Stephen Jonathan Machin (born 23 December 1962 [1] ) is a British economist and professor of economics at the London School of Economics (LSE). [2] Moreover, he is currently director of the Centre for Economic Performance (CEP) and is a fellow of the British Academy, the Society of Labor Economists and the European Economic Association. [3] His current research interests include labour market inequality, the economics of education, and the economics of crime. [4]
Stephen Machin earned a B.A. in economics from Wolverhampton Polytechnic in 1985 as well as a Ph.D. from the University of Warwick in 1988, wherein he analysed the impact of trade unions on economic performance. After his Ph.D., he worked first as a lecturer (1988–93), then as a reader (1993–96), and finally as professor of economics at University College London (1996–2016). Since 1994, Machin has repeatedly held positions at the Centre for Economic Performance (CEP) at the London School of Economics (LSE) before becoming CEP's director and accepting a professorship in economics at LSE in 2016. Additionally, Machin has served as director of the Centre for the Economics of Education at LSE (1999–2009) and held visiting appointments at Harvard University (1993–94) and at MIT (2001–02). [5]
In terms of professional service and responsibilities, Stephen Machin is a member of the council of the Royal Economic Society, a fellow of the European Economic Association (EEA), Society of Labor Economists, and British Academy, and an editor of Economica . In the past, Machin has been a council member of the EEA (2014–18), president of the Economics Section of the British Science Association (2013), a president of the European Association of Labour Economists (2009–2011), and was an editor of the Economic Journal (1998–2013) and of the International Journal of Industrial Organization (1995–97). [6]
Stephen Machin's research focuses on labour economics, the economics of education, the economics of crime, and industrial economics. According to IDEAS/RePEc, Machin belongs to the 1% of most-cited economists, in particular ranking 9th among education economists. [7]
In labour economics, main areas of Machin's research include minimum wages, trends in wage inequality and social mobility, and skill-biased technological change.
In the mid- and late 1990s, following David Card and Alan B. Krueger's re-evaluation of the employment effects of the minimum wage, Stephen Machin (with Alan Manning) conducted research in the U.K. on the subject. In general, they find that the decrease in the ratio between Britain's minimum wage and its average wage significantly contributed to growing wage dispersion in the 1980s but didn't increase employment, which in turn suggests that - with the possible exception of young workers - the minimum wage had either no or a small positive effect on employment. [8] They further argue that this finding extends to other European countries for 1966-1996 and is in line with monopsonistic models of labour demand. [9] [10]
The rise in wage inequality in the United Kingdom from the late 1970s prompted Machin to research the subject, along with developments in intergenerational mobility. [11] Amongst other things, Machin (with Lorraine Dearden and Howard Reed) finds that intergenerational mobility is low in Britain as upward mobility from the bottom of the wage distribution fails to compensate for the rigidity of downward mobility from its top. [12] With regard to wage inequality, Machin, Costas Meghir and Amanda Gosling argue that the growth in British wage inequality in 1978-95 is mainly due to increases in the differences between returns to education and the persistently slow growth of entry level wages. [13] Related to his work on the role of wage-education differentials, Machin has also conducted research on skill-biased technological change. In particular, he finds (with John van Reenen) that the relative demand for skilled workers increased throughout the 1970s and 1980s all across the OECD (and not only in the U.S.) as technical change required workers to upgrade their skills [14] and shows (with Eli Berman and John Bound) that the larger the skill-biased technological change is, the larger its potential to depress the relative wages of less-skilled workers, thus resulting in higher wage inequality. [15]
In the economics of education, Machin's research ranges from the effect of school quality on property prices, trends in educational inequality, the impacts of school choice, school competition, and ICT in primary education on student achievement to education policy. With Stephen Gibbons, he finds that a 10pp increase in a British neighbourhood in the share of children reaching the grade corresponding to their age increases the neighbourhood's property prices by 6.7%, implying that society values improved primary school performance by up to GBP 90 per year and per child at 2000 property prices. [16] In research with Jo Blanden on educational inequality in the UK, Machin finds that the expansion of British higher education from the 1970s to 1990s has disproportionately benefited children from relatively richer backgrounds and widened participation gaps between rich and poor children. [17] Addressing methodological shortcomings in the earlier literatures, Machin, Gibbons, Sandra McNally and Olmo Silva use IV estimations to study the impact of new technology in British primary schools, of increased school choice for students and of stronger competition between schools on student achievement, and find a positive impact for ICT investments, though generally no or only very limited effects for school choice and competition. [18] [19]
A more recent area of Machin's research has been the economics of crime. In particular, Machin and Meghir find a strong negative link between low-skilled workers' wages and crime rates, as well as important effects for crime deterrents and returns to crime, thus further emphasizing the importance of economic incentives for crime. [20] Exploiting changes in compulsory schooling laws in the UK through a regression discontinuity design, Machin, Olivier Marie and Suncica Vujic find that education can substantially reduce (property) crime rates. [21] Finally, Machin, Brian Bell and Francesco Fasani find that the influx of asylum seekers into the UK in the late 1990s and early 2000s modestly increased property crime, whereas the influx of immigrants from eastern European EU members decreased it property crime, with immigration having no effect on violent crime in either case, thus underlining the importance of labour market opportunities as a means to reduce crime rates. [22]
Investigating the impact of developing an innovation on British corporations' profitability, Machin, van Reenen and Paul Geroski observe that the indirect effects of innovation on profits due to innovation signalling firms' internal commitment to improving their competitiveness are up to three times as large as the direct effect of producing a new product or using a new, more efficient production process. [23] Around the same time, Machin (with Paul Gregg and Stefan Szymanski) also studied the vanishing relation between directors' pay and their firms performance over the 1980s and early 1990s, finding that directors' pay became completely disconnected from corporate performance around 1988 and was instead driven by corporate growth. [24] Finally, Machin and Gibbons pioneered a new approach to estimating consumers' valuation of rail access through housing prices, finding that local households significantly valued the construction of new stations in the context of improvements to the London Underground and Docklands Light Railway in South East London in the late 1990s. [25]
A minimum wage is the lowest remuneration that employers can legally pay their employees—the price floor below which employees may not sell their labor. Most countries had introduced minimum wage legislation by the end of the 20th century. Because minimum wages increase the cost of labor, companies often try to avoid minimum wage laws by using gig workers, by moving labor to locations with lower or nonexistent minimum wages, or by automating job functions. Minimum wage policies can vary significantly between countries or even within a country, with different regions, sectors, or age groups having their own minimum wage rates. These variations are often influenced by factors such as the cost of living, regional economic conditions, and industry-specific factors.
Economic inequality is an umbrella term for a) income inequality or distribution of income, b) wealth inequality or distribution of wealth, and c) consumption inequality. Each of these can be measured between two or more nations, within a single nation, or between and within sub-populations.
Immigration is the international movement of people to a destination country of which they are not usual residents or where they do not possess nationality in order to settle as permanent residents. Commuters, tourists, and other short-term stays in a destination country do not fall under the definition of immigration or migration; seasonal labour immigration is sometimes included, however.
In economics, a monopsony is a market structure in which a single buyer substantially controls the market as the major purchaser of goods and services offered by many would-be sellers. The microeconomic theory of monopsony assumes a single entity to have market power over all sellers as the only purchaser of a good or service. This is a similar power to that of a monopolist, which can influence the price for its buyers in a monopoly, where multiple buyers have only one seller of a good or service available to purchase from.
John Michael Van Reenen OBE is the Ronald Coase School Professor at the London School of Economics. He is also Director of the Programme On Innovation and Diffusion (POID) at the Centre for Economic Performance. He was appointed an Officer of the Order of the British Empire (OBE) and received the Yrjö Jahnsson Award. He was appointed as Chair of the Council of Economic Advisors to the UK Chancellor of the Exchequer, Rachel Reeves, on July 5 2024.
Alan Manning is a British economist and professor of economics at the London School of Economics.
Joseph Gerard Altonji is an American economist and the Thomas DeWitt Cuyler Professor of Economics at Yale University. His fields of interest include macroeconomics and applied econometrics and in particular labour economics, being ranked as one of the foremost labour economists worldwide. In 2018, his contributions to the analysis of labour supply, family economics and discrimination were rewarded with the IZA Prize in Labor Economics.
The Centre for Economic Performance (CEP) is an interdisciplinary research centre at the London School of Economics dedicated to the study of economic growth and effective ways to create a fair, inclusive and sustainable society. Currently led by Prof. Stephen Machin, it is one of the world's most prestigious economic research institutes, being the most important economic research institute in the United Kingdom, jointly with the Centre for Economic Policy Research. Its research performance has been particularly strong in the research areas of labour economics, productivity, happiness economics, human capital, the knowledge economy, ICT, innovation, education, and European microeconomic issues.
Thomas Lemieux is a Canadian economist and professor at the University of British Columbia.
Sandra McNally is an Irish economist, who is Professor of Economics at the University of Surrey and works at the Centre for Economic Performance (CEP), at the London School of Economics (LSE). Her research interests include economic evaluation of government policies in schools and further education and labor market returns to education and training.
Christian Dustmann, FBA, is a German economist who currently serves as Professor of Economics at the Department of Economics of University College London. There, he also works as Director of the Centre for Research and Analysis of Migration (CReAM), which he helped found. Dustmann belongs to the world's foremost labour economists and migration scholars.
Francis Kramarz is a French economist who works as Professor at the École Nationale de la Statistique et de l'Administration Économique (ENSAE), where he has been directing the Center for Research in Economics and Statistics (CREST). He is one of the leading labour economists in France.
Holger Görg is a German economist who currently works as Professor of International Economics at the University of Kiel. Görg also leads the Kiel Center for Globalization and heads the Research Area "Global Division of Labour" at the Kiel Institute for the World Economy. In 2009, he was awarded the Gossen Prize for his contributions to the study of firms' decisions to invest, export and outsource parts of their value chains abroad.
Edwin Leuven is a Dutch economist and Professor of Economics at the University of Oslo. He is one of the leading European education economists, with a focus on the economics of training.
Lorraine Margaret Dearden is an Australo-British economist and professor of economics and social statistics at the Department of Social Science of the Institute of Education, University College London. Her research focuses on the economics of education.
Arindrajit (Arin) Dube is a professor of economics at the University of Massachusetts Amherst, known internationally for his empirical research on the effects of minimum wage policies. He is among the foremost scholars regarding the economic impact of minimum wages. In 2019, he was asked by the UK Treasury to conduct a review of the evidence on the impact of minimum wages, which informed the decision to set the level of the National Living Wage. His work is focused on the economics of the labor market, including the role of imperfect competition, institutions, norms, and behavioral factors that affect wage setting and jobs.
Barbara Sianesi is an Italian economist currently a senior research economist at the Institute for Fiscal Studies in London. She obtained her PhD from University College London and a BA in economics from Bocconi University.
The decoupling of median wages from productivity, sometimes known as the great decoupling, is the gap between the growth rate of median wages and the growth rate of GDP per person or productivity. Erik Brynjolfsson and Andrew McAfee highlighted this problem toward the end of the twentieth century and the beginning of the twenty-first century. This problem furthermore leads to wage stagnation for the median despite continued economic growth overall. Mathematically, if inequality grows, then top incomes and total income can increase even if median income is relatively stagnant.
Ellora Derenoncourt is an American economist. She is an assistant professor of Economics in the Industrial Relations Section of the Department of Economics at Princeton University and a member of the Industrial Relations Section of Princeton Economics. She was previously at the Department of Economics and assistant professor of Public Policy at the Goldman School of Public Policy at UC Berkeley. Her work focuses on labor economics, economic history and the study of inequality. Her research on racial inequality in the United States has been featured on NPR, New York Times, and The Wall Street Journal.
Oleg Itskhoki is a Russian-American economist specialized on macroeconomics and international economics and a professor of economics at the Harvard University. He won the John Bates Clark Medal for his "fundamental contributions to both international finance and international trade" in 2022.
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