Brexit: epitaph for a national trajectory now lost – John Van Reenen

John Van Reenen, Professor of Applied Economics at MIT Sloan School of Management

From the London School of Economics and Political Science Blog

As I write on 31 January 2020, Britain leaves the European Union (EU). The loss I feel is almost as much as when my father died, almost a quarter century ago. He was 16 when he came to Britain with my grandfather who was a South African political refugee. After completing his UK national service, he married the daughter of a Merseyside dockworker. They moved to Carlisle where I was born, to run a new community centre. Then later back to Liverpool where I started school.

My secondary education was in Kelsey Park Comprehensive School. When I started it had just converted from a Secondary Modern, schools for kids who failed their 11+ exams. It was in the late 1970s and early 1980s – a brutal place in a brutal time. I remember our class having a mock vote in the 1979 election. The most popular two parties for our boys were Mrs. Thatcher’s Conservatives and the National Front, an overtly racist party promising to send foreigners ‘back to where they came from’.

Read More »

How helping disabled people find employment affects the job market – John Van Reenen, Barbara Petrongolo, Felix Koenig

John Van Reenen, Professor of Applied Economics at MIT Sloan School of Management

From OUP Blog

Policy makers have long been concerned with helping people on disability benefits find some employment as this group has grown dramatically in recent decades. In the UK, as in several other countries, there are now many more people on disability benefits than on unemployment benefits. The chances of leaving disability benefits once someone is enrolled is low and although many disabled people cannot work at all, many others would like to have some access to the labor market, such as part-time employment.

Introducing performance rewards for public employment service staff may be a cost-effective way to help the disabled find jobs. The UK Jobcentre Plus reform introduced modern management practices into the welfare system. Similar incentive schemes have been associated with substantial productivity gains in the private sector. The reform offered caseworkers greater career rewards if they successfully placed benefit recipients into work. Jobcentre Plus was introduced at different times in different districts between 2001 and 2008, so this staggered timing enabled researchers to implement a thorough examination of the impact of the policy.

Read More »

Why No-Deal Brexit is a battle for the soul of our nation – John Van Reenen

John Van Reenen, Professor of Applied Economics at MIT Sloan School of Management

From LSE Business Review

We are careening towards the most extreme form of Brexit imaginable – flouncing out of the European Union (EU) after 46 years, without any transition plan. Operation Yellowhammer, a leaked secret report from the government’s own officials predicted that the outcome of this “No Deal Brexit” would be shortages of medicines and fresh foods, civil unrest and transport chaos. In short, the most vulnerable people will suffer terribly. Many will die.

Boris Johnson is a man who clawed his way to power through the votes of a mere 0.13 per cent of the population. His lies are so profuse and extreme they would make Pinocchio blush. During the 2016 Brexit referendum, he was driven around in a big red bus plastered with false claims about how much money Britain gave to be a member of the EU. The numbers were so wrong, the UK’s chief statistician had to refute them – the best estimates find that Britain gets economic benefits from being in the EU that are about ten to twenty times as large as the financial cost of membership (see box on “the economics bit” below). Like so many populists, Johnson is a son of the wealthy privileged elite, who promises nirvana to a polarised country weakened by decades of stagnant wages and austerity. And like so many in the rabidly Eurosceptic UK media, his journalistic career was made from fabricating stories about European regulations. He was sacked not once, but twice by his editor for lying.

Read More »

Good managers, not machines, drive productivity growth – John Van Reenen

MIT Sloan Professor John Van Reenen

From Bloomberg View

When people discuss what drives long-run productivity, they usually focus on technical change. But productivity is about more than robots, new drugs and self-driving vehicles. First, if you break down the sources of productivity across nations and firms there is a large residual left over (rather inelegantly named “Total Factor Productivity” or TFP for short). And observable measures of technology can only account for a small fraction of this dark matter.

On top of this, a huge number of statistical analyses and case studies of the impact of new technologies on firm performance have shown that there is a massive variation in its impact. What’s much more important than the amount spent on fancy tech is the way managerial practices are used in the firms that implement the changes.

Although there is a tradition in economics starting with the 19th-century American economist Francis Walker on the importance of management for productivity, it has been largely subterranean. Management is very hard to measure in a robust way, so economists have been happy to delegate this task to others in the case study literature in business schools.

Managers are more frequently the butt of jokes from TV shows like “The Office” to “Horrible Bosses,” than seen as drivers of growth. But maybe things are now changing.

Read More »