Can workers still climb the social ladder as middling jobs become scarce? Evidence from two British cohortsJournal articleCecilia Garcia-Peñalosa, Fabien Petit et Tanguy van Ypersele, Labour Economics, Volume 84, pp. 102390, 2023

The increase in employment polarization observed in several high-income economies has coincided with a reduction in inter-generational mobility. This paper argues that the disappearance of middling jobs can drive changes in mobility, notably by removing a stepping stone towards high-paying occupations for those from less well-off family backgrounds. Using data from two British cohorts who entered the labour market at two points in time with very different degrees of employment polarization, we examine how parental income affects both entry occupations and occupational upgrading over careers. We find that transitions across occupations are key to mobility and that the impact of parental income has grown over time. At regional level, using a shift-share IV-strategy, we show that the impact of parental income has increased the most in regions experiencing the greatest increase in polarisation. This indicates that the disappearance of middling jobs played a role in the observed decline in mobility.

EEAG Report on the European Economy 2022 - Economic Policy for the Next Decade: A Changed Role of Governments?ReportTorben M. Andersen, Giuseppe Bertola, Clemens Fuest, Cecilia Garcia-Peñalosa, Harold James et Jan-Egbert Sturm, Number 11, pp. 87, 2022

This year‘s report addresses the future role governments and the challenges they are confronted with in post-pandemic times. It takes a broader perspective and relates the current situation to economic and political developments since the 1970s and examines whether and how the role of governments will change after the Covid-19 crisis.

Urbanisation and the Onset of Modern Economic GrowthJournal articleLiam Brunt et Cecilia Garcia-Peñalosa, The Economic Journal, Volume 132, Issue 642, pp. 512-545, 2022

A large literature characterises urbanisation as resulting from productivity growth attracting rural workers to cities. Incorporating economic geography elements into a growth model, we suggest that causation runs the other way: when rural workers move to cities, the resulting urbanisation produces technological change and productivity growth. Urban density leads to knowledge exchange and innovation, thus creating a positive feedback loop between city size and productivity that initiates sustained economic growth. This model is consistent with the fact that urbanisation rates in western Europe, most notably England, reached unprecedented levels by the mid-eighteenth century, the eve of the Industrial Revolution.

Beyond the Coronavirus Crisis: Investing for a Viable FutureReportTorben M. Andersen, Giuseppe Bertola, Clemens Fuest, Cecilia Garcia-Peñalosa, Harold James, Jan-Egbert Sturm et Branko Uroševic, Number 20, 2021

The 20th EEAG report, entitled “Beyond the Coronavirus Crisis: Investing for a Viable Future” has been released. Economists from Europe and the US are calling for changes to the Next Generation EU (NGEU) package to repair the damage caused by the coronavirus crisis.

Introduction March 2021 issueJournal articleFrank Cowell et Cecilia Garcia-Peñalosa, Journal of Economic Inequality, Volume 19, Issue 1, pp. 1-2, 2021
EEAG Corona Policy Brief July 2020: Europe’s Pandemic PoliticsReportTorben M. Andersen, Giuseppe Bertola, Clemens Fuest, Cecilia Garcia-Peñalosa, Harold James, Jan-Egbert Sturm et Branko Uroševic, Number July, 2020

The corona pandemic has created a health and economic crisis without modern parallel. As it hit affected countries ill-prepared and spread quickly within the EU, member states had to adopt more interventionist approaches than ever before – particularly in the areas of fiscal and monetary policy, labor markets and redistribution, and industrial policy. EU member states started controversial discussions about how to support those that were hit particularly hard. This debate has become a litmus test for solidarity in the world's richest bloc of nations.

The decisions and measures taken in each country and at the European level will set the course for economic development in the coming years and shape the countries' long-term prospects for decades to come. This EEAG policy brief is a supplement to the group's usual annual report. The authors examine the various effects of the crisis, how Europe can react effectively and how political measures should evolve as the pandemic subsides. In addition, the authors analyze how an efficient supranational insurance mechanism might look like.

EEAG Report on the European Economy 2020: Fair Taxation in a Mobile WorldReportTorben M. Andersen, Giuseppe Bertola, Clemens Fuest, Cecilia Garcia-Peñalosa, Harold James, Jan-Egbert Sturm et Branko Uroševic, Number 19, pp. 117, 2020

In the 1930s, countries fought destructive trade conflicts – now we have a similar situation, but the conflicts are taking place in the tax system. These conflicts arise out of the twin impacts of globalization and digitalization. Once upon a time, there was an implicit understanding of fairness in taxation, meaning how countries tax within their borders and how the tax burden is distributed. More specifically, companies and individuals were taxed based on their residence and consumption in the destination country. Such an approach worked while these events were mostly perceived as national. However, the world has changed, and in an increasingly globalized, digitalized, and mobile world, these understandings no longer appear to work smoothly, efficiently, and uncontentiously.

The changing nature of gender selection into employment over the great recessionJournal articleJuan J. Dolado, Cecilia Garcia-Peñalosa et Linas Tarasonis, Economic Policy, Volume 35, Issue 104, pp. 635-677, 2020

The Great Recession has strongly influenced employment patterns across skill and gender groups in EU countries. We analyse how these changes in workforce composition might distort comparisons of conventional measures of gender wage gaps via non-random selection of workers into EU labour markets. We document that male selection (traditionally disregarded) has become positive during the recession, particularly in Southern Europe. As for female selection (traditionally positive), our findings are twofold. Following an increase in the labour-force participation of less-skilled women, due to an added-worker effect, these biases declined in some countries where new female entrants were able to find jobs, whereas they went up in other countries which suffered large female employment losses. Finally, we document that most of these changes in selection patterns were reversed during the subsequent recovery phase, confirming their cyclical nature.

Gender and Promotions: Evidence from Academic Economists in FranceJournal articleClément Bosquet, Pierre-Philippe Combes et Cecilia Garcia-Peñalosa, Scandinavian Journal of Economics, Volume 121, Issue 3, pp. 1020-1053, 2019

The promotion system for French academic economists provides an interesting environment to examine the promotion gap between men and women. Promotions occur through national competitions for which we have information both on candidates and on those eligible to be candidates. Thus, we can examine the two stages of the process: application and success. Women are less likely to seek promotion, and this accounts for up to 76 percent of the promotion gap. Being a woman also reduces the probability of promotion conditional on applying, although the gender difference is not statistically significant. Our results highlight the importance of the decision to apply.

Inequality in Macroeconomic ModelsJournal articleCecilia Garcia-Peñalosa, Revue de l'OFCE, Volume 157, Issue 3, pp. 93-115, 2018

This articles focuses on the recent research efforts to incorporate income, wage and wealth inequality in macroeconomic models. I start by reviewing recent models on the impact of inequality on, on the one hand, long-run growth and, on the other, and macroeconomic fluctuations. The articles then reviews the literature concerned with the macroeconomic determinants of wage and wealth inequality. It concludes by discussing a number of possible avenues of research that seem to me particularly important, such as the impact of macroeconomic policy on distribution or the effect that firm size can have on both growth and wage inequality.