The Unassuming Economist

From a paper by Keyang Zhan & Zhengning Pu:

“Firms, in response to risk response, tend to avoid and transfer the risks associated with climate policy uncertainty (CPU) as much as possible, which in turn has a profound impact on household income. We use Chinese prefecture-level cities as the research sample to examine the economic impact of CPU on income inequality. We find that (1) CPU exacerbates income inequality by promoting agglomeration effect, technological bias effect, and automation effect. (2) The negative impact of CPU on income inequality is not obvious in the central region, high administrative level, high capital allocation ability, low labour allocation ability and resource-based cities. (3) Shock duration, effects (as opposed to climate physical risks), and other impacts are examined. Command-and-control environmental regulations can mitigate the potential impacts of CPU, whereas market-based environmental regulations have limited effectiveness. This study examines the potential impacts of CPU on balanced development and high-quality development, providing new insights for the formulation of climate policies and the management of policy risks associated with climate change.”

From a paper by Cephas Naanwaab:

“Recent trends in inequality have raised concerns among researchers and policymakers globally. The role of globalization, one of the leading forces driving this trend, continues to be intensely debated in academic and policy circles. Invoking standard trade theory, this paper analyses whether and the extent to which trade liberalization has contributed to the recent trends in inequality. The approach and findings of the paper are novel: previous studies of trade liberalization’s impact on inequality do not explicitly control the direction of trade. The empirical results show that trade liberalization is associated with decreasing income inequality overall, but contingent on the direction of trade, it has opposing effects: North–North and South–South trade are inequality-reducing while North–South trade is inequality-increasing. Simply put, liberalizing trade between countries of similar developmental levels does not raise inequality. This paper affirms, using recent data, that trade with developing countries raises inequality in developed countries. Additionally, it finds that North–South trade (particularly imports from high-income to low-income countries) may also raise inequality in developing countries, contrary to Heckscher–Ohlin–Stolper–Samuelson model predictions. Skill-biased technical change, a consequence of trade liberalization between North and South, is the main mechanism driving inequality increases in developing countries.”

From a paper by Joe Piacentini, Harley Frazis, Peter B. Meyer, Michael Schultz, and Leo Sveikauskas:

“This paper surveys economic literature largely from 2020 and 2021 on how the COVID-19 pandemic and responses to it affect U.S. income inequality. Established trends of growing inequality may continue roughly as before, involving new technologies, international trade, and the growth of “superstar” firms. Employment, earnings, and schooling were affected differently across demographic groups and occupations. The pandemic disrupted lower-paid, service sector employment most, disadvantaging women and lower income groups at least temporarily, and this may have scarring effects. Government policies implemented in response to the pandemic offset much of the effect on income. Higher-paid workers tend to gain more from continuing opportunities to telework. Less-advantaged students suffered greater educational setbacks from school closures. School and day care closures disrupted the work of many parents, particularly mothers. We conclude that the pandemic is likely to widen income inequality over the long run, because the lasting changes in work patterns, consumer demand, and production will benefit higher income groups and erode opportunities for some less advantaged groups. Telework has increased permanently. High-contact jobs and services may continue to face reduced demand and increased automation. School disruptions have been worse for lower-income students and are likely to have lingering negative effects, which may widen future inequality within more recent birth cohorts. The history of the 1918 flu shows that the effect of a pandemic on inequality in income, education, health, and wealth depends on the nature of the pandemic and on behavioral and policy responses.”

From a paper by Andrea Foschi, Christopher L. House, Christian Proebsting, and Linda L. Tesar:

“We examine the responsiveness of labor participation, unemployment and labor migration to
exogenous variations in labor demand. Our empirical approach considers four instruments
for regional labor demand commonly used in the literature. Empirically, we find that labor
migration is a significant margin of adjustment for all our instruments. Following an increase
in regional labor demand, the initial increase in employment is accounted for mainly through
a reduction in unemployment. Over time however, net labor in-migration becomes the dominant
factor contributing to increased regional employment. After 5 years, roughly 60 percent
of the increase in employment is explained by the change in population. Responses of labor
migration are strongest for individuals aged 20-35. Based on historical data back to the
1950s, we find no evidence of a decline in the elasticity of migration to changes in employment.”

From a paper by Xuecheng Fan, Zeshui Xu, Marinko Skare & Xinxin Wang:

“This study examines the impact of the COVID-19 pandemic on unemployment dynamics, focusing on youth unemployment and gender-specific disparities across 20 European countries from 2013 to 2022. Using a panel structural vector autoregressive (PSVAR) model, the study analyzes the effects of the pandemic on total unemployment, youth unemployment (ages 15–24), and gender differences in unemployment rates. The results reveal that youth unemployment was disproportionately affected by the COVID-19 shock, with significant increases observed in countries with high pre-pandemic unemployment rates, such as Greece and Spain. Additionally, gender inequality in unemployment rates was exacerbated, particularly in countries like Greece, where women consistently faced higher unemployment rates than men throughout the observed period. The study also highlights the significant role of excess mortality during the pandemic, with countries experiencing higher COVID-19 mortality rates, such as Italy and Spain, also showing higher unemployment rates. These findings contribute to the understanding of how economic shocks, such as the COVID-19 pandemic, exacerbate the existing labor market inequalities, particularly for vulnerable demographic groups such as youth and women. The study calls for targeted policy interventions to address these disparities and promote a more inclusive recovery.”