COVID-19 spurred a wave of new technology adoption by UK businesses

The pandemic spurred three-quarters of firms to adopt new technologies, and businesses are keen to continue with this innovation mindset, which could be harnessed to fulfil the UK’s net zero commitments. Anna Valero, Capucine Riom and Juliana Oliveira Cunha find that the innovation response was stronger among larger and more digitised firms, potentially creating a lasting impact on the UK’s digital divide

Covid has forced many firms to innovate, with possible lasting impacts

A survey reveals greater UK innovation rates than what we might have expected in the absence of a pandemic, write Capucine Riom and Anna Valer

Climate impacts on material wealth inequality: global evidence from a subnational dataset

Worsening climatic conditions are a significant threat to livelihoods, health and well-being worldwide. In this paper, we estimate the impact of temperature and precipitation anomalies on inequality and poverty using a dataset combining comprehensive climatological data with subnational regional wealth and inequality measures derived from the Demographic and Health Surveys for 52 countries and 453 regions. Using the International Wealth Index as a comparative measure of material wealth, we find a significant impact of temperature anomalies on the distribution of material wealth. We estimate that an average temperature anomaly of one standard deviation in the past 4 years increases the regional Gini coefficient by 0.018 points and increases the share of extremely poor households by 4.1 percent. The impacts are stronger in rural areas. We find that temperature anomalies affect inequality through multiple channels, including agricultural employment, the deterioration of assets, decreased economic activity, higher unemployment and worsened access to healthcare. The impacts of precipitation anomalies on inequality, on the other hand, are more ambiguous

Net zero transition to mean significant change for 1.3 million workers

The UK’s experience of structural change through deindustrialisation during the 1970s and 1980s drove up unemployment, concentrated among particular parts of the population, and left deep scars on some parts of the country. However, the net zero transition will have impact on jobs across the economy but is unlikely to follow the same path as these previous episodes of change. Molly Broome, Stefano Cellini, Kathleen Henehan, Charlie McCurdy, Capucine Riom, Anna Valero, and Guglielmo Ventura assess the likely scale – and nature – of labour market change brought on by the net zero transition over the next decade

Lessons on designing tech RCTs with SMEs

How can we help small and medium-sized businesses improve their productivity? New technologies based on artificial intelligence - such as chatbots and marketing automation - seem to offer clear benefits but are not yet widely adopted by SMEs. Alongside the Greater London Authority, Capital Enterprise and CognitionX, we designed a randomised trial to investigate how to encourage SMEs in London's retail and hospitality sectors to adopt the use of these technologies

Firms’ digital innovation in the pandemic: how have workers been affected?

Covid-19 has accelerated digitisation in businesses and changes in working practices. Effective training and skills policies will be needed to support continued innovation in firms, while also building workers’ resilience in times of economic transition

Workforce Composition, Productivity and Pay: The Role of Firms in Wage Inequality

In many OECD countries, low productivity growth has coincided with rising inequality. Widening wage and productivity gaps between firms may have contributed to both developments. This paper uses a new harmonised cross-country linked employer-employee dataset for 14 OECD countries to analyse the role of firms in wage inequality. The main finding is that, on average across countries, changes in the dispersion of average wages between firms explain about half of the changes in overall wage inequality. Two thirds of these changes in between-firm wage inequality are accounted for by changes in productivity-related premia that firms pay their workers above common market wages. The remaining third can be attributed to changes in workforce composition, including the sorting of high-skilled workers into high-paying firms. Over all, these results suggest that firms play an important role in explaining wage inequality as wages are driven to a significant extent by firm performance rather than being exclusively determined by workers' earnings characteristics