Tallinn University of Technology

Micro-level responses to socio-economic challenges in face of global uncertainties (Global2Micro)

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  • European Economic Area (EEA) Financial Mechanism 2014-2021, Baltic Research Programme Project No S-BMT-21-8 (LT08-2-LMT-K-01-073)
  • 01.01.2021-31.12.2023
  • Consortium: Vilnius University (coordinator), Tallinn University of Technology, BI Norwegian Business School, Baltic International Centre for Economic Policy Studies (BICEPS), University of Tartu and Hong Kong University of Science and Technology
  • TalTech Project Team: professors Kadri Männasoo (Project Leader) and Aaro Hazak; PhD students Heili Hein, Artjom Saia and Helery Tasane.

Events such as an increased concentration on domestic matters and engagement in trade wars by the US, the British decision to leave the European Union and an increase in global political and economic power by China, as well as current pandemic and global lockdowns, call for a deeper understanding of how societies adjust their behaviour within such an uncertain and evolving environment. We plan to tackle these broad socio-economic challenges by analysing in detail, firstly, how firms adjust to trade shocks in terms of their labour allocations, human capital and technological investments; secondly, concentrating on how the two major adjustments of firms’ production functions – labour and technology – interact in response to increasing global uncertainty, especially in the face of de-globalization and the fragmentation of global trade links; finally, combining the empirical insights from the first and the second blocks, and building a theoretical framework on the labour market adjustments, paying special attention to the complementarity/substitutability of new types of labour and capital as well as labour and technology (automation). The three blocks will the three different approaches – empirical analysis based on administrative data, empirical analysis based on the new big data methods, theoretical and structural analysis – and details in our plan to understand the firm- and individual-level adjustments.

The expected project results include not less than 12 theoretical and empirical publication in high level academic journals, a number of working papers and policy notes to foster economic policy debate among economic agents and equip the policy makers with relevant economic policy tools, the creation of new databases available to economic researchers in the future, the organization of one large international conference and enhanced research network that would serve as a platform for future collaborations (we plant at least one follow-up research grant).