Our objective is to engage in world-leading innovative research that extends the frontiers of the discipline, enhancing our understanding of the operation of modern economies and their interrelationships with the broader society. We seek to have impact by informing and improving the design and the implementation of economic and public policy in the UK and world-wide. 

We are one of the largest groups of academic economists in Europe and this is reflected in the diversity of our research. We seek to maintain world-class expertise in the core discipline areas of microeconomics, macroeconomics and econometrics, while building clusters of research strength in more specialists subfields – notably applied microeconomics; behavioural economics and game theory; economic history; development economics.

In the 2014 Research Excellence Framework to evaluate the research output of UK Universities, Oxford was first for overall research strength in Economics and Econometrics, with more research ranked as ‘world-leading’ than any other participating institution. In a submission of 84 FTE academics, 56% of our research was rated as ‘world-leading’ (4*) and a further 33% rated as ‘internationally excellent’ (3*).

The recent Tilburg University ranking of Economics departments based on research contribution between 2015-2019, placed Oxford 11th in the world and 2nd in Europe.

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Policy and Impact

As one of Europe’s leading Economics departments, Oxford aims to inform and improve the development and implementation of economic and public policy in the UK and around the world. We do this by producing innovative research that extends the frontiers of the discipline and deepens our understanding of the operation of modern economies.

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Working Papers

Authors: Subhasish M. Chowdhury, Patricia Esteve-González, Anwesha Mukherjee

Aug 2020

The heterogeneous abilities of the players in various competitive contexts often lead to undesirable outcomes such as low effort provision, lack of diversity, and inequality. A range of policies are implemented to mitigate such issues by enforcing competitive balance, i.e., leveling the playing field. While a number of such policies are aimed at increasing competition, affirmative action (AA) policies are historically practiced in an ethical response to historical discrimination against particular social groups among winners. This survey summarizes the rapidly growing literature of contest theory on AA and other policies that level the playing field. Using a general theoretical structure, we outline research on player and contest designer behavior under a multitude of policy mechanisms; and discuss the theoretical, experimental, and empirical results in relation to some of the common debates surrounding AA.

JEL Codes: A31; C72; D74; D82

Keywords: Survey; Affirmative Action; Contest; Heterogeneity

Individual View

Authors: Meredith M. Paker

Aug 2020

The brief recession from 1980–1981 in the UK led to a prolonged employment downturn, with the unemployment rate continuing to increase through 1984. A large literature has developed around the concept of jobless recoveries and their possible causes, focused primarily on the US from the 1990s. This paper argues that the employment recovery from the 1980–1981 recession in the UK can be considered an early example of a jobless recovery.

Then, taking the US as a comparison case, possible causes of this jobless recovery are evaluated. Labor reallocation across industries, regional effects, and job polarization are considered in depth for the UK. Industry labor reallocation emerges as the major difference between the UK and the US during the early 1980s recession and recovery period, suggesting this was the key factor driving the UK’s jobless recovery.

JEL Codes: N14, N34, J64, J21, E24

Keywords: jobless recovery; industry labor reallocation; structural change; job polarization

Individual View

Authors: Patrick Moran, , Hamish Low, Agnes Kovacs

Jul 2020

This paper estimates the importance of temptation (Gul and Pesendorfer, 2001) for consumption smoothing and asset accumulation in a structural life-cycle model. We use two complementary estimation strategies: first, we estimate the Euler equation of this model; and second we match liquid and illiquid wealth accumulation using the Method of Simulated Moments. We find that the utility cost of temptation is one-quarter of the utility benefit of consumption. Further, we show that allowing for temptation is crucial for correctly estimating the elasticity of intertemporal substitution: estimates of the EIS are substantially higher than without temptation. Finally, our Method of Simulated Moments estimation is able to match well the life-cycle accumulation profiles for both liquid and illiquid wealth only if temptation is part of the preference specification. Our findings on the importance of temptation are robust to the different estimation strategies.

Revised July 2020

JEL Codes: D12; D91; E21; G11; R21

Keywords: life-cycle; temptation preferences; housing; estimating Euler equations

Individual View

Authors: Rick Van der Ploeg

Jul 2020

The social rate of discount is a crucial driver of the social cost of carbon (SCC), i.e. the expected present discounted value of marginal damages resulting from emitting one ton of carbon today. Policy makers should set carbon prices to the SCC using a carbon tax or a competitive permits market. The social discount rate is lower and the SCC higher if policy makers are more patient and if future generations are less affluent and policy makers care about intergenerational inequality. Uncertainty about the future rate of growth of the economy and emissions and the risk of macroeconomic disasters (tail risks) also depress the social discount rate and boost the SCC provided intergenerational inequality aversion is high. Various reasons (e.g. autocorrelation in the economic growth rate or the idea that a decreasing certainty-equivalent discount rate results from a discount rate with a distribution that is constant over time) are discussed for why the social discount rate is likely to decline over time. A declining social discount rate also emerges if account is taken from the relative price effects resulting from different growth rates for ecosystem services and of labour in efficiency units. The market- based asset pricing approach to carbon pricing is contrasted with a more ethical approach to policy making. Some suggestions for further research are offered.

JEL Codes: D81, D90, G12, H43, Q51, Q54, Q58

Keywords: cost-benefit analysis, climate policy, carbon pricing, social discount rate, term structure, Keynes-Ramsey rule, risk and uncertainty, disasters, expert opinions

Individual View

Authors: Rajssa Mechelli, Andrea Colciago

Jul 2020

This paper links the debate on the decrease in competitiveness and busi- ness dynamism with that on rising inequality. We build a framework withentry, imperfect competition, heterogeneous households, and incompletemarkets. Recent trends in markups, factors’share, and business dynamismare explained through an increase in barriers to entry for new …rms, whichrestrict competition. Those trends account for 11% to 22% of the increasein income inequality observed between 1989 and 2007 and for 10% of the in-crease in wealth inequality. Just 16% of the population experiences a welfaregain during the transition from a high to a low competition environment.These are either the wealthy, or agents with low productivity relative to their asset holdings.

Keywords: inequality, entry, oligopoly, markups, incomplete markets

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