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RA5a: Structure,environment and staffing policy

The department has enhanced its leading reputation in research, and has seen its research strengths grow and expand in a number of new directions. This has also been reflected in a series of leading new appointments at the senior and junior level. Research in the department has also maintained the strong emphasis on the interaction between rigorous research, policy influence, research training and international collaboration. It has continued to place a high value on team research and the building of broad research groups and centres. The aim has been to retain and attract the very best economic researchers by providing a lively and active research environment. Research has been deliberately steered away from narrow fields, preferring instead broader interactive areas. In each of these broad areas, described in section 1.3 below, the department has made significant and influential contributions to research. Its staff have presented their research as invited addresses at key international meetings, they have published seminal papers in the major economics journals, they edit leading economics journals, they have established collaborative research with the best in their field from North America and Europe and have been involved in significant policy developments.

Key features of the department's general strategy are:
· An effective research environment, based around major research groups - including three ESRC-funded centres (directed by Blundell, Binmore and Pearce) during the period, and a new Leverhulme-funded Centre for Quantitative Research Methods and Practice (directed by Chesher and Ichimura). This will be significantly enhanced by recently-announced JIF funding for new experimental and econometrics laboratories and supporting technical staff.
· international interaction and collaboration - through visitors, seminars, joint research and research training networks including the PhD network European Network for Training and Economic Research (ENTER), editorial involvement (including the editorship of Econometrica (Blundell), Review of Economic Studies (Attanasio) and Economic Journal (Meghir)), staff and student recruitment.
· policy-relevance and engagement - a distinctive feature of all our research groups, which will be developed further through our new coordinating centre on the Design and Evaluation of Economic Policy (DEEP).
· careful selection of young staff with potential, and supportive career development with low teaching loads throughout an initial 6-year appointment.
· well-resourced PhD programme with substantial teaching contributions from research-active staff and international visitors, opportunities for international exchange through our ENTER network, and major research interactions with our research centres.


1.1 The university research context
UCL is a major, internationally-recognised multi-faculty university, with a strong commitment to research excellence. The UCL Corporate Plan commits UCL to maintain and strengthen its presence in basic research, and to enhance the applicability of the research that it undertakes. UCL has supported the development of economics research at UCL through major appointments of international research figures (recently, Aghion, Jehiel, Chesher, Ichimura and Newman), and through the competitive recruitment of young researchers with the highest potential. It provides an effective research administration infrastructure, and excellent library and computing facilities. In October 2000 the Department of Economics moved to newly-refurbished premises, providing much-improved facilities for its research centres and seminars, accommodation for academic visitors and research students, and space for major new economics research laboratories.

The value of an interdisciplinary approach to both basic and applied research is recognised by UCL, and is underpinned by the wide range of established disciplines at UCL. Economics has particular research links with Psychology, Mathematics, Laws, Epidemiology and Public Health.

1.2 Departmental mechanisms
During the period, much of the department's research has been grouped around three major ESRC-funded research centres:
· Centre for Economic Learning and Social Evolution (ELSE), directed by Ken Binmore and David Ulph. ELSE is an interdisciplinary research centre also involving the departments of Psychology and Mathematics.
· Centre for Microeconomic Analysis of Fiscal Policy (CMAFP) at the Institute for Fiscal Studies, directed by Richard Blundell and Costas Meghir.
· Centre for Social and Economic Research on the Global Environment (CSERGE), directed by David Pearce

These centres provide a framework for effective research interaction between a group of established researchers, research training and stable career development for younger researchers, resources and training for graduate students, a focus for visitors and for international projection of the department's research. Each centre is a highly-effective vehicle for policy application of academic research, and for communication and interaction with research users.

These three major ESRC-funded centres have formed the foundation of the department's main research strengths over the past decade: Econometrics and Applied Microeconomics; Game Theory and Industrial Organisation; and Environmental Economics. New appointments and initiatives taken by existing staff are broadening the range of fields where the department has substantial research concentrations. As described in Section 3, this process will be given further impetus by our new coordinating centre DEEP, which will provide scope for new initiatives under the general theme of the Design and Evaluation of Economic Policy, while providing strong mechanisms to encourage research interaction and synergy, coordination and support of the activities of younger researchers, and effective policy application and interaction with research users.

1.3 Departmental strengths
The department's principal research groupings, together with some examples of key research achievements making significant advances in the literature in each area are:

Empirical Microeconomics (includes Attanasio, Blundell, Dustmann, Machin, Meghir, Preston, Van Reenen, Smith and Adda) A clear underlying theme of the empirical microeconomics research at UCL is the close relation between careful empirical analysis and policy relevance. The distinguished level of this analysis was recognised in a series of influential publications and policy papers over this period. The 2000 Frisch Medal of the Econometric Society (given every two years for the best applied paper over the past five), was awarded to Richard Blundell, Alan Duncan and Costas Meghir for the paper "Estimating Labor Supply Responses using Tax Reforms," Econometrica July 1998. The citation states: The paper is important for its policy relevance, for its careful treatment of identification and estimation, and for the clarity of its visual representation of the data. This field has also been an important training area for research students, producing a number of outstanding PhD students, including James Banks (IFS), Luigi Pistaferri (Stanford), Hamish Low (Cambridge).

Econometric methods (includes Blundell, Chesher, Ichimura, Szroeter)
Econometric research has a very high profile in the department and is organised to span the divide between statistics, econometrics and empirical economic analysis. Among the substantive achievements in this field is the work by Chesher, published in the Journal of the Royal Statistical Society, which recovered smoothed estimates of the complex relationships between age and intakes of energy, fat and calcium. The published discussion stated: It is extremely gratifying that such good use is made of a roughness penalty method in a problem of great importance in public policy. Another field with similar impact in public policy has been the refinement of matching methods in policy evaluation. The work by Ichimura, jointly with Nobel prizewinner James Heckman, published in Econometrica and Review of Economic Studies, has revolutionised this field providing theory and empirical blueprints for the application of matching and selection methods in the policy evaluation context. This forms an important part of our quantitative research training at UCL and is supporting a number of dissertation topics.

Game Theory (includes Binmore, Borgers, Jehiel, Agastya, Inderst, Ottaviani)
This field, built around ELSE, has developed a strong applied aspect based on experimental data and applied theory which has been used heavily in auction design, in particular the successful UK mobile phone network auction. Similar applied work in game theory has been carried out, not only for the telecom industry (Belgium, Demark, Greece, Hong Kong, Israel) but also for a variety of other clients, including the Forestry Commission, National Audit Office and the Department of Health. At the same time, the team has maintained a high profile in theoretical developments. For example, in the Review of Economic Studies (Binmore) paper "Equilibrium Selection and Evolutionary Drift" the major obstacle to further application of game theory, namely the equilibrium selection problem in games with many equilibria, was addressed. This paper developed the role of evolutionary drift in this context, and derives results which are close to those observed in experimental laboratories.

Industrial Organisation and Innovation (Aghion, Ulph, Ottaviani, Vaughan, Albano, Van Reenen)
This team work closely with applied micro and theory areas and have been involved in major new developments. The work on Endogenous Spillovers and the Performance of Research Joint Ventures endogenises two aspects of the innovation process - research design and information sharing – that are treated as exogenous in the conventional literature on research joint ventures. This has provided what has turned out to be a very productive new framework within which to examine the effects of RJVs. This team has published major findings on the empirical relationship between industrial competition and firm level productivity and innovation.

Labour Economics & Industrial Relations (includes Machin, Meghir, Dustmann, van Reenen, Symons, Verry, Violante)
A key theme of this research has been human capital and education policy; this work has been coordinated through the Centre for the Economics of Education (directed by Machin), a DfEE-funded joint venture between UCL, IFS, CEP and the Institute of Education. Another important area of research has been directed at the link between technology, industrial organisation and the labour market. Influential papers by Machin and van Reenen (in QJE) have shown strong links between technological change and the structure of wages and employment in many countries. This work identifies a skill-bias in new technology that has brought wage gains and improved employment rates for workers who are skilled enough to utilise the new technologies that have rapidly diffused into workplaces in similar industries in different countries; at the same time, technology is an important factor underlying the poor wage and/or employment performance of unskilled workers seen in many countries in recent years. This has important policy implications: If skill-biased technological change is an important driver of wage and employment inequality, the design of education and training programmes to provide workers with skills that complement new technologies becomes a central element in policies to combat low wages and unemployment.

Environmental Economics (includes Pearce, Swierzbinski, Smith, Pemberton, Ulph, Swanson (returned as research-active to Laws UoA)) Much of the work of this long-established team is based around the ESRC-funded research centre CSERGE, and has involved a large group of PhD students - including Kirk Hamilton and and Vivienne Foster (both now at the World Bank), Susana Mourato (now at Imperial), and Sam Fankhauser (now at EBRD). Major research contributions include work on irreversibility and sustainability. Until recently many eminent economists argued that the conventional results by Arrow and Fisher (1974) et. al. on the effects of learning on irreversible investment implied that current CO2 emissions should be lower than recommended by the Intergovernmental Panel on Climate Change. Ulph's research on Global Warming, Irreversibility and Learning shows that conventional models of irreversible investment miss an important feature of global warming and that when this is taken into account then it may be optimal to have current emissions higher than recommended by IPCC. Pearce and other members of the research team have developed the notion of ‘genuine savings’ as a single indicator of sustainable development. This work - now published annually as part of the World Development Indicators by the World Bank - has been applied to 140 countries.

Economic Transition and Development (includes Aghion, Carlin, Newman, Verry, Armendariz)
Work in this area has focussed on competition, credit and human capital in transition and development. For example, during the initial phase of transition the focus for micro-economic reform was put almost entirely on privatisation by policy makers in the region and in the International Financial Institutions (World Bank, EBRD) involved in post-communist transition. More recently, policy-makers have become increasingly aware of the importance of competition and competition policy in inducing progress in governance and enterprise reform. In this respect, work of this group has been influential. In particular, it helped devise the "Competition Module" of the World Bank/EBRD Enterprise Survey (administered so far in more than 3500 enterprises across 26 countries). The main results from the survey were published in the 1999 EBRD Transition Report, and have stimulated a set of new research projects on the role of competition in economic development. The World Bank has requested a background paper on competition and development for this year's World Bank World Development Report. This in turn has stimulated further theoretical research on competition and growth.

Macroeconomics, Growth and Development (includes Aghion, Attanasio, Violante, Armendariz)
The department has established a strong research base in growth and development at the boundaries between micro economics and macroeconomics. A major question in the analysis of growth is whether it is primarily driven by endogenous quality-improving innovations. Work by Aghion presented in his Walras Bowley lecture (forthcoming in Econometrica) and in joint work with Violante presented in the Carnegie–Rochester macro series shows that this can be used to explain two main puzzles about the recent evolution of wage inequality in developed economies. The first puzzle is that the wage premium has increased at a much higher rate than before since the early 1980s, even though economies like the US have experienced a long period of measured productivity slowdown; the second puzzle is that much of the increase in wage inequality has been within (more than between) educational groups, and that this within-group inequality has mainly affected the temporary component of income, while the increase in between-group inequality has mainly affected its permanent component, as shown in the 1996 Journal of Political Economy paper by Attanasio.

The number of people in each area demonstrates the effective focussing of the department's research. The fact that many are active in more than one area enables synergies between different areas of the department's research. This will be further enhanced by the new coordinating centre, DEEP, which will explicitly develop areas of cross-fertilization.

1.4 Relationship with users
Each of the three ESRC-funded centres has a major commitment to policy involvement and interaction with research users. Individual staff also engage with research users through consultancy, membership of scientific advisory panels, and through publications and dissemination activities aimed at users. Some examples:
Philippe Aghion: Economic Adviser at EBRD; Richard Blundell: National Academy of Science panel on data requirements for research on ageing: Research Committee of the British Academy: Andrew Chesher: advisor to British Telecom Group Regulatory Finance, external assessor to ONS and MAFF on the NFS/FES merger; John van Reenen: secondment to Department of Health Policy Unit; David Pearce: Academic Panel, DETR; Environment Advisory panel of the National Grid Company; consultant to OECD on biodiversity and sustainable development. Stephen Smith: Academic Panel, DETR; adviser on tax policy to HM Treasury; consultant to the Fiscal Affairs and Environment Directorates of OECD; Specialist Advisor, House of Lords Select Committee on European Communities. Donald Verry: consultant to OECD on economic aspects of Early Childhood Education and Lifelong Learning.

1.5 Funding and research activity
The principal external funding for the department's research is coordinated through the three research centres, ELSE, CMAFP and CSERGE. This includes core ESRC funding, and substantial funding from other sources (research charities, government departments, EU, etc).

The Centres are committed to helping research staff develop stable, long-term research careers, providing good incentives for researchers to invest in training and acquire in-depth expertise in a specialised research field.

1.6 Interdisciplinary and collaborative research
The department has developed a highly active level of collaboration in the UK, across Europe and with North America. This is reflected in high profile and successful network collaborations. The Savings and Pensions TMR network, involving Blundell, Attanasio and Meghir, is very closely linked to the department's ENTER programme and has funded at least 5 doctoral or post-doctoral year-long visitors. A second TMR network Aggregate Fluctuations involves Attanasio, Blundell and Violante. We were the lead institution (Aghion, Van Reenen and Ulph) for the TSER project on Growth, Inequality and Training. In the area of innovation the recent RTN network Product Markets, Financial Markets and the Pace of Innovation in Europe involves Aghion, Ulph, van Reenen and Blundell. Stephen Machin is directing a new European RTN Network on the Evaluation of European Labour Market Policies. We have also just begun a new RTN network on Welfare analysis of fiscal and social security reforms in Europe, involving Richard Blundell. NEAPOL (Negotiated Agreements in Environmental Policy) involved Stephen Smith and CSERGE researcher Roger Salmons. Salmons also participates in the pan-European CAVA group on voluntary agreements. Tim Swanson (CSERGE and Laws) is coordinating international groups on biological economics and on economics and laws. Wendy Carlin participates in the PHARE-ACE research network Competitive pressures and enterprise adjustment on the way to EU accession.

The department has developed close links with researchers in Health and Psychology. Jerome Adda holds a joint appointment in Economics and Epidemiology, and works on a range of health-related topics with Costas Meghir and CMAFP researchers. Richard Blundell is co-director, with Michael Marmot (Epidemiology) and Roger Jowell (National Centre), of the English Longitudinal Survey on Ageing, a 5-year programme to develop and analyse a dataset covering health, inequality, retirement, and cognitive ability aspects of ageing. The ELSE research programme on game theory and applications includes interdisciplinary collaborations with Psychology, Mathematics and Anthropology. Tim Swanson (Faculty of Laws) works closely with CSERGE.

Great emphasis is placed on research collaboration and interaction with international colleagues. This brings UCL staff and research students into contact with other researchers working at the leading edge of the discipline:
· We encourage staff to take leave at leading universities outside the UK. Visiting Professorships held in this period include: Aghion at Harvard, Blundell at Berkeley, Borgers and Jehiel at Princeton, van Reenen at Berkeley, Meghir at Chicago.

· Incoming Visiting Professors have included Dov Samet, Benny Moldovanu, J-P Benoit, Joel Horowitz, Martin Hellwig, Abhijit Banerjee, Ted Bergstrom, Bo Honore, George Borjas, James Heckman, Dan McFadden, Rob Townsend, and many more.
· Our five research seminar programmes (Departmental Seminar, and seminars in Applied Micro, Economic Theory, Development, Environmental Economics) regularly include leading international speakers.
· With six leading European departments - Barcelona (Autonoma), Brussels (ULB), Mannheim, Stockholm, Tilburg and Toulouse - we run the European Network for Training in Economic Research (ENTER), operating staff and student exchanges and an annual PhD student workshop.


2.1 Staff development and support
Substantial resources are devoted to recruiting young lecturers with high research potential. Recruitment is normally without restriction on field. The Lectureship Recruitment Committee has a broad representation of senior and junior members of the department. Members read and discuss research papers of candidates, and shortlisted candidates are invited to the department for a "job talk" seminar. New lecturers are appointed on initial six year contracts, with half the department's standard teaching load, allowing adequate time for research potential to be demonstrated. A senior member of staff is assigned as Academic Adviser, and a Tenure and Promotions Committee makes an annual review of research performance and publications based on criteria agreed with the lecturer.

Newly-appointed lecturers are integrated into the activities of research centres at an early stage, giving them the opportunity to work on projects under the guidance of experienced staff, and providing assistance and experience in grant applications, dissemination and policy application.

2.2 Research student development
The MSc courses both have research training recognition, and include a substantial research dissertation. Numbers on the programmes are chosen to maintain quality and to ensure that good dissertation supervision can be provided.

The PhD programme contains a major taught element, which has been enhanced over the period. MPhil/PhD students now take six taught courses from a range of options covering the research areas of the department. These taught courses aim to equip students with an understanding of theory and methods at the level required for frontier research, and to expose students to active research topics within their own field and more broadly. PhD students are required to register for and attend the department's seminar series in their area of research, exposing students to current research, and giving them the opportunity to engage in discussion with leading international researchers. Many research students can undertake their research within the activities of one of the department's research centres, providing them with a high degree of research supervision from both staff and other researchers, exposure to an active, high-level research culture with demanding standards in terms of research quality and deadlines, and, in many cases, opportunities to work on well-specified topics and specialised data.

A major contribution to our research training is provided by the department's participation in the European PhD network ENTER, involving six other leading economics departments. ENTER gives students the opportunity to make visits to participating departments, to receive research training and advice from leading researchers, complementing our own courses and supervision. UCL students can meet with other PhD students working on similar topics and can present their work to staff and students from all participating departments at an annual three-day research workshop.

In addition to the usual external sources, we provide significant funding support for research students in two ways: the Teaching Assistant scheme provides substantial financial support for 10-12 students each year, and the opportunity to gain experience in teaching skills in the context of a structured training regime. The research centres provide some (currently 4) full-time PhD scholarships, and also offer scope for part-time PhD registration by the research staff they employ.

2.3 Staff departing during assessment period
Jonathan Thomas left the Department in July 1998 to a senior position in the Government Economics Service.

2.4 Staff holding joint appointments
2.4.1 Jehiel has a 50% appointment at UCL, in parallel with a research fellowship at the Ecole Nationale des Ponts et Chaussees in Paris. He spends half of each week at UCL, directs the ELSE Mechanism Design research division, and is an active PhD supervisor.
2.4.2 During the US teaching semesters of academic year 2000/01, Aghion has been on leave at Harvard. He continues to be actively involved in research collaborations with members of the department (Violante, Carlin, Blundell), to teach within our PhD programme and to supervise research students. During academic year 2001/02 he will again be on leave at Harvard for much of the year, but will return full-time to UCL in 2002/03.


3.1 Achievement of 1996 RAE plans
In the previous RAE we said that we would:
a. develop our existing activities based around the three research centres ELSE, CMAFP (at IFS) and CSERGE.
All three centres have produced prolific academic research, and have contributed to our research training environment. Funding for both ELSE and CMAPF has been renewed during the period. CSERGE will reach the end of its 10-year ESRC funding in 2001, but will remain the focus for the department's environmental economics research, developing new areas (partly jointly with ELSE, under the DEEP umbrella)
b. maintain MSc numbers broadly constant, to maintain quality, and increase PhD student numbers while raising quality through rigorous selection and initial training
Overall MSc numbers have been maintained below 60 throughout the period. PhD numbers have been increased gradually, while maintaining entry quality. The taught component of the PhD programme has been significantly upgraded.
c. contribute to the development of the interdisciplinary School of Public Policy at UCL
Philippe Aghion was appointed to a joint chair in Economics and Public Policy; Stephen Smith established the new interdisciplinary MSc in Public Policy (now run from SPP); a number of joint research projects are underway involving the Economics department and SPP researchers (eg David Ulph supervises an SPP researcher working on pharmaceuticals pricing).
d. build up our strength in Macroeconomics
During the period Philippe Aghion and Gianluca Violante have been appointed in this area. Together with Attanasio there is now a significant group working on various aspects of macro. Victoria Chick will retire during the next period, and the department is committed to making the replacement appointment in the field of macro.
e. further develop our European networks and collaborative research
Major EU funded networks in which members of the department have been involved include:
· Savings and Pensions (TMR network, coordinated by CENTER, Tilburg); UCL participant Richard Blundell. The network is very closely linked to our ENTER programme, and there have been at least 5 doctoral or post-doctoral year-long visitors during the course of this programme.
· Aggregate Fluctuations (TMR network) UCL participants Orazio Attanasio, Richard Blundell.
· Product Markets, Financial Markets and the Pace of Innovation in Europe (RTN network) UCL participants Philippe Aghion, David Ulph, John van Reenen, Richard Blundell.
· Welfare analysis of fiscal and social security reforms in Europe (RTN network organised by Laisney, ZEW Mannheim) UCL participant Richard Blundell.
· NEAPOL (Negotiated Agreements in Environmental Policy) coordinated by M. de Clercq (Ghent); UCL participant Stephen Smith.
· Competitive pressures and enterprise adjustment on the way to EU accession. (PHARE-ACE research network coordinated by Halpern, Budapest); UCL participant Wendy Carlin.

3.2 Objectives and activities for next 5 years
As described above, research plans for the coming 5 years will be focussed and coordinated under the umbrella of DEEP - a co-ordinating Centre for the Design and Evaluation of Economic Policy. DEEP will draw together elements of the existing research activities of the department that have relevance to the design and evaluation of economic policy (game theory at ELSE, economics of education at the CEE, microeconomics and public finance in CMAFP at IFS, environmental economics), and foster new research interactions between them (eg empirical modelling of auctions, experimental research on mechanism design in environmental policy, etc). DEEP will also draw in the three main research initiatives envisaged:
· Jointly with IFS we are establishing a new Centre for Quantitative Research Methods and Practice, involving Andrew Chesher, Hidehiko Ichimura and Richard Blundell, fostering the development of quantitative research skills in the social sciences.
· A new laboratory for experimental research in Economics will allow major new research in this area; this facility will also be available to researchers from other institutions, creating new opportunities for collaboration and interaction.
· An expansion of work on economic development, building on the appointments of Aghion, Armendariz, Newman.
The range of DEEP activities (spanning theoretical and empirical research, policy application and user training) will provide opportunities for enhancing the range of experiences acquired by our PhD students. In addition, a further significant upgrading of the taught element of our PhD programme is planned, ensuring that PhD students acquire levels of technical expertise comparable to those acquired in leading US universities.

Users of this website should note that the information is not intended to be a complete record of all research centres in the UK

Copyright 2002 - HEFCE, SHEFC, ELWa, DEL

Last updated 17 October 2003

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