Mumbai: Unemployment rate among educated youth in India is higher than their uneducated counterparts and the situation only worsens with increase in education level, according to a new Economic and Political Weekly paper by Indrajit Bairagya, assistant professor at the Institute for Social and Economic Change. One key reason is that educated people are less likely to accept informal work even when there is limited supply of regular, salaried jobs. Also, educated people in relatively developed states are more likely to remain out of work as they often have to compete among a larger pool of educated youth for limited jobs. The study also finds that the unemployment rate among youth from large households tends to be higher, possibly because they can afford to not work while they search for a better job.

Also Read: Why Is Unemployment Higher among the Educated?

Advent of driverless cars might actually worsen traffic congestion as people will be more willing to travel in cars even during peak hours, given they no longer need to bear the stress of driving. Thus, governments should make use of technology to implement ‘surge’ type road-tolls on one hand and encourage carpooling on the other hand to ensure better road management, according to Michael Ostrovsky, professor at Stanford University and Michael Schwarz, chief economist at Microsoft. Advances in global positioning system (GPS), mobile and other technologies can make it possible for governments to charge different tolls at different points of time in the day and also vary it across streets and roads. This would ensure that roads stay toll-free during off-peak hours, but tolls kick in during peak hours. Carpooling apps can automate the tedious process of finding and matching carpool partners, finding the best matches, routes and travel times.

Also Read: Carpooling and the Economics of Self-Driving Cars

Exposure to violence often has counter-intuitive effects and its psychological impact can sometimes spur greater economic activity, according to a recent National Bureau of Economic Research working paper by Kenneth Ahern, associate professor at the USC Marshall School of Business. He examines data from European Social Surveys from 2002 to 2010, covering 91 sub-national regions in Europe, to study how terrorism impacts psychology. He finds that regions with higher concentration of migrants often did better in economic terms, when the home countries of migrants faced greater terrorism. This corroborates existing research which suggests that terrorist attacks can spur entrepreneurial activities. However, effects of terrorist attacks closer home, such as the 2005 London metro attacks and the 2004 Madrid train bombing, were largely negative, both in terms of psychological impact and economic outcome.

Also Read: The Importance of Psychology in Economic Activity: Evidence from Terrorist Attacks

The melting of the Arctic ice cap will open shipping routes and enhance world trade by 0.32%, according to a new paper by Jules Hugot, economist at the Asian Development Bank, and Camilo Umana Dajud, research economist at CEPII. Once Arctic routes are open for the entire year, shipping distance would decline on average by 1.4-2%. Distance of travel by ship would decline almost 50% between Japan and Iceland. As a result, trade between northeast Asia and Northern Europe will likely accelerate, with significant gains accruing to these two regions. Korea is likely to gain the most, with exports rising by 0.72%. However, these gains will not materialise if Arctic navigation becomes 2.5 times more costly than elsewhere. Such a situation could arise if Canada and Russia decide to charge a fee for access to the trade routes through their territorial waters.

Also Read: Breaking Away from Icebreakers: The Effect of Melting Distances on Trade and Welfare

Estimating India’s gross domestic product (GDP) remains susceptible to multiple errors and hence the government should provide estimates of error for GDP statistics, argue Amey Sapre and Rajeswari Sengupta, economists with the National Institute of Public Finance and Policy (NIPFP) and Indira Gandhi Institute of Development Research (IGIDR) respectively. Errors can creep up due to multiple reasons at multiple stages of GDP calculation. It can range from errors in collecting primary data from firms to improper interpolation of missing data. Time lag in collecting data, inadequate sample size and non-response in surveys further erode the accuracy of GDP estimates.

Also Read: Communicating uncertainties in GDP data

Economics Digest runs weekly, and features interesting reads from the world of economics.

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