Working papers

2023-04
Identity conflict, ethnocentrism and social cohesion
Matteo Sestito
This paper uses a novel dataset on ethnic warfare to shed light on how conflict affects social identification and cohesion. A large body of anecdotal studies suggests that ethnic identities become more salient at times of conflict. Using data from eighteen sub-Saharan countries, I provide econometric evidence for such a claim. The effect of ethnic conflict on various measures of social cohesion is also investigated, uncovering a positive relationship between the two. The finding is understood as a result of the ethnocentric dynamics generated by conflict: as ethnic warfare increases ethnic identification, in-group cooperation follows suit. This parochial interpretation is further strengthened by the use of remote violence and the conditionality of conflict-induced pro-social behaviour on low levels of ethnic polarisation.
Keywords: ethnic conflict, social cohesion, identity, Africa
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2023-03
When are wages cut? The roles of incomplete contracts and employee involvement
Marco Fongoni
Daniel Schaefer
Carl Singleton

We develop a model of incomplete employment contracts such that employees have some discretion over effort, which depends on their work morale. Nominal wage cuts have a strong negative effect on morale, while employee involvement in workplace decision-making tends to increase morale. We derive predictions on how these two mechanisms affect the decisions of firms to cut nominal wages. Using matched employer-employee and manager survey data from Great Britain, we find support for our model: nominal wage cuts are only half as likely when managers think that employees have some discretion over how they perform their work, but this reduced likelihood recovers partially when employees are involved in the decision-making process at their workplace.

Keywords: wage rigidity; reciprocity; workplace relations; employer-employee data
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2023-02
Turning worries into cognitive performance: Results from an online experiment during Covid
Timothée Demont
Daniela Horta Sáenz
Eva Raiber
Worrisome topics, such as climate change, economic crises, or the Covid-19 pandemic, are increasingly present and pervasive due to digital media and social networks. Do such worries affect cognitive performance? The effect of a distressing topic might be very different depending on whether people have the scope and means to cope with the consequences. It can also differ by how performance is rewarded, for instance, if is there a goal that people can focus on. In an online experiment during the Covid-19 pandemic, we test how the cognitive performance of university students responds to topics discussing (i) current mental health issues related to social restrictions or (ii) future labor market uncertainties linked to the economic contraction. Moreover, we study how the response is affected by a performance goal by conditioning payout on reaching a minimum level. We find that the labor market topic increases cognitive performance when performance is motivated by a goal. Conversely, there is no such effect after the mental health topic. We even find a weak negative effect among those mentally vulnerable when payout is not based on reaching a goal. The positive effect is driven by students with larger financial and social resources, pointing at an inequality-widening mechanism.
Keywords: cognitive performance, financial worries, COVID-19, financial incentives, anxiety, coping behaviors
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2023-01
How can technology significantly contribute to climate change mitigation?
Claire Alestra
Gilbert Cette
Valérie Chouard
Rémy Lecat
This paper highlights how technology can contribute to reaching the COP21 goals of net zero CO 2 emissions and global warming below 2°C at the end of the century. It uses the ACCL model, particularly adapted to quantify the consequences of energy price shocks and technology improvements on CO 2 emissions, temperature changes, climate damage and GDP. Our simulations show that without climate policies, i.e. a 'business as usual' scenario, the warming may be +4 to +5°C in 2100, with considerable climate damage. We also find that an acceleration in 'usual technical progress'-not targeted at reducing greenhouse gas intensity-makes global warming and climate damage worse than the 'business as usual' scenario. According to our estimates, the world does not achieve climate goals in 2100 without technological changes to avoid CO 2 emissions. To hit such climatic targets, intervening only through the relative price of different energy types, e.g. via a carbon tax, requires challenging hypotheses of international coordination and price increase for polluting energies. We assess a multi-lever climate strategy, associating diverse price and technology measures. This mix combines energy efficiency gains, carbon sequestration, and a decrease of 3% per year in the relative price of non-carbon-emitting electricity with a 1 to 1.5% annual rise in the relative price of our four polluting energy sources. None of these components alone is sufficient to reach climate objectives. Our last and most important finding is that our composite scenario achieves the climate goals.
Keywords: climate, global warming, Technology, Environmental policy, growth, long-term projections, Uncertainties, Renewable energy
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