Centrepiece the Magazine of the Centre for Economic Performance Volume 25 Issue 1 Spring 2020

CentrePiece The Magazine of The Centre for Economic Performance Volume 25 Issue 1 Spring 2020

CAN WE BE HAPPIER?

The cost of being young Poor students Regional inequalities Cluster policy Self-employment TV superstars CentrePiece

CentrePiece is the magazine of the CEP director, Stephen Machin Centre for Economic Performance at the Editor, Romesh Vaitilingam London School of Economics. Articles in this Design, DesignRaphael Ltd issue reflect the opinions of the authors, not Print, Westminster European/Lavenham Press Ltd of the Centre. Requests for permission to reproduce the articles should be sent to the © Centre for Economic Performance 2020 Editor at the address below. Volume 25 Issue 1 (ISSN 1362-3761) All rights reserved. Editorial and Subscriptions Office Centre for Economic Performance London School of Economics Houghton Street London WC2A 2AE

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Since the general election in December, between generations and inequalities in And in an investigation of differences the new catchphrase in UK public policy people’s wellbeing. in the consumer prices facing generational discussions is ‘levelling up’ – what can be In a study of access to higher groups, Rahat Siddique notes that the done to help parts of the country where education, Gill Wyness and colleagues UK’s young adults – the ‘millennials’ – economic performance is comparatively find that many young people from poorer are changing their spending patterns weak. Spatial disparities have long been backgrounds attend less academically compared with previous generations as a focus of work at the Centre for prestigious courses than their A-level they navigate a contrasting economic Economic Performance (CEP) – and in attainment merits. They conclude that landscape, including low real wage this CentrePiece, our research director widening participation units at high- growth, lower likelihood of owning Henry Overman surveys what we know ranking universities could do important their own home and the uncertain about the economic forces polarising outreach work to address this inequality prospects of Brexit. the UK and the potential of various by attracting more disadvantaged Finally, our cover story outlines the policy responses. students from their local areas. evidence on what explains the huge A central message is that we should In an analysis of the very different variation in people’s life satisfaction, care more about the effect of policies on kinds of people who make up the one in notably mental and physical health, and people than on places: the key question seven of the UK workforce who are now our human relationships at work and is the extent to which they improve the in self-employment, Jack Blundell detects at home. In his new book Can We Be life circumstances and life opportunities a sizeable group of less educated young Happier?, CEP’s founder director Richard of individuals and groups of people living men, who stand out as being dissatisfied Layard explores how we can boost all- in particular places, rather than their and most likely to report being self- round happiness – both through public impact on gaps between regions, cities employed due to a lack of better options. policy and in our jobs and private lives. and towns. This is echoed in other articles The policy challenge is how to support in this issue, which explore inequalities in them without impeding the flexibility Romesh Vaitilingam, Editor education and employment, inequalities enjoyed by others in self-employment. [email protected] CentrePiece Spring 2020

page 6 The UK’s self-employed workers

page 24 Contents TV superstars

Page 2 in brief… Can we be happier? Richard Layard and George Ward outline how we Page 16 can boost wellbeing, both through public policy and in Swings and silicon roundabouts: our jobs and private lives does cluster policy work? Max Nathan evaluates a flagship programme set up a decade Page 6 ago to accelerate the growth of East London’s Tech City The UK’s self-employed workers: who they are and what they need Page 22 Jack Blundell is developing a typology of self-employed Mismatched students and universities workers, in part to identify vulnerable groups who may Gill Wyness and colleagues find that many disadvantaged benefit from policy support students attend less academically prestigious courses than their A-level attainment merits Page 10 People, places and politics: the Page 28 challenge of ‘levelling up’ the UK Pupil exclusion in academy schools Henry Overman assesses policies to address the Stephen Machin and Matteo Sandi ask whether wide disparities in economic performance between stricter disciplinary measures are intended more to improve towns, cities and regions educational results than to tackle bad behaviour

Page 18 page 16 The cost of being young: measuring Swings and silicon intergenerational consumer prices roundabouts Rahat Siddique explores an important aspect of the

economic landscape facing the UK’s young adults – the City Road ‘millennial’ generation

Page 24

TV superstars: how a new technology Old Street disrupted the entertainment industry Felix Koenig explains how the rollout of TV in mid-twentieth Old Street century America benefited a handful of superstars but few City Road other entertainers

City Road

Old Street

City Road CentrePiece Spring 2020

If the goal for society is the greatest possible all-round happiness, how can that be achieved? Richard Layard and George Ward outline the evidence on what explains the huge variation in people’s life satisfaction – and how we can boost wellbeing, both through public policy and in our jobs and private lives. Can we be happier?

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homas Jefferson said that Figure 1: ‘The care of human life and What things best explain the spread of happiness in Britain? happiness… is the first and only legitimate object of good ent et Tgovernment.’ We agree with him, as did the LSE’s main architects – the Webbs and it r William Beveridge. So too do an increasing Prtnere number of policy-makers worldwide: Pic et only last October, the European Union’s Council of Ministers requested that all of nce its member states ‘put people and their t ee wellbeing at the centre of policy design’. This basic idea goes back to the ncriinit eighteenth century Enlightenment and it is, ctin in our view, the most important idea of the modern age. But until recently, it has not been easy to apply for lack of systematic Prti crretin ceicient knowledge about the causes of happiness. The new science of happiness is now Source: Mainly the British Household Panel Survey. changing all that, while at the same time modern psychology provides individuals politicians assume. The biggest single factor their lives. And in general, the costs of such with new tools to manage their emotions is mental health – whether you have ever improvements in social and psychological and their human relationships. been diagnosed with depression or an infrastructure are small compared with the With these tools, millions of individuals anxiety disorder. costs of physical infrastructure. And the and policy-makers worldwide are already Next come human relationships – subsequent savings are often enough to taking active steps to create happier including the quality of your work and repay the costs. lives – a world happiness movement is your private life – as well as your physical In our book, we review what can be being born. In our new book, Can We Be health. While all of these factors explain done to raise happiness by many of the Happier? Evidence and Ethics, we describe 18% of the variance of happiness, key players in society. We can start with the new tools – the evidence on what income inequality explains only 1%. teachers. Children’s wellbeing should causes happiness and how we can increase Unemployment causes even less – it is a clearly be a major goal for every school, happiness, both through public policy and devastating experience but affects relatively and schools should be measuring their in our jobs and private lives. few people. wellbeing on a yearly basis. To improve So what causes the huge variation in We find this disconcerting since poverty wellbeing requires major changes in the people’s life satisfaction? Figure 1 provides and unemployment are the topics on ethos in many schools, but it also requires the answer for Britain, and the key factors which Richard has worked for most of his the weekly teaching of life skills, using are very different from the ones that most life. So is it possible that they are more evidence-based materials. important at explaining the scale of really To facilitate this, our research group low life satisfaction? The answer is No: the sponsored and evaluated a complete ranking of factors is essentially the same course of life skills for children aged as in Figure 1. And this applies in all the 11-15 called ‘Healthy Minds’, which has advanced countries that we have studied. dedicated lesson plans and materials. Moreover, if people themselves are asked In the evaluation, this passed the cost- what they worry about most, the ranking effectiveness test of the National Institute of factors is much the same (Sainsbury’s, for Health and Care Excellence (NICE) at 2019): money and debt come sixth. a cost of only 3% of NICE’s maximum But the next issue is this: the state can permitted cost (Lordan and McGuire, 2018; do something about income inequality and Layard et al, 2018). unemployment, but can it do anything After school, young people enter the about mental illness or the quality of world of work, where research shows work, or loneliness, or family conflict and that the worst time in the week is when Governments domestic violence? To this, the answer is workers are with their boss. This is shocking should commit emphatically Yes: there is experimental and in many workplaces we need a quite evidence of ways in which we can different management philosophy. A trial themselves tackle all these problems and reduce the led by MIT shows that where workers are to the goal of unhappiness they cause. involved more closely in decision-making, No one would propose ‘forcing people their job satisfaction rises by more than the people’s to be happy’, but we really should offer 10% and their quit rate falls by a third wellbeing people help with the central problems in (Moen et al, 2017).

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We need a new form of policy-making where policies are judged by the amount of happiness they produce per pound of expenditure

But while good schools and workplaces countries do better at this than any others. Fortunately, modern psychology (and can do much for mental health, at least There, the size of the state is bigger and parts of ancient wisdom) enables us to do a fifth of children and adults will still these are the happiest countries (Helliwell both. The basic idea is that our feelings are experience serious anxiety disorders or et al, 2019). There is no convincing not just things that happen to us but can depression. When this happens, there are evidence that low-tax countries are happier. be influenced by how we think. ctin r ine cre 1.1 now strong evidence-based psychological Will politicians listen? There is every This old idea was more or less therapies (above all, cognitive behavioural reason that they should. Studies of rediscovered by modern psychology in t nee 0.89 therapy or CBT, which helps at least 50% European elections since 1970 as well as the 1970s. Aaron Beck, the founder of rriertnere 0.69 of patients to recover). Because mental the vote for Donald Trump in the United CBT, showed how we could observe illness stops so many people working, these States in 2016 show clearly that elections our automatic negative thoughts. By therapies save more public money than are decided more by the happiness of concentrating more on positive memories Cne in ine they cost (Layard and Clark, 2014). the people than by their incomes and and actions, we could transform our mood. Fortunately, we now have a whole employment (Ward, 2020). More recently, Martin Seligman has range of effective therapies for tackling Even so, there are limits to what public shown how these ideas can be applied to not only standard mental health problems, policy can do, and at least as important is all of us. At the same time, mindfulness such as anxiety and depression, but also what each of us does of our own accord. and other meditative techniques have substance abuse, family conflict and So what kind of culture do we want? taken off, enabling millions to achieve domestic violence. We need urgently to The dominant culture of today urges greater contentment with their lives. make these evidence-based therapies us to strive to be more successful than Despite appearances, a new gentler culture available to all who need them – exactly as other people. is being born. we do in the case of physical illness. At the level of society, this is a zero- But for cultures to flourish, they But humans are also social animals. sum game. For every winner, there is a need to be embedded in organisations, Loneliness is a major problem in modern loser. That is not great for the losers, but it where people meet regularly to remind society, and town planners and community can also be very stressful for the winners. themselves of what really matters and to organisations can do much to promote From the Gallup World Poll, we know that feel supported and inspired. In a largely social connections (Tan, 2006; Pitkala et stress has increased worldwide despite post-religious age, there are few such al, 2009). There is much that different much better living standards than a organisations representing the new, professions can do, and many more generation ago. gentler culture. One of them is Action for experiments are needed to increase their This makes no sense. Instead, we Happiness: it has one million followers on ability to contribute to a happier society. need a positive-sum culture where Making all this happen requires a major people get more of their happiness from Income and rethink of the role of government. First, making other people happier – and from governments have to commit themselves concentrating less on external success and unemployment to the goal of the people’s wellbeing. more on the inner feelings of themselves matter far less This means a new form of policy-making and others. where policies are judged by the amount So we need a revolution not only for happiness of happiness they produce per pound in political philosophy but also in moral than mental of expenditure. philosophy. Our aim should not be Second, there has to be a wider view personal success, but rather to create as and physical of the role of the state in which it not only much happiness as we can in the world health, and the helps people to be better workers, but also (including, of course, our own). This supports them in becoming better parents. requires us to take better care of our own quality of work The evidence is clear: the Scandinavian wellbeing but also that of others. and home life

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We need a Further reading positive-sum Council of the European Union (2019) The culture where Economy of Wellbeing: Creating Opportunities people get for People’s Wellbeing and Economic Growth.

more of their Jan-Emmanuel De Neve, Daisy Fancourt, happiness from Christian Krekel and Richard Layard (2020) ‘A Local Community Course That Raises making other Mental Wellbeing and Pro-Sociality’, people happier CEP Discussion Paper No. 1671 (http://cep.lse. ac.uk/pubs/download/dp1671.pdf).

John Helliwell, Richard Layard and Jeffrey Sachs (2019) World Happiness Report 2019. Figure 2: ‘Exploring What Matters’ raises happiness more than Richard Layard, Lucy Bailey, John Coleman finding a job or a partner and Emma Judge (2018) Healthy Minds: A Four-year Course in Secondary Schools (http://www.healthymindsinschools.org/ ctin r ine cre 1.1 wp-content/uploads/2017/11/HealthyMinds- t nee 0.89 Pamphlet-181130.pdf). rriertnere 0.69 Richard Layard and David Clark (2014) Thrive: The Power of Evidence-based Psychological Cne in ine Therapies, Penguin.

Source: De Neve et al (2020). Grace Lordan and Alistair McGuire (2018) Healthy Minds: Interim Paper (https:// educationendowmentfoundation.org.uk/ Facebook, but its main activities are public/files/Projects/Evaluation_Reports/ face-to-face groups. Elections seem Healthy_Minds_interim_paper.pdf). A group begins with an eight-week to be decided course called ‘Exploring What Matters’, Phyllis Moen, Erin Kelly, Shi-Rong Lee, which has been independently evaluated more by the Michael Oakes, Wen Fan, Jeremy Bray, David in a randomised experiment. Two months happiness of Almeida, Leslie Hammer, David Hurtado after the course, participants were found to and Orfeu Buxton (2017) ‘Can a Flexibility/ have increased their happiness by over one the people Support Initiative Reduce Turnover Intentions point (out of ten) – more than the change than by their and Exits? Results from the Work, Family, and that occurs when someone finds a partner Health Network’, Social Problems 64(1): 53-85. or a job (see Figure 2). incomes and So we now have two powerful and employment Kaisu Pitkala, Pirkko Routasalo, Hannu converging trends, one top-down and the Kautiainen and Reijo Tilvis (2009) ‘Effects of other bottom-up. From the top-down, Psychosocial Group Rehabilitation on Health, we have policy-makers and professionals Use of Health Care Services, and Mortality paying much more attention to the of Older Persons Suffering from Loneliness: outcome that really matters – how people A Randomized, Controlled Trial’, Journals of actually feel about their lives. From the Gerontology Series A 64A(7): 792-800. bottom-up, we have millions of people refocused on how to be happy and make This article draws on Can We Be Happier? Sainsbury’s (2019) Living Well Index. others happy. Evidence and Ethics by Richard Layard In our view, this is an unstoppable force with George Ward, published in January 2020 Jonathan Tan (2006) ‘Religion and Social and within a generation, we shall have by Pelican. Preferences: An Experimental Study’, better public policy and better lives. Let’s Economics Letters 90(1): 60-67. hope that LSE will have played a major role Richard Layard is director of CEP’s wellbeing in this. Perhaps LSE needs a new motto: programme and founder director of CEP. George Ward (2020) ‘Happiness and Voting: not ‘to know the causes of things’, but ‘to George Ward of MIT is a research associate in Evidence from Four Decades of Elections in know the causes of happiness’. CEP’s wellbeing programme. Europe’, American Journal of Political Science.

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One in seven people in the UK workforce is now in self-employment – but this is a very diverse community. Jack Blundell is developing a typology of self-employed workers, which can then be used to assess differences in how satisfied they are with their working lives and to identify vulnerable groups who may benefit from policy support. The UK’s self-employed workers: who they are and what they need

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etween 2000 and 2017, a ‘one-size-fits-all’ approach may not be self-employment in the UK appropriate: ‘Government should recognise There are high grew from 12% of the labour the wide variety of forms of modern self- rates of under- force to 15.1%, with the employment and should act to support and Byears since the financial crisis seeing protect those who need help.’ employment particularly rapid growth (Office for In light of this, the goal of my CEP across all National Statistics, 2018). project is first, to develop a typology of Accompanying this rise has been a self-employed workers in the UK, and then groups of change in the nature of self-employed to explore the extent to which different self-employed workers (D’Arcy and Gardiner, 2014). groups in self-employment may benefit Much of the new workforce of the ‘gig from policy intervention. workers economy’ qualifies as self-employed – and the self-employed of today represent a Methodology: hours, occupation, industry and part-time/ diverse community. identifying clusters full-time status. The seminal Taylor review of UK The statistical challenge of grouping or The challenge here is to assess whether working practices notes that ‘The ‘clustering’ data into a small number of there are indeed distinct clusters and, if experiences and vulnerabilities of this group similar classes or types has been around so, how many there are. Using these six range from billionaire entrepreneurs to taxi for quite some time, but the associated characteristics in the LFS, I find support drivers working 90 hours a week simply to methods have only recently become widely for two separate typologies: one in which pay their bills’ (Taylor, 2017). Self-employed used, thanks to the advent of cheap individuals are assigned to two groups; workers are old and young; they might computing power. Clustering is and another where they are assigned to have left school at 16 or have postgraduate one of many ‘machine learning’ tools and six groups. degrees; and they can be found in a variety is now implemented across a wide variety Figure 1 shows the relationship of sectors – from construction to banking of fields, including marketing, geology between the two typologies. The two and finance. and genetics. clusters on the left-hand side are labelled If we are to design effective policies for Applications to labour markets have to FeDe (female degree holders) and MaLE the self-employed, as a first step we must date been limited, so an additional goal of (male and low-educated). understand who they are, and whether my project is to demonstrate how this can We can see a strong relationship they would indeed benefit from any be achieved. Using data from the Labour between the two typologies. For example, additional social protection. As emphasised Force Survey (LFS), I apply a ‘partitioning there is a group in the six-cluster typology in the Taylor review, the multi-faceted around medoids’ algorithm. This divides labelled ‘Construction workers’ who are nature of self-employment suggests that workers into types based on age, sex, entirely drawn from the MaLE cluster in the

Figure 1: The relationship between the two-cluster and six-cluster typologies

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High under- employment indicates a large pool of reserve workers seeking further employment and pushing wages down

two-cluster typology, whereas the group of The second group, constituting a When it comes to general satisfaction, ‘older health/education workers’ is drawn sizable minority of self-employment, is more than three quarters of workers in almost entirely from the FeDe group. The exceptionally highly educated: more than each group are content in self-employment group labels are not perfect, as seen by the two thirds of the FeDe group hold post- relative to conventional employment. fact that some members of the MaLE group secondary degrees. The FeDe group is also So while there are clear differences in are found among the female service worker significantly more likely to work part-time demographic and work characteristics group in the six-cluster typology. and its members tend to be found in across these two groups, satisfaction is professional and service industries. They are similar. While there appear to be some The two-cluster typology: also somewhat older than the MaLE group. differences in the groups’ motivations for MaLE and FeDe Characteristics drawn from the being self-employed, to a large extent Of the two groups that emerge from LSE-CEP Survey of Alternative Work each group appears to be benefitting from the two-cluster typology, the larger of Arrangements allow us to shed light on self-employment relative to a conventional the two, labelled MaLE, is perhaps closer whether self-employed workers in each of employment relationship. to the traditional view of self-employment. these two groups are content with their Its members are predominantly male, level of working hours, their motivation The six-cluster typology less educated workers in industries such for becoming self-employed and whether Will we find the same high levels as construction. they would rather be in a conventional of satisfaction across our six-cluster employment relationship. typology? In terms of characteristics, I find significant rates of under- the six groups are: employment in both groups, with only half the respondents satisfied with their hours Female service workers: this group and the majority of the remainder wanting is predominantly female, part-time and more hours. This is consistent with the not particularly highly educated. They argument that recent high employment tend to work in the services sector. The rates mask significant under-employment dominant occupations among this group among the self-employed, and that in fact are hairdressing, cleaning and childcare there is a large pool of reserve workers London professionals: predominantly seeking further employment and pushing male, full-time and highly educated, Flexibility, wages down. There is little difference in this group is geographically focused in this across the two groups, which both London and the South East. They work in including being exhibit similar rates of under-employment. professional occupations, typically in the able to work In terms of why workers are self- banking and finance sector. employed, flexibility is the most important Less educated young men: members from home, is factor for both groups. More than three of this group are the most likely to have often the main quarters of the FeDe group list flexibility, below secondary school qualifications. They including being able to work from home, as are predominantly male and noticeably reason for being their main reason for being self-employed. younger than other groups. The transport self-employed For MaLE, the figure is lower, at 59%. and communications sector is the most

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common industry, with 51% of this group They are also the least likely to be content Conclusion working as road transport drivers. This with their hours, exhibiting the highest This work provides an example of how group is likely to include many gig economy rates of under-employment. clustering methods can be used to yield workers, such as private hire and delivery Perhaps most concerning is that insights about the labour market as well drivers. The group is also by far the least this group is the most likely to report as broad lessons for policy. I demonstrate likely to be white, with more than a quarter being self-employed due to a lack of evidence of significant under-employment from ethnic minorities. better options. It is notable that the across self-employment, which suggests Managers: this predominantly male group is predominantly made up of that measures of labour market slack ought group is older than other groups working drivers, who have been at the forefront to be augmented to include aspects of self- as managers and proprietors in distribution, of technological disruption in the labour employment. hotels and restaurants. market. Many of these workers find jobs What stands out from the analysis is Older health/education workers: through gig economy platforms and that while rates of satisfaction with self- this group of workers is the most highly they are potentially vulnerable to further employment are high on aggregate, there educated. They work in a wide set technological innovations, such as self- is a group of primarily less educated young of occupations related to health and driving cars. It could be that the option men who are dissatisfied and not able to education. They are older than workers of self-employment provides valuable enjoy the potential advantages that self- in other groups and the most likely to be insurance to these workers in economic employment can bring. part-time. downturns, but these patterns do suggest In reference to self-employment, Taylor Construction workers: the largest a preference for more conventional work (2017) states that ‘Policy interventions have group of the six is the most homogeneous, among many in this group. to be tailored to respond to those who dominated by tradesmen working in the In sum, if policy-makers want to require support’. This project has illustrated construction industry. identify groups who are not benefitting how policy-relevant groups can be found from self-employment and who are and has identified such a group. The key Drawing on the LSE-CEP survey and potentially vulnerable, this group of challenge facing policy-makers now is how consistent with patterns across the less educated young men (outside of they can improve support for this group two-group typology, I find high rates of construction) would be an appropriate without impeding the flexibility enjoyed by under-employment across all groups. In starting point. others in self-employment. addition, across all six groups, workers are motivated by the flexibility that self-employment can provide. I find that while aggregate satisfaction is high across the six groups, the group of less A policy challenge is how to support educated young men stands out as being less educated young men without dissatisfied. As Figure 2 shows, more than 40% impeding the flexibility enjoyed by of this group would rather be in a others in self-employment conventional employment relationship. This article summarises ‘Clusters in UK Self- employment’ by Jack Blundell, a forthcoming Figure 2: Would you rather be in a conventional CEP Occasional Paper. The work was funded employment relationship? by the Turing-HSBC-ONS Economic Data Science Award. Preer eent ■ Jack Blundell is a doctoral student at Stanford ■ e University and a research assistant in CEP’s labour markets programme.

Further reading

Conor D’Arcy and Laura Gardiner (2014) ‘Just the Job – Or a Working Compromise?’,

Percente re Resolution Foundation. Office for National Statistics (2018) Trends in Self-employment in the UK. Cntrctin ee nn e ner er rer erice rein ecte et Matthew Taylor (2017) Good Work: The Taylor rer n ectin en rer Review of Modern Working Practices.

9 CentrePiece Spring 2020

As has been much discussed since the election, economic performance varies widely among the towns, cities and regions of the UK. Henry Overman argues that policies to address these spatial disparities should be judged on whether they improve individual opportunities, not whether they narrow the gaps between different parts of the country. People, places and politics: the challenge of ‘levelling up’ the UK

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patial disparities across the UK Union, living in different places – but are once again high on the agreeing on the same solution. Improving the public policy agenda. There are The other reason why individual economy in left- clear political motivations for mobility matters is because it means that Sthe ambition of ‘levelling up’ parts of the policies targeted at specific places don’t behind places country where economic performance necessarily end up benefitting the people requires increased has been weak and which have somehow that we hoped to help. For example, been ‘left behind’. But such disparities are transport improvements in a poorer area investment also intrinsically important because local won’t necessarily benefit poorer families and the reversal social and economic conditions affect if those improvements then lead to higher individual outcomes. For example, there are rents and house prices that see them priced of austerity substantial differences in social mobility at out of the neighbourhood. the local level: where you grow up makes Taken together, these two a difference to how much your family complications – the need to distinguish background affects your life chances. between people and place; and the fact employment, with cities in the Greater Spatial disparities also reflect individual that people move between places – mean South East performing better. Eight of the inequality. For example, if individual that it is important for us to understand ten cities with the highest unemployment inequality increases and poorer families what is causing spatial disparities and to are in the North of England or Scotland. are concentrated in particular areas, then think carefully about who will benefit from There is also substantial variation within spatial disparities will also increase. The link the different policies proposed to address those broad areas: some northern cities between individual and spatial disparities these disparities. (such as Manchester) are doing relatively is complicated by the fact that people can well and some southern cities (such as move around. This matters for thinking Disparities in the UK: Ipswich) are doing relatively badly. Despite about what spatial disparities can tell us it’s more than just a many policy initiatives by a series of about important policy issues. North-South divide governments, these disparities remain large For example, the geography of the There is a broad North-South pattern to and persistent. Brexit vote was highly uneven with some spatial disparities in the UK. According to Indeed, these disparities have widened places more likely to vote Leave and Cities Outlook, the most useful source of since the global financial crisis. Figure 1 others more likely to vote Remain. One detailed data on the economic performance shows a standard measure of the extent explanation is that the Leave vote reflects of UK cities, there is a very clear geography of spatial disparities calculated for the the ‘revenge’ of left-behind places – that is, in terms of both output per worker and (NUTS2) regions of the UK from 1980 to it is a story not about individuals, but about shared anger by those living in places left Figure 1: behind by globalisation and technological Spatial inequality in the UK change. The alternative is to think of this as a story about individuals, disaffected by social and economic changes, and where they live. The first way of thinking about this appears to be driving the current policy response. But the second is perhaps a more useful way of understanding why wealthy Sevenoaks and struggling Sunderland both voted Leave. Different kinds of people, with Marlborough very different concerns about the European

Marlow ritin Ceicient Marlow-on-Thames Martlock Louth Marylebone Lowestoft Matlock Newcastle-under-Lyme Ludlow ExmouthMawgan Porth Newick Fakenham Lulworth Cove Falmouth MayfairStockport GoathlandNewmarket Denton Luton FaringdonMelbourneStockton on TeesGolders GreenNewnham er Derby Lyme Regis FarnboroughMelksham GomersalNew Forest Leigh LymingtonSouthport Melton MowbrayStoke-on-Trent Newquay Source: Author’s own calculations based on Eurostat data for NUTS2 regions of the UK DerehamLeighton Buzzard Dunster Lymm Southsea Farnham Meriden Stone GooleNewton Aycliffe DevizesLeiston-cum-Sizewell DurhamLympshamSt Albans FavershamMevagisseyStonehouse GorlestonNorfolk TettenhallBroads Wood DewsburyLetchworth DuxfordLyndhurstSt Aubin FawkhamMiddlesbroughStourport on SevernGracechurchNorth ActonThame Didcot Lewes DymchurchLyntonSt Austell FelixstoweMidhurstStow-on-the-WoldGranthamNorth FerribyThetford Diss Shipton-under-WychwoodLeyburn EalingMacclesfieldSt Brelade's BayFerndownMildenhallStowmarket GrasmereNorth WalshamThirsk Ditchling LichfieldShoreditch Earls CourtMaidenheadSt Helier FinchleyMilford-on-SeaStratfield MortimerGravesendNorthallertonThrelkeld Doncaster LiftonShrewsburyEast CottingwithMaidstoneSt Issey Fleet MillStratford-upon-Avon Hill GraysNorthamptonTintagel Plymouth Dorchester-on-ThamesLincolnSittingbourneEast GrinsteadMalmesburySt Ives FolkestoneMilton KeynesStratford Great DunmowNorthwichTiverton Ormskirk Polesworth Dorchester Skegness East Horsley St James ParkFordingbridgeMineheadStreatham HillGreat TorringtonNorwichThompson Oswestry HeathfieldPolperro DorkingLightwaterSkelmersdaleEast MoleseyMaltonSt John's Wood Forest Stroud Great Yarmouth Tonbridge Wellingborough Helmsley Weymouth DorsingtonLincoln EastbourneMalvern Forest RowMinster Lovell GreenwichNotting Hill Hanwell Otley Penrith HelstonPolruan-by-Fowey Liphook Skipton ManchesterSt Katharine's Marina ModburyStudland NottinghamTorquay OtterburnWakefield Penzance Wells Polzeath11Whitby Douglas LiskeardSleaford EastleighManningtreeSt Lawrence FoweyMorecambeSunderland GrimsbyNuneatonTotland Bay Harleston Oundle Wallasey HassocksPerranporthWelwyn Helton PooleWhitchurch Dover LiverpoolSloane Gardens Eccles MansfieldSt Leonards-on-SeaFramlinghamMoreton-in-MarshSurbiton GuernseyOakamoorTotnes Harlow OutlaneWallingford HastingsPershoreWelwyn GardenHemel City HempsteadPorthlevenWhitehaven Downham MarketLolworthSloane Square EdenbridgeMarazionSt Martin FreshwaterMorpethSutton ColdfieldGuildfordOgbourne St GeorgeTrevone HarmondsworthOxford StreetWalsall HatfieldPeterboroughWembleyHemingford GreyPortlandWhitley Bay Droitwich London Slough Egham MargateSt Mawes FulhamMouseholeSutton-in-AshfieldGuiting PowerOkehamptonTrowbridge HarpendenOxfordWaltham ForestHathersagePetworthWeobleyHenley on ThamesPortsmouthWhitstable Droitwich SpaLooe Soho EllesmereMarket Port DraytonSt Pancras GatesheadMuch HadhamSwadlincote HailshamOld HarlowTruro HarrogatePaddingtonWandsworth Havant PickeringWest Bromwich HerefordPotters BarWidnes DudleyLostwithielSolihull EllingtonMarket HarboroughSt Peter PortGerrards MuchCross WenlockSwaffham Hale OldhamTunbridge Wells Harrow PadstowWantage HaverhillPiercebridge-on-TeesWestbury on SevernHertford Prenton Wigan Dukinfield South Benfleet Enfield St Saviour GillinghamMullion Swanage Halifax Two Bridges Hartington Ware HawksheadPimlicoWest Drayton HevershamPrescotWilmslow DulvertonLoughboroughSouth Brent Epping MarkfieldStafford Glaisdale Swindon Haltwhistle Tysoe Hartlepool Wareham Haydock West Ealing Hexham Wimbledon Dumbleton South Croydon Eskdale Stamford Glastonbury Tamworth Hammersmith Uckfield Harvington Warkworth Hayes West End Heywood Wimborne Dunmow South Kensington Euston Stanton Drew Glossop Taplow Hampstead Ullswater Harwich Warrington Hayle West Ham High Wycombe Winchcombe Dunstable South Littleton Evesham Steeple Aston Gloucester Tarporley Hampton Court Up Holland Haslemere Warwick Hayling Island Westcliff On SeaHighbridge Winchester South Ruislip Ewloe Stevenage Taunton Upminster Wasdale Westminster Hillingdon Windermere South Shields Exeter Stilton Tavistock Uppingham Washington Weston-Super-MareHinckley Windsor Southall Stockbridge Telford Upton upon Severn Watchet Wetherby Winnersh CentrePiece Spring 2020

2015, the last date for which we have Figure 2: data. Disparities fell between 1980 and Shares of the UK population with tertiary education the mid-1990s, increased in the early days of the Labour government before falling ■ ■ again. The increase in disparities since the ■ recession has returned us to roughly the ■ ■ level of the 1980s. ■ ■ What are the economic forces polarising the UK?

Better educated workers are concentrated In 2018, around 65% of inner London residents had tertiary education, the highest percentage in Europe. This was up from around 54% in 2010. In contrast, the proportion of residents with tertiary education in Greater Manchester was around 39% in 2018, up from 31% in 2010 – see Figure 2. There is also a growing wage premium for graduates compared with people without degrees. In 1980, male graduates earned, on average, 46% more than their non-graduate counterparts; in 2017, this earnings uplift was 66% (Elliot Major and Machin, 2018). Given a strong and growing concentration of more educated workers and a large and increasing wage premium for graduates, it is not surprising that the spatial distribution of higher skilled workers explains up to 90% of area-level disparities in wages in the UK (Gibbons et al, 2013).

Bigger cities make firms and people more productive There is a great deal of empirical evidence of the ‘agglomeration economies’ that underpin the relationship between a city’s Having a better educated labour force is the most important driver of local economic performance

Exeter Hope Valley Lincoln Exmouth Hampton Court Horley Liphook Fakenham Hanwell Horncastle Liskeard Fowey Falmouth Harleston Cheadle Horrabridge LiverpoolFramlingham Faringdon Harlow Cheddar Horsham Lolworth Freshwater Farnborough HarmondsworthChelmsford Horsington London Fulham Farnham Isle of SheppeyHarpenden Chelsea Hounslow Deal Looe Gateshead Faversham BurnleyIsle of WightHarrogateCheltenham Cockermouth Hove Deddington LostwithielGerrards Cross Fawkham Burton-on-TrentIslington Harrow Cheshunt Helston Colchester Huddersfield Denton Knipton Enfield LoughboroughGillingham Oldham Felixstowe Bury JesmondHartington Chester Helton Coleshill Leigh Hull Derby Knowsley Epping Louth Glaisdale Ormskirk Ferndown GorlestonBury St EdmundsKeighleyHartlepoolChesterfield Hemel HempsteadCommondaleLeighton BuzzardHungerford Dereham Lymm Knutsford Eskdale LowestoftGlastonburyOswestry Finchley Bridport Gracechurch Buxton KempseyHarvington ChichesterKniptonHemingford GreyConistonLeiston-cum-SizewellHunstanton Devizes Lympsham Melksham Lacock Euston Ludlow Glossop Otley Fleet Brierley HillHounslowGrantham Camberley Kendal Harwich ChiddinglyKnowsleyHenley on ThamesCorby LetchworthHuntingdon Devon LyndhurstKempsey Melton MowbrayLambeth Evesham Lulworth CoveGloucesterOtterburn Folkestone Brigg 12 Hove Grasmere CambridgeKenilworthHaslemere Chinnor KnutsfordHereford Corfe CastleLewesHutton Le HoleDewsbury Lynton Kendal Meriden Lamorna Ewloe Newmarket Luton Goathland Oundle FramlinghamBrighstoneHuddersfieldGravesend CamdenKensingtonHassocks ChippenhamLacock HertfordCornhill on TweedLeyburn Hyde DidcotMacclesfieldKenilworth MevagisseyLancaster Exeter NewnhamLyme RegisGolders GreenOutlane Freshwater Brighton Hull Grays Canning TownKent HastingsChipping CampdenLambethHeversham CotswoldsLichfieldHyde Park Diss MaidenheadKensingtonDumbletonMiddlesbroughLancing ExmouthNew ForestLymington GomersalOxford Street Fulham Bristol HungerfordGreat DunmowCanterburyKeswick HatfieldChipping NortonLamorna Hexham Coulsdon Lifton Hythe DitchlingMaidstone Kent Dunmow Midhurst Larkfield FakenhamNewquay Lymm Goole Oxford Gateshead BrixhamHunstantonGreat TorringtonCarlisle KetteringHathersage Chiswick LancasterHeywoodCovent GardenLincoln Ifield DocklandsMalmesburyKeswick DunstableMildenhallLaunceston FalmouthNewton AycliffeLympsham GorlestonPaddington Gerrards CrossBroadstairsHuntingdonGreat YarmouthCastel Kew Havant Chorley LancingHigh WycombeCoventryLightwaterIlfracombe Doncaster Malton Kettering DunsterMilford-on-SeaLavenham FaringdonNorfolk BroadsLyndhurstGracechurchPadstow Gillingham BroadwayHutton Le HoleGreenwichCastle AshbyKidderminsterHaverhill ChristchurchLarkfieldHighbridgeCrackington HavenLincoln ImminghamDorchester-on-ThamesMalvern Kew Durham Mill HillLeamington SpaFarnboroughNorth ActonLynton GranthamPaignton GlaisdaleBrockenhurstHyde GrimsbyCastle CombeKings CrossHawksheadChurch StrettonLauncestonHillingdon Crawley Liphook Ingleton DorchesterManchesterKidderminsterDuxfordMilton KeynesLeatherhead FarnhamNorth FerribyMacclesfieldGrasmerePeak District GlastonburyBromboroughHyde ParkGuernseyCastle DoningtonKings LangleyHaydock CirencesterLavenham HinckleyCrawley DownLiskeard Ipswich DorkingManningtreeKings CrossDymchurchMinehead Ledbury FavershamNorth WalshamMaidenheadGravesend Penrith Glossop Bromley Hythe Guildford Catford Kings Lynn Hayes City of LondonLeamington SpaHilton Crewe LiverpoolIsle of ManDorsingtonMansfieldKings Langley EalingMinster LovellLeek FawkhamNorthallertonMaidstone Grays Penzance GloucesterBromsgrove IfieldGuiting PowerCattistockKingsbridge Hayle Clacton-on-SeaLeatherheadHitchin CrewkerneLolworthIsle of SheppeyDouglas MarazionKings LynnEarls CourtModbury Leeds FelixstoweNorthamptonMalmesburyGreat DunmowPerranporth Goathland BromyardIlfracombeHailshamChaddesleyKingston Corbett uponHayling Hull IslandClerkenwellLedbury Holborn CricklewoodLondonIsle of Wight Dover MargateKingsbridgeEast CottingwithMorecambeLeicester FerndownNorthwich MaltonGreat TorringtonPershore Golders GreenBuckfastleighImmingham Hale CharlburyKingston uponHaywards Thames HeathClifton-WithoutLeek Holsworthy Cromer Looe IslingtonDownham Market DraytonKingston uponEast Hull GrinsteadMuch WenlockLeicester SquareFinchley Norwich MalvernGreat YarmouthPeterborough Gomersal Buckland Ingleton Halifax CharlwoodKirkby LonsdaleHeathfield Clitheroe Leeds Honiton CrosthwaiteLostwithielJesmond DroitwichMarket HarboroughKingston upon ThamesEast HorsleyMullion Leigh Fleet Notting HillManchesterGreenwichPetworth Goole Bude IpswichHaltwhistle ChathamKirkby StephenHelmsley Clovelly Leicester Hook CrowthorneLoughboroughKeighleyDroitwich SpaMarkfieldKirkby LonsdaleEast MoleseyMuswellLeighton Hill BuzzardFolkestoneNottinghamManningtree Grimsby Pickering Isle of Man Knightsbridge Leicester Square Louth Marlborough Newark Nuneaton Piercebridge-on-Tees

Shipton-under-Wychwood St Brelade's Bay Stratfield Mortimer Tiverton Wareham Whitley Bay Worcester Shoreditch St Helier Stratford-upon-Avon Thompson Warkworth Whitstable Workington Shrewsbury St Issey Stratford Tonbridge Warrington Widnes Worksop Sittingbourne St Ives Streatham Hill Torquay Warwick Wigan Worth Skegness St James Park Stroud Totland Bay Wasdale Wilmslow Worthing Skelmersdale St John's Wood Studland Totnes Washington Wimbledon Wotton-under-Edge Skipton St Katharine's Marina Sunderland Trevone Watchet Wimborne Wrantage Sleaford St Lawrence Surbiton Trowbridge Waterloo Winchcombe Wrotham Heath Sloane Gardens St Leonards-on-Sea Sutton Coldfield Truro Watford Winchester Wroxall Sloane Square St Martin Sutton-in-Ashfield Tunbridge Wells Wellingborough Windermere Wroxham Slough St Mawes Swadlincote Two Bridges Wells Windsor Yarmouth Soho St Pancras Swaffham Tysoe Welwyn Winnersh Yelverton Solihull St Peter Port Swanage Uckfield Welwyn Garden City Winscombe Yeovil South Benfleet St Saviour Swindon Ullswater Wembley Winterbourne Stoke York South Brent Stafford Tamworth Up Holland Weobley Winterslow South Croydon Stamford Taplow Upminster West Bromwich Wirral South Kensington Stanton Drew Tarporley Uppingham Westbury on Severn Wisbech South Littleton Steeple Aston Taunton Upton upon Severn West Drayton Wishaw South Ruislip Stevenage Tavistock Uxbridge West Ealing Witney South Shields Stilton Telford Ventnor West End Woking Southall Stockbridge Temple Sowerby Wadebridge West Ham Wokingham Southam Stockport Tenterden Wakefield Westcliff On Sea Wolverhampton Southampton Stockton on Tees Tetbury Wallasey Westminster Woodbridge Southend-on-Sea Stoke-on-Trent Tettenhall Wood Wallingford Weston-Super-Mare Woodford Bridge Southport Stone Thame Walsall Wetherby Woodford Green Southsea Stonehouse Thetford Waltham Forest Weymouth Woodstock St Albans Stourport on Severn Thirsk Wandsworth Whitby Wool St Aubin Stow-on-the-Wold Threlkeld Wantage Whitchurch Woolacombe St Austell Stowmarket Tintagel Ware Whitehaven Wooler CentrePiece Spring 2020

size and the productivity of its inhabitants. Figure 3: Graham and Gibbons (2018) summarise GDP per capita against city size results from 47 studies estimating these agglomeration economies, 12 of which are from the UK. The consensus estimate suggests that once we allow for the unequal spatial distribution of higher-skilled workers, the elasticity of productivity with respect to size is around 0.02 to 0.03. This means that doubling city size increases people’s productivity by 2-3%. While these productivity effects are important, when it comes to GDP per capita, they can easily be swamped by n P er cti spatial disparities in the share of skilled workers. This happens in the UK where (if we exclude London) the overall relationship between city size and GDP per capita isn’t very strong – as Figure 3 shows. Our cities still benefit from agglomeration economies – someone with a degree moving from Blackpool to n Ptin Manchester would be more productive – but this isn’t enough to encourage the sorting of highly skilled workers into some of our bigger cities outside London. places. A small, rich town, with limited Under-investment in the North Cities versus towns housing supply can easily have housing Because London and the South East are Because both skills and size matter, and costs that offset any productivity benefits rich and our tax system is progressive, skills matter much more than size, it’s not for households. Similarly, a large poorer there is a lot of redistribution from the very helpful to distinguish between cities city, such as Liverpool, may have housing South to the North. But on some measures, and towns. Smaller towns can do very costs that help to offset some of the London receives a disproportionate share well if they have lots of highly skilled productivity advantages that workers of investment in infrastructure. residents. Bigger cities may struggle if would gain by moving. A more equal distribution of they have lots of low-skilled residents, Amenities matter too and we need infrastructure investment would slow even if they may still do better than their to think about the three-way trade-off growth in London. Whether it would surrounding regions. between differences in productivity, the increase growth elsewhere would depend The cost of living also matters, with cost of living and amenities if we want to on how the money was spent because the housing supply a key determinant of understand who lives where and what are economic returns to infrastructure vary a differences in the cost of living across the implications for individual disparities. lot across places. Rather than focusing on London’s dominance, we should ask why other cities and towns do not offer similar opportunities

Exeter Hope Valley Lincoln Exmouth Hampton Court Horley Liphook Fakenham Hanwell Horncastle Liskeard Fowey Falmouth Harleston Cheadle Horrabridge LiverpoolFramlingham Faringdon Harlow Cheddar Horsham Lolworth Freshwater Farnborough HarmondsworthChelmsford Horsington London Fulham Farnham Isle of SheppeyHarpenden Chelsea Hounslow Deal Looe Gateshead Faversham BurnleyIsle of WightHarrogateCheltenham Cockermouth Hove Deddington LostwithielGerrards Cross Fawkham Burton-on-TrentIslington Harrow Cheshunt Helston Colchester Huddersfield Denton Knipton Enfield LoughboroughGillingham Oldham Felixstowe Bury JesmondHartington Chester Helton Coleshill Leigh Hull Derby Knowsley Epping Louth Glaisdale Ormskirk Ferndown GorlestonBury St EdmundsKeighleyHartlepoolChesterfield Hemel HempsteadCommondaleLeighton BuzzardHungerford Dereham Lymm Knutsford Eskdale LowestoftGlastonburyOswestry Finchley Bridport Gracechurch Buxton KempseyHarvington ChichesterKniptonHemingford GreyConistonLeiston-cum-SizewellHunstanton Devizes Lympsham Melksham Lacock Euston Ludlow Glossop Otley Fleet Brierley HillHounslowGrantham Camberley Kendal Harwich ChiddinglyKnowsleyHenley on ThamesCorby LetchworthHuntingdon Devon LyndhurstKempsey Melton MowbrayLambeth Evesham Lulworth CoveGloucesterOtterburn Folkestone Brigg Hove Grasmere CambridgeKenilworthHaslemere Chinnor KnutsfordHereford Corfe CastleLewesHutton Le HoleDewsbury Lynton Kendal Meriden Lamorna Ewloe Newmarket Luton13 Goathland Oundle FramlinghamBrighstoneHuddersfieldGravesend CamdenKensingtonHassocks ChippenhamLacock HertfordCornhill on TweedLeyburn Hyde DidcotMacclesfieldKenilworth MevagisseyLancaster Exeter NewnhamLyme RegisGolders GreenOutlane Freshwater Brighton Hull Grays Canning TownKent HastingsChipping CampdenLambethHeversham CotswoldsLichfieldHyde Park Diss MaidenheadKensingtonDumbletonMiddlesbroughLancing ExmouthNew ForestLymington GomersalOxford Street Fulham Bristol HungerfordGreat DunmowCanterburyKeswick HatfieldChipping NortonLamorna Hexham Coulsdon Lifton Hythe DitchlingMaidstone Kent Dunmow Midhurst Larkfield FakenhamNewquay Lymm Goole Oxford Gateshead BrixhamHunstantonGreat TorringtonCarlisle KetteringHathersage Chiswick LancasterHeywoodCovent GardenLincoln Ifield DocklandsMalmesburyKeswick DunstableMildenhallLaunceston FalmouthNewton AycliffeLympsham GorlestonPaddington Gerrards CrossBroadstairsHuntingdonGreat YarmouthCastel Kew Havant Chorley LancingHigh WycombeCoventryLightwaterIlfracombe Doncaster Malton Kettering DunsterMilford-on-SeaLavenham FaringdonNorfolk BroadsLyndhurstGracechurchPadstow Gillingham BroadwayHutton Le HoleGreenwichCastle AshbyKidderminsterHaverhill ChristchurchLarkfieldHighbridgeCrackington HavenLincoln ImminghamDorchester-on-ThamesMalvern Kew Durham Mill HillLeamington SpaFarnboroughNorth ActonLynton GranthamPaignton GlaisdaleBrockenhurstHyde GrimsbyCastle CombeKings CrossHawksheadChurch StrettonLauncestonHillingdon Crawley Liphook Ingleton DorchesterManchesterKidderminsterDuxfordMilton KeynesLeatherhead FarnhamNorth FerribyMacclesfieldGrasmerePeak District GlastonburyBromboroughHyde ParkGuernseyCastle DoningtonKings LangleyHaydock CirencesterLavenham HinckleyCrawley DownLiskeard Ipswich DorkingManningtreeKings CrossDymchurchMinehead Ledbury FavershamNorth WalshamMaidenheadGravesend Penrith Glossop Bromley Hythe Guildford Catford Kings Lynn Hayes City of LondonLeamington SpaHilton Crewe LiverpoolIsle of ManDorsingtonMansfieldKings Langley EalingMinster LovellLeek FawkhamNorthallertonMaidstone Grays Penzance GloucesterBromsgrove IfieldGuiting PowerCattistockKingsbridge Hayle Clacton-on-SeaLeatherheadHitchin CrewkerneLolworthIsle of SheppeyDouglas MarazionKings LynnEarls CourtModbury Leeds FelixstoweNorthamptonMalmesburyGreat DunmowPerranporth Goathland BromyardIlfracombeHailshamChaddesleyKingston Corbett uponHayling Hull IslandClerkenwellLedbury Holborn CricklewoodLondonIsle of Wight Dover MargateKingsbridgeEast CottingwithMorecambeLeicester FerndownNorthwich MaltonGreat TorringtonPershore Golders GreenBuckfastleighImmingham Hale CharlburyKingston uponHaywards Thames HeathClifton-WithoutLeek Holsworthy Cromer Looe IslingtonDownham Market DraytonKingston uponEast Hull GrinsteadMuch WenlockLeicester SquareFinchley Norwich MalvernGreat YarmouthPeterborough Gomersal Buckland Ingleton Halifax CharlwoodKirkby LonsdaleHeathfield Clitheroe Leeds Honiton CrosthwaiteLostwithielJesmond DroitwichMarket HarboroughKingston upon ThamesEast HorsleyMullion Leigh Fleet Notting HillManchesterGreenwichPetworth Goole Bude IpswichHaltwhistle ChathamKirkby StephenHelmsley Clovelly Leicester Hook CrowthorneLoughboroughKeighleyDroitwich SpaMarkfieldKirkby LonsdaleEast MoleseyMuswellLeighton Hill BuzzardFolkestoneNottinghamManningtree Grimsby Pickering Isle of Man Knightsbridge Leicester Square Louth Marlborough Newark Nuneaton Piercebridge-on-Tees

The overall effect on regional inequalities would be limited since Addressing spatial disparities relative to the concentration of skilled requires an approach to workers, differences in infrastructure play a relatively small role in driving long-term policy that allows for different disparities. The only way for infrastructure responses in different places to have a big effect on spatial disparities is if it leads to the relocation of large numbers of skilled workers across the UK, away from London. Improving economic performance at work. Equal outcomes across places outside the capital would require places to have similar skill The financial crisis and austerity Rather than focusing on London’s compositions and to be of similar sizes. London and the South East were initially dominance, we should ask why other cities As with the previous strategy, this is not hard hit by the recession, but they have and towns do not offer similar economic economically feasible, nor socially or recovered more quickly. Adjustment opportunities and what can be done politically acceptable. elsewhere has been slower and, as a result, about it? Given what we know about the London’s strong economic performance spatial disparities have widened. Local economic forces driving polarisation, there plays a large part in explaining widening government in England has borne the are two key questions: disparities. Providing an effective counter- biggest burden of austerity and cities in the balance to London may require some North of England have been much harder n In which places could greater investment to be more spatially focused hit than those elsewhere. investment and other government support – for example, by identifying a number of Given that austerity reduced be used to increase productivity and help places, spread across the UK, that are doing redistribution, it is partly responsible for to create jobs? relatively well and focusing infrastructure widening disparities. The resulting cuts to n How do we make sure that people investment on achieving productivity and public services may mean that austerity can access these opportunities? jobs growth in those areas. hindered adjustment to the financial crisis and that the adverse effects on disparities Evidence suggests that around 50% of Access to opportunity could persist in the medium to long run. people only ever work while living in the Policy then needs to make sure that local labour market where they were people can access the opportunities What’s the appropriate policy born (Bosquet and Overman, 2019). This generated. The current debate often response? suggests that the policy response needs interprets this far too narrowly as being What should be the objective of policy? to be realistic about how far people are about ‘better transport’. In fact, we need On the implications for overall economic willing to move for work, particularly for to address multiple barriers that prevent growth, the debate is polarised. For some, less educated workers (the figure rises to individuals from being able to access these it is obvious that spreading growth across 60% for those without a degree). Having opportunities – for example, through the UK would make use of underused ‘everyone’ move to London and the South investment in education, in childcare, and resources. For others, London and the East is not economically feasible, nor in mental and physical health services. South East are key, and we should focus on socially or politically acceptable. Barking and Dagenham have very making sure they continue to perform well. The same is true for the other good transport links to one of the largest extreme: achieving a level playing field concentrations of employment in the Planning restrictions where productivity is equalised and jobs world, but this is not enough to prevent There is no evidence of large benefits from are generated ‘everywhere’. We need bad social and economic outcomes for spatial redistribution, and much evidence to be realistic about the market forces households who live there. to show that very restrictive planning in London and the South East has been harmful. Hence, artificially restraining London’s growth does not seem like a desirable policy.

Market Harborough Hemingford Grey Cirencester Markfield PadstowHenley on Thames City of London Marlborough Harlow Paignton Hereford Castle Ashby Clacton-on-Sea Marlow Harmondsworth Peak DistrictHertford LiverpoolCastle CombeSt Albans Clerkenwell Marlow-on-ThamesCrosthwaiteStow-on-the-Wold Egham NuneatonHarpenden Ware PenrithHeversham LolworthCastle DoningtonSt Aubin Clifton-Without MartlockCrowthorneStowmarket Tamworth Ellesmere Port Goole UllswaterOakamoorHarrogate WarehamPenzance Hexham London CatfordSt Austell ClitheroeSt Saviour MaryleboneCroydeStratfield MortimerMill HillDownham MarketTaplow Newark Ellington Gorleston Up HollandOgbourne St GeorgeHarrow WarkworthPerranporthHeywood Looe CattistockSt Brelade's Bay Clovelly Stafford Matlock CroydonStratford-upon-AvonMilton KeynesDroitwich Tarporley Newbury Enfield Tiverton GracechurchUpminsterOkehamptonHartington WarringtonPershoreHigh Wycombe LostwithielChaddesley CorbettSt Helier Maidenhead Clun StamfordMawgan PorthCuckfieldStratford MineheadDroitwich SpaTauntonNewcastle-upon-TyneEpping Thompson Grantham UppinghamOld HarlowHartlepool WarwickPeterboroughHighbridge LoughboroughCharlburySt Issey MaidstoneCoalvilleStanton Drew Mayfair DanbyStreatham HillMinster LovellDudley TavistockNewcastle-under-LymeEskdale Tonbridge GrasmereUpton upon SevernOldhamHarvington Wasdale PetworthHillingdon Louth Charlwood14St Ives MalmesburyCockermouthSteeple AstonMelbourneDarlington Stroud ModburyDukinfield Telford Newick Euston Torquay Gravesend Uxbridge Ormskirk Harwich WashingtonPickering Hinckley LowestoftChathamSt James Park Malton ColchesterStevenage MelkshamDartford Studland MorecambeDulvertonTemple SowerbyNewmarketEvesham Totland Bay Grays Ventnor OswestryHaslemere WatchetPiercebridge-on-TeesHilton Ludlow CheadleSt John's Wood Malvern Coleshill StiltonMelton MowbrayDartmoorSunderlandMoreton-in-MarshDumbletonTenterden Newnham Ewloe TotnesNorth WalshamGreat DunmowWadebridge Otley Hassocks Waterloo Pimlico Hitchin Lulworth CoveCheddarSt Katharine's MarinaManchesterCommondaleStockbridge MeridenDartmouthSurbiton Morpeth Dunmow Tetbury New Forest Exeter TrevoneNorthallertonGreat TorringtonWakefieldOtterburnHastings Watford Plymouth Holborn Luton ChelmsfordSt LawrenceManningtreeConistonStockport MevagisseyDaventrySutton ColdfieldMouseholeDunstableTettenhall WoodNewquay Exmouth TrowbridgeNorthamptonGreat YarmouthWallasey Oundle HatfieldWellingboroughPolesworthHolsworthy Lyme RegisChelseaSt Leonards-on-SeaMansfield CorbyStockton on TeesMiddlesbroughDawlishSutton-in-AshfieldMuch HadhamDunster ThameNewton AycliffeFakenham Truro NorthwichGreenwichWallingfordOutlaneHathersage Wells Polperro Honiton LymingtonCheltenhamSt Martin MarazionCorfe CastleStoke-on-TrentMidhurst Deal SwadlincoteMuch WenlockDurham ThetfordNorfolk BroadsFalmouthTunbridge WellsNorwich Grimsby WalsallOxford StreetHavant WelwynPolruan-by-FoweyHook Lymm CheshuntSt Mawes MargateCornhill on TweedStone MildenhallDeddingtonSwaffham Mullion Duxford Thirsk North ActonFaringdonTwo BridgesNotting HillGuernseyWaltham ForestOxford HaverhillWelwyn GardenPolzeath City Hope Valley Lympsham ChesterSt PancrasMarket DraytonCotswoldsStonehouseMilford-on-SeaDenton Swanage Muswell HillDymchurchThrelkeldNorth FerribyFarnborough Tysoe NottinghamGuildford WandsworthPaddingtonHawkshead Wembley Poole Horley ChesterfieldSt Peter Port CoulsdonStourport on Severn Derby Swindon Ealing Tintagel Farnham Uckfield Guiting PowerWantage Haydock Weobley Horncastle Chichester Covent Garden Dereham Earls Court Faversham Hailsham Hayes Horrabridge Chiddingly Coventry Devizes East Cottingwith Fawkham Hale Hayle Horsham Chinnor Crackington Haven Devon East Grinstead Felixstowe Halifax Hayling Island Horsington Chippenham Crawley Dewsbury East Horsley Ferndown Haltwhistle Haywards Heath Hounslow Chipping Campden Crawley Down Didcot East Molesey Finchley Hammersmith Heathfield Hove Chipping Norton Crewe Diss Eastbourne Fleet Hampstead Helmsley Huddersfield Chiswick Crewkerne Ditchling Eastleigh Folkestone Hampton Court Helston Hull Chorley Cricklewood Docklands Eccles Fordingbridge Hanwell Helton Hungerford Christchurch Cromer Doncaster Edenbridge Forest Harleston Hemel Hempstead Hunstanton CentrePiece Spring 2020

Housing costs Devolution Henry Overman is professor of economic We also need to address concerns over Discussion around the systems through geography at LSE and research director high housing costs in our more successful which urban and regional economic of CEP. areas, as well as thinking about ways to policy is delivered often distracts attention encourage increased mobility. For example, from more fundamental questions An earlier version of this article appeared how do we widen the horizons of young about the effectiveness of particular in CEP’s 2019 Election Analysis series as people growing up in disadvantaged areas policy interventions. There is a growing ‘People, Places and Politics: Policy Challenges to ensure that they are willing to commute recognition that greater local control may of the UK’s Uneven Economic Geography’ or move to access opportunities offered in be needed to improve policy effectiveness, (http://cep.lse.ac.uk/pubs/download/ the broader local area? although there is disagreement about the ea047.pdf). form that this devolution should take. Left-behind places Whatever happens, it is important that An effective policy response will require policies that have wide-scale impacts (such Further reading increased investment (LSE Growth as transport and housing) are coordinated Commission, 2013) and the reversal of across local areas and that the right kind of Clément Bosquet and Henry Overman (2019) austerity. Left-behind places have high policies are targeted at different areas. ‘Why Does Birthplace Matter so Much?’, proportions of vulnerable people with Differentiating the response in this Journal of Urban Economics 110: 26-34. complex needs and low levels of economic way is controversial and difficult for activity. This compounds their problems, constituency-based politicians (in both Lee Elliot Major and Stephen Machin (2018) as long-term unemployment, poverty, central and local government). The Social Mobility and Its Enemies, Pelican. mental illness and poor health often go traditional policy mix – central government hand-in-hand. investments in local growth projects, Steve Gibbons, Henry Overman and CEP research suggests that small transport and other infrastructure, funding Panu Pelkonen (2013) ‘Area Disparities in tinkering and minor tweaks of existing for business support and access to finance, Britain: Understanding the Contribution policies will not be enough to tackle the and a host of other interventions – has of People vs. Place Through Variance multiple barriers to social mobility faced not properly addressed this challenge Decompositions’, Oxford Bulletin of Economics in these places. and has therefore been ineffective in and Statistics 76(5). It is also important to be clear that narrowing disparities. spending in left-behind places does Daniel Graham and Steve Gibbons (2018) not always need to be justified based Conclusion ‘Quantifying Wide Economic Impacts of on economic performance. There are Spatial disparities in the UK are profound Agglomeration for Transport Appraisal: important public good arguments that and persistent. Improving economic Existing Evidence and Future Directions’, could justify increased expenditure across performance and helping to tackle the CEP Discussion Paper No 1561 (http://cep.lse. a wide range of policy areas. For example, problems of left-behind places are both ac.uk/pubs/download/dp1561.pdf). it is possible to argue for subsidising important policy objectives. Addressing rural broadband as a public good while these challenges requires a new approach LSE Growth Commission (2013) Investing recognising that its economic impacts are to policy, one that allows for different for Prosperity: A Manifesto for Growth. likely to be limited. responses in different places. Distributional arguments can also Such variation makes many people be used to support intervention. nervous. But it is important to remember For example, reversing austerity cuts to that we should care more about the effect welfare benefits would disproportionately of policies on people than on places. benefit areas with high concentrations Policies should be judged on the extent We should care of disadvantaged households. But it is to which they improve individual important to be realistic about the likely opportunities and on who benefits, more about the economic impact of these policies so that rather than whether they narrow the effect of policies we properly consider sustainable sources of gap between particular places. government revenue to fund this on people increased public expenditure. than on places

Market Harborough Hemingford Grey Cirencester Markfield PadstowHenley on Thames City of London Marlborough Harlow Paignton Hereford Castle Ashby Clacton-on-Sea Marlow Harmondsworth Peak DistrictHertford LiverpoolCastle CombeSt Albans Clerkenwell Marlow-on-ThamesCrosthwaiteStow-on-the-Wold Egham NuneatonHarpenden Ware PenrithHeversham LolworthCastle DoningtonSt Aubin Clifton-Without MartlockCrowthorneStowmarket Tamworth Ellesmere Port Goole UllswaterOakamoorHarrogate WarehamPenzance Hexham London CatfordSt Austell ClitheroeSt Saviour MaryleboneCroydeStratfield MortimerMill HillDownham MarketTaplow Newark Ellington Gorleston Up HollandOgbourne St GeorgeHarrow WarkworthPerranporthHeywood Looe CattistockSt Brelade's Bay Clovelly Stafford Matlock CroydonStratford-upon-AvonMilton KeynesDroitwich Tarporley Newbury Enfield Tiverton GracechurchUpminsterOkehamptonHartington WarringtonPershoreHigh Wycombe LostwithielChaddesley CorbettSt Helier Maidenhead Clun StamfordMawgan PorthCuckfieldStratford MineheadDroitwich SpaTauntonNewcastle-upon-TyneEpping Thompson Grantham UppinghamOld HarlowHartlepool WarwickPeterboroughHighbridge LoughboroughCharlburySt Issey MaidstoneCoalvilleStanton Drew Mayfair DanbyStreatham HillMinster LovellDudley TavistockNewcastle-under-LymeEskdale Tonbridge GrasmereUpton upon SevernOldhamHarvington Wasdale PetworthHillingdon Louth CharlwoodSt Ives MalmesburyCockermouthSteeple AstonMelbourneDarlington Stroud ModburyDukinfield Telford Newick Euston Torquay Gravesend Uxbridge Ormskirk Harwich WashingtonPickering15 Hinckley LowestoftChathamSt James Park Malton ColchesterStevenage MelkshamDartford Studland MorecambeDulvertonTemple SowerbyNewmarketEvesham Totland Bay Grays Ventnor OswestryHaslemere WatchetPiercebridge-on-TeesHilton Ludlow CheadleSt John's Wood Malvern Coleshill StiltonMelton MowbrayDartmoorSunderlandMoreton-in-MarshDumbletonTenterden Newnham Ewloe TotnesNorth WalshamGreat DunmowWadebridge Otley Hassocks Waterloo Pimlico Hitchin Lulworth CoveCheddarSt Katharine's MarinaManchesterCommondaleStockbridge MeridenDartmouthSurbiton Morpeth Dunmow Tetbury New Forest Exeter TrevoneNorthallertonGreat TorringtonWakefieldOtterburnHastings Watford Plymouth Holborn Luton ChelmsfordSt LawrenceManningtreeConistonStockport MevagisseyDaventrySutton ColdfieldMouseholeDunstableTettenhall WoodNewquay Exmouth TrowbridgeNorthamptonGreat YarmouthWallasey Oundle HatfieldWellingboroughPolesworthHolsworthy Lyme RegisChelseaSt Leonards-on-SeaMansfield CorbyStockton on TeesMiddlesbroughDawlishSutton-in-AshfieldMuch HadhamDunster ThameNewton AycliffeFakenham Truro NorthwichGreenwichWallingfordOutlaneHathersage Wells Polperro Honiton LymingtonCheltenhamSt Martin MarazionCorfe CastleStoke-on-TrentMidhurst Deal SwadlincoteMuch WenlockDurham ThetfordNorfolk BroadsFalmouthTunbridge WellsNorwich Grimsby WalsallOxford StreetHavant WelwynPolruan-by-FoweyHook Lymm CheshuntSt Mawes MargateCornhill on TweedStone MildenhallDeddingtonSwaffham Mullion Duxford Thirsk North ActonFaringdonTwo BridgesNotting HillGuernseyWaltham ForestOxford HaverhillWelwyn GardenPolzeath City Hope Valley Lympsham ChesterSt PancrasMarket DraytonCotswoldsStonehouseMilford-on-SeaDenton Swanage Muswell HillDymchurchThrelkeldNorth FerribyFarnborough Tysoe NottinghamGuildford WandsworthPaddingtonHawkshead Wembley Poole Horley ChesterfieldSt Peter Port CoulsdonStourport on Severn Derby Swindon Ealing Tintagel Farnham Uckfield Guiting PowerWantage Haydock Weobley Horncastle Chichester Covent Garden Dereham Earls Court Faversham Hailsham Hayes Horrabridge Chiddingly Coventry Devizes East Cottingwith Fawkham Hale Hayle Horsham Chinnor Crackington Haven Devon East Grinstead Felixstowe Halifax Hayling Island Horsington Chippenham Crawley Dewsbury East Horsley Ferndown Haltwhistle Haywards Heath Hounslow Chipping Campden Crawley Down Didcot East Molesey Finchley Hammersmith Heathfield Hove Chipping Norton Crewe Diss Eastbourne Fleet Hampstead Helmsley Huddersfield Chiswick Crewkerne Ditchling Eastleigh Folkestone Hampton Court Helston Hull Chorley Cricklewood Docklands Eccles Fordingbridge Hanwell Helton Hungerford Christchurch Cromer Doncaster Edenbridge Forest Harleston Hemel Hempstead Hunstanton CentrePiece Spring 2020

in brief... Swings and silicon roundabouts: does cluster policy work? Despite scepticism among researchers, policies to promote geographical clusters of firms in the same sector remain popular.Max Nathan evaluates a flagship programme set up a decade ago to accelerate the growth of Tech City in East London. While the cluster has increased in size and density, the outcomes for firm performance are – at best – mixed. That raises some bigger questions for future cluster policies.

London’s technology ecosystem is thriving. The city has over until now, no one has actually tested what happened on the 50,000 tech firms, with over 260,000 employees. Venture ground. My recent study plugs that gap. capital investment rose from £384 million in 2013 to £1.8 billion in 2018. A number of companies, such as Darktrace, There are many reasons to care about this, even if you’re Transferwise and Deliveroo, have become unicorns – valued not a Londoner. First, lots of cities worldwide have tech at more than £1 billion. The sector survived the financial clusters like this – Manchester, Leeds, New York, San crisis and is – so far – largely Brexit-proof. Francisco, Stockholm, Berlin and Tel Aviv. Can they learn from London’s experience? East London is an important part of this story. Since the late 1990s, the neighbourhoods around Shoreditch have become Second, cluster policy is contentious. Policy-makers love home to a rich tech community, especially digital content them: but many researchers are deeply sceptical of whether firms that bridge to traditional media, advertising, marketing they achieve anything. Who is right? It turns out that while and design. there are hundreds of academic papers on clusters, very few actually try to evaluate the effects of cluster policies. Here is The cluster’s growth went under the radar until, in 2008, a gap we need to fill. Silicon Roundabout caught the media’s attention. In late 2010, policy-makers stepped in: then prime minister David Cameron launched East London Tech City, a flagship cluster acceleration programme. The policy mixed marketing and place branding; foreign investment; business support; network-making; tax breaks; and a one-stop delivery body – the Tech City Investment Organisation.

The consensus is that these interventions – lauded by, among others, Boris Johnson in his time

as London’s mayor – have been hugely City Road successful. Rebranded as Tech Nation, the programme now covers the whole UK. But

While the Tech Old Street City cluster of firms has become Old Street bigger and denser

since 2010, there City Road are clear winners and losers

City Road

Old Street

City Road CentrePiece Spring 2020

Third, the Tech City policy is potentially very attractive to policy-makers. Very simply, there are three families of cluster Only the established policy. One group involves formalised national partnerships, digital content as used in France and Japan; a second group covers city re-zoning and rebuilding, as in Barcelona’s 22@ district. firms have seen A third group uses Michael Porter-style ‘light touch’ higher revenue per programmes: Tech City is in this third group. It tries to ‘go with the grain’ of the local ecosystem, rather worker; for younger than reshaping the area through large-scale physical digital tech firms, development, or using industry membership models. Does this bottom-up, light touch approach work any performance has fallen better than previous top-down approaches?

In my research I think of the cluster as a 1km zone around Old Street roundabout: that’s how most people saw it in 2010, when the policy arrived. more established content firms. But for smaller, younger I start by looking at long-term trends in the area. Clusters digital tech firms, performance fell after 2010. Here, the are governed by positive and negative feedback loops. As policy overheated the ecosystem. they get bigger and denser, the exchange of people and ideas between firms boosts productivity. But bigger and So did the policy work? Sure, if a bigger cluster is all that denser also means more expense and competition. This matters. But if you also want a better cluster, the results are pushes some companies out of the market or out of the much more mixed, with clear winners and losers. neighbourhood. In Shoreditch, both positive and negative effects were in evidence: the cluster got bigger and more A pessimist might say that this shows that trying to steer a expensive. cluster’s course is pointless. On the other hand, Tech City shows that government can influence change without Working out how much of this was down to policy dropping huge amounts of public money. interventions is especially tricky in this case. Shoreditch is an unusual neighbourhood, and it’s hard to find like-for-like While trade-offs are probably inevitable, a better thought- comparisons elsewhere in London. through programme, with clear objectives linked to specific policy actions might have delivered a better balance of So instead, I compare changes in Shoreditch to a ‘synthetic positives and negatives. Shoreditch’, modelled using data adapted from London tech hotspots beyond Tech City. This simulated cluster looks very Light touch approaches may work for established clusters, like the real Shoreditch before the Tech City programme but they are less likely to succeed in growing one from began, but after 2010 it follows its own path, in a parallel scratch. Other cities will also want to vary the policy mix, world where the policy didn’t happen. for example, by placing more emphasis on infrastructure or less on branding. It will be fascinating to see how future Overall, I find that the policy increased the size and density cluster policy experiments, such as London’s Med City and of the cluster, both for the digital content firms and a newer Manchester’s Graphene City, play out. wave of smaller, younger digital tech firms specialising in hardware, software and information technology. But this More broadly, there are lessons here for the ‘levelling up’ seems not to have consistently increased firm performance, agenda, especially the current government’s plans to with only the established digital content firms seeing higher jump-start regional economies and move large institutions revenue per worker. out of London.

Why hasn’t a bigger, denser cluster raised performance for everyone? Cluster disruption might provide part of the answer – digital tech firms crowded into the heart of the area, and content businesses moved to its edges. Growth is also driven by new entrants, mainly UK-owned, raising levels This article summarises ‘Does Light Touch Cluster Policy Work? of competition and driving down revenue per worker for the Evaluating the Tech City Programme’ by Max Nathan, CEP average firm. Discussion Paper No. 1648 (http://cep.lse.ac.uk/pubs/download/ dp1648.pdf). More troublingly, I find that much of this began before 2010, when the Tech City programme began, and then Max Nathan of University College London is a research weakened relative to the two years preceding it. The policy associate in CEP’s urban and spatial programme, and a deputy seemed to amplify the benefits of clustering for the larger, director of the What Works Centre for Local Economic Growth.

17 CentrePiece Spring 2020

The UK’s young adults are navigating a very different economic landscape to earlier generations, including low real wage growth, lower likelihood of owning their own home and the uncertain prospects of Brexit. Rahat Siddique explores another potential source of variation across generational groups: their consumer preferences and the consumer prices that they face. The cost of being young: measuring intergenerational consumer prices

he UK’s consumer prices index investment decisions and inflation (CPI), a standard measure expectations. of inflation, is made up of a For example, the negative ‘shopping basket’ of items macroeconomic shock of the Great Tbought by the representative consumer. Depression made a generation of But the index may not reflect individual Americans less likely to invest in the stock experiences of price rises (or price falls) market and more pessimistic about future because different people buy different stock returns even if they did invest. items from the basket, reflecting Equally, experiences of price variation and demographic factors such as their age, inflation could have lasting effects on gender and location. consumers. For example, people living in rural parts of the country might spend more on fuel Do millennials have a and motor vehicles, while those in urban unique consumer basket? areas may spend more on public transport. There has been a lot of discussion Younger members of the population recently about the ‘millennial’ generation: Across may buy pushchairs and nappies for their those who were born between 1981 generations, children, while elder groups will not. and 1996 – which includes people who Clearly, there are intergenerational started their working lives during the the young have consumption differences, but does that global financial crisis of 2007-08 and its repeatedly matter? One reason that it might matter immediate aftermath. is that intergenerational variation in Kurz et al (2018) do not find a had different consumer prices could have macroeconomic distinct trend in consumption preferences consumption implications. Malmendier and Nagel (2011, for millennials – debunking the myth 2016) find that economic conditions in an of avocado-eating, Uber-riding young choices than individual’s past affect their future adults – but they do note that across older cohorts

18 CentrePiece Spring 2020

The cost of a fixed basket of household items has been consistently higher for the under-30s

Food Survey (LCF), which categorises expenditure variation across household groups by age, to create weights by generational group to develop a more granular picture of the consumption patterns of millennials. In 2018, the LCF showed under-30s spending a higher proportion of their income on housing and fuel than any other age group, whereas 65-74 year olds were spending the most on recreational and cultural activities. We use CPI price quotes data to create a weighted basket of goods and services for each age group. After cleaning the dataset, we are left with a panel of 27 million observations. generations, the young have repeatedly 1980s, the homeownership rate was 25% had different consumption choices than at the age of 27, compared with 33% Selecting basket items older cohorts. There have been changes for those born five years earlier (Cribb The ONS emphasises that the CPI is a in millennial spending, compared with et al, 2018). fixed-weight index and not a cost of previous generations, which are attributed Age-specific price indices have been living measure. A consumer price index is to changes in housing costs and low produced in the past. Until 2016, the interpreted as the average purchases for wage growth. These changes mean that Office for National Statistics (ONS) used the entire population, while a cost of living millennials have less disposable income alternative weights to create a ‘pensioner index can be measured in many ways. For than their parents’ generation at the RPI (retail prices index)’ because of this some, this means the cost of items needed same age. group’s reliance on pension benefits, to maintain a certain standard of living, That said, the opportunities afforded implying different spending patterns while others define it as the cost of to this generation have improved: 40% of compared with the rest of the population. basic essentials. the UK population held a university degree Similarly, it is plausible that a ‘youth The ONS CPI basket is reviewed in 2017 compared with 19% in 1990; CPI’ could be constructed to reflect the annually, which means that every year and the unemployment rate for recent preferences of the UK’s young adults, items are added and removed. For graduates, those who graduated in the last who are more likely to be renting than the simplicity, we only keep items that are five years, halved between 1993 and 2017 previous generation; who are concentrated present over the 22 years, leaving us with (Office for National Statistics, 2017). Yet in cities; and who, unlike their parents’ or 172 unique items to construct our basket, millennials are navigating a very different grandparents’ generations at the same age, spanning the period from January 1997 economic landscape, and living standards have experienced extremely low real wage to April 2019. have not improved for them relative to the growth (or falling real wages) for more Our basket contains essential previous generation. than a decade (Blanchflower et al, 2017). household items that are universal across Today’s young adults aged 25-29 are genders, regions and ages. But this also considerably less likely to own a home at Measuring intergenerational means that we exclude all electronic a given age than those born only five or consumer prices in the UK devices that have been replaced by a ten years earlier. For those born in the late We use data from the Living Costs and new technology (cassettes to CDs, for

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example) or seen improvements in model Figure 1: (for example, televisions and smartphones) UK mean basket over time, nominal despite, arguably, being bought by consumers regularly. Therefore, our basket ■ ner 0.5 may not contain items reflective of all ■ e ■ e consumption trends. ■ e ■ Our basket is made up of 47% food er 0.4 and drink and 14% various articles of clothing. Household costs and cleaning make up 17% of our basket, and transport 0.3 only makes up 4%. Percente Stylised facts 0.2 In real terms, the increase in the mean price of our universal basket has increased dramatically across all age groups, doubling 0.1 over 22 years. In recent months, there has been a decline (an average of 14% between September 2017 and April 2019). te Expenditure on the items in our fixed Notes: Real price January 1997 to April 2019 where January 1997=100, rebased weighted-basket. basket has been consistently higher for the Source: ONS under-30s than for other age groups, and has been more pronounced since 2010 (see Figures 1 and 2). Figure 2: Of course, there are also regional UK mean basket over time, real disparities in the UK. Although there is no regularly recorded statistic on regional ■ ner 250 ■ e inflation levels, a recent ONS analysis of ■ e 2016 prices demonstrated the variation ■ e ■ er across UK regions. This basket construction has static 200 weights, so we cannot attribute this change to direct differences in preferences or geographical location. But this trend Percente could indicate a tendency for young people to purchase items that are becoming more 150 expensive. Across regions we see a similar pattern, where under-30s have the most costly consumer basket compared with other age groups. 100 Using generational weights te We use the LCF survey data on household Notes: Real price January 1997 to April 2019 where January 1997=100, rebased weighted-basket. expenditure by age to create our weights. Source: ONS In doing so, we face two challenges. The first is that our basket is more disaggregated than the LCF survey. the methodology used for 2018 weights. This means that we have to adjust for Comparing generational groups in having used the same weight multiple 2008 and 2018, we find that consumption times for different items. We then rebase has increased in real terms by an average of the weights, so that they sum to one for 22% across all ages, though highest The costs of our fixed basket of goods. for over-70s (23.2%) and those aged being young Our second challenge is using static 50-64 (22.5%). weights for our panel data: static weights A similar trend is apparent comparing extend beyond assume that consumption preferences for 2001 and 2018: the average increase was consumer prices age groups remain the same over time. 45% and highest for the 50-64s (48.1%) To resolve the latter issue, we create and under-30s (47.1%) – see Figure 3. for the UK’s dynamic weights for two additional In 2001, the under-30s basket cost £113; young adults years – 2001 and 2008 – by repeating in 2018, it had increased to £166. The

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Figure 3: Rahat Siddique is an economist at the Real basket cost over time, UK Confederation of British Industry and was formerly a CEP research assistant.

Further reading

David Blanchflower, Rui Costa and Stephen Machin (2017) ‘The Return of Falling Real Wages (http://cep.lse.ac.uk/pubs/download/ rwu006.pdf). Jonathan Cribb, Andrew Hood and Jack Hoyle

(2018) ‘The Decline of Homeownership Among Young Adults’, Institute for Fiscal Studies.

Department for Work and Pensions (2018) ‘Automatic Enrolment Evaluation Report 2018’.

Notes: Real price for annual basket where 1997=100, rebased weighted-basket. Christopher Kurz, Geng Li and Daniel Vine Source: ONS (2018) ‘Are Millennials Different?’, Federal Reserve Board Finance and Economics Discussion Series 2018-080. basket for the over-75s cost £107 in 2001, Conclusion Ulrike Malmendier and Stefan Nagel (2011) rising to £155 in 2018. This indicates that Our analysis finds that the cost of a fixed ‘Depression Babies: Do Macroeconomic preferences for universal goods have not basket of consumer goods has increased Experiences Affect Risk Taking?’, Quarterly increased anomalously for young people, by approximately the same proportion Journal of Economics 126(1): 373-416. but have followed the same trend. across age groups. While this is not a controversial finding in itself, the costs Ulrike Malmendier and Stefan Nagel (2016) Policy implications of being a young adult in the UK extend ‘Learning from Inflation Experiences’, Considering the impact that negative beyond consumer prices. For example, the Quarterly Journal of Economics 131(1): 53-87. macroeconomic experiences can have on millennial generation has had an acutely an individual’s investment decisions and different economic experience of the past Office for National Statistics (2018) inflation expectations, there could be scope decade, including poorer post-recession ‘How Well are You Doing Compared with for smarter policy. The UK’s young adults wage growth than older people. Other Young People?’ not only joined the labour market during Our results provide an insight into why the Great Recession but they will also policy intervention might be important in continue their adult lives navigating the the new economic landscape experienced economic effects of leaving the European by today’s young adults. There is a growing Union. Combined, these pose challenges to body of research on the subject, and living standards and are likely to inform the consumer prices illustrate only one aspect long-run investment and saving decisions of the challenges that this generation faces. of millennials. Policies to promote long-term saving and The ONS (2018) finds that over 50% of to ensure that consumers do not expect young adults don’t have a savings account. higher inflation in the future are areas While there are many reasons for this, where young adults may benefit. interventions such as automatic pension enrolment demonstrate the power of small government policies in addressing a future savings shortfall. Between 2012 and 2017, pension enrolment for eligible employees aged 22 to 29 saw a 44% increase in participation to 79%, the largest increase among all age bands (Department for Work Millennials’ current economic and Pensions, 2018). experiences are likely to inform There is an appetite for reform, and policy-makers can make a difference in their long-run investment and reducing intergenerational inequalities. saving decisions

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in brief... Mismatched students and universities Higher education has long been thought of as a tool to equalise opportunities. But according to research by Gill Wyness and colleagues, if we really want to improve the life chances of disadvantaged students, we need to pay much more attention to the types of universities and subjects in which they enrol.

Higher education has long been thought of as a tool course with equally high-attaining students. They would be to equalise opportunities, with governments spending under-matched if they attend a course where their fellow billions a year on encouraging disadvantaged students to students have lower grades than they do (suggesting that go to university through financial aid and other ‘widening they could have attended a more academically prestigious participation’ strategies. Indeed, the Office for Students course); and over-matched if they attend a course where in England has recently set ambitious new targets for the other students on their course have higher grades than universities to widen access. But is simply getting poor they do. students into university enough? Second, we rank courses based on the average earnings Our research examines the ‘quality match’ between of their graduates five years later, and consider a student students and the courses they attend, using data on a to be well-matched if that course has a similar ranking to cohort of students who enrolled in university in 2008. their own individual ranking by attainment. For example, We are interested in whether certain groups (such as a high-attaining student would be well-matched if they disadvantaged students) are more likely to ‘undermatch’, attend a course with high earnings potential, and under- by attending courses that are less selective than might matched if their course has low average earnings. be expected given their A-level grades. We also examine whether certain types of students ‘overmatch’, attending We find a significant amount of mismatch in the system in courses that are more selective than might be expected England, with 15-23% of students under-matching and a given their grades. similar proportion over-matching. Importantly, we find that students from backgrounds of low socio-economic status We examine this phenomenon of mismatch along two (SES) are more likely to undermatch than those from rich dimensions of course ‘quality’. First, we consider a student backgrounds. to be well-matched to their course if they have similar A-level scores to others on the course. For example, a high- Comparing low- and high-SES students at every level attaining student would be well-matched if they attend a of attainment, disadvantaged students attend less

Many disadvantaged UNIVERSITY students attend less academically prestigious courses than their A-level attainment merits

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academically prestigious courses, and courses with lower earnings potential, than those from high-SES backgrounds. Widening participation So these students have the same A-level attainment, but units at high-ranking they are attending lower ‘quality’ courses. This has obvious implications for equity and for equalising opportunities. universities could do important outreach But economic disadvantage is not the only dimension of inequality we study. Examining mismatch by gender, we work to attract local find that female students attend courses that are just as disadvantaged students academically selective as male students, but they attend courses with lower future average earnings than men, comparing students with the same A-level attainment. This has important implications for equity and for the gender pay gap.

So what should policy-makers do? We examine three might choose a subject such as engineering, which is important factors that might drive this mismatch in an typically high returns, whereas a high-attaining female attempt to work out potential policy solutions. First, we student might choose a subject such as English or history, consider the choice of subject studied at degree level: commanding a lower average salary. comparing students of similar academic attainment and studying the same degree subject, the gap between So what can we do? The evidence suggests that an advantaged and disadvantaged students remains. This tells intervention that may help to reduce SES and gender us that low-SES students are studying at lower ‘quality’ gaps in match would be to improve the level and quality institutions relative to high-SES students, rather than of information available to under-matched students – for choosing lower ‘quality’ subjects for their courses. example, on the attainment profile of students on each course and labour market returns. What about the role of geography? It is well-known that low-SES students are more likely to attend universities close Some recent studies have investigated the importance to home, but does this drive them to choose a less selective of providing information to low-SES students specifically institution? If we just consider the group of students living to improve match. Our results highlight that it may also close to home, we still see differences in the institutions be beneficial to target women in a similar way, providing that disadvantaged students attend compared with more information on potential earnings associated with both advantaged students. High-attaining, low-SES students institution and field of study. But as with most studies of tend to enrol in post-1992 institutions near home, whereas mismatch, we have no information on the preferences of high-attaining, high-SES students are more likely to attend students: women may be well-informed on the earnings a nearby Russell Group university. potential of subjects, but simply prefer not to study them.

There may therefore be scope for some outreach work for Similarly, it may be the case that low-SES students prefer to high-ranking universities to attract local disadvantaged attend less academically challenging institutions even when students. Interestingly, those low-SES students who move their attainment levels suggest that they are academically further away from home to attend university appear to be prepared. This could be down to perceptions about as well-matched as similar attaining high-SES students. institutions not being a good fit for them. Our finding on geography suggests that universities’ widening participation Our third factor is school attended, which accounts for units could do some important outreach work in these cases the majority of mismatch among low-SES students. The to challenge perceptions. implication is that factors correlated with school (such as peers, school resources, information, advice and guidance at school, and sorting into different types of schools) play an important role in student match. Unpicking what is This article summarises ‘Inequalities in Student to Course driving this schools channel is an important step for Match: Evidence from Linked Administrative Data’ by Stuart future research. Campbell, Lindsey Macmillan, Richard Murphy and Gill Wyness, CEP Discussion Paper No. 1647 (http://cep.lse.ac.uk/pubs/ Turning to our gender gap in earnings mismatch, we find download/dp1647.pdf). The research was funded by the Nuffield no role for distance to university or schools attended. Foundation. But we do find a very important role for degree subject. The fact that women attend courses with lower future Stuart Campbell, Lindsey Macmillan and Gill Wyness are average earnings than men is largely driven by the subjects at UCL Institute of Education. Richard Murphy is at the that women are studying rather than by the institutions University of Texas at Austin. Murphy and Wyness are research they attend. For example, a high-attaining male student associates in CEP’s education and skills programme.

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The rollout of television to virtually every household in the United States in the mid- twentieth century created a potentially huge audience for people working in the entertainment industry. As Felix Koenig explains, this experience illustrates how new technologies can have a disruptive impact on labour markets: a handful of superstars were richly rewarded, but the majority of entertainers ended up worse off.

TV superstars: how a new technology disrupted the entertainment industry

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any economists link rising inequality to technological New technologies change. A classic theory may generate in economics suggests Mthat ‘superstar effects’ may arise when ‘superstar effects’ technologies enable workers to reach and move labour larger markets. These effects amplify minor differences in talent into large income markets towards differences and move the labour market a ‘winner-takes- towards a ‘winner-takes-all’ outcome. My study looks at an iconic experience all’ outcome with scale-related technical change in the entertainment industry – the launch of television in the United States in the mid- twentieth century – and tests the impact on Figure 1: inequality in this field. Change in the wage distribution for US entertainers, The rollout of TV multiplied the 1940-1970 audiences of entertainers many times over. While a few hundred individuals watched ■ ■ live performances before the launch of TV, the same performance could be watched by millions a few years later. From TV’s earliest days, people flocked away from traditional amusement in theatres, bars, bowling alleys, vaudeville palaces or sports events and became glued to their TV sets. enit During this period, inequality in the entertainment industry increased markedly. Figure 1 shows the earning distribution in entertainment before and after the launch of TV and reveals the spreading out of the income distribution during this period. A rising share of actors earned extreme incomes, while the share in mid-paid jobs n re e declined. Simultaneously, a growing share of workers ended up in low-paid jobs at Notes: The figure shows the entertainment log real wage distribution in 1950 the bottom of the income distribution. US dollars in 1940 and 1970 from the lower 48 states. In the wider US economy, inequality Sources: US Census 1940, 1970. was relatively stable during this period, so the sharp rise in inequality in entertainment suggests that the industry was going through unusual times. While this is not feasible, institutional details in the TV rollout process lead to Analysing the effects variation in TV access that is as good as of technical change on random. inequality TV filming initially started city-by-city, Besides the launch of TV, other factors, and different places thus experienced including trends in regulation and pay- this technical change at different times. setting norms, affected inequality too. By comparing local changes in inequality Distinguishing the effect of technology Inequality in the across local labour markets, we can from such trends is one of the key distinguish the effect of TV from the challenges that have hampered credible US entertainment industry-wide trends in inequality, including statements about the impact of technology industry deregulation and pay-setting norms. on inequality. A further appeal of this setting is that The rollout of TV provides a rare increased local economic conditions were not the opportunity to isolate the impact of a markedly as driver of the launch of TV stations. Instead, technical disruption on the labour market. the Federal Communications Commission A scientific approach would randomise a result of the deployed TV according to their priority access to technology across labour markets. rollout of TV system. The system ranked places according

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to technical location features that paid Figure 2: no attention to the local economy. This The effects of TV on top earners setting thus addresses another common problem in studies of technical change: le tatin the emergence of new technologies in TV Videotape otherwise booming labour markets. What’s more, signal interference among neighbouring TV stations interrupted the rollout plan. Due to this intervention, several local labour markets narrowly missed out on TV launches. This gives rise to another source of variation in TV access that is as good as random, and offers an opportunity to verify that the rollout process is unrelated to local labour market shocks. re t i entertinent in t

Superstar effects The results reveal that TV had substantial effects on inequality in entertainment. er Places where TV was deployed experienced sharp income gains for star entertainers. tie tatin Having a local TV station boosts pay at the TV Videotape 99th percentile by around 17%. This gain for star entertainers is large relative to the wider US economy. This can be seen since the share of local entertainers in the top 1% of the US wage distribution nearly doubled compared with the number before the launch of TV. Figure 2 shows that this occurs when a local TV station is launched and disappears again when centralised network filming displaces local filming. Locations that narrowly miss out on the launch of a TV re t i entertinent in t station see no growth in top entertainer pay. This lack of effects confirms that the rollout process was unrelated to other local er trends, and increases the confidence that we are isolating the effect of TV in the Notes: Panel A shows the effect of blocked TV stations (comparison groups are untreated baseline results. areas); Panel B shows the effect of TV stations. Top-paid entertainers are in the top 1% of the US Economists have argued that income distribution. Vertical lines mark the beginning of local TV (‘TV’) and the end of local TV superstar effects magnify the rewards (‘Videotape’). The area shaded in light yellow marks the 95% confidence interval. to being the best but offer limited gains outside of a small group of top stars. These characteristic patterns are strongly supported in the data. Income growth escalates as we move up towards the top of the wage distribution and the share of income going to the top 1% nearly doubles. All the gains accrue to a few entertainers at the top and marginally less Places where TV talented workers do not benefit from TV. was deployed Looking beyond the stars, the rollout of TV has substantial negative effects experienced on a large part of the entertainer sharp income workforce. The share of entertainment jobs in the middle of the wage distribution gains for star contracts sharply and places where TV is entertainers

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This article summarises ‘Technical Change Beyond the and Superstar Effects: Evidence from the entertainment Roll-out of Television’ by Felix Koenig, CEP Discussion Paper No. 1663 (http://cep.lse. industry, ac.uk/pubs/download/dp1663.pdf). many current Felix Koenig of Princeton University is a technologies are research associate in CEP’s labour market making it feasible programme. for workers to reach vast scale markets

launched experience a near 50% decline Addressing imperfect competition in labour outlets dropped significantly. This in such jobs. markets may thus do little to reduce rising effect was particularly pronounced for TV also affects places beyond the city top income concentration. live performances that were in direct limits where the show filming took place. Does this rise in inequality reflect competition with TV. Entertainment outlets Historic TV stations transmitted shows via unequal gains in productivity? In the that were more immersive and distinct airwaves and could reach audiences far entertainment industry, productivity can from TV were shielded to some degree beyond the local labour market where the be uniquely well measured, which allows from the disruption. station was based. me to quantify how unequal productivity I use the propagation of the TV signal gains are distributed. The data show Conclusion to compute which local entertainers had that revenues of stars’ shows grew strongly Technologies may generate superstar to compete with shows broadcast over with the launch of a local TV station, effects and move labour markets towards the airwaves. In the initial rollout period, while ordinary shows suffered a sharp a ‘winner-takes-all’ outcome. The results of many parts of the country did not have drop in revenues. one of the most iconic cases of a scale- access to a TV signal. But as soon as the To quantify these effects, I collect related technical change reveal the seismic TV signal became available, interest in local archival data on audiences of entertainers impact such changes can have on income entertainment declined substantially. and prices, and track how these changed inequality. TV generated sharp income Comparing demand for local during the TV rollout. Audiences of concentration on a handful of stars, while it entertainment across areas with and star entertainers quadrupled, and hurt the majority of workers. without a signal throughout the rollout simultaneously revenues grew in line with But to evaluate the overall merits of reveals the devastating impact of TV. the audience size. such technical change, it is also important Spending at local county fairs declined At the same time, attendance and to contrast the rising inequality in labour by 5% and employment in the local spending at traditional live entertainment markets with the gains for consumers. entertainment industry dropped by TV was embraced enthusiastically by about 13%. Americans. As with many technical The data show that a key driver of changes, TV is a double-edged sword, these superstar effects is competition for which generates consumer benefits at the talent. Little top income growth occurs TV hurt spending cost of rising inequality. in labour markets where only a single Beyond the entertainment industry, TV station operates. It is the launch of a at local county many current technologies are making competitor station that introduces the fairs and it feasible to reach vast scale markets. striking rise in top incomes. While there are parallels, superstar effects This highlights that market employment arise only when workers have unique and concentration on a few stars does not in the local irreplaceable talents. In labour markets necessarily indicate malfunctioning of where skills are learnable and workers are markets: rather, the superstar effects arise entertainment closer substitutes, superstar effects ought because of intense competition for talent. industry to be smaller.

27 CentrePiece Spring 2020

in brief... Pupil exclusion in academy schools

Schools in England that became academies before 2010 typically began to exclude significant numbers of their more disruptive pupils. Research by Stephen Machin and Matteo Sandi suggests that this was the result of the strict disciplinary approach that the schools adopted rather than a strategic effort to improve their educational results.

Does the strategic exclusion of poorly performing pupils pre-2010 academies to disappear, each excluded pupil explain the improvements in overall performance recorded would have needed to exert an implausibly large negative by academy schools in England? Our analysis of the initial influence on the GCSE results of all other Year 11 pupils in wave of academies – those that opened before 2010 as the same school and school year. part of a school improvement programme – shows that exclusion was not a means of improving aggregate results Moreover, we find no evidence that pupils excluded from for academies in the published league tables. academies were worse performers than pupils excluded from ‘control’ schools (otherwise similar schools that Pre-2010 academy schools did indeed experience sharp did not have academy status). Pre-2010 academies also pupil performance gains after conversion, but not because permanently excluded more pupils in Year 11 who were of strategic pupil exclusion. Rather, exclusion seems to be a still allowed to take their GCSE exams in the school feature of the strict disciplinary behaviour procedures that that excluded them, which removes scope for strategic some of these schools operate – an integral part of a ‘No manipulation of GCSE results. Excuses’ culture. Finally, we find no association between performance gains This finding is corroborated by the fact that we find and changes in permanent exclusion following conversion. much smaller gaps in permanent exclusion among the The schools that experienced the greatest performance second batch of conversions to academies – those gains are not in fact the same schools that experienced the opened after 2010, which were not disadvantaged schools largest increases in exclusion rates following conversion. coping with the behaviour problems that faced the earlier batch of academies. The overall conclusion is that rather than being used as a strategic means to boost measured school Inclusion in a school league table results hinges on the performance, the higher rate of exclusion seems to have January census of pupils in Year 11, the final year of been part of the tough discipline procedures that the compulsory education in England. We study whether pre-2010 academies adopted. following conversion, academies started to exclude permanently more pupils before the January census in Year 11.

Following academy conversion, the likelihood of pupils enrolled in academies being permanently excluded in Year 11 before the January census increased by 0.083 percentage points. This increase is much bigger between This article summarises ‘Autonomous the pre-2010 academies, where conversion led to a 0.282 Schools and Strategic Pupil Exclusion’ percentage points increase in the likelihood that an enrolled by Stephen Machin and Matteo Sandi, pupil was excluded in Year 11 before the January census. In published in the Economic Journal in post-2010 academies, the likelihood that an enrolled pupil January 2020 (earlier version available as was strategically excluded increased by a more modest CEP Discussion Paper No. 1527: http://cep. 0.052 percentage points. lse.ac.uk/pubs/download/dp1527.pdf).

We also study whether these higher rates of pupil exclusion Stephen Machin is director of CEP. Matteo can plausibly explain the steep pupil performance gains Sandi is a research economist in CEP’s observed in pre-2010 academies. Our simulation exercise programmes on community, and education suggests that for the performance improvement of and skills.

28 CEP PUBLICATIONS CEP publications are available as electronic copies free to download from the Centre’s website: http://cep.lse.ac.uk/_new/publications/default.asp

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THE RISE OF AGRIBUSINESS AND THE A LOCAL COMMUNITY COURSE #GE2019Economists: The Research DISTRIBUTIONAL CONSEQUENCES OF THAT RAISES MENTAL WELLBEING Evidence on Key issues for Voters POLICIES ON INTERMEDIATED TRADE AND PRO-SOCIALITY in the 2019 UK General Election Swati Dhingra and Silvana Tenreyro Jan-Emmanuel De Neve, Daisy Fancourt, CEP Discussion Paper No. 1677 Christian Krekel and Richard Layard While Brexit may have been the trigger February 2020 CEP Discussion Paper No. 1671 for the 2019 election, it was far from January 2020 being the only issue debated during the COMPARING CONVENTIONAL AND campaign. CEP produced 11 briefings MACHINE-LEARNING APPROACHES TO RISK GLOBALIZATION AND CONFLICTS: covering key issues in the election ASSESSMENT IN DOMESTIC ABUSE CASES THE GOOD, THE BAD AND THE campaign. These provide impartial, Jeffrey Grogger, Ria Ivandic and Tom UGLY OF CORPORATIONS IN AFRICA evidence-based analyses of topics and Kirchmaier Tommaso Sonno give policy suggestions. The briefings CEP Discussion Paper No. 1676 CEP Discussion Paper No. 1670 went beyond the party manifestos to February 2020 January 2020 look at vital issues that were being overlooked – as well as giving context to WHO’S PAYING FOR THE U.S. TARIFFS? IMMIGRATION, LOCAL CROWD-OUT what was being discussed. A LONGER-TERM PERSPECTIVE AND UNDERCOVERAGE BIAS Mary Amiti, Stephen Redding Michael Amior https://cep.lse.ac.uk/_new/ and David Weinstein CEP Discussion Paper No. 1669 publications/abstract. CEP Discussion Paper No. 1675 January 2020 asp?index=6760 February 2020 TRADE, PRODUCTIVITY AND IMPORT COMPETITION, (MIS)ALLOCATION CEP EVENT HETEROGENEOUS PREFERENCES OF Antoine Berthou, John Jong-Hyun MANAGERS AND PRODUCTIVITY Chung, Kalina Manova and 10th EUROPEAN MEETING OF THE Cheng Chen and Claudia Steinwender Charlotte Sandoz Dit Bragard URBAN ECONOMICS ASSOCIATION CEP Discussion Paper No. 1674 CEP Discussion Paper No. 1668 24-25 APRIL 2020, LSE January 2020 January 2020 The Urban Economics Association seeks INTELLECTUAL PROPERTY AND EXCHANGE RATES AND CONSUMER to promote participation and excellence in THE ORGANIZATION OF THE PRICES: EVIDENCE FROM BREXIT academic research in urban and regional GLOBAL VALUE CHAIN Holger Breinlich, Elsa Leromain, economics. The association welcomes Stefano Bolatto, Alireza Naghavi, Gianmarco Dennis Novy and Thomas Sampson researchers looking into the economics Ottaviano and Katja Zajc Kejzar CEP Discussion Paper No. 1667 of cities, housing, real estate, transport, CEP Discussion Paper No. 1673 December 2019 local public good provision, the spatial January 2020 distribution of activities, economic TRADE LIBERALIZATION, INPUT geography, and urban or regional policy. THE AGGREGATE CONSEQUENCES INTERMEDIARIES AND FIRM OF DEFAULT RISK: EVIDENCE PRODUCTIVITY: EVIDENCE FROM CHINA All special events organised FROM FIRM-LEVEL DATA Fabrice Defever, Michele Imbruno by CEP are here: Timothy Besley, Isabelle Roland and Richard Kneller https://cep.lse.ac.uk/ and John Van Reenen CEP Discussion Paper No. 1666 _new/events/special.asp CEP Discussion Paper No. 1672 December 2019 January 2020

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