Fall of Labor Share and the Superstar Companies
2020-04-08: Across developed countries labor share, the slice of GDP that goes into workers’ wages, is decreasing. This decrease is mainly driven by market concentration and the increase in market share of big “superstar companies”, as research co-authored by David Dorn and published in this month’s edition of the Quarterly Journal of Economics has shown. Furthermore, the authors found that in those industries, in which market concentration increased the most, labor share decreased the most. Other hypotheses, such as changes in international trade policies, the decrease of labor union power or the squeezing of wages were also tested, however they did not show to have an effect on the fall of the labor share.
David Dorn as guest at SRF ECO
2020-04-07: In the interview David Dorn outlines the main ideas from the Coronavirus Position Paper, which the Department of Economics issued last week. He explains why the federal government has acted correctly from an economic point of view and how to avoid years of corporate debt. Solutions are needed on how to evenly distribute the costs of such a huge government intervention in the economy.
Coronavirus shock increases labor market inequality
Differences Between Economic Shocks
2020-04-04: In an interview with Tagesschau24 Joachim Voth talks about historical pandemics and economic crises. In contrast to past shocks such as the financial crisis of 2008, we are currently simultaneously experiencing a global supply and demand shock. If the economic lockdown does not last longer than two or three months, we can expect the economy to recover faster than it did from the financial crisis.
How the Economy Survives
2020-04-04: In his column in Finanz und Wirtschaft, David Dorn points out the key differences between a normal recession and the current slump initiated by the economic lockdown. "The current crisis is very different from previous recessions. Not only the weakest sectors and companies are affected, but also many [...] with solid business models and intact future prospects. If the Swiss economy is to survive the crisis well, these companies and their jobs must be preserved to ensure a rapid recovery of the economy after the crisis".
Minimize pandemic risk in the future
2020-04-02: In this week’s Weltwoche, Joachim Voth looks towards the future. "There is no guarantee that the next virus will not be as deadly as Ebola and as contagious as the Coronavirus", he notes. The answer to future pandemic risks does not lie in reversing globalization, as the greatest advantages of globalization, are based on the free exchange of goods, which is not the problem. The main risk is the movement of people. "We need to ask ourselves whether millions of people really need to fly around the world, just for pleasure," Joachim Voth says.
Welcome Prof. Teodora Boneva
2020-04-01: Teodora Boneva has been appointed Assistant Professor of Economics of Child and Youth Development, endowed by the Jacobs Center for Productive Youth Development as of April 1, 2020. Prof. Boneva joins us from her previous position as Associate Professor at the Department of Economics at the University of Oxford. Her research studies the role of beliefs in educational investment decisions and the role of educational interventions in fostering skills in childhood. She aims to improve our understanding of how we can promote skill acquisition and narrow socioeconomic and gender gaps in educational and labor market outcomes.
Welcome Prof. Boneva!
A perfect storm
2020-03-31: Interview with Joachim Voth in the German Spiegel about historical brick and mortar, and modern virtual plague walls to protect residents from epidemics. He critically notes that the wealthy Western nations have failed to learn from past epidemics: "We Germans buy insurance for all sorts of things, but as a society we don’t protect ourselves against this kind of emergency," he notes.
Dopamine, the reward system and the addiction treatment
2020-03-31: With the support of EU Grants Access, Lydia Hellrung successfully applied for a Marie Sklodowska-Curie Fellowship Grant over 175'000 Euro. Her research project DOPANF takes place in the Department’s SNS Lab where she investigates how network activity in the brain differs depending on whether effort is motivated by a potential reward or to avoid punishment, and if one of the underlying motivations leads to better learning than the other. The answer to this question has, among other things, an influence on the treatment of addicts. EU Grants Access presents the project and the researcher in their publication Science Stories.
Coronavirus: Contributions and Position Paper
2020-03-29: The Coronavirus is a global concern. In recent weeks, researchers from the Department have contributed to the public discussion in national and international media. In addition to insights from their respective specialist areas, all professors of the Department of Economics have jointly published a position paper. Titled "Testing and Freezing: A survival strategy for the Swiss economy", the paper summarizes the consensus of the economic debate and outlines paths of action for Switzerland.
Find the Position Paper and Executive Summary (German) here
Interviews (German, full access)
"Pandemics past and present"
Tagesschau24 video interview, Joachim Voth (03.04.2020)
"Conflicts between medical and economic interests are only short-term"
Radio1 interview, David Dorn (MP3, 7073 KB) (27.03.20)
"The collapse of the stock prices cannot be explained by rational behavior alone"
Sonntagszeitung interview, Ernst Fehr (PDF, 1327 KB) (22.03.20)
"Our decisions are currently based on insufficient data"
NZZ video interview, Ernst Fehr (21.03.20)
Economic Effects of Pandemics
2020-03-03: The Economist in its Free Exchange column looks at the economic effects of pandemics. It highlights research by Joachim Voth, published in the Review of Economic Studies, arguing that population collapse after the Black Death in 14th century Europe caused a jump in incomes. This, in turn, led to more spending on manufactured goods produced in cities, and thus to higher rates of urbanization. In this way, the medieval plague had a silver lining - it put Europe on the path to the industrial revolution. The Economist concludes that though the human costs of pandemics are dreadful, the long-run economic effects need not be so.
Humans and Herd Instincts
2020-03-05: In the "NZZ am Sonntag" Björn Bartling explains how fundamental behavioral tendencies shape our reaction to the coronavirus outbreak. Herd instinct, insecurity, and the balancing act of public communication are decisive factors that can accelerate or slow down an escalation.
Travel and Trade in Times of the Epidemic
2020-03-04: Joachim Voth draws parallels between the current strategies to curb the spread of the coronavirus and those used to combat the plague in Marseille in 1720. Back then, the rigorous restriction of mobility by building plague walls proved to be the most effective solution. Today, politics must balance the costs and benefits of unrestricted movement of people and goods. While exchange of goods supports economic growth, freedom of movement for people contributes little to the benefits of globalization, he argues: "The lesson of Wuhan should be that we start a broad discussion about how much mobility is actually desirable".
Nudging towards more Eco-Friendly Lunches
2020-02-18: Using an experiment, six municipal staff canteens in Zurich have tried to improve their CO2 balance. Without coercion or financial incentives, customers should be encouraged to choose climate-friendly menus with more plant-based foods. This was to be achieved through nudging and gamification: the restaurants were competing against each other, in order to encourage the visitors to participate. Nick Netzer answers the most important questions about nudging and explains why, when it comes to climate protection, he would intervene more directly rather than just nudge people.
Read the article about the experiment and the interview in the «NZZ».
You Think You Know What Economics is About?
2020-02-13: This question set the theme for the second Research Slam held at the Department of Economics at the end of last semester. Aimed at Bachelor and Master students, the event wants to highlight the broad variety of topics, that economics can contribute to. Twelve PhDs, Post-Docs and Professors from the Department gave entertaining 5-minute talks on a paper in their research area. By giving students an insight into economics that might exceed what they learn as part of the curriculum, the participants hope to pass on their enthusiasm for research. The event was organized by a team around PhD students Ursina Schaede, Lexi Schubert and Claude Raisaro and was supported by the Department and the UBS Center. You can listen to the podcast now in case you missed it and be sure to save the date for the next edition on 29 April.
Why Are Economists Talking About Climate Change?
2020-01-27: The answer to this question was given at the public lecture organized by the UBS Center for Economics in Society last week, by the speaker himself, Nobel Prize laureate, William Nordhaus. In his opinion, carbon pricing, either as cap-and-trade or as a tax, is the most effective solution in fighting climate change. Drawing an analogy to a tram ride in Zurich, he also pointed out the main problem why international climate policy has come to a dead end: freeriding, "Schwarzfahren" in German, is too easy, because the likelihood of being caught is not very high and the penalties are too small. He proposes a "climate club", where non-participants would face export tariffs, therefore incentivizing nations to contribute to global climate policy. Nordhaus` lecture attracted a very diverse crowd who had many questions during the Q&A session, showing that climate change is in fact the topic everyone is talking about.
Read the interview with William Nordhaus in NZZ am Sonntag (in German)
Watch the video of the public lecture.
Moral appeals alone will not suffice
2020-01-14: In an interview in the Der Bund Ernst Fehr explains why we need policy intervention and a general climate tax. "The prevention of global warming is a prime example of legitimate state intervention. Individual actors generate negative external effects, and the state must intervene. This is 101 textbook knowledge, and all economists agree on this point. The prevention of global warming is a public good, one of the most important ones for humanity".
Article in Der Bund (PDF, 669 KB) (PDF, German)
Parental leave has no negative consequences on companies or coworkers
Who is Who: David Dorn
2020-01-07: David Dorn's track record in economic research is listed in the current edition of the Who is Who in Research list. David Dorn examines, among other things, how the economic rise of China has affected social and political conditions in the USA. As the most cited professor at an European university, David Dorn regularly presents his research findings to national and international politicians and business associations.
Björn Bartling appointed Associate Editor to the Journal of the European Economic Association
2020-01-06: Björn Bartling has been appointed Associate Editor to the Journal of the European Economic Association (JEEA). He is the third representative from our Department in this role, alongside David Yanagizawa-Drott and Michel Maréchal. The JEEA was established in 2003 and has meanwhile risen to be one of the top ten journals in economics. The aim of the European Economic Association is to help base economic decision-making on scientific principles, facts and economic theory, rather than on political discussions.
Social security does not make people lazy
2020-01-02: Interview with Dina Pomeranz in Finanz und Wirtschaft covering the drivers of economic growth in developing countries, the role of empirical evidence to move political discussions out of the ideological corner, and how randomized trials can refute beliefs regarding the effectiveness of aid projects in developing countries.