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Grant
Agency: GTR | Branch: ESRC | Program: | Phase: Research Grant | Award Amount: 702.28K | Year: 2014

Abstracts are not currently available in GtR for all funded research. This is normally because the abstract was not required at the time of proposal submission, but may be because it included sensitive information such as personal details.


Grant
Agency: GTR | Branch: ESRC | Program: | Phase: Research Grant | Award Amount: 261.05K | Year: 2016

In recent decades, the proportion of older people in the United Kingdom who are in paid work has been steadily rising. In 2000, 60% of 50-64 year olds were employed and by 2015, 70% of them were. The proportion of people aged 65 and over in paid employment has doubled over the same period, from around 5% to 10%. Growth in the size of the older population over this period means the increases in the numbers of older individuals in paid work are even greater. With an ageing population, and policy reforms that are encouraging people to remain in work longer, it is important to understand the broader effects of longer working lives on the older population. Our research focuses on two important factors related to longer working lives. The first is the effect on health. Do people who work longer into their 60s have lower health because of their extended working life? Or does work (and the income associated with it) allow people to live healthier, more active lives? This question is hard to answer because simply observing that workers are healthier/less healthy than non-workers tells us little about the causal effect of work on health. Health and employment can be related in a complicated way. The fact of working may improve or worsen a persons health. But, at the same time, people may be less likely to work if they are already unwell: for example because pain prevents them from doing the job they used to, or want to, do. Our research will look directly at the effect of working longer on health by using a reform which increased the employment of older workers, without having any direct effect on health. This reform was the increase in the state pension age for women. The second factor that we will examine is the interaction between work and caring, using a model that incorporates a large range of factors that affect the health, income and wealth of the older population. We will use this to understand the factors affecting the need for and receipt of social care (informal care, publicly-funded formal care, and privately-funded formal care). We will also model the supply of informal care - that is, who provides care, and how much they provide (in terms of number of hours per week). We will then use the model to understand the interaction between peoples decisions to be in paid work and the decision to provide informal care. Underlying all the research that we do will be the idea of how the effects of working lives can differ for different people, and how they might reinforce or ameliorate existing inequalities in health and income. This means we will not only look at the effect of longer working lives on one type of health, but a range of measures, and understand the behaviours that might have positive or negative impacts on health. We will look at the groups of the population that might be affected differently. In terms of care, we can see whether it is particular types of people who are in greater need of care, and who end up providing care, in particular the differences by income and sex. All of the research outlined in this proposal is being undertaken in parallel with researchers in France, Germany and Denmark. Together we form one consortium. Our European partners are also academic researchers who have intricate knowledge of the public policies affecting older people in their countries. By studying similar questions in each country, we will be able to increase our understanding of these issues by examining behaviour and outcomes in different policy settings. This will help policymakers understand the impacts of government policies across Europe.


Grant
Agency: Cordis | Branch: H2020 | Program: ERC-ADG | Phase: ERC-ADG-2015 | Award Amount: 1.78M | Year: 2016

We propose to study the process of human capital accumulation during the early years of life in developing countries. The research is motivated by the importance of early years to human development, both because of the long run consequences of events during that period and because of high malleability across key developmental domains during that period, making it particularly salient for policy interventions. The research is organized into three parts. First, we need to understand the process of formation of human capital, what economists refer to as the production function of human capital. Human capital is understood as a multidimensional object whose components (cognition and intelligence, socio-emotional skills, health) evolve in a complex way interacting with a variety of inputs and environmental factors. Disentangling the role played by different factors and inputs (including initial conditions, environmental shocks, parental inputs, centre based care) is important for our understanding of the process and for policy analysis. Second, we need to understand parental behaviour, as parents choose many of the investments in human capital development. Many questions are open: what are the constraints (resources, information, beliefs and attitudes) that parents face in making investment choices? Do parents make optimal choices? Do parents reinforce or compensate shocks? How are resources allocated across children of different gender and/or ability? Who makes decisions within the family? Third, measurement and the design of measurement tools is central to our research. We need to examine the performance of existing measurement tools and propose, design and validate new ones. The research, led by an economist, is interdisciplinary, using inputs from psychologists, child development specialists, geneticists, anthropologists and is organized around a unified framework, whereupon parents make choices taking into account the production function and a number of constraints


Grant
Agency: GTR | Branch: ESRC | Program: | Phase: Research Grant | Award Amount: 155.06K | Year: 2016

The UK is currently in the midst of sweeping changes to both state pension provision and private pension arrangements. Recent policy reforms include the introduction of the new state pension from April 2016, further increases in the state pension age and the introduction of auto-enrolment into workplace pensions. These changes are happening against a backdrop of continuing long-term trends, including a decline in the generosity of many employer-provided pensions and increasing life expectancies. These trends and policy reforms have significant implications for households saving and retirement decisions. In very general terms, the environment is one in which accumulating resources to finance retirement is increasingly important, but the responsibility for ensuring such accumulation happens is shifting ever more to the individual as the state and employers take a step back. We propose a programme of research that will study the implications of this changing environment and recent policy reforms for household behaviour and well-being. Our two central sets of research questions are: 1) Are working-age households saving appropriately for retirement? What will be the likely standards of living in retirement of successive generations of pensioners? 2) What are the likely long-run impacts of recent reforms and other long run trends on household saving and retirement decisions? Different cohorts of individuals (those born in the 1940s, 1950s, 1960s, 1970s) have faced very different incentives to save privately for retirement (and to do so in different types of assets), and will face different incentives to retire as they approach what would traditionally have been the end of working life. This had led to considerable policy concern that while those recently retired have, on average, done so with relatively high levels of resources, those currently in working life are not saving enough for their retirement. We aim to add considerably to the evidence base available for policy makers by exploring what can be known now about the future retirement living standards of currently working age households. We will do this by using the best available data on the decisions that these cohorts have already made, taking into account their past earnings and the structure of state and private pensions that they face, to estimate their future behaviour. We will then consider how their likely retirement standards of living will compare to those enjoyed during working life and to absolute thresholds of poverty in order to assess the appropriateness of the household saving. An important feature of our research will be to study how this differs across different cohorts, given the different incentives they have faced and will face in future. We will also analyse separately the impact of various changes to the pensions and savings environment - including specific policy reforms - on household saving and retirement behaviour, and consequently on households resources. This will allow us to assess the impact of these changes on standards of living in retirement. The trends and policy changes whose effects we propose to consider are: the declining prevalence of some employer-provided pensions, increases in the state pension age, the introduction of the new state pension, changes in annuity prices, and the financial incentives to save encompassed in auto-enrolment. Such analysis is of considerable importance for policy makers. Understanding the long-run impact of recent, extremely large policy reforms on households behaviour and living standards is vital for any assessment of a policys effectiveness at meeting its objectives. Furthermore, greater understanding of the impact of some long-running changes in the pensions and saving environment is needed to better understand which (if any) future policy reforms may be desirable.


Grant
Agency: GTR | Branch: ESRC | Program: | Phase: Research Grant | Award Amount: 443.95K | Year: 2017

Family circumstances changed significantly over the past 50 years on key dimensions such as mothers education, employment and earnings, fathers involvement in raising children, and the prevalence of lone-motherhood. These changes increased inequality in home environments, particularly by maternal education. Less educated mothers are now more likely to divorce and have children out-of-wedlock; more educated mothers are now more likely to work continuously and their wages have increased steadily. These trends raise great concerns about their implications for child development and inequality because child outcomes and parental choices are related. Growing evidence links socio-economic background and broader differences in childhood experiences to child development from early infancy and to life-long outcomes such as education, employment, income, family formation and crime. The degree to which child outcomes are related to those of parents is a measure of the inequality of opportunities in a society, the focus of much policy debate. Although the importance of family characteristics and choices for the abilities and opportunities of children is clearly established, the mechanisms that drive these relations remain largely unexplored. Since policy can influence parental choices, understanding the interplay between child outcomes and parental characteristics and choices is critical to inform the design and evaluation of policies aiming to improve child wellbeing, reduce poverty and shape inequality in the long-term. The aim of this project is to fill this gap by investigating the interactions between parental characteristics, investments in children and child outcomes, and studying the implications of these interactions for poverty, inequality, and the design of childcare, education and welfare policies. It focuses on the inter-generational transmission of human capital (HC), a key determinant of economic wellbeing. Studying the importance of family characteristics and investments in children for child development and its policy implications faces two key difficulties. First, investments in children and lifetime decisions driving family characteristics are closely related. E.g., altruistic parents take their offspring expected outcomes into account when deciding about their own education, marriage and labour supply because these decisions affect family resources and their value in raising children. Second, quantifying empirically these relationships requires long longitudinal data, linking parents lifetime decisions and its determinants with child outcomes. This project combines rich longitudinal data from several sources for the UK and the US with a model of intergenerational transmission of HC to advance knowledge on the roots of inequality and the role of policy in promoting equal opportunities. The model has four main building blocks: 1. a process of HC formation in childhood, accumulated through sequential investments of both parents time, childcare and other investments; 2. a model of the life course, formalising parental education, marriage, divorce, working and the intra-household allocation of resources; 3. the market for marriage; 4. a detailed description of the tax and welfare system. The project will produce new empirical evidence on the mechanisms linking parental characteristics and choices with child outcomes. It will account for the interplay between the HC of both parents for family wellbeing and child development, helping to explain the value of HC for marriage. It will measure the dynamic links between education, marriage, divorce and family resources, and their implications for inequality in resources and investments in children. Understanding these links is key to assess responses to policy reforms in their entirety; this project is the first to explore the links between lifetime decisions to study the effects of policy on the transmission of HC.


Grant
Agency: Cordis | Branch: H2020 | Program: ERC-ADG | Phase: ERC-ADG-2015 | Award Amount: 994.77K | Year: 2016

The proposed research aims to improve our understanding of individual choices over which foods to purchase. The research aims to make fundamental contributions to models of choice and preference formation, and the outputs will inform the development of policy interventions that seek to improve nutritional outcomes. Our particular interest will be to better understand: (i) the importance of the foods available at home in childhood in influencing choices that young adults make over which foods to eat, (ii) the relevance of temptation and self-control in explaining poor nutritional food choices, and the ways that advertising might influence these behaviours, and (iii) the important interactions that exist between the ways that people spend their time (for example work and physical activity) and the food choices that they make and how this determines nutritional outcomes. A proper understanding of the way that preferences are formed, and the ways that they might be influenced, is key to the design of effective public policy. The food market is a good place to study these questions for a number of reasons. First, people make decisions with high frequency and in different economic conditions, which helps provide variation needed for identification of key parameters of interest. Second, we observe the same individuals making choices both for immediate consumption and for future consumption, which will also help us with identification. Third, the food industry is of considerable policy interest. People in developed countries are getting fatter at an alarming rate. To the extent that people do not take account of the effects of this on themselves in the future and on others then they are making suboptimal decisions; they and society could potentially be made better off by policy intervention, but it is important that we have a good understanding of what impact these interventions are likely to have.


Grant
Agency: GTR | Branch: ESRC | Program: | Phase: Research Grant | Award Amount: 353.07K | Year: 2016

The aim of the proposed research is to better understand individual behaviour in food markets, and to provide new evidence on the potential impacts of proposed policy interventions that seek to improve nutritional outcomes. Our focus will be on understanding what form preferences take and what factors might influence preference formation. We will extend economic models of food choice to reflect potential non-standard features of behaviour such as habits and temptation and we will also study the effects on decision making of advertising. To study habit formation, we will use food purchasing information on migrants and on children and their parents. We will study how we can incorporate behavioural biases such as temptation and self-control into the standard economic models of demand and use information on purchases people make for immediate and future consumption to estimate these models. We will also allow for potentially persuasive effects of advertising on consumers choices. Finally, we will use these new models of demand to carry out ex ante policy evaluation of reforms that change relative prices or costs to study how the existence of habits formation or behavioural biases effect the potential impact of policy reform. When considering such policy counterfactuals we will analyse firm behaviour, accounting for dynamic strategic interactions between firms, in order to assess the long run impact on both demand and supply of government policy (such as taxes).


Grant
Agency: GTR | Branch: ESRC | Program: | Phase: Research Grant | Award Amount: 7.13M | Year: 2015

This proposal sets out a major new programme of research that will lead to significant scientific progress and policy impact. Building on the expertise developed at the Centre and at IFS, we will use the developments in econometric techniques and data availability, including linked survey and administrative data, to push our research agenda in exciting new directions. The focus of the work will be on: - Consumers and markets. We will use insights from behavioural economics and robust methods to understand within-household behaviour and we will explore the relationships between government policy, firm behaviour and outcomes for consumers. This work has the potential to transform our understanding of the effects of policy interventions that either change the relative prices of the goods consumers buy (e.g. taxes on alcohol, green levies, sugar taxes) or try to change consumers preferences (e.g. through information campaigns or restrictions on advertising). - Inequality, risk and insurance. Understanding the determinants of inequality is central to our agenda. We will focus on understanding inequality across the life cycle and across and within generations. We will explore the role of housing, of insurance and of market and non-market mechanisms in managing risk and uncertainty. The availability of new administrative data linked to existing surveys will allow us to examine the dynamics of inequality and the impact of alternative policies. In particular, we will focus on the role of wealth and bequests in generating within-cohort inequality among the younger generations and we will investigate how uncertainty is resolved over the life cycle and how this affects the degree of insurance provided by taxes and benefits at different ages. - Public finances and taxation. Focusing on high earners and multinational companies, we will use newly-available data to throw new light on risks to the public finances in the UK from these vital but increasingly risky sources of revenue. We will also develop a programme of work that focuses on the particular issues facing tax design in middle-income countries. - Evolution of human capital over the life cycle. We aim to make major strides in understanding the process of formation of human capital from the early years to young adulthood, how human capital is rewarded in the labour market, how it is linked to labour supply and productivity, and how the evolution of health and well-being interacts with labour supply and other outcomes in later years. These issues are intricately related and we envisage a joined-up programme of work that will provide new answers to some of the most important questions currently facing policymakers. How do people make decisions over savings, nutrition, education and labour supply and how can government influence those decisions? What is driving increased levels of income inequality and how might interventions in education and through the tax and welfare system ameliorate them, and at what cost? How should governments respond to the pressures on corporate and individual tax revenues created by increasing globalisation? What drives decisions over pension savings, health behaviours and retirement decisions and how should governments design policy in the face of an ageing population? In answering these questions, we will make use of the unique expertise and data resources brought together at the Centre. Crucially, our intention is also to take a consistent approach in which we will model the determinants of individual decisions over the life course and the interactions between economic actors; we will model behavioural biases and market frictions; we will use a combination of available data, randomised controlled trials and structural modelling to understand not just the effect of policies but also what drives that effect and hence what might be the effect of other policies; and we will develop new data and measurement tools.


Grant
Agency: GTR | Branch: ESRC | Program: | Phase: Research Grant | Award Amount: 118.24K | Year: 2016

The tax and benefit system and education finance regime alter the value of human capital investments (e.g. education) by treating up-front costs, forgone earnings and future returns differently, and by insuring against earnings risk. In so doing, they affect the incentive to invest in human capital compared with not investing, and compared with other kinds of investment, such as financial investments. These are potentially important distortions that policymaking needs to take into account. The overall aim of this project is to use Understanding Society and British Household Panel Survey data, together with lifecycle modelling techniques, to provide new evidence on how the returns to human capital investments are distorted by actual and hypothetically-reformed UK tax and benefit systems and education finance regimes (including those in Scotland, Wales and Northern Ireland). To that end, we will address the following research questions: - How are investments in human capital taxed? - How do tax rates vary across different population subgroups and stages of life? - How effectively do taxes, benefits and the education finance regime insure against uncertainty in returns? - How do these features vary under different policy environments? - How do behavioural responses affect these results? Although some work has been done in this area, there remains much about the way that the tax and benefit system and education finance regime treat human capital investments that we do not know. Existing work has the common disadvantage that it is all for example individuals in idealised settings. This means there is limited consideration of variation across individuals, no attention paid to uncertainty, rudimentary modelling of taxes and benefits and no allowance for the behavioural effect of policies. These are important limitations, which our proposed approach will address. We will consider two types of human capital investment - education and labour market experience - and use two measures of how investments in human capital are taxed - an effective tax rate (ETR) and a participation tax rate (PTR). The ETR measures how much the internal rate of return to investment is affected by taxes, benefits and subsidies. This is the measure that has been used previously to describe, e.g. how the tax system treats the return to saving held in different assets. The PTR describes what proportion of the return to investment is lost due to higher taxes and lower benefits, possibly offset by subsidies. This has been widely used in the literature on financial work incentives. Our analysis will be for the UK and will be based on the Understanding Society and British Household Panel Survey (BHPS) datasets, supplemented with published data on educational spending per pupil from Government departments and agencies (e.g. the Education Funding Agency) and previous IFS work, and information about education-related expenses from the Student Income and Expenditure Survey. In the first stage of the project, we will use these data to produce descriptive analysis of employment, earnings and human capital investment costs. In the second stage, we will use the data and the results of the first stage to estimate how investments in human capital are taxed. This will be based on a lifecycle model of education, employment and saving choices that will allow us to calculate the ETRs and PTRs described above. This research represents a significant advance over the current literature, providing accurate and detailed estimates of the tax rates on investment in human capital and developing a methodology that can be applied in other settings. We also anticipate having significant impact on policymakers, improving understanding over how the tax and benefit system and education finance regime affect incentives to accumulate human capital, and affecting future policy decisions. We will exploit project partners in BIS and HMRC to ensure these impacts are realised.


Grant
Agency: Cordis | Branch: H2020 | Program: ERC-COG | Phase: ERC-CoG-2014 | Award Amount: 1.29M | Year: 2016

This research project is motivated from three observations regarding recent trends in empirical economics using micro-level data. First, researchers are increasingly aware of the trade-off between credibility and the strength of the assumptions maintained, eloquently termed as the law of decreasing credibility by Charles F. Manski. This trend has led to recent intensive research in partial identification. Second, applied empirical research is increasingly based on data collected for study by individual researchers, quite often through laboratory or field experiments. Third, high-dimensional data are more readily available than ever before, and have received growing attention in economics. In view of these observations, there is a call for research to improve standard econometric practice by facing identification problems upfront, by providing econometrically sound guidelines for data collection, and by making use of the increasing availability of high-dimensional data without sacrificing the credibility of econometric methods. This research project aims to contribute to advances in microeconometrics by considering the issues of identification, data collection, and high-dimensional data carefully. The proposed research builds on semiparametric and nonparametric approaches to increase the credibility of proposed econometric methods. In particular, the proposed research will: (1) develop identification results of practical value and characterize optimal data collection for applied researchers; (2) make advances in estimation, inference, and testing in a variety of microeconometric models; (3) produce credible evidence in applied microeconometric research; (4) develop computer software that implements newly available microeconometric techniques.

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