The lesson from yesterday’s election is to ignore pontificating from highly paid pundits. Put your faith in the numbers

John Van Reenen finds great cause for optimism in President Obama having won a second term. He argues that this election was also a vindication for quantitative social science, as the eventual results confirmed what mathematical models had predicted contrary to the instincts of pundits

Budget 2012: ideology 1, evidence 0

The Chancellor delivered his third budget yesterday. CEP Director Professor John Van Reenen gives his initial reaction. There were some positive steps such as the extension of personal allowances, but the Budget had an empty core. There is a missed opportunity for coherent tax reform, no retreat from a failing macro-economic policy, insufficient attention to policy evaluations and most damagingly, no credible plan for long-term growth

The new economy: reality and policy

This paper concerns the new economy (alias the knowledge-based economy). I examine the different meanings attached to the new economy term and the evidence surrounding it, concentrating on the upsurge in US productivity growth between 1995 and 2000. I argue that the reports of the death of the new economy have been greatly exaggerated. There is evidence that information technology has transformed the US economy and is thus likely to have a strong impact on the UK economy in coming years. I discuss how elements of public policy should adapt to these economic changes, both in terms of an overall framework and in applications to specific areas (technology policy, human capital policy, competition policy and industrial policy). The new economy is a place of hope and fear. The hope is that policy activism can cement in potential productivity gains; the fear is that government actions will not mitigate the seemingly ineluctable pressures towards social exclusion.

In brief: Location, location, location: why geography matters for R&D

John Van Reenen and colleagues assess the impact on growth of 'knowledge spillovers' between corporate research labs located close to each other

No more skivvy schemes? Active labour market policies and the British New Deal for the young unemployed in context

The British New Deal for Young People began in January 1998. After 6 months of unemployment, 18-24 year olds enter a 'Gateway' period where they are given extensive job search assistance. If they are unable to obtain an unsubsidised job, then they can enter one of four New Deal options. One of these is a job subsidy ("employers' option"), the others involve full-time education and training, government-provided employment ("environmental task force") or voluntary work. In this paper I evaluate the New Deal in a historical and international context. The toughening of the work search criterion has evolved since the Restart initiative in 1986. Using either the age-related eligibility criteria and/or a comparison of pilot and non-pilot areas results suggest that there has been a significant increase in outflows to employment due to the New Deal. Unemployed young men are now about 20% more likely to get jobs as a result of the policy (the stock of youth employment is about 17,000 higher than it would be without the New Deal). Much of this effect is likely to be because of the take up of the employer wage subsidy, but at least a fifth of the effect is due to enhanced job search. Taken as a whole I conclude that the social benefits of the New Deal outweigh the costs.Labour Market Programme evaluation, job search, wage subsidy, Difference in Differences

Extreme austerity is the wrong medicine.

Increasing numbers of liberal economists are gravely worried that the UK has made a wrong turn in choosing an austerity budget. Here Professor John Van Reenen, Director of the LSE’s Centre for Economic Performance, explains why the budget measures fulfil only a political logic, and risk creating a double-dip recession.

The success of the R&D tax credit shows that there can be a role for public policy in stimulating innovation and growth.

Competition and labour market flexibility are key for spurring productivity growth, but there are other ways in which policymakers can influence innovation more directly. John Van Reenen argues that tax credits for business spending on research and development can increase UK firms’ market value, productivity and innovation.

In brief: Blair's economic legacy.

One of CEP's core research themes is the impact of trade openness on countries, firms, regions, communities and sectors.Two recent studies confirm the gains from opening up trade - but recognise that addressing the uneven outcomes of globalisation is as big a challenge as pursuing liberalisation in the face of entrenched interests.

In brief: Europe's top prize for economic research

Europe's top prize for economic research John Van Reenen has been jointly awarded the Yrjö Jahnsson Award in Economics 2009.