UBS Center Newsletter July 2018

11 UBS CENTER POLICY BRIEFS Publication preview No. 1, Nir Jaimovich: End of men No. 2, Bruno Caprettini and Joachim Voth: Labor-saving and unrest No. 3, Josef Zweimüller: Culture, work attitudes, and job search evidence and economic thinking into otherwise – sometimes heated – public debates. What are your research interests? Many developed countries have seen a dramatic increase in inequality in the past decades. We have made great progress in empirically documenting these trends, but the open question is: Which policy responses does this trend need? This includes tax policy, which has always taken the center stage in the public policy debate, and which I have focused on in much of my past research. But I also think of institutional responses more broadly, in terms of regulation, education, insurance, industrial policies, or even the role of money in politics. One example is my work on superstar phenomena, which have been recognized as a key driver of the recent inequality trends (for example with regards to CEO compensation). These effects can generate differences in pay that, as one moves up the scale, eclipse any inherent differences in skill. Does this provide an argument for a more steeply progressive tax code? In my work, I have shown that, in fact, it does not, because while superstar effects make the earnings distribution more unequal, they should also increase the responsiveness of individual in- comes to tax changes. Both are two sides of the same coin. This emphasizes that we really need more precise estimates of the elasticity of superstar earners’ taxable income, rather than just measuring the change in the distribution of earnings, which has received most of the recent attention. How can economists influence policy makers? The policy-making process is a complicated one, and few economists have managed to have their ideas implemented exactly as they had envisioned them. This is by design – ultimately, we live in a democracy and not a technocracy! But I think there is another useful role economists can play in policy- making: Even if we do not manage to have our ideas implemented, at least we can provide argu- ments to ensure that the really bad policy ideas do not get implemented. Many colleagues who have served in policy and business roles have shared the experience that they were much more effective at the latter than the former! PUBLICATIONS New UBS Center Policy Briefs, injecting nonpartisan evidence. Get involved in the discussion with #UBSCenterPolicyBriefs Watch Florian’s interview on