A shared social identity is potentially an important element in ensuring cooperation and the coordination of actions among individuals when formal institutions for achieving these ends are weak. But the construction of group identity also leads to the creation of in-groups and out-groups and thus, the possibility of conflict as people born and raised with diverse identities are compelled to interact due to resource competition, market forces, etc.
These contrasting ideas lead to the following question: Under what conditions do increased social diversity within a population – e.g. due to migration, market penetration – raise the potential for conflict as opposed to harmonious social diversity? If ‘group identity’ plays a key role in shaping conflict and cooperation, a related question that requires consideration is as follows: How does increased social diversity affect identity?
It is well known that technological change is not only one of the key drivers of overall economic growth, but also has implications for inequality.
Developed economies have seen a large reallocation from goods to the service sector. In the US for example, while the goods sector accounted for about 44% of total hours worked in 1960, by 2010 this was down to just 21%. The economic literature on structural transformation typically explains these changes by pointing to differences in productivity growth across sectors. As goods and services tend to be complements in consumption and labor productivity grows faster in goods than in other sectors, supply outgrows demand for goods, leading to a reduction of employment in the goods sector and a rise in service employment.
The Journal of Ethnic and Migration Studies has featured a research paper by Dr Matloob Piracha. The paper entitled ‘Integration of humanitarian migrants into the host country labour market: Evidence from Australia’ (with Isaure Delaporte) was published on 6 February. You can read the full article here.
The American Economic Association has featured a research paper by Dr Christian Siegel in their ‘Chart of the Week‘. The paper entitled ‘Job Polarization and Structural Change’ (with Zsófia Bárány, Sciences Po) was also published in the January 2018 issue of the American Economic Journal: Macroeconomics. You can read the full article here.
Financial institutions carry out various transactions with each other, including risk-sharing and insurance. The architecture of the network of transactions between institutions can support financial stability because it enables them to share funding or transfer risk. But these linkages can also facilitate the diffusion of shocks through the system, due to chains of default and the domino effect. This is referred to as systemic risk. Systemic risk is costly for individuals, institutions and economies, as demonstrated by the last financial crisis (of 2008). The obvious need for a stable financial system has led to a significant interest in policies that could reduce systemic risk and mitigate contagion.