Tag Archives: economics

News

Pegasus Group economics director joins Institute of Economic Development Board

“The more people we can get together from economic development – public and private sector – to help to lead the economic development agenda and influence decision-making, the better it will be for everyone.” This is the view of Richard Cook, Director – Economics, at Pegasus Group who has been appointed to the Board of the Institute of Economic Development (IED).

Richard, entering his 19th year in economic development and his sixth as an IED member, explained that he was motivated to help the sector evolve and thrive. “Economic development is an area I find extremely interesting but it is also one that is hard to define,” he said. “Whether it is Levelling Up, town centres/high streets, the role of LEPs going forward, devolution or planning, economic development is all around us. My ambition is for us to represent an even wider range of public and private sector organisations that help shape the direction of the IED and government agenda on economic development. This means influencing Levelling Up or any other flagship policies that are announced in the next few years and the agenda for the new local and sub-regional government structure.”

Richard outlined his view that the IED is “a serious thought leader for the area of economic development” and there is an opportunity to increase the breadth and depth of insight available to decision makers. “As a Board we need to ensure that the IED provides an evidence base to inform economic development decisions,” he revealed. “My expertise is in undertaking economic impact assessments and socio-economic analysis, and, whilst I am based in Manchester, I work all over the country so can contribute to that evidence base. We should also be thinking about intelligence that developers need, including issues such as how the housing offer can meet the needs of an older population.”

Pegasus Group is an independent consultancy specialising in planning, design, environment, economics, transport, infrastructure and heritage. The economics arm of the business helps organisations make the case for development, including residential, extra care and student accommodation schemes, and commercial development, and Richard told how the IED has supported him professionally. “The IED is the main national voice for economic development and it is important that we are members,” he said. “It is known, even by non-members, and carries a level of authority and respect. From a personal perspective, being part of the IED has been crucial for connecting with economic development professionals, public and private sector, including traditionally at the annual conference. It also brings people together effectively through online events and CPD programmes.”

Having previously worked at DTZ Investors as well as New Economy Manchester, now part of the Greater Manchester Combined Authority, before joining Pegasus Group in 2016, Richard is an advocate of the role of public-private sector collaboration. “Private sector consultancies offer a level of independence to the economic development sphere and there is a lot they can bring to the table in terms of analysis and evidence-informed advice,” he said. “Yes, they have to follow their clients’ directive, but it is healthy for private sector consultancies to provide a level of critique to public sector organisations (on local plan consultations, for example), and also vice-versa.”

IED Executive Director Nigel Wilcock said: “Our vision is be the leading professional body for economic development professionals, helping them to create stronger communities and sustainable economies across the UK. Within that our core purpose is to support, develop and connect our members, represent and champion the profession, and influence and inform policy. This is a crucial time for economic development across the four nations and we want to draw on the knowledge, expertise and ideas from within our membership, public and private sector, to support our mission. We are therefore delighted to welcome Richard to our Board of Directors.”

News

Managers and employees argue more over fair wages when economic conditions are uncertain

Workplace disagreements between managers and employees over the fair pay of staff wages drastically increase when wider economic conditions are more uncertain, according to new research from emlyon business school.

These increased disagreements between managers and employees were mainly caused by both uncertainty or a lack of productivity caused by wage slashes, state the researchers, who say that often firms reduced wages or considered doing so, which led to employees actively reducing their productivity output as they believed their time and work was worth more.

However, the economy booming can have just as much of an impact on workplace disagreements over wages, say the researchers, who state that conflicts can arise because employers want to keep wages in check whereas workers demand higher wages to reflect increased productivity levels.

This research was conducted by Brice Corgnet, Professor of Finance at emlyon business school, alongside colleagues from Lafayette College and Centro de Investigación y Docencia Económicas (CIDE), who were keen to understand the impact of economic conditions on gift-exchange.

Gift-exchange can be described as a model which showcases the productivity and effort of employees in relation to their wages. If there is a strong gift-exchange between employers and employees, then staff will put in the correct amount of effort for their wages would determine, and increase their effort if their pay is increased and vice versa.

In order to determine the impact of economic conditions over gift-exchange, the researchers created a controlled experiment where employees were given work tasks for a specific wage per hour.

This wage per hour was then either increased or decreased in the next round of the study, to see the impact on workers productivity and effort in the tasks when doing so.

When employers utilised the excuse of economic conditions for a potential and actual drop in workers’ wages, productivity decreased massively, and disagreements began to increase between employers and employees.

Professor Corgnet says,

“Employees always want to know what the specific reference wage would be for the work they do, and value being paid a fair and decent wage for the work they do. Therefore, when their wages increase, so does their effort. However, when their wage is threatened whether it be through them being undervalued or external economic conditions, naturally workers begin to exert less effort and productivity into their roles.”

The researchers state that the findings clearly show the turbulence that external factors, such as economic conditions, can have on the productivity of employees, tensions in an organisation, and the wider economic output.

The tension caused discussions over reference wage can be dealt with says the researchers, who state that for many employees, receiving a strong, real-wage is enough to keep them satisfied and productive.

Whilst in unstable economic conditions, the researchers suggest that though reducing workers’ wages may appear attractive, this is only likely to lead to a huge lack of productive or even strikes from workers who are heavily unionised, which will only likely lead to lack of productive, and bargaining impasses until real wages are referred back to.

The researchers state that a strong gift-exchange is a win-win, with employees ensuring their staff are productive and hard-working, which is of course ideal for the organisation, while employees are happy and feel valued within their work.

This research was published in the Journal of Economic Behaviour and Organisation.

News

Durham University Business School Welcomes Dr. Vicky Saporta as Professor in Practice

Durham University Business School has announced the appointment of Dr. Vicky Saporta, Executive Director of Prudential Policy Directorate at the Bank of England, to its faculty as Professor in Practice in the Department of Economics and Finance.

Created to bring public distinction and practical insights to the classroom and applied research, Durham’s Professors in Practice initiative recognises the skills, perspectives and experiences of senior business professionals and enables students to directly benefit from them. Such individuals are invited to lead classes and workshops, support education in their individual areas of expertise, and engage with research that addresses real world challenges.

Over the next three years, Vicky will be working within the Business School, delivering modern, immersive education programmes that reflect and address the key issues facing industry today, and in fostering greater connection between Durham University and banking, economics and finance sectors.

Speaking on her appointment and what she hopes to bring to the role, Vicky said

“I am excited to be appointed Professor in Practice in the Business School and cannot wait to meet the students and share experiences.”

Vicky has held a number of positions in prudential policy, financial stability and monetary analysis in a career spanning 25 years at the Bank of England. In particular, Vicky was at the heart of the macro prudential and micro prudential policy reforms undertaken by the Bank after the global financial crisis.

Since taking on the role of Executive Director in 2014, Vicky has been responsible for directing the work developing and delivering prudential policy for both the Board of the Prudential Regulatory Authority (PRA) and the Bank of England’s Financial Policy Committee. Vicky has represented the Bank on numerous international committees dealing with central banking and regulatory issues, including being a member of the Basel Committee that sets international standards for internationally active banks. During her career, Vicky has published over 20 articles in books, professional journals and Bank of England publications.

The Professor in Practice initiative also provides the opportunity for Durham University’s faculty to directly connect with business practice and public policy, enabling their research to have an actionable, positive impact on society. In this role, Vicky will contribute to directing and guiding the high-level research undertaken in the Department of Economics and Finance in Business School towards addressing policy-oriented vital research questions, which have the potential to lead to significant impact. She will be regularly participating in research events we hold in the Business School and delivering guest lectures on pertinent economic policy issues to our undergraduate and postgraduate students.

Anamaria Nicolae, Associate Professor in Economics at Durham University Business School has supported Vicky’s appointment, highlighting the value her expertise will bring to the School’s teaching, research, and student engagement.

“We are delighted that Vicky joins us as a Professor in Practice in the Department of Economics and Finance. Vicky’s strong interest in academia, her rich research background in banking policy, and her wider experience as executive director brings enormous strength to the department’s ambition to be excellent in research, excellent in teaching and broaden student experience.

We are very much looking forward to Vicky taking part in the Central Bankers’ Forum, a research workshop organised by the Centre for Banking, Institutions and Development (CBID) in June 2021. She will give the practitioner’s keynote address, drawing on her experience and knowledge as Executive Director of Prudential Policy Directorate at the Bank of England.”

Vicky’s announcement follows the recent appointment of Sally Guyer, also as a Professor in Practice at Durham University Business School. Sally is the Global CEO of World Commerce & Contracting, and will join the Business School’s faculty as Professor in Practice in Strategy and Innovation.

News

Tax evasion can be combatted by prefilling deductions on tax returns

Limiting the deductibility of expenses can help fight tax evasion, according to new research by the University of Cologne.

The study, conducted by Professors Michael Overesch, Martin Fochmann, Tobias Kölle and Frank Hechtner, looked into tax evasion and how policymakers can fight it.

They analysed three anti-tax evasion methods: the tax laws that regulate which expenses are deductible, the method of limiting deductible amounts to certain maximum amounts, and prefilling deductions on tax returns.

The results revealed that limiting tax evasion by disallowing deduction of certain expenses is an ineffective method – instead a tax evasion shift effect is observed.

Furthermore, the researchers found tax evasion through the overstatement of deductions is barely reduced.

However, the study revealed that limiting the deductibility of expenses, through prefilled deduction, avoids this tax evasion shift, therefore is an effective method to fight tax evasion.

“Tax returns with prefilled deductions represent a relatively new method. For example, electronic tax return programs fill in the current tax return with the previous year’s figures for initial guidance. Furthermore, automatic data exchange between tax authorities and employers, social security institutions and banks can enable prefilling of tax returns,” says Professor Overesch

When compared to blank forms, the study revealed that prefilled deductions increased tax compliance considerably. Particularly, the level of item specific tax evasion decreases – especially for items that are favoured for tax evasion.

The researchers say that for political decision makers, the prefilling of deduction in the tax return could therefore represent an effective method to reduce tax evasion.

“The current method of limiting the deductibility of expenses requires democratic justification in each individual case, whereas prefilling only requires a change in the administrative process and is essentially already performed by tax return software. More importantly, however, the disallowance or limitation of deductibility is a lump sum solution that also affects tax bills of honest taxpayers. Whereas prefilling does not have any of these negative consequences on honest taxpayers,” says Professor Overesch.

The study was published in the Journal of Business Economics.

Business Research, News

Finance employees are the least trustworthy

Employees in the financial sector are 30 per cent less trustworthy than other industries, according to new research by the University of Cologne.

The study, conducted by Professors Matthias Heinz and Matthias Sutter, measured the trustworthiness of students and found that those who were less trustworthy ended up in the financial sector after graduation.

In order to show this, the researchers identified the degree of trustworthiness of business and economics students several years before they entered the job market by analysing their career aspirations, social preferences and personality traits.

They then followed up on the students’ professional specialisation as well as their job placement after graduation and found that most of those who were considered untrustworthy, had entered the financial industry.

“A well-functioning financial market is of the utmost importance for social welfare, however, the industry struggles with widespread misconduct and corporate scandals which compromises its benefits for society. Our paper argues that this is as a result of the companies selecting candidates with little trustworthiness,” says Professor Heinz.

The research also highlights that that companies within the financial industry do not screen out less trustworthy individuals, in fact, it seems that the opposite is the case.

The researchers suggest that policy interventions might be needed to change incentive structures in the financial industry to ensure that they attract more trustworthy and pro-social candidates in the future.

Professor Matthias Heinz and Matthias Sutter are scientists at the University of Cologne and the Cluster of Excellence ECONtribute: Markets & Public Policy.

News

International companies hire more women

Globalisation provides opportunities for gender equality in employment, according to new research by Vienna University of Economics and Business (WU).
The study, conducted by WU’s researchers Alyssa Schneebaum and Carolina Lennon, found that there is a correlation between global economic interaction and the gender distribution among a firm’s employees.

Firms that export or are owned by parent companies abroad have a higher female share of full-time, permanent employees than firms that are only active in their national markets.
This was especially apparent for exporters with customers in countries with equal gender norms – these companies employed six to seven percentage points more female employees.

“What we see here is a ‘race to the top,’ meaning that global firms adopt more equal hiring practices compared to non-global firms if they interact commercially with more gender-equal economies. There seems to be no evidence of a race to the bottom, that is, gender inequality isn’t imported through commercial links with gender-unequal countries,” says Professor Schneebaum.

However, the percentage of women only increases at the lower and middle levels of the organisation – exposure to gender equal norms has no effect on top management positions.
Being internationally oriented has a negative effect on the probability of a firm having a female in top management positions with exporters 3.9 per cent less likely to have a female in charge.

“These results are important because they show how commercial trade serves as a medium through which gender norms can be transmitted across countries. However, we do find that for more prestigious jobs, it will take more than just commercially-base exposure to norms of equality to get more women into management positions,” says Professor Schneebaum.

The study analysed data administered by the Enterprise Analysis Unit of the World Bank from 2006 to 2014, on 30,000 firms in more than 100 developing and emerging economies.

Business Research

Investing abroad? Take advice from immigrants, says University

Taking advice from immigrants has a positive effect on outward foreign investment because, given the right circumstances, immigrants can provide companies in their host country with key information about their home countries, according to new research by Vienna University of Economics and Business.

The research, conducted by Professor Jonas Puck, Vera Kunczer and Thomas Lindner, reveals that knowledge about circumstances in target countries is key in international investment decisions.

The study argues that immigrants usually have a comprehensive understanding of the language, economics, culture, political systems, and the business practices of their home countries, than citizens of the host country.

As a result, companies can improve their familiarity with international markets based on immigrants’ first-hand market knowledge and social ties to their respective home countries, regardless of whether the immigrants are employed by the companies.

Immigrants can contribute to companies’ knowledge indirectly by interacting with other people in the host country. This leads to knowledge flows between different markets that go beyond the mere employment of immigrants in the host country.

“A firm located where immigrants move can use the immigrants’ knowledge to reduce barriers to the markets in the immigrants’ home countries. This, in turn, reduces a company’s uncertainty, which results in the country being more attractive to a firm seeking to establish operations abroad,” says Professor Puck.

However, the effect of immigrants’ knowledge on the resources a company commits to operations abroad depends on two key factors: the stability of the political framework in the country of origin and the attitudes towards immigration in the host country.

“The information provided by the immigrants can be negatively influenced by policy instability in their home country, because immigrants’ knowledge about their home country may no longer be accurate if the situation is unstable there. Furthermore, if anti-immigrant sentiment is prevalent in the host country, companies may be less likely to listen to the information and advice provided by immigrants,” says Professor Puck.

The research was supported by data from Oesterreichische Nationalbank (OeNB) and uses a data set based on more than 13,000 observations made over a 14-year period and was published in the Journal of International Business Policy.