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Firms’ exporting behaviour to countries under sanctions

Sanctions are imposed on a target country to exert political and economic pressure. But there is little evidence on how exporting firms regard trade with the sanctioned country. This column uses detailed monthly customs data from French firms to investigate the extensive margin of trade in episodes of sanctions-use against Iran, Russia, Cuba, and Myanmar. It finds the impact of sanctions is heterogeneous along firm dimensions and advises caution in the use of a policy tool with...

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Sick? Stay home!

The US is one of the few OECD countries that does not guarantee universal access to paid sick leave. Europeans, by contrast, take this benefit for granted. Nevertheless, more than a third of all European employees go into work when sick at least once a year (European Working Conditions Survey 2015). Moreover, also in Europe, lower sick-pay generosity can increase presenteeism behaviour and trigger relapses of illness, as shown for Spain (Marie and Castello 2020). Our research shows...

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Exporting pollution

Anti-pollution laws penalise firms whose activities emit CO2. Itzhak Ben-David tells Tim Phillips that well-intentioned regulation may be causing multinationals to shunt polluting activities to poorer countries where regulation isn’t so strict.

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Informality and the effects of trade in developing countries

Rafael Dix-Carneiro, Pinelopi Goldberg, Costas Meghir, Gabriel Ulyssea 05 March 2021 The informal sector accounts for a large part of the economy in most developing countries, yet it is understudied in economics. The informal sector captures, broadly speaking, all activities that are invisible to the government: operations of firms that are not registered with tax authorities and/or the employment of workers who are not covered by labour market regulations...

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Will Schumpeter catch COVID-19? Evidence from France

Concerns have emerged that public support to firms in the COVID-19 crisis has been too generous, reducing exit of unproductive firms and preventing Schumpeterian destructive creation. Using data on French firm failures in 2020, this column suggests that these concerns are, at this stage, unwarranted. Although the number of firms filing for bankruptcy was well below its normal level, the same factors that predicted firm failures in 2019 – primarily low productivity and debt – were...

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How institutional investment funds’ reach for yield intensifies asset price volatility

How institutional investment funds’ reach for yield intensifies asset price volatility Institutional funds, which are set up as specialised funds in Germany, manage the assets of a few institutional investors, mostly smaller banks and insurers, but also pension funds, foundations and churches. Unlike retail funds, they are only available to experienced (institutional) investors, often have more flexible investment mandates and prescribe longer redemption notice...

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Information sharing and the geography of banking

Digitalisation, FinTech, and the expansion of mobile banking have changed the way in which many banks operate on a day-to-day basis, including where they choose to have physical branches. This column explores the effect of digitalisation on the geography of banks, testing the effects of digital information-sharing on branch locations in Europe. findings suggest that information sharing has a strong positive effect on branch clustering, with banks more likely to open new branches...

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US business dynamism rises

In 2020, the creation of US startups shot up by 24% relative to the previous year. This is the largest annual increase since business statistics started being collected in the US. Some of this boom in entrepreneurial activity is accounted for by the migration of businesses to online activity.  This business dynamism is unexpected. Vox columns written in early 2020 (e.g. Baker et al. 2020, Coibion et al. 2020, Sedláček and Sterk 2020, Calvino et al. 2020) recorded steep falls in...

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AI and jobs: Evidence from US vacancies

Artificial intelligence (AI) refers to algorithms that act intelligently, by identifying patterns in unstructured data (for example, speech or image data), and then use this information to accomplish tasks that would normally require human judgement or expertise. The last decade has witnessed rapid advances in AI based on new machine learning techniques and the availability of massive data sets. The pace of change is expected to increase in the years to come (e.g. Neapolitan and...

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Grandparental childcare and Covid-19

Since the beginning of the pandemic, many studies have analysed the driving forces behind the spread of Covid-19. This includes the role of intergenerational relations, and particularly contact between grandparents and their grandchildren, in potentially increasing the risk of infection and Covid-19 mortality (e.g. Aparicio and Grossbard 2020, Arpino et al. 2020, Balbo et al. 2020, Bayer and Kuhn, 2020). Due to substantially higher mortality rates of older persons infected with...

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