Report on the Annual Globalisation Seminar and Workshop in Political Economy and Economic Policy

By Beatriz Rodriguez-Satizabal

Last Thursday saw the annual edition of the Workshop in Political Economy and Economic Policy and the Globalisation Seminar Series organised by Dr. Caterina Gennaioli. Along with the Brown Bag Seminars and the Workshop on the Theory and Empirics of Poverty, Inequality and Mobility, the annual seminar and workshop constitutes the CGR’s main effort in further the research on economic and political global concerns. The Centre seeks to offer a platform to prominent academics and policy-makers to discuss the latest debates on global issues such as immigration and social mobility. This year the seminar was co-sponsored by the Royal Economic Society.

During the day, six researchers from QMUL (2), LSE (3) and Warwick (1) presented their quantitative research on political economy and economic policy. To close the seminar series, Professor Alberto Alesina (Harvard University) presented his recent work on redistribution, social mobility and immigration. Alesina provided a discussion on intergenerational mobility and preferences for redistribution, highlighting both the fascinating survey they conducted and the results of the study. The research investigates how beliefs about intergenerational mobility affects preferences for redistribution, society’s views on fairness and the preferred redistribution policies. Based on a survey conducted in the US, UK, France, Italy and Sweden, the study finds that US citizens tend to be too optimistic about the “American dream”, while Europeans tend to be too pessimistic about remaining stuck into poverty. Alesina and coauthors run an experiment where survey respondents are treated with pessimistic information about social mobility. The results of the study are striking and highlight the presence of a strong political polarization. Left-wing respondents are more pessimistic about mobility, their preferences for redistribution are correlated with their mobility perceptions, and they support more redistribution after seeing pessimistic information. None of these apply to right-wing respondents.

The workshop was opened by Prof. Gino Gancia (QMUL-SEF) who presented on the links between political structures and the first two waves of globalisation through the lens of trade and local policy preferences. Built on previous research on the trade and size of countries, federalism and international unions, trade and war, Prof. Gancia explored the question on why did the waves of globalisation lead to different political structures: in its first stage, globalisation lead to political concentration and conflict, while at a later stage globalisation lead to political fragmentation and peace. Gancia and coauthors argue that the political response to globalization first consists of removing borders by increasing country size. In its later stages, however, the political response to globalization is to remove the cost of borders by creating international economic unions. As a result, country size declines and negotiation replaces war as a tool to ensure market access.

Dr. Andrea Tesei (QMUL-SEF) engaged in a stimulating analysis of the role of digital ICT on fostering political mobilisation and advance political freedom in Africa. As explained by the author, Africa represents a theatre of spectacular political mobilisation in the last 15 years. At the same time, Africa is the continent with the fastest growth of mobile phone users. Moreover, Africa presents high rates of political exclusion and economic instability which is useful to explore further the links between mobile use and political riots. Based on very detailed geo-referenced data on mobile coverage and protests protests, Dr. Tesei argued that ICT has the ability to reach large audiences and spread information fostering coordination. As protests are counter-cyclical, mobile phones become instrumental to mass mobilisation during economic downturns. However, it is not the case that people protest more when they have more access to technology.

Prof. Gerard Padro I Miguel (LSE) continued presenting a paper on the role of village democracy in the context of autocratic China. Moving from the literature that focus on elections at the national level, Prof. Padro I Miguel presented an analysis of the trade-off between performance and vertical control in the layers of Chinese local government. The author discusses a model whereby citizens have better information on local officials than the distant central government, therefore delegation of authority via local elections improves selection and performace of local officials. However, local officials under elections have no incentive to implement unpopular centrally mandated policies. Using detailed data on outcomes in villages before and after the introduction of local elections, Padro I Miguel and coauthors find that elections improve (weaken) the implementation of popular (unpopular) policies, and improve official selection.

The afternoon was opened with a session on unemployment insurance schemes and consumption, led by Dr. Joana Naritomi (LSE). The focus of the talk was on understanding how two different government-provided schemes (state-contingent and lump-sum) have an impact on consumption in Brazil. Dr. Naritomi explained that consumption responds to each of the different unemployment benefits and highlighted a new trade-off between state-contingent and lump-sum schemes based on the timing of the transfers and worker’s imperfect consumption smoothing. Moreover, Dr. Naritomi called the attention on the need for unemployment insurance in countries with high labour informality, as finding a job takes usually longer than expected.

Dr. Sandra Sequeira (LSE) discussed a research on the short and long-run effects of immigration in the US between 1860 and 1920. Dr. Sequeira argued that the long-run economic impact of immigration needs a better understanding. The study focuses on measuring how much of the economic success in US is due to the wave of immigration that occurred during the age of mass migration. Furthermore, the author questions if there are differences between counties with more and less historical immigration. Dr. Sequeira concluded that there is strong evidence of long-run economic benefits associated with immigration and these benefits persisted over time. The study showed three main channels of persistence: industrialisation, agricultural productivity and innovation.

Dr. Sascha Becker (Warwick University) drew on the case of Polish immigrants during the post-II WW period to discuss the relationship between forced migration and human capital accumulation. Based on a natural experiment of forced migration, Prof. Becker concludes that there was a substantial and permanent increase in human capital accumulation by the community of Polish immigrants that were displaced in Western Germany. More importantly, the study shows that the effect persists through increasing value placed on higher education rather than material well-being. Finally, the author calls the attention on the fact that this results could imply that ensuring forced migrants a greater access to education can increase long-term economic returns.

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