally, there will be an increasing focus on incorporating diverse perspectives and experiences in economic research, as well as addressing issues of ethics and social responsibility in economic analysis.

Overall, the future of economics research holds great potential to contribute to a more just and sustainable global economy.

Frequently Asked Questions

What is economics research.

Economics research involves the application of economic theories and methods to understand and address real-world economic problems and issues. It can involve a range of approaches, from theoretical modeling and econometric analysis to field experiments and case studies.

What are some key areas of economics research?

Some key areas of economics research include macroeconomics, microeconomics, econometrics, and applied economics. Within these areas, researchers may focus on topics such as economic growth, market competition, statistical analysis, health economics, environmental economics, urban economics, and development economics.

Why is economics research important?

Economics research plays a critical role in informing policy-making and decision-making in a range of fields, from government and business to international organizations and non-profit organizations. By providing insights into the causes and consequences of economic phenomena, economics research can help to identify effective policies and interventions to promote social welfare, economic growth, and sustainability.

What are some emerging trends in economics research?

Emerging trends in economics research include a growing focus on interdisciplinary collaborations with other fields, such as data science and behavioral science, as well as an increasing emphasis on incorporating diverse perspectives and experiences into economic analysis.

How is economics research conducted?

Economics research can be conducted using a range of methods, including theoretical modeling, econometric analysis, field experiments, and case studies. Researchers may also use data from a variety of sources, including surveys, administrative records, and experimental data.

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The Potentially Large Effects of Artificial Intelligence on Economic Growth (Briggs/Kodnani)

The potentially large effects of artificial intelligence on economic growth.

The recent emergence of generative artificial intelligence (AI) raises the question whether we are on the brink of a rapid acceleration in task automation that will drive labor cost savings and raise productivity. Despite significant uncertainty around the potential of generative AI, its ability to generate content that is indistinguishable from human-created output and to break down communication barriers between humans and machines reflects a major advancement with potentially large macroeconomic effects.

If generative AI delivers on its promised capabilities, the labor market could face significant disruption. Using data on occupational tasks in both the US and Europe, we find that roughly two-thirds of current jobs are exposed to some degree of AI automation, and that generative AI could substitute up to one-fourth of current work. Extrapolating our estimates globally suggests that generative AI could expose the equivalent of 300mn full-time jobs to automation.

The good news is that worker displacement from automation has historically been offset by creation of new jobs, and the emergence of new occupations following technological innovations accounts for the vast majority of long-run employment growth. The combination of significant labor cost savings, new job creation, and higher productivity for non-displaced workers raises the possibility of a productivity boom that raises economic growth substantially, although the timing of such a boom is hard to predict.

We estimate that generative AI could raise annual US labor productivity growth by just under 1½pp over a 10-year period following widespread adoption, although the boost to labor productivity growth could be much smaller or larger depending on the difficulty level of tasks AI will be able to perform and how many jobs are ultimately automated.

The boost to global labor productivity could also be economically significant, and we estimate that AI could eventually increase annual global GDP by 7%. Although the impact of AI will ultimately depend on its capability and adoption timeline, this estimate highlights the enormous economic potential of generative AI if it delivers on its promise.

The recent emergence of generative artificial intelligence (AI) has raised questions around whether we are at the brink of a rapid acceleration in task automation that will significantly save on labor costs, raise labor productivity, and increase the pace of economic growth. In this Global Economics Analyst , we provide an overview of AI's potential macroeconomic impacts, and argue that if AI delivers on its promised capabilities, it has the potential to significantly disrupt labor markets and spur global productivity growth over the coming decades.

Generative AI, Explained

We first discuss the current state of AI development and its key capabilities. Exhibit 1 provides an overview of generative AI, in comparison to its predecessor machine learning methods, sometimes referred to as narrow or analytical AI. In our assessment, the generative AI technologies currently in focus, such as ChatGPT, DALL-E, and LaMDA, are distinguished by three main characteristics: 1) their generalized rather than specialized use cases, 2) their ability to generate novel, human-like output rather than merely describe or interpret existing information, and 3) their approachable interfaces that both understand and respond with natural language, images, audio, and video.

The first two advances are key to expanding the set of tasks that AI can perform, while the third is key for determining its adoption timeline. Just as the migration from command line programming (e.g., MS-DOS) to graphical user interfaces (e.g., Windows) enabled the development of programs (e.g., Office) that brought the power of the personal computer to the masses, the intuitive interfaces of the current generation of AI technologies could significantly increase their speed of adoption. For example, ChatGPT surpassed 1mn users in just 5 days, the fastest that any company has ever reached this benchmark.

Exhibit 1 : An Overview of Generative AI

Source: Goldman Sachs Global Investment Research

Beyond these changes, exponential increases in the raw computing power available [ 1 ] has enabled rapid advances in the complexity of tasks AI can perform and the accuracy at which it can perform them. For example, the latest iteration of OpenAI’s GPT model—GPT-4, released in March 2023, roughly one year after the GPT-3.5 model currently underlying ChatGPT finished training—scores 150 points higher on the SAT than its predecessor, is 40% more likely to produce accurate responses, and can now accept visual input (rather than just text). [ 2 ] As Exhibit 2 shows, the algorithms underlying generative AI had begun to surpass human benchmarks for tasks such as image classification and reading comprehension even before these recent advances.

Exhibit 2 : AI Increasingly Outperforms Human Benchmarks

Source: Stanford Institute for Human-Centered Artificial Intelligence, Goldman Sachs Global Investment Research

As AI has become increasingly advanced and accessible, interest and investment have followed. Management teams of publicly-traded corporations increasingly cite AI in earnings calls—and at a rapidly increasing rate—and these indications of interest predict large increases in capital investment at the company level ( Exhibit 3 ). As of 2021, US and global private investment in AI totaled $53bn and $94bn respectively—each up more than fivefold in real terms from five years prior [ 3 ] —and if investment continues to increase at the more modest pace that software investment grew at during the 1990s, US investment in AI alone could approach 1% of US GDP by 2030.

Exhibit 3 : Management Teams Are Increasingly Focused on Opportunities from AI on Company Earning Calls, and More Mentions of AI Predict Higher Capex

Source: GS Data Works, FactSet, Goldman Sachs Global Investment Research

While much uncertainty remains around both the capability and adoption timeline of generative AI, these developments suggest that AI is well-positioned to advance rapidly and grow in scale in the coming years.

The Future of Work: Substitute Sometimes, Complement Often

Generative AI’s ability to 1) generate new content that is indistinguishable from human-created output and 2) break down communication barriers between humans and machines reflects a major advancement with potentially large macroeconomic effects.

To assess the size of these effects, we consider the likely impact generative AI will have on the labor market if it delivers on its promised capabilities. In particular, we use data from the O*NET database on the task content of over 900 occupations in the US (and later extend to over 2000 occupations in the European ESCO database) to estimate the share of total work exposed to labor-saving automation by AI by occupation and industry.

Based on our review of existing literature on the probable use cases of generative AI, we classify 13 work activities (out of 39 in the O*NET database) as exposed to AI automation, and in our base case assume that AI is capable of completing tasks up to a difficulty of 4 on the 7-point O*NET “level” scale (see Appendix for more details). We then take an importance- and complexity-weighted average of essential work tasks for each occupation and estimate the share of each occupation’s total workload that AI has the potential to replace. We further assume that occupations for which a significant share of workers’ time is spent outdoors or performing physical labor cannot be automated by AI.

In Exhibit 4 , we report the occupation-level distribution of the share of tasks that AI can perform. We find that roughly two-thirds of US occupations are exposed to some degree of automation by AI, and that of those occupations which are exposed, most have a significant—but partial—share of their workload (25-50%) that can be replaced.

Exhibit 4 : Two-Thirds of Current Occupations Could be Partially Automated by AI

Weighting our estimates by the employment share of each occupation in the US Occupational Employment and Wage Survey (OEWS) and aggregating to the industry level, we estimate that one-fourth of current work tasks could be automated by AI in the US ( Exhibit 5 , top panel), with particularly high exposures in administrative (46%) and legal (44%) professions and low exposures in physically-intensive professions such as construction (6%) and maintenance (4%). Matching our occupation-level estimates to the European ISCO occupation classification system and performing a similar exercise for the Euro Area using the Eurostat Labor Force Survey (LFS) database yields estimates of a similar magnitude, both in aggregate and across industries ( Exhibit 5 , bottom panel).

Exhibit 5 : One-Fourth of Current Work Tasks Could Be Automated by AI in the US and Europe

We next extend our US and European estimates globally, adjusting for differences in industry composition across countries and further assuming that AI does not impact the agricultural sector in EM economies due to significant differences in the composition and production approaches in that industry between EM and DM economies. [ 4 ] Our estimates intuitively suggest that fewer jobs in EMs are exposed to automation than in DMs, but that 18% of work globally could be automated by AI on an employment-weighted basis ( Exhibit 6 ).

Exhibit 6 : Globally, 18% of Work Could be Automated by AI, with Larger Effects in DMs than EMs

Collectively, our estimates suggest that a large share of employment and work is at least partially exposed to automation by AI, raising the prospect of significant labor savings. To assess the robustness of our estimates, we compare our baseline US estimate to a wider range of scenarios, including those in which AI can perform more or less difficult tasks than we assume in our baseline, and in which we relax our assumption that AI cannot assist with jobs which are primarily outdoors or physical (i.e., a scenario in which AI is complementary with robotics and existing machinery). Our scenario analysis suggests that the ultimate share of work exposed to automation could range from 15-35% ( Exhibit 7 , left panel), a range which is consistent with—but on the conservative side of—existing estimates in the literature ( Exhibit 7 , right panel). Our relatively conservative baseline primarily reflects our narrower focus on the impact of generative AI, in contrast to other studies which sometimes consider a wider range of related technologies (including robotics) that increase the scope for automation.

Exhibit 7 : Our Estimates Confirm that a Significant Share of Employment Is at Least Partially Exposed to Automation by AI, but Larger Effects Frequently Cited Include the Automation of Physical Tasks That Seem Less Likely in the Near-Term

Although the impact of AI on the labor market is likely to be significant, most jobs and industries are only partially exposed to automation and are thus more likely to be complemented rather than substituted by AI. In Exhibit 8 , we assume for illustration that jobs for which at least 50% of importance- and complexity-weighted tasks are exposed to automation are likely to be substituted by AI, while jobs with an exposure of 10-49% are more likely to be complemented, and jobs with a 0-9% exposure are unlikely to be impacted. In our baseline, these assumptions would be consistent with 7% of current US employment being substituted by AI, 63% being complemented, and 30% being unaffected, though the ultimate effects will depend on how labor demand and occupational workloads evolve in response to partial labor savings in the majority of occupations.

Exhibit 8 : Replacement in Legal and Administrative Fields, Little Effect in Manual and Outdoor Jobs, and Productivity-Enhancement Everywhere Else

Sizing the Boost to Productivity and Growth

The large share of employment exposed to automation from generative AI raises the potential for a boom in labor productivity that significantly increases global output. There are two main channels through which AI-driven automation could raise global GDP.

First, most workers are employed in occupations that are partially-exposed to AI automation and, following AI adoption, will likely apply at least some of their freed-up capacity toward productive activities that increase output.

Academic studies confirm that workers at early-adopting firms experience higher labor productivity growth following AI adoption, with estimates generally implying a 2-3pp/year boost ( Exhibit 9 ). While differences in the capability of generative AI relative to earlier vintages make it hard to extrapolate these results forward, they clearly suggest that generative AI can drive an economically significant increase in productivity.

Exhibit 9 : Academic Studies Generally Find That AI Adoption Increases Within-Firm Annual Worker Productivity Growth by 2-3pp

Second, we anticipate that many workers that are displaced by AI automation will eventually become reemployed—and therefore boost total output—in new occupations that emerge either directly from AI adoption or in response to the higher level of aggregate and labor demand generated by the productivity boost from non-displaced workers. Both of these channels have plenty of historical precedent. For example, information technology innovations introduced new occupations like webpage designers, software developers, and digital marketing professionals, but also increased aggregate income and indirectly drove demand for service sector workers in industries like health care, education, and food services.

To demonstrate how technological innovation that initially displaces workers drives employment growth over a long horizon, in Exhibit 10 we show results from a recent study by economist David Autor and coauthors. [ 5 ] Using Census data, they find that 60% of workers today are employed in occupations that did not exist in 1940, implying that over 85% of employment growth over the last 80 years is explained by the technology-driven creation of new positions.

Exhibit 10 : Technological Innovation Leads to the Creation of New Occupations That Account for the Bulk of Employment Growth

Source: Autor et al. (2022), Goldman Sachs Global Investment Research

Exhibit 11 leverages a different academic study by economists Daren Acemoglu and Pascual Restrepo that decomposes changes in labor demand into contributions from productivity growth and technology-driven worker displacement and reemployment (among other factors) to show how the drivers of labor demand change over time. [ 6 ]

Technological change displaced workers and created new employment opportunities at roughly the same rate for the first half of the post-war period, but has displaced workers at a faster pace than it has created new opportunities since the 1980s. These results suggest that the direct effects of generative AI on labor demand could be negative in the near-term if AI affects the labor market in a manner similar to earlier advances in information technology, although the effects on labor productivity growth would still be positive.

Exhibit 11 : Historically, Worker Displacement from Automation Was Roughly Offset by Creation of New Roles/Tasks Prior to 1980, but Displacement Has Created a Net Drag on Labor Demand More Recently

Source: Acemoglu and Restropo (2019), Goldman Sachs Global Investment Research

The combination of significant labor cost savings, new job creation, and a productivity boost for non-displaced workers raises the possibility of a labor productivity boom like those that followed the emergence of earlier general-purpose technologies like the electric motor and personal computer. These past experiences offer two key lessons.

First, the timing of a labor productivity boom is hard to predict, but in both cases started about 20 years after the technological breakthrough, at a point when roughly half of US businesses had adopted the technology ( Exhibit 12 , left panel). Second, in both of these instances, labor productivity growth rose by around 1.5pp/year in the 10 years after the productivity boom started, suggesting that the labor productivity gains can be quite substantial ( Exhibit 12 , right panel).

Exhibit 12 : Previous Milestone Technologies Have Led to Labor Productivity Booms, but the Timing Is Hard to Predict

Source: US Bureau of Labor Statistics, Census Bureau, Our World in Data, Woolf (1987), Haver Analytics, Goldman Sachs Global Investment Research

To estimate the boost to labor productivity in the US from widespread adoption of generative AI, in Exhibit 13 we sum up the implied labor productivity effects from direct labor cost savings, a productivity boost for non-displaced workers, and a composition effect from the reemployment of displaced workers in new positions.

Our baseline analysis incorporates our key findings from above, including that about 7% of workers are fully displaced but that most are able to find new employment in only slightly less productive positions, that partially exposed workers experience a boost in productivity consistent with existing estimates ( Exhibit 9 ), and that effects are realized over a 10-year period that starts around the time when roughly half of businesses have adopted generative AI. Under these assumptions we estimate that widespread adoption of generative AI could raise overall labor productivity growth by around 1.5pp/year (vs. a recent 1.5% average growth pace), roughly the same-sized boost that followed the emergence of prior transformative technologies like the electric motor and personal computer.

This estimated boost to labor productivity growth is both admittedly quite large and highly uncertain. Exhibit 13 therefore also considers other plausible scenarios and shows that the boost to US productivity growth could easily range from 0.3-3.0pp depending on the difficulty level of tasks generative AI can perform, how many jobs are ultimately automated, and the speed of adoption:

First, we vary the O*NET difficulty level of the tasks that AI is capable of completing. In a much less powerful AI scenario where, for example, generative AI is only ultimately able to “skim a short article to gather the main point” (difficulty score 2) rather than “determine the interest cost to finance a new building” (difficulty score 4), the implied labor productivity growth boost would fall to 0.3pp/year. If AI is instead more powerful and is able to, again for example, “analyze the cost of medical care services for all US hospitals” (difficulty score 6), the implied labor productivity growth boost would rise to 2.9pp/year.

Second, we vary the amount of labor that is fully displaced by generative AI. Assuming no labor displacement implies only a moderately smaller productivity growth boost of 1.2pp/year because non-displaced workers would still experience significant productivity gains, while assuming that a much larger share of workers are displaced would raise the boost to productivity growth to 2.4pp/year.

Third, we vary the timeline of adoption. The productivity growth boost would only be roughly half as large if the gains are realized over a 20-year period and one-third as large if realized over a 30-year period.

Our key takeaway from these analyses is that the ultimate boost to labor productivity is uncertain, but in most scenarios would remain economically significant.

Exhibit 13 : We Estimate That Generative AI Could Boost Aggregate Labor Productivity Growth by 1.5pp in the US, Although the Size of the Boost Will Depend on AI’s Capability and Adoption Timeline

In Exhibit 14 we extrapolate our analysis for the US to other countries under the assumption that differences in the industry-composition of labor can account for most of the differences in labor productivity growth. Our estimates imply that AI adoption could boost global annual productivity growth for countries in our coverage by 1.4pp (FX-weighted average) over a 10-year period, although we would likely expect a more delayed impact in EM economies.

Exhibit 14 : Productivity Growth Boosts Could Be Sizable in Other Countries As Well; We Estimate Widespread AI Adoption Could Boost Global Annual Productivity Growth by 1.4pp Over a 10-Year Period

Applying our estimated global labor productivity boost to countries in our coverage implies that widespread AI adoption could eventually drive a 7% or almost $7tn increase in annual global GDP over a 10-year period. Although the size of AI’s impact will ultimately depend on its capability and adoption timeline—and uncertainty around both of these factors is sufficiently high that we are not incorporating our findings into our baseline economic forecasts at this time—our estimates highlight the enormous economic potential of generative AI if it delivers on its promise.

Joseph Briggs

Devesh kodnani, our baseline assumes tasks in 13 categories up to a difficulty level of 4 could be automated.

Source: O*NET, Goldman Sachs Global Investment Research

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Study finds medical debt relief doesn’t always work

When it comes to helping Americans manage rising health care costs, one increasingly popular policy stands out for both its simplicity and potential payoff: Buy up vast amounts of medical debt for pennies on the dollar and cancel it, thereby giving struggling families a break from one major stressor.

Over the last two years, 15 state or local governments passed programs to acquire about $8 billion worth of medical fees that have either been — or are about to be — sent to bill collectors. Five others are considering programs that would raise that total to nearly $13 billion.

It’s not just governments that think medical debt relief holds promise: Private donors are financing the purchase of outstanding medical debts worth billions of dollars at steep discounts.

But are these efforts delivering on their promise?

Not according to the largest study to date of medical debt relief programs released April 8 as a National Bureau of Economic Research working paper and co-authored by Neale Mahoney , a professor of economics in the Stanford School of Humanities and Sciences.

Mahoney and his collaborators find no evidence that buying and then forgiving medical debts that are in collections improved on average beneficiaries’ finances, access to credit, or their physical or mental health. People were even less likely to pay existing medical bills after their debt was eliminated.

Calling the results “largely disappointing,” Mahoney says that policymakers, philanthropists and even the experts in health care costs that the study authors surveyed as part of their experiment had every reason to think that buying medical debts in collections would be a relatively low cost, scalable tool for helping people in need.

“We are not saying with this study that medical debt relief doesn’t help people,” says Mahoney, who is the George P. Shultz Fellow at the Stanford Institute for Economic Policy Research ( SIEPR ) and will become director of the institute in January 2025.

“What we are saying” he says, “is that trying to help them by reducing their medical debt when it’s either in collections or headed there may be happening too late to make a difference or else there are problems with how it is currently done that need to be addressed.”

In response to the study’s results, Mahoney says that RIP Medical Debt, the nonprofit organization that partnered with Mahoney and his collaborators on the research and is working with state and local governments on their debt relief plans, is changing its approach — including buying up debts before they reach collections, when the hoped-for benefits are more likely to be felt by patients.

“This is what we, as scientists, set out to do, which is to help people in the business of reducing medical debts figure out how to actually have the impact that they want to have,” he says.

“The overriding question now is, how do we find the sweet spot between low cost and high impact,” says Mahoney, whose ongoing research into health care costs includes a study that found significant benefits for patients who participated in a hospital debt-forgiveness program.

Beyond correlations

Medical debt is a real problem in the U.S.: Two in five Americans have outstanding health care bills, according to the Kaiser Foundation. Those with payments overdue are more likely to be uninsured, low-income, and either Black or Hispanic. What’s more, the total amount of outstanding medical debt in the United States is, as Mahoney has shown, much bigger than people think.

Eight years ago, comedian John Oliver turned RIP Medical into a household name with a segment on his HBO show in which he announced he had financed RIP’s purchase of $15 million worth of medical debt held by some 9,000 Americans. An outpouring of donations to RIP followed, including a $30 million grant in 2022 from Mackenzie Scott, ex-wife of Amazon founder Jeff Bezos.

With RIP gaining traction, Mahoney teamed with the company and with Raymond Kluender, an assistant professor at Harvard Business School; Francis Wong, an assistant professor at Ludwig Maximilian University of Munich; and Wesley Yin, an economics professor at UCLA, to study its effects on people whose debts are forgiven.

To do that, the researchers conducted two experiments, both of which allowed them to compare one group selected at random to have their medical debts paid for against another group, also selected at random, whose outstanding bills remained in collections.

In doing so, Mahoney and collaborators were able to get to the root of a vexing question in health care economics: “We know that people with medical debt are struggling with their health and with other aspects of their life,” Mahoney says. “But is medical debt a cause or a symptom of these issues? Our study shows that medical debt is a symptom, and not an underlying cause.”

Possible explanations

The researchers’ first experiment looked at what happened when RIP Medical relieved nearly 14,400 patients of $19 million in hospital debt that was unlikely to be paid but had not yet been sent to third-party collection. The second involved a similar analysis of $150 million worth of medical debt incurred by 69,000 individuals and that had languished with debt collectors for several years.

The first test mattered because the hospital debt was “younger” — meaning patients were more likely to experience benefits once it was written off than they would with “older” debt that they may have already put behind them.

To Mahoney and his co-authors’ surprise, in both instances they didn’t see in their data any payoff on average in their measures of financial well-being, physical health, or mental state. Beneficiaries of debt relief were also less likely to pay their existing medical bills. And those with the most medical debt were more likely to feel depressed upon learning that their debt had gone away.

Mahoney says it’s difficult to know for sure why removing debts in collection or near-collection didn’t help patients — but the evidence suggests that the help came too late.

“These findings reject the idea that people who had some debt relieved would have more resources to pay other bills,” Mahoney says.

One explanation for why people on average weren’t paying their current medical bills, he says, could be that they now figured those would be forgiven, too. As for the rise in feelings of sadness, he says people may have taken the debt forgiveness as a reminder of their overall financial distress and of their need for charity to help address it.

A silver lining

Mahoney cautions that the study doesn’t analyze every potential outcome of having medical debt relieved, so could be that there are benefits that his study does not account for.

But it does offer one piece of good news for proponents of medical debt relief efforts, he says. In recent years, the Consumer Financial Protection Bureau has been cracking down on the practice of listing medical debts on credit reports, which it says is a poor predictor of whether people are likely to pay their bills. Even so, Mahoney and his coauthors were able to study nearly 2,800 individuals that had their outstanding bills listed on their credit reports when RIP Medical bought their debt.

The researchers find that debt relief immediately raised their credit scores as well as credit limits.

To Mahoney, the finding is significant for what it says about the power of policymaking to reduce the fallout of health care costs — and for evidence-based research to help identify what’s working and what isn’t.

“My hope is that the next study on medical debt relief shows positive impacts, not because our study is wrong but because the world will have responded to our research,” he says.

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Atmospheric and economic drivers of global air pollution

Carbon monoxide emissions from industrial production have serious consequences for human health and are a strong indicator of overall air pollution levels. Many countries aim to reduce their emissions, but they cannot control air flows originating in other regions. A new study from the University of Illinois Urbana-Champaign looks at global flows of air pollution and how they relate to economic activity in the global supply chain.

"Our study is unique in combining atmospheric transport of air pollution with supply chain analysis as it tells us where the pollution is coming from and who is ultimately responsible for it," said lead author Sandy Dall'erba, professor in the Department of Agricultural and Consumer Economics (ACE) and director of the Center for Climate, Regional, Environmental and Trade Economics (CREATE), both part of the College of Agricultural, Consumer and Environmental Sciences (ACES) at Illinois.

"There is a direct link between a country's level of production and how much air pollution is emitted. But production may be driven by demand from consumers in other countries. We use supply chain analysis to quantify the links between production and consumption. This helps us to understand how production in one country is linked to domestic and foreign demand," he added.

The researchers traced the movement of pollutants through the atmosphere to understand the flow of emissions, using simulations developed by Nicole RIemer, professor in the Department of Climate, Meteorology & Atmospheric Sciences, College of Liberal Arts & Sciences at Illinois. For analytical purposes, they divided the world into five sections: the United States, Europe, China, South Korea, and the rest of the world. South Korea is located downwind of China, and it serves as an example of how a small country can be affected by pollution from a much larger upwind neighbor.

"Over recent years, South Korea has taken several measures to reduce its own pollution, yet it has experienced worsening air quality. Why? The answer is to be found in its upwind neighbor, China. Yet, a large amount of the goods manufactured in China are destined for foreign consumers in the U.S. and in Europe, among other places. As such, who is to be blamed for the increase in air pollution in South Korea? That is the challenge we embarked on with this study," Dall'erba stated.

The researchers found the amount of carbon monoxide emissions coming from China to South Korea increased from 30 teragrams (Tg) in 1990 to 42 Tg in 2014.

"To put these numbers in perspective, 5 Tg of carbon monoxide corresponds to the emissions from all of the cars in the U.S. -- roughly 274 million -- each driving 13,500 miles per year. So it's definitely not a small increase. We conclude that South Korea has, in effect, lost control of their own air quality," Dall'erba explained.

Dall'erba and his colleagues conducted a structural decomposition analysis to identify the economic drivers of carbon monoxide emissions in the five study regions. They found that while China's technological processes to reduce pollution have improved, overall carbon monoxide emissions have gone up because the country's production has increased.

Next, the researchers sought to identify where the demand that drives the increased production comes from. In China's case, some of the increase can be attributed to U.S. and European demand, but it is primarily driven by households in China. The Chinese population grew considerably between 1990 and 2014, and the country became wealthier, leading to higher consumption, Dall'erba noted.

"Our findings show that pollution is a global concern that can't be solved by individual countries. The world is connected, and we're all in this together," said co-author Yilan Xu, associate professor in ACE. "Pollution in one country can result from economic activities in neighboring countries, which in turn is influenced by who's demanding the goods produced in that country. Pollution emitted anywhere in the world is going to have consequences all over the world to varying degrees."

Dall'erba, Riemer, and Xu emphasize that everybody can play a part in reducing emissions. Producers can implement technological change; policymakers can issue regulations or provide incentives; and consumers can make choices that favor sustainable products.

Air Quality
Environmental Issues
Air Pollution
Environmental Policies
Resource Shortage
Public Health
World Development
Air pollution
Automobile emissions control
Climate change mitigation
Environmental impact assessment
Global warming
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Story Source:

Materials provided by University of Illinois College of Agricultural, Consumer and Environmental Sciences . Original written by Marianne Stein. Note: Content may be edited for style and length.

Journal Reference :

Sandy Dall’erba, Nicole Riemer, Yilan Xu, Ran Xu, Yu Yao. Identifying the key atmospheric and economic drivers of global carbon monoxide emission transfers . Economic Systems Research , 2024; 1 DOI: 10.1080/09535314.2023.2300787

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Economic conditions outlook, March 2024

Executives’ latest views on the global economy and their countries’ economies lean much more positive than they did at the end of 2023.

In the latest McKinsey Global Survey on economic conditions, 1 The online survey was in the field from March 4 to March 8, 2024, and garnered responses from 957 participants representing the full range of regions, industries, company sizes, functional specialties, and tenures. To adjust for differences in response rates, the data are weighted by the contribution of each respondent’s nation to global GDP. the outlook on domestic conditions in most regions has become more hopeful, despite ongoing shared concerns about geopolitical instability and conflicts. In a year brimming with national elections, 2 Katharina Buchholz, “2024: The super election year,” Statista, January 19, 2024. respondents increasingly see transitions of political leadership as a primary hazard to the global economy, particularly in Asia–Pacific, Europe, and North America.

Furthermore, respondents now view policy and regulatory changes as a top threat to their companies’ performance, and they offer more muted optimism than in December about their companies’ prospects.

Optimism builds over global and domestic conditions

Respondents share much brighter assessments of the global economy and conditions in their countries than they did at the end of 2023, and views of the global economy are the most positive they’ve been since March 2022 (Exhibit 1). In the December survey, respondents were equally likely to say the global economy had improved and worsened. Today, respondents are twice as likely to report improving rather than deteriorating conditions. Looking ahead to the next six months, respondents are also more optimistic than they were last quarter. Forty-six percent expect the global economy to improve—nearly double the share expecting worsening conditions—while 37 percent expected improvement in the previous survey.

Likewise, respondents offer hopeful views when asked about the most likely near-term scenario for the global economy, suggesting confidence in central banks. They are more likely to expect a soft landing overall—with either slowing or accelerating growth compared with 2023—than a recession (Exhibit 2). The largest share of respondents expect a soft landing, with slowing growth relative to 2023.

Respondents’ views on their own economies have also become more upbeat. Nearly half of respondents say economic conditions at home are better now than they were six months ago, up from 41 percent in December, while just 22 percent say conditions have gotten worse. Respondents in Europe—who offered the most negative assessments of any respondents in September and December—are now nearly twice as likely as in December to say conditions have improved in the past six months, though it is unclear what has prompted that change and whether it is a durable finding.

McKinsey’s original survey research

More than half of respondents expect their economies to improve over the next six months. It’s the first time in two years that a majority of respondents have said that. In most regions, larger shares of respondents express optimism about economic conditions at home now than in December (Exhibit 3).

Geopolitical instability remains top of mind as concerns over political transitions rise

Geopolitical instability and conflict continues to be the most cited risk to global growth, selected by two-thirds of respondents for the second quarter in a row (Exhibit 4). Yet in this first quarterly survey of 2024—a year in which more than 60 countries will hold national elections 3 Katharina Buchholz, “2024: The super election year,” Statista, January 19, 2024. —transitions of political leadership have jumped from the fifth-most-cited to the second-most-cited threat to the world economy. The share of respondents in Europe reporting political transitions as a top threat is 2.4 times the share in December, while the shares in North America and Asia–Pacific have nearly doubled. 4 Prior to the latest survey, respondents in Mexico were included in Latin America in analyses but are now included in North America. We see a smaller uptick in concern about supply chain disruptions, which is cited as a threat by the largest share of respondents since December 2022.

Looking at risks to growth in respondents’ countries, geopolitical instability and conflict remains the top perceived threat, cited by a larger share than in any quarter since March 2022. Uneasiness about domestic political conflicts and transitions of political leadership, now the second- and third-most-cited risks, have overtaken concerns about inflation, which was the second-most-cited risk in December. Among respondents in North America, transitions of political leadership are cited nearly twice as often as in December (Exhibit 5). In Greater China, multiple risks now appear to carry equal weight, whereas in December, inflation was the top concern.

Policy and regulatory changes top the list of cited threats to companies’ growth

As respondents’ concerns about inflation as a domestic threat wane, the survey results suggest that companies are holding off on price increases. For the first time since we began asking about companies’ prices in September 2022, less than half of private-sector respondents in the latest survey—45 percent—say their companies increased the price of their goods or services over the past six months, down from 56 percent in December.

For five quarters, respondents’ most cited risk to their companies’ performance in the next 12 months was weak customer demand. Now, they most often point to policy and regulatory changes as a threat. In December 2023, policy and regulatory changes weren’t even one of the top five perceived risks. This increased wariness of policy changes cuts across most regions, though we see the largest increase in Europe.

Even though weak demand is no longer the most cited risk for companies, optimism over expected demand has tapered since December. Fifty-one percent of respondents expect an increase in customer demand over the next six months, down from 57 percent in December. Yet expectations about profits remain upbeat: about six in ten respondents expect increasing profits in the months ahead, in line with expectations in much of 2023.

The survey content and analysis were developed by Jeffrey Condon , a senior knowledge expert in McKinsey’s Atlanta office; Krzysztof Kwiatkowski , a capabilities and insights expert in the Boston office; and Sven Smit , chair of insights and ecosystems, chair of the McKinsey Global Institute, and a senior partner in the Amsterdam office.

They wish to thank Jan Mischke for his contributions to this work.

This article was edited by Heather Hanselman, a senior editor in the Atlanta office.

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