The Unassuming Economist

From a paper by Sam Peltzman:

“I document a sudden, sharp and historically unprecedented decline in self-reported happiness in the US population. It occurred during 2020, the year of the Covid pandemic, and mainly persists through 2024. This happiness crash spread across nearly all typical demographics and geographies. The happiest groups pre-Covid (e.g., whites, high income, well-educated and politically/ideologically right-leaning) tend to show the largest happiness reductions. The glaring exception is marital status, which has consistently been an important marker for happiness. The already wide happiness premium for marriage has, if anything, become slightly wider. With both married and unmarried reporting large declines in happiness the country has become segregated: slightly over half-the married adults-remain happy on balance; the unmarried, nearly half, are now distinctly unhappy. I also show that across a number of aspects of personal and social capital post-Covid deterioration is the norm, including a collapse of belief in the fairness of others and of trust in the US Supreme Court.”

From a paper by Giuseppe Pio Dachille, Antonio Dalla Zuanna, Monica Paiella, and Eliana Viviano:

“We quantify how the employment expansion accompanying Italy’s post-pandemic recovery mitigated the distributional consequences of the contemporaneous surge in prices, which disproportionately affected households at the bottom of the expenditure distribution. Using linked administrative employment records and household survey and expenditure data, we examine labour income dynamics, employment transitions, differential inflation exposure, and the redistributive role of the tax–benefit system for Italian households without pension or self-employment income over 2018–2023. Despite elevated inflation, households in the lowest expenditure quintile experienced gains in real labour income, whereas those higher in the distribution did not. The decline in inequality is driven primarily by employment entry among previously non-employed household members, while adjustments among continuously employed workers played a limited role. Extensive-margin gains reflect stronger demand for low-skilled labour rather than differential labour-supply responses to inflation. Microsimulations indicate that fiscal measures cushioned disposable incomes at the bottom but did not alter the central role of employment growth in shaping distributional outcomes.”

From a paper by Maridueña-Larrea, Ángel and Martín-Román, Ángel L:

“This study assesses the empirical validity, heterogeneity, and spatial dependence of Okun’s Law
in a global setting. Using annual data for 163 countries over the period 1992–2023, we estimate
country-specific unemployment–output elasticities under two standard specifications (output-gap
and first-difference models) and allow for cyclical asymmetries by distinguishing expansionary and
recessionary phases. The results indicate that Okun’s coefficient is negative and statistically
significant in most countries, although its magnitude is highly heterogeneous and varies
systematically across income groups. Controlling for the common 2020 shock (COVID-19) does
not meaningfully alter statistical significance for most countries, but it generates economically
relevant shifts in the coefficient’s magnitude for a non-negligible subset, thus improving
cross-country comparability. We also document pronounced asymmetry: elasticities are, on
average, stronger during recessions than expansions, particularly among middle- and high-income
economies. Moran’s I statistics reveal positive and significant spatial autocorrelation in cyclical
sensitivities across alternative k-nearest-neighbour weighting matrices, with stronger dependence
during recessions. These findings motivate the design of countercyclical labour-market policies
tailored to structural heterogeneity and coordinated regionally during downturns.”

From a paper by Marta Sordyl:

“The findings confirm that labour demand is the dominant channel of EPL influence,
but productivity, labour supply, and efficiency effects are also important in determining
macroeconomic and social outcomes. EPL influences economic performance not only by
regulating job security but also by shaping incentives for innovation, organizational change,
and resources use. By integrating these wider mechanisms, the study provides a more comprehensive
understanding of EPL’s role in the economy. It contributes to policy debates by
highlighting that EPL should be assessed not solely in terms of labour market flexibility, but
also with regard to its broader implications for efficiency, equity, and welfare.”

From a VoxEU post by Karan Bhasin and Prakash Loungani:

“Many governments have to mitigate concerns about fiscal sustainability, without triggering near-term output losses or reversing progress on containing poverty or inequality. This column assesses how the design of fiscal consolidation packages shapes their impact on aggregate and distributional outcomes. It finds that the careful design of fiscal consolidation (making use of available monetary space or choosing tax-based instruments) can lower the output and unemployment costs of austerity and mitigate the adverse impacts on poverty and inequality. The results stress the importance of monetary-fiscal coordination for maintaining fiscal buffers, while limiting setbacks to development goals.”