Professor Philipp Kircher joined the Faculty at the Economics Department of the EUI in January 2017. He was previously Professor at the University of Edinburgh (2012-2016) and the London School of Economics (2012-2013). He has also held positions at the University of Pennsylvania and Corpus Christi College, Oxford. In 2007 he received the Young Economist Award of the European Economic Association and in 2013 he was the first recipient of the British Academy’s Wiley Prize in Economics. His work focusses mainly on labor markets.
Labour markets are a lot like marriage – it can be hard to find the right match. So says Philipp Kircher, award-winning economist and new Professor at the EUI. Indeed, it took him some time to settle into the discipline he now enjoys. Kircher’s path to the EUI has included forays into industrial engineering, and an MBA at the University of Wisconsin. But eventually he realised economics was the best match. ‘What I like about economics is that it includes a huge range of subjects, from the classical stuff like labour markets, financial markets and the economic crisis, to topics people might not think about, like welfare, how to measure poverty, voting systems or transmission of diseases,’ Kircher told EUI Times. For although Kircher describes himself as a classical economist in terms of the methods he employs, his research subjects, such as unemployment and even diseases like HIV/AIDS, are compelling for their real-world effect on human life.
One main aspect of Kircher’s research is the heterogeneity of workers and firms. In short, he designs models to understand why people might be unhappy in the labour market. ‘Classically, people in the labour market have looked a lot at models as shortcuts where all firms were the same and all workers were the same. That gives you a coarse picture of the world,’ he explained. Instead, by factoring in some, though not all heterogeneity present amongst firms and workers into his model, Kircher tries to paint a more accurate picture of labour markets. ‘We ask ‘how would such a world work out? Who would work where? Would it be a good world, in terms of efficiency? Are the good workers in good firms?’’
This aspect of Kircher’s research seems particularly relevant in 2017, as unemployment featured heavily in the discourse surrounding Brexit and Trump. ‘Labour market dissatisfaction is a long-standing theme. People are not happy,’ he said. ‘But if you look at unemployment in the UK or the US it is actually really low.’ So why are people unhappy with the world of work? For Kircher, it’s a question of mismatches between worker and employer. ‘I look at the people who have a job, and ask, ‘is this job any good?’. Out of all the work I’ve done on heterogeneity, this is just a small part,’ he tells EUI Times, ‘but it’s certainly something timely. There is a non-trivial set of people who think that their skills are not well used,’ he said.
Indeed, Kircher is genuinely concerned about solving social problems through his work. ‘I started in this area [of labour markets] because I saw open problems that needed solving,’ he explained. ‘Over time you learn much more about the subject area and you start to think about how to move from theorizing to doing something that might actually matter for these markets. So you start looking at data.’
For, like a true economist, Philipp Kircher is compelled by the numbers. ‘As a very young researcher I was initially fascinated by the ability to model things that are somewhat real in a mathematical fashion. In mathematics you see something that doesn’t look very intuitive at the beginning. Then all of a sudden there is some kind of beauty which makes all the forces at play transparent. It still fascinates me,’ he said. ‘Apart from the real questions, of ‘how can we help people get jobs, learn and so on, sometimes there is a certain beauty that translates into knowledge that does still excite me.’
As well as continuing his research on labour markets today, Kircher is very interested to discover how economists might contribute to labour markets in the future. As economists, ‘we are good at looking backwards, but we are not so good at looking forwards,’ he said. But that is precisely what Philipp Kircher intends to do. ‘I would like to think much more about the consequences of artificial intelligence on labour markets. I think this is inevitable that it comes,’ he told EUI Times. ‘Short-term we know something of the nature it will take but long-term it is quite unknown. Many of my colleagues disagree,’ he admitted, ‘but I think the consequences could be quite drastic.’