Pub Date : 2026-02-01Epub Date: 2025-11-13DOI: 10.1016/j.euroecorev.2025.105195
Wenli Li , Yichen Su
This paper studies the significance of migration in evaluating the welfare impacts of remote work. By analyzing individual location history data, we first document an increase in net migration toward suburbs and smaller cities in the US since 2020. We demonstrate that the migration wave has been disproportionately fueled by high-income individuals, who were more likely to move due to remote work. Consequently, regions with substantial in-migration observed the greatest rise in housing expenses. This also led to changes in local demand for services and associated employment. Employing a stylized welfare accounting framework, we show that migration mitigated the increase in housing cost burdens for both high- and low-income groups, with the advantages being greater for low-income individuals. Conversely, dispersed job growth, as a result of migration away from major urban centers, curtailed the increase in job accessibility, especially for high-income groups. Factoring in the spatial impacts of migration on housing costs and job accessibility, the welfare inequality surge related to remote work is considerably tempered.
{"title":"The great reshuffle: Remote work and residential sorting","authors":"Wenli Li , Yichen Su","doi":"10.1016/j.euroecorev.2025.105195","DOIUrl":"10.1016/j.euroecorev.2025.105195","url":null,"abstract":"<div><div>This paper studies the significance of migration in evaluating the welfare impacts of remote work. By analyzing individual location history data, we first document an increase in net migration toward suburbs and smaller cities in the US since 2020. We demonstrate that the migration wave has been disproportionately fueled by high-income individuals, who were more likely to move due to remote work. Consequently, regions with substantial in-migration observed the greatest rise in housing expenses. This also led to changes in local demand for services and associated employment. Employing a stylized welfare accounting framework, we show that migration mitigated the increase in housing cost burdens for both high- and low-income groups, with the advantages being greater for low-income individuals. Conversely, dispersed job growth, as a result of migration away from major urban centers, curtailed the increase in job accessibility, especially for high-income groups. Factoring in the spatial impacts of migration on housing costs and job accessibility, the welfare inequality surge related to remote work is considerably tempered.</div></div>","PeriodicalId":48389,"journal":{"name":"European Economic Review","volume":"182 ","pages":"Article 105195"},"PeriodicalIF":2.4,"publicationDate":"2026-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145499851","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-02-01Epub Date: 2025-11-21DOI: 10.1016/j.euroecorev.2025.105211
Dick Oosthuizen
Before the Great Recession, residential institutional investors predominantly bought and rented out condos, but then they increased their market share of rental houses from 15 percent in 2001 to 27 percent in 2018. Along with this change, rental survey data show that the annual house operating-cost premium of institutional investors relative to homeowners fell from 44 percent in 2001 to 28 percent in 2015. To measure how these reduced costs affected the housing bust of 2007–2011, I build a heterogeneous agent model of the housing market featuring corporate investors and two types of dwellings: condos and houses. A transition experiment intended to replicate the Great Recession yields three results. First, house prices would have fallen by 1.6 percentage points more without the corporate-cost reduction. Second, the corporate-cost reduction can explain the fall in the homeownership rate. Third, the cost reduction produced a welfare gain of 0.4 percent for homeowners and 0.6 percent for individual investors.
{"title":"Institutional housing investors and the Great Recession","authors":"Dick Oosthuizen","doi":"10.1016/j.euroecorev.2025.105211","DOIUrl":"10.1016/j.euroecorev.2025.105211","url":null,"abstract":"<div><div>Before the Great Recession, residential institutional investors predominantly bought and rented out condos, but then they increased their market share of rental houses from 15 percent in 2001 to 27 percent in 2018. Along with this change, rental survey data show that the annual house operating-cost premium of institutional investors relative to homeowners fell from 44 percent in 2001 to 28 percent in 2015. To measure how these reduced costs affected the housing bust of 2007–2011, I build a heterogeneous agent model of the housing market featuring corporate investors and two types of dwellings: condos and houses. A transition experiment intended to replicate the Great Recession yields three results. First, house prices would have fallen by 1.6 percentage points more without the corporate-cost reduction. Second, the corporate-cost reduction can explain the fall in the homeownership rate. Third, the cost reduction produced a welfare gain of 0.4 percent for homeowners and 0.6 percent for individual investors.</div></div>","PeriodicalId":48389,"journal":{"name":"European Economic Review","volume":"182 ","pages":"Article 105211"},"PeriodicalIF":2.4,"publicationDate":"2026-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145580294","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-02-01Epub Date: 2025-11-25DOI: 10.1016/j.euroecorev.2025.105220
Marius F. Gunnesmo , Casper W. Hansen
In 1919, the Danish craft and industrial sector permanently adopted the 8-hour workday, representing the largest reduction in working hours in the country’s history. We collected quarterly data on hourly wages and employment from 1914 to 1931 across occupation groups, covering Copenhagen and the aggregate of the provinces in Denmark. By exploiting variation in percent work-time reductions across occupation groups and regions, we examine the income and employment effects of the reform. Our findings reveal only a compensating rise in hourly wages in Copenhagen, though this increase was insufficient to offset the decline in weekly earnings due to fewer working hours. Furthermore, we observe that the reduction in working hours was mitigated by new hires, particularly of unskilled workers. Overall, our results suggest that reductions in working hours were not (in any region) fully compensated by gains in hourly wages but tend to support the “work-sharing” hypothesis.
{"title":"Labor-market effects of introducing the 8-hour workday","authors":"Marius F. Gunnesmo , Casper W. Hansen","doi":"10.1016/j.euroecorev.2025.105220","DOIUrl":"10.1016/j.euroecorev.2025.105220","url":null,"abstract":"<div><div>In 1919, the Danish craft and industrial sector permanently adopted the 8-hour workday, representing the largest reduction in working hours in the country’s history. We collected quarterly data on hourly wages and employment from 1914 to 1931 across occupation groups, covering Copenhagen and the aggregate of the provinces in Denmark. By exploiting variation in percent work-time reductions across occupation groups and regions, we examine the income and employment effects of the reform. Our findings reveal only a compensating rise in hourly wages in Copenhagen, though this increase was insufficient to offset the decline in weekly earnings due to fewer working hours. Furthermore, we observe that the reduction in working hours was mitigated by new hires, particularly of unskilled workers. Overall, our results suggest that reductions in working hours were not (in any region) fully compensated by gains in hourly wages but tend to support the “work-sharing” hypothesis.</div></div>","PeriodicalId":48389,"journal":{"name":"European Economic Review","volume":"182 ","pages":"Article 105220"},"PeriodicalIF":2.4,"publicationDate":"2026-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145624341","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-02-01Epub Date: 2025-11-21DOI: 10.1016/j.euroecorev.2025.105210
Margherita Giuzio , Sujit Kapadia , Hradayesh Kumar , Luisa Mazzotta , Miles Parker , Linda Rousová , Dimitris Zafeiris
This paper examines the role of insurance in mitigating the adverse macroeconomic effects of climate-related catastrophes. We first develop a stylised theoretical growth model which incorporates a role for natural catastrophes, climate change and insurance. This illustrates how insurance can mitigate the impact of catastrophes and articulates the potential effect of falling insurance coverage as global warming intensifies. The model also provides a basis for our empirical analysis which explores the link between insurance coverage and the macroeconomic impact of catastrophes for a sample of several thousand disaster events across 47 developed and middle income countries between 1996 and 2019. The results confirm that higher insurance coverage is associated with less severe macroeconomic consequences of disasters. With climate-related catastrophes becoming ever more frequent and severe, our findings highlight the importance of developing policies to reduce the climate insurance protection gap.
{"title":"Climate change, catastrophes, insurance and the macroeconomy","authors":"Margherita Giuzio , Sujit Kapadia , Hradayesh Kumar , Luisa Mazzotta , Miles Parker , Linda Rousová , Dimitris Zafeiris","doi":"10.1016/j.euroecorev.2025.105210","DOIUrl":"10.1016/j.euroecorev.2025.105210","url":null,"abstract":"<div><div>This paper examines the role of insurance in mitigating the adverse macroeconomic effects of climate-related catastrophes. We first develop a stylised theoretical growth model which incorporates a role for natural catastrophes, climate change and insurance. This illustrates how insurance can mitigate the impact of catastrophes and articulates the potential effect of falling insurance coverage as global warming intensifies. The model also provides a basis for our empirical analysis which explores the link between insurance coverage and the macroeconomic impact of catastrophes for a sample of several thousand disaster events across 47 developed and middle income countries between 1996 and 2019. The results confirm that higher insurance coverage is associated with less severe macroeconomic consequences of disasters. With climate-related catastrophes becoming ever more frequent and severe, our findings highlight the importance of developing policies to reduce the climate insurance protection gap.</div></div>","PeriodicalId":48389,"journal":{"name":"European Economic Review","volume":"182 ","pages":"Article 105210"},"PeriodicalIF":2.4,"publicationDate":"2026-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145624343","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-02-01Epub Date: 2025-11-20DOI: 10.1016/j.euroecorev.2025.105209
Deborah A. Cobb-Clark , Haniene Tayeb
We first examine the correlation in self-control between parents and their young-adult children, drawing on two decades of population-representative panel data. We then exploit variation in the family environment during childhood to investigate how family stress related to: i) parenting responsibilities; ii) parents’ relationship quality; iii) household finances; and iv) poor mental health shape the self-control of young adults. A finite mixture model is used to account for unobserved heterogeneity in young adults’ capacity for self-control. Our results indicate that some young people may be particularly sensitive to growing up in a stressful environment, opening the door for family stress to affect the formation of self-control.
{"title":"Family stress and the intergenerational correlation in self-control","authors":"Deborah A. Cobb-Clark , Haniene Tayeb","doi":"10.1016/j.euroecorev.2025.105209","DOIUrl":"10.1016/j.euroecorev.2025.105209","url":null,"abstract":"<div><div>We first examine the correlation in self-control between parents and their young-adult children, drawing on two decades of population-representative panel data. We then exploit variation in the family environment during childhood to investigate how family stress related to: i) parenting responsibilities; ii) parents’ relationship quality; iii) household finances; and iv) poor mental health shape the self-control of young adults. A finite mixture model is used to account for unobserved heterogeneity in young adults’ capacity for self-control. Our results indicate that some young people may be particularly sensitive to growing up in a stressful environment, opening the door for family stress to affect the formation of self-control.</div></div>","PeriodicalId":48389,"journal":{"name":"European Economic Review","volume":"182 ","pages":"Article 105209"},"PeriodicalIF":2.4,"publicationDate":"2026-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145693631","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-01-01Epub Date: 2025-10-27DOI: 10.1016/j.euroecorev.2025.105161
Florian Heine , Arno Riedl
Economic and social situations where groups have to compete are ubiquitous. Such group contests create both a coordination problem within and between groups. Introducing leaders may help to mitigate these coordination problems, but little is known about the effect of leadership in group contests. In a group contest experiment, we compare two types of leadership – leading-by-example and transactional leadership – and also investigate the effect of communication between leaders under both leadership styles. We find that the introduction of leaders mostly increases contest investment. Transactional leaders increase followers’ investment through the allocation of a relatively larger share of the prize to followers who have invested more. Communication between leaders decreases contest investments when there is leading-by-example but not when there is transactional leadership. Overall, leaders do not mitigate the over-investment problem in group contests.
{"title":"Let’s (not) escalate this! Leadership and communication in a group contest","authors":"Florian Heine , Arno Riedl","doi":"10.1016/j.euroecorev.2025.105161","DOIUrl":"10.1016/j.euroecorev.2025.105161","url":null,"abstract":"<div><div>Economic and social situations where groups have to compete are ubiquitous. Such group contests create both a coordination problem within and between groups. Introducing leaders may help to mitigate these coordination problems, but little is known about the effect of leadership in group contests. In a group contest experiment, we compare two types of leadership – leading-by-example and transactional leadership – and also investigate the effect of communication between leaders under both leadership styles. We find that the introduction of leaders mostly increases contest investment. Transactional leaders increase followers’ investment through the allocation of a relatively larger share of the prize to followers who have invested more. Communication between leaders decreases contest investments when there is leading-by-example but not when there is transactional leadership. Overall, leaders do not mitigate the over-investment problem in group contests.</div></div>","PeriodicalId":48389,"journal":{"name":"European Economic Review","volume":"181 ","pages":"Article 105161"},"PeriodicalIF":2.4,"publicationDate":"2026-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145419634","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-01-01Epub Date: 2025-10-16DOI: 10.1016/j.euroecorev.2025.105154
Štěpán Mikula , Mariola Pytliková
This paper examines how improvements in air quality affect migration behavior. We exploit a natural experiment in the Czech Republic, where rapid desulfurization of coal-fired power plants in the 1990s led to a sharp reduction in SO2 pollution—from extremely high levels to below EU/WHO limits—without directly impacting economic activity. Using a difference-in-differences approach, we find that cleaner air reduced emigration from previously heavily polluted municipalities by 24% and increased net migration by 78%, with effects strongest in the most formerly polluted areas. The impact was particularly pronounced among highly educated individuals. Migration responses were strongest in municipalities with weaker social capital and fewer public amenities, suggesting that environmental improvements matter most where other local advantages are limited. In contrast, anti-emigration monetary subsidies—such as those offered during the socialist period in polluted areas—had no effect. Overall, our findings highlight the potential of environmental policies to support re-population and regional revitalization—especially when combined with investments in infrastructure and public services.
{"title":"Migratory responses to air pollution reduction: Evidence from large-scale desulfurization programme","authors":"Štěpán Mikula , Mariola Pytliková","doi":"10.1016/j.euroecorev.2025.105154","DOIUrl":"10.1016/j.euroecorev.2025.105154","url":null,"abstract":"<div><div>This paper examines how improvements in air quality affect migration behavior. We exploit a natural experiment in the Czech Republic, where rapid desulfurization of coal-fired power plants in the 1990s led to a sharp reduction in SO<sub>2</sub> pollution—from extremely high levels to below EU/WHO limits—without directly impacting economic activity. Using a difference-in-differences approach, we find that cleaner air reduced emigration from previously heavily polluted municipalities by 24% and increased net migration by 78%, with effects strongest in the most formerly polluted areas. The impact was particularly pronounced among highly educated individuals. Migration responses were strongest in municipalities with weaker social capital and fewer public amenities, suggesting that environmental improvements matter most where other local advantages are limited. In contrast, anti-emigration monetary subsidies—such as those offered during the socialist period in polluted areas—had no effect. Overall, our findings highlight the potential of environmental policies to support re-population and regional revitalization—especially when combined with investments in infrastructure and public services.</div></div>","PeriodicalId":48389,"journal":{"name":"European Economic Review","volume":"181 ","pages":"Article 105154"},"PeriodicalIF":2.4,"publicationDate":"2026-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145340945","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-01-01Epub Date: 2025-11-01DOI: 10.1016/j.euroecorev.2025.105192
Knut Are Aastveit , Hilde C. Bjørnland , Jamie L. Cross , Helene O. Kalstad
After decades of low and stable inflation, advanced economies experienced a sharp and persistent surge in inflation following the COVID-19 pandemic. While many studies have examined the sources of this inflation, less attention has been paid to how domestic inflation expectations amplify global shocks. This paper makes a novel contribution by quantifying that amplification mechanism across six advanced, inflation-targeting economies: the United States, Canada, New Zealand, the Euro Area, the United Kingdom, and Norway. Using a structural Bayesian vector autoregression model, we jointly identify global demand and supply shocks, including various oil market shocks and global supply chain disruptions, as well as domestic shocks to inflation and inflation expectations. We show that these global shocks were key drivers of the post-pandemic inflation surge in all countries studied. Importantly, our counterfactual analysis reveals that inflation expectations have significantly amplified the transmission of global shocks, particularly in Canada, New Zealand, and the US. These findings demonstrate that the interaction between global forces and country-specific expectations is central to understanding inflation dynamics, and underscore the importance of managing inflation expectations as a tool to mitigate persistent inflation.
{"title":"Unveiling inflation: Oil shocks, supply chain pressures, and expectations","authors":"Knut Are Aastveit , Hilde C. Bjørnland , Jamie L. Cross , Helene O. Kalstad","doi":"10.1016/j.euroecorev.2025.105192","DOIUrl":"10.1016/j.euroecorev.2025.105192","url":null,"abstract":"<div><div>After decades of low and stable inflation, advanced economies experienced a sharp and persistent surge in inflation following the COVID-19 pandemic. While many studies have examined the sources of this inflation, less attention has been paid to how domestic inflation expectations amplify global shocks. This paper makes a novel contribution by quantifying that amplification mechanism across six advanced, inflation-targeting economies: the United States, Canada, New Zealand, the Euro Area, the United Kingdom, and Norway. Using a structural Bayesian vector autoregression model, we jointly identify global demand and supply shocks, including various oil market shocks and global supply chain disruptions, as well as domestic shocks to inflation and inflation expectations. We show that these global shocks were key drivers of the post-pandemic inflation surge in all countries studied. Importantly, our counterfactual analysis reveals that inflation expectations have significantly amplified the transmission of global shocks, particularly in Canada, New Zealand, and the US. These findings demonstrate that the interaction between global forces and country-specific expectations is central to understanding inflation dynamics, and underscore the importance of managing inflation expectations as a tool to mitigate persistent inflation.</div></div>","PeriodicalId":48389,"journal":{"name":"European Economic Review","volume":"181 ","pages":"Article 105192"},"PeriodicalIF":2.4,"publicationDate":"2026-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145475372","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-01-01Epub Date: 2025-10-15DOI: 10.1016/j.euroecorev.2025.105177
Laura Pagani , Giovanni Pica
Thanks to data allowing us to observe children’s peers multiple times, we investigate whether exposure during primary school to same- and opposite-gender high achievers affects children’s outcomes after termination of the exposure. Exploiting the as-good-as random allocation of children across classes within Italian primary schools, we find that exposure to a higher share of same-gender math high achievers is related to better academic performance, for both boys and girls, three years after termination of the exposure. Negative effects are observed in case of exposure to a higher share of opposite-gender high achievers. Results are consistent with a role model channel.
{"title":"A peer like me? Early exposure to high achievers in math and later educational outcomes","authors":"Laura Pagani , Giovanni Pica","doi":"10.1016/j.euroecorev.2025.105177","DOIUrl":"10.1016/j.euroecorev.2025.105177","url":null,"abstract":"<div><div>Thanks to data allowing us to observe children’s peers multiple times, we investigate whether exposure during primary school to same- and opposite-gender high achievers affects children’s outcomes after termination of the exposure. Exploiting the as-good-as random allocation of children across classes within Italian primary schools, we find that exposure to a higher share of same-gender math high achievers is related to better academic performance, for both boys and girls, three years after termination of the exposure. Negative effects are observed in case of exposure to a higher share of opposite-gender high achievers. Results are consistent with a role model channel.</div></div>","PeriodicalId":48389,"journal":{"name":"European Economic Review","volume":"181 ","pages":"Article 105177"},"PeriodicalIF":2.4,"publicationDate":"2026-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145475375","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-01-01Epub Date: 2025-10-18DOI: 10.1016/j.euroecorev.2025.105186
Teppo Felin , Madison Singell
Recombination has long been seen as a central mechanism for explaining technological evolution and economic growth. Yet this view suggests several puzzles. First, the set of potential combinations is astronomically large, raising the question of how humans somehow arrive at useful combinations (amongst indefinite possibilities). And second, just as possible combinations are “unprestatable” in advance, the same goes for the elements or components that might serve as building blocks of combination. The central question, then, is how actors generate salience for useful combinations as well as plausible combinatorial components. We argue that theory-driven experimentation generates combinatorial salience by providing a shortcut for brute force search—making the combinatorial explosion analytically tractable. We link our argument to existing approaches to combination and technology, in particular, Koppl et al.’s Explaining Technology. We augment long-run, evolutionary explanations of combinatorial technology with a more decision-oriented approach. In all, we argue that human theorizing—the forward-looking use of science and causal reasoning—functions as a generative metatechnology that guides experimentation and enables the discovery of useful combinations.
{"title":"Technology: Theory-driven experimentation and combinatorial salience","authors":"Teppo Felin , Madison Singell","doi":"10.1016/j.euroecorev.2025.105186","DOIUrl":"10.1016/j.euroecorev.2025.105186","url":null,"abstract":"<div><div>Recombination has long been seen as a central mechanism for explaining technological evolution and economic growth. Yet this view suggests several puzzles. First, the set of potential combinations is astronomically large, raising the question of how humans somehow arrive at useful combinations (amongst indefinite possibilities). And second, just as possible combinations are “unprestatable” in advance, the same goes for the elements or components that might serve as building blocks of combination. The central question, then, is how actors generate salience for useful combinations as well as plausible combinatorial components. We argue that <em>theory-driven experimentation</em> generates combinatorial salience by providing a shortcut for brute force search—making the combinatorial explosion analytically tractable. We link our argument to existing approaches to combination and technology, in particular, Koppl et al.’s <em>Explaining Technology.</em> We augment long-run, evolutionary explanations of combinatorial technology with a more decision-oriented approach. In all, we argue that human theorizing—the forward-looking use of science and causal reasoning—functions as a generative metatechnology that guides experimentation and enables the discovery of useful combinations.</div></div>","PeriodicalId":48389,"journal":{"name":"European Economic Review","volume":"181 ","pages":"Article 105186"},"PeriodicalIF":2.4,"publicationDate":"2026-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145419636","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}