Our completed ERC projects
completed in 2021
Social Preferences, Well-Being, and Policy (SOWELL)
ERC Consolidator Grant 2015
Awardee : Yann ALGAN
Objective
"The goal of my project is to develop advanced research into the foundations of social preferences and well-being. If high value is placed on social cooperation and well-being for human development, then it becomes an urgent task to elaborate appropriate theories and measures, to understand their foundations, and to identify policies that will enhance them.
I will advance this research in three steps: 1) The first stage will break new ground in the theory and measurement of social preferences and well-being, by exploiting the "Big Data" revolution and exporting behavioral economics into the field with online representative samples of societies and organizations. 2) The next stage will exploit those new large-scale behavioral measures to analyze the foundations of social preferences, sorting out the role of social cognition, individual life experience and social norms. 3) The third step will be to evaluate how policy affects social preferences and well-being, and in particular in the realms of education, employment and institutions. This project will yield proposals for a new agenda in the assessment of policies, by integrating criteria based on their impact on social cooperation and happiness.
I will propose cutting-edge methods to carry out this research. First I will use the revolutionary possibilities of Big Data to test theories of happiness by exploiting high-frequency behavioral measurements of well-being from Web 2.0. Second I will use computational sciences to develop an online laboratory aimed at studying social behaviors on representative samples of the population and how they relate with real world production and policy, thus addressing the lack of external validity that currently hampers experimental economics. Last, I will combine these new measurements of behavior with randomized trials, in order to assess policy within a new paradigm based on social preferences and well-being. My research is both theoretical, empirical and trans-disciplinary."
Read more about Yann ALGAN and his research
Read more about the project on SOWELL's website or on CORDIS' website
Read the interview with Yann ALGAN, "Big Data, Be Happy"
completed in 2020
New Dimensions and Approaches to Anti-Corruption Policy (ANTICORPOL)
Horizon 2020 - Marie Sklodowska-Curie Action - European Fellowship
Awardee : Fei XU
Objective
Corruption continues to be a central issue in the governance of institutions (public, private or mixed). The scholars and practitioners working on the topic are facing with two challenges: (1) measurement of corruption, which is a thorny issue on empirical studies of corruption, and (2) the increasing awareness of the failure of most anti-corruption policies. The overarching objective of ANTICORPOL is to introduce a new dimension in the discussion of corruption: the degree of corruption (i.e., the depth as opposed to the spread). The benchmark of ANTICORPOL is this: it is unclear whether a system (organization, public administration) with few individuals who terribly deviate from their duty is less/more corrupt, than one with many corrupt individuals who only slightly deviate from their duty. Therefore, the degree of corruption of its members must be an integral part of the debate about corruption in a system and the development of effective policies against it. This proposal raises the following research questions: (R1) How can the degree of corruption of an individual be defined? (R2) Which policies are effective in reducing the distortion of duties of corrupt individuals? (R3) How can the degree of corruption be incorporated into measurements of corruption, at organization/country level? The proposed research is based on both theoretical and empirical methods and the combination of qualitative, comparative and quantitative analysis. This project is inherently of interdisciplinary interest because corruption is a multifaceted issue with economic, political and sociological dimensions. The research findings will contribute to a deeper understanding of corruption and further to the evaluation of the quality of democracy.
Read more about Fei XU and her research
Consult the ANTICORPOL project information on CORDIS' website
Firm Networks, Trade, and Growth (FiNet)
ERC Starting Grant 2013
Awardee : Thomas CHANEY
Objective
The general theme of this research is to introduce the notion of large-scale economic networks into the mainstream of economics, in particular in macroeconomics and international trade. Economic agents often do not have access to all the relevant information they may need: whom they know, whom they interact with represents a small fraction of all possible interactions. I model this limited set of interactions as a network: agents are nodes, and they only interact with other agents they have formed a link with. What is the shape of this network of linkages between agents, and how does it evolve? More importantly, what are the aggregate implications of the shape of this network? These are the broad questions I will address in this research. I will consider six specific applications of this unifying idea in various fields: international trade, IO, macroeconomics and growth. In international trade, we have only a very crude understanding of the frictions that prevent most firms from exporting. I propose to model trade frictions as a dynamic network: at a point in time, a given exporter only has information about a limited set of potential customers in a few foreign countries; over time, this exporter discovers new export opportunities, and its network of customers evolves dynamically. I offer theoretical and empirical tools to understand and analyze the properties of this network, and show how it shapes aggregate trade patterns. In IO and macroeconomics, most plants only have few suppliers. I will model the input-output linkages between plants as a dynamic network; I offer theoretical and empirical tools to analyze this network, and show how it shapes the propagation of plant level shocks to generate aggregate fluctuations. Human capital accumulation is key to economic growth and development, with workers learning from each other. I will model these growth-enhancing interactions as a dynamic network; I will show how the properties of this network shape long run growth.
completed in 2018
Heterogeneity That Matters for Trade and Welfare (HETMAT)
ERC Starting Grant 2012
Awardee: Thierry MAYER
Objective
Accounting for firms' heterogeneity in trade patterns is probably one of the key innovations of international trade that occurred during the last decade. The impact of initial papers such as Melitz (2003) and Bernard and Jensen (1999) is so large in the field that it is considered to have introduced a new paradigm. Apart from providing a convincing framework for a set of empirical facts, the main motivation of this literature was that there are new gains to be expected from trade liberalization. Those come from a selection process, raising aggregate productivity through the reallocation of output among heterogeneous firms. It initially seemed that the information requirements for trade policy evaluations had become much more demanding, in particular requiring detailed micro data. However, the recent work of Arkolakis et al. (2011) suggests that two aggregate "sufficient statistics'' may be all that is needed to compute the welfare changes associated with trade liberalization. More, they show that those statistics are the same when evaluating welfare changes in representative firm models. The project has three parts. The first one starts by showing that the sufficient statistics approach relies crucially on a specific distributional assumption on heterogeneity, the Pareto distribution. When distributed non-Pareto, heterogeneity does matter, i.e. aggregate statistics are not sufficient to evaluate welfare changes and predict trade patterns. The second part of the project specifies which type of firm-level heterogeneity matters. It shows how to identify which sectors are characterized by "productivity sorting'' and in which ones "quality sorting'' is more relevant. Extending the analysis to multiple product firms, the third part shows that heterogeneity inside the firm also matters for welfare changes following trade shocks. It considers how the change in the product mix of the firm following trade liberalization alters the measured productivity of the firm.
More about Thierry MAYER and his research
Read more about the project on HETMAT's website or on CORDIS' website
Within and Across Countries Heterogeneity in International Finance (INFINHET)
ERC Starting Grant 2014
Awardee : Nicolas CŒURDACIER
Objective
Financial globalization has led to a large increase in capital flows together with increasing global imbalances. Understanding how investors structure their international portfolios and how such decisions interact with the real side of the economy has become a critical macro issue. Recently, policy makers have been advocating the understanding of capital flows and global imbalances as a necessary step to analyze the roots of the last financial crisis and its international transmission. Another important evolution is the larger role played by fast growing emerging markets. The world is getting more asymmetric as they feature very different characteristics compared to developed countries.
INFINHET aims at developing new dynamic multi-country macro-models to better account for the heterogeneity across agents and across countries in order to answer age-old questions in international macro such as the benefits from financial integration, the adjustment of global imbalances, the dynamics of exchange rates and asset prices, international financial contagion, the international dimension of tax policies.
The first part of INFINHET deals with new methods for dynamic stochastic models with heterogeneous agents/countries. Applications include normative questions regarding the welfare impact of policies in open economies and positive questions regarding the dynamics of asset prices and capital flows. The second part focuses on long-term issues in multi-country overlapping generations models. It analyzes the importance of asymmetries between countries on macroeconomic outcomes in a globalized world. Besides differences in growth and demographics, asymmetries in financial institutions, insurance mechanisms and welfare states are emphasized, with a particular focus on the specificities of China. The theoretical predictions will be tested empirically. This will require the development of panel data based on cross-country aggregates and the use of micro data based on individuals.
More about Nicoals CŒURDACIER and his research (insérer lien)
Read more about the project on INFINHET's website or on CORDIS' website
completed in 2017
Macroeconomics and Financial History (MACROHIST)
FP7 - Marie-Curie Action: "Initial Training Networks"
Awardee : Philippe MARTIN
Objective
The current macroeconomic and financial crisis has given rise to a vigorous debate about the state of macroeconomics and macroeconomic training. Among the voices arguing most strongly for a change in the way that young macroeconomists are trained are those coming from employers in the private and public sector. Strikingly, many employers are also arguing that a knowledge of economic history might be particularly useful. A knowledge of economic and financial history is crucial in thinking about macroeconomic problems and the financial sector in several ways. It forces students to recognize that major discontinuities in economic performance and economic policy regimes have occurred many times in the past, and may therefore occur again in the future. Additionally, economic history teaches students the importance of context. Finally, exposure to economic history leads to an empirical frame of mind, and a willingness to admit that one’s preferred theoretical framework may not always work in explaining the real world. These are essential habits for young economists wishing to apply their skills in the work environment. Young macroeconomists need training in economic and financial history. Equally, students of economic history need exposure to the techniques of modern macroeconomics and financial economics. MACROHIST brings together some of the strongest history, economic history and economics departments in Europe. Its aim is to expose young macroeconomists to the most recent work in macroeconomic and financial history; young economic historians to the most recent techniques in financial and macroeconomics, and both groups to the policy and work environment. We will achieve these aims by funding research on macroeconomics and macroeconomic and financial history; by funding visiting studentships for ESRs in partner institutions; by organising internships and other activities with our private sector partners; and by arranging network-wide research and training events.
More about Philippe MARTIN and his research (insérer lien)
Consult the MACROHIST project information on CORDIS' website
Economics of Matching Markets: Theoretical and Empirical Investigations (EcoMatch)
ERC Starting Grant 2013
Awardee : Alfred GALICHON
Objective
This project offers a theoretical and empirical investigation of matching markets. Matching is, broadly speaking, the study of complementarities, which explains the formation of coalitions. Matching models are found in many applied fields within Economics: Labour Economics, Family Economics, Consumer theory of differentiated goods (hedonic models), Trade, etc. Desirable properties of these coalitions, such as stability, lead to testable implications of the surplus that individuals generate in a match, allowing for structural estimation of matching models.
The goal of this proposal is to expand the frontiers of the theory of matching to design a very general and highly flexible model of matching that will lend itself to estimation and thus lead to empirical findings in various fields of Economics. Based on promising work initiated by the PI, this proposal seeks to bridge the gap between the theory and the empirics of matching markets that was traditionally observed in this literature.
Particular focus will be given to situations where stable outcomes may not exist (such as unipartite, or one-to-many matching models), frictions, taxes. In these cases, a thorough investigation is carried on what solution concept should be used, and what are the testable implications.
Applications will be given to various empirical issues or policy relevant questions such as:
-
The nature of the complementarities between senior and junior employees within teams,
-
The role played by the marriage market in the problem of rural depletion in China,
-
The impact of CEO risk aversion on assignment to firms, and on the CEO compensation package,
-
The pricing of attributes of French wines.
completed in 2016
Risk Incentives in Financial Institutions and Financial Instability (RIFIFI)
ERC Starting Grant 2010
Awardee : Guillaume PLANTIN
Objective
The main objective of this research project is to develop a new framework for the study of the informational frictions that separate investors from sophisticated traders operating in complete markets. I plan to develop a model of “generalized risk-shifting,” in which traders in complete markets can secretly take fair bets with any arbitrary distribution. The goal is to study the interplay of this generalized risk-shifting with traders’ career concerns. When investors learn about trading skills from observing traders’ realized returns, taking exposures on risk factors with rare adverse realizations may help a trader temporarily improve her reputation and attract more funds. The first intermediary step of this project consists in fully characterizing the payoff functions that lead a trader to gamble inefficiently in a one-period setting. The second step consists in solving for contracts that are risk-shifting-proof in a dynamic career concern environment. Finally, the model is well suited to be taken to hedge fund data.
More about Guillaume PLANTIN and his research
Consult the RIFIFI project information on CORDIS' website
Wage Dynamics, Sorting Patterns in Labour Markets and Policy Evaluation (WASP)
ERC Advanced Grant 2011
Awardee : Jean-Marc ROBIN
Objective
WASP is aimed at developing realistic empirical equilibrium search models of the labour market, with heterogeneous agents and long-term self-enforcing contracts, that:
- Can help better understand rent sharing mechanisms in labour markets,
-
Allow for multiple sources of productivity dynamics, including deterministic human capital accumulation and idiosyncratic productivity shocks,
-
Do not rule out sorting by assumption, nor the possibility of mismatch – as in perfectly competitive Beckerian marriage models,
-
Can fit linked employer-employee data in all three dimensions: across workers, firms and time,
-
Can be used for policy evaluation.
These research questions will be addressed within six different sub-projects:
- Understanding tenure effects. Human capital accumulation and productivity shocks are introduced in a search-matching framework to explain the difference between tenure and experience effects.
- Employment protection policies, wage dynamics and sorting. A search-matching model with productivity shocks is estimated on worker data and used to discuss the optimal design of employment protection policies.
- Large firms, sorting and linked employer-employee data. Firms post more than one job offer. The model permits the use of linked employer-employee data for estimation.
- Risk-aversion, savings and risk sharing. Risk-averse workers, subject to productivity shocks, are matched with risk-neutral employers. The model is used to measure the relative importance of self-insurance vis-à-vis insurance provided by the employer.
- Unemployment, wage inequality and business cycle. Allowing for aggregate productivity shocks in a search-matching model with worker heterogeneity can explain the unemployment volatility puzzle and the effect of business cycles on the wage distribution.
- Marriage, search and welfare policy. The intra-household resource allocation process is endogenised in a search model of marriage.
More about Jean-Marc ROBIN and his research
Consult the WASP project information on CORDIS' website
The Welfare State in a Complex World Taxes and Benefits in a Diverse Society (WSCWTBDS)
ERC Advanced Grant 2011
Awardee : Guy LAROQUE
Objective
Empirical studies of labour supply at the microeconomic level describe a diverse society with heterogeneous agents and stress the importance of the participation decision, to work or not to work. The aim of this project is to improve our knowledge of the properties of the optimal tax and benefit systems in the extensive model in the presence of heterogeneity.
The proposal has a theoretical part and an empirical part. The theoretical part deals with four applications of the extensive model: (1) family benefits and the interaction between household transfers and income taxes; (2) fraud and tax evasion; (3) indirect taxes; (4) dynamic aspects, such as capital taxation and the life-cycle. The empirical part is based on microeconomic data sets. It is made of three different projects: (1) how much of the difference in the number of hours worked in France, the UK and the USA can be assigned to differences in the tax and benefit structure of these countries?; (2) the role of taxes and benefits in the participation decisions of United Kingdom couples, 1979-2008; (3) pensions, savings, and the decision to retire in the United Kingdom.
More about Guy LAROQUE and his research (lien à insérer)
completed in 2015
Mapping European Competitiveness (MAPCOMPETE)
FP7 - Specific Programme "Cooperation" 2013
Awardee : Philippe MARTIN
Objective
“Mapping European Competitiveness” (MAPCOMPETE) is a FP7 proposal by six European research centers to provide an assessment of data opportunities and requirements for the analysis of comparative competitiveness in European countries.
Partners of the project are Brussels based think tank Bruegel, Budapest based research center CERS-HAS (coordinator), Milan research center LdA, Paris School of Economics and Sciences-Po in Paris, and Tübingen research institute IAW. Associate partners are the OECD, the ECB and several central banks in Europe.
Competitiveness is at the heart of policy making at the Union level and specifically within the Eurogroup. Definition of new country-level competitiveness indicators is an essential task. The aim of this project is to provide a thorough assessment of data opportunities and requirements for the analysis of comparative competitiveness in European countries. Work will examine how to interconnect different approaches to research and policy making in this field at the macro, sectoral and micro-level and consequently map data availability and needs. It will come up with proposals for enhancing standards and consistency of data, with the aim of improving future comparative work on competitiveness. It will analyze data requirement and suggest collection methods for selected topics such global value chains, trade and performance as well as pricing and quality.
Researchers in the team are and have been working on the analytics of how to combine macro and micro approaches on the study of competitiveness. Taking stock from these two sets of activities, researchers will be in the ideal position for mapping data opportunities and requirements in this field. The team includes some of the most prominent researchers in the field, who have also been involved with leading roles in carrying out the first European survey on the international activities of firms (www.EFIGE.org).
More about Philippe MARTIN and his research (insérer lien)
Consult the MAPCOMPETE project information on CORDIS' website
COMPLETED IN 2014
Culture, Cooperation and Economics (TRUST)
ERC Starting Grant 2010
Awardee : Yann ALGAN
Objective
My research project TRUST aims at looking at the links between culture of cooperation, economics and institutions, with causality running in both directions. The first step is to assess the causal effect of cooperation on economic decisions and happiness. Social attitudes such as trust seems a prerequisite to expand economic exchanges, in particular in modern societies characterized by the increased complexity of information and relations with anonymous others. Cooperative beliefs might also directly affect happiness by reducing the feelings of risks that humans have to cope with in modern societies. The second step of my research is to look conversely at the effect of economic policies on social attitudes. I will assess the effect of human resources management and welfare state policies on cooperation within organizations and the society. I propose cutting-edge methods to carry on this research agenda. First, I will track social and economic attitudes on the cyberspace by using a Medialab. The development of new communications technologies has triggered a revolution in the social traces that citizens leave simply by using digital technologies. The available data reservoirs on the web are colossal and can provide a new way to relate self-reported social and economic attitudes. I will also provide to the civil society new instruments of reflexivity on the state of social and economic cooperation. Second, I will introduce the new tools of randomized experiments in the sphere of social sciences to estimate the impact of economic policies on social attitudes. I will run these experiments in the context of the management of human resources to understand how inequalities and organizational structure can influence cooperative attitudes.
More about Yann ALGAN and his research
Consult the TRUST project information on CORDIS' website
