The recent work on misallocation argues that aggregate productivity in poor countries is low because various market frictions prevent marginal products from being equalized. By focusing on such allocative inefficiencies, misallocation is construed as a purely static phenomenon. This paper argues...

We revisit Western Europe’s record with labor-productivity convergence, and tentatively extrapolate its implications for the future path of Eastern Europe. The poorer Western European countries caught up with the richer ones through both higher rates of physical capital accumulation and...

Developing countries are vulnerable to the adverse effects of climate change, yet there is disagreement about what they should do to protect themselves from antic- ipated damages. In particular, it is unclear what the optimal balance is between investments in traditional productive capital...

This paper explores the role of knowledge flows and TFP growth by using direct survey data on knowledge flows linked to firm-level TFP growth data. Our knowledge flow data correspond to the kind of information flows often argued, especially by policy-makers, as important, such as within the...

Are individuals more sensitive to losses than gains in macroeconomic growth? Using subjective well-being measures across three large data sets, we observe an asymmetry in the way positive and negative economic growth are experienced, with losses having more than twice as much impact on...

At the centre of politics in Britain and other countries is what is sometimes called ‘the big trade-off’ – where to strike the balance between private consumption and collective goods and social spending – and hence the sacrifices that would be entailed by the higher taxation required to...

A growing literature documents the existence of strategic political reactions to public expenditure in one jurisdiction on either neighboring or reference jurisdictions. The latter might give raise to downward expenditure spiral, or “race to the bottom”. However, in ascertaining the...

Two experiments show that eliciting taxpayer preferences on government spending—providing taxpayer agency--increases tax compliance. We first create an income and taxation environment in a laboratory setting to test for compliance with a lab tax. Allowing a treatment group to express...

This paper analyses the shifting balance between public sector and private sector welfare provision in the United Kingdom over the past two decades. Five sectors – education, health, personal social services, housing, and income maintenance and social security – are examined over three time...

Many political scientists and economists have addressed the implications of the public sector’s sheltered status on their unions’ wage strategies vis-à-vis the government. Since the public sector is a monopoly provider of necessary and price inelastic services, conventional wisdom suggests...