“When studying at Oxford, you endure a great deal of pressure, some people cannot handle it,” describes the researcher from IES specializing in development economics
Matěj Bajgar from the Institute of Economic Studies at the Faculty of Social Sciences, Charles University has always been interested in how society works. Although he was most drawn to history in grammar school, he ultimately decided to study economics. After earning his bachelor’s degree at IES, he pursued his master’s and doctoral studies at Oxford University. He then worked as an economist at a prestigious international institution before returning to the Czech Republic to rejoin the academic environment. He is now involved in several projects at IES and intends to continue his scientific career.
Bajgar was introduced to studying at IES by Petr Janský, currently a professor of economics also working at the institute, whom he met through mutual friends and handball matches. “He invited me to visit the institute and have a look. After a day’s visit, it was clear to me. I liked the small number of students in the year, the emphasis on quantitative methods and the teaching in English,” recalls Bajgar.
After completing his bachelor’s program, he went to Oxford University, where he studied development economics, specifically the topic of international trade. In his master’s thesis, he used export data at the country level. However, he eventually found it too abstract in some respects. Gradually, he came to the conclusion that in order to better understand the topic, he needed to observe individual exporting companies. “That’s why I applied for a PhD with Professor Beata Javorcik, who had extensive experience with corporate data and was a pioneer in studying spillover effects from foreign direct investment,” explains Bajgar. “During my PhD, I studied the impact of globalization on companies in developing economies from various angles. For example, Beata and I published an article showing that when foreign companies came to Romania, local companies were able to improve the quality of their products and sell them at higher prices worldwide thanks to contact with them,” he says.
He also appreciates his supervisor for passing on a lot of practical knowledge about how to conduct empirical research. “For example, I often think of her advice that there is no point in starting a research project if it does not have the potential – if everything goes perfectly – to be published in a top scientific journal. In practice, things often don’t go so well and the article ends up lower, so you need to at least start high,” says Bajgar.
Difference in teachers and students
He ended up spending seven years in England, thanks to his doctoral studies, which shaped him not only professionally but also personally. “As a lover of history – and especially medieval architecture – I have the strongest memories of the city and its medieval colleges. Dinners in seven-century-old stone halls, Sunday sung services at New College (similarly “new” to Prague’s New Town), walks in the cloisters and writing my thesis in the library with a crypt built before William the Conqueror arrived in England,” he recalls.
According to his experience, studying at Oxford University differs from studying at Czech educational institutions in several ways. A significant difference, for example, is the fact that the university consists of several dozen colleges. “Each college is an independent educational institution where students live, eat, play sports and party, but where they also have a significant part of their teaching. The colleges accept students across fields, which is why there are only a few economists in the college in each year, who are taken care of by the on-site economics tutor,” he mentions. “Students have to read literature and write an essay every week or two, and then discuss it with the tutor, individually or in a small group. The college environment allows for a much more individual approach to students than a typical Czech university,” he adds.
Another undoubted benefit of Oxford, according to him, is that students have the opportunity to meet a significant number of exceptional personalities. “I met Paul Krugman, Richard Dawkins and one-hundred-year old Nicolas Winton, countless Nobel laureates and world politicians. Great personalities also taught me,” says Bajgar. “I wouldn’t say that the professors at Oxford were better teachers than the ones at IES, but they were top-notch researchers and often had significant experience in policymaking. It was great to be in contact with them and see how they think and work,” he adds.
He also saw a big difference in the students themselves, especially in their efforts to do everything to the fullest. His colleagues often got up at six in the morning, rowed for two hours, spent the day at school, went to a party in the evening and then wrote an essay until the morning. “On the one hand, there was a lot of pressure that some couldn’t handle, but on the other hand, it was definitely an inspiring environment,” he notes, adding that as a student he also had access to a large number of student clubs and societies, which are generally available at British universities. “Before the semester even started, there was a fair where room after room was filled with stalls from every student club you could or couldn’t imagine – from sports from rowing to lacrosse, from volunteer work with poor children to an investment bankers’ club, from young atheists to Tolkien fans. Participating in clubs is an important part of the so-called ‘Oxford experience’,” he says.
Position in an international organization
However, after completing his doctoral studies, Bajgar decided to leave academia for a while. As a PhD student, he often felt lonely and the pressure of independent academic research did not do him any good. However, he was always attracted to working in an international organization, where he would have the opportunity to improve economic policies in the world. That is why he decided to apply for a position in three major institutions at once – the World Bank, the United Nations, and the Organization for Economic Cooperation and Development (OECD).
“I didn’t make it to the UN entrance exams because the aforementioned Petr Janský accidentally locked me in his apartment, and I wasn’t selected for the World Bank. But I ended up at the OECD, where I wanted to be the most,” he says. At the organization, he got to study policies in the field of science, research, and innovation, which he still does to this day. There he also gained access to very interesting data and found co-authors with whom he still collaborates to this day. “And I also met my wife at the OECD, with whom we now have two beautiful little girls. So I really owe a lot to the OECD,” he adds.
After 11 years abroad, he decided to return to the Czech Republic – he wanted to settle down in his native country and the expat life did not appeal to him. However, the move to Prague was not initially directly connected with a return to academia. “I had an agreed research position at CERGE-EI and I also worked remotely for the OECD. However, five years at the OECD taught me to value academic freedom in choosing and developing a topic, and I also discovered that research in collaboration with co-authors can be significantly more fun and less stressful than my doctorate. Therefore, when the door to IES opened for me, I first put one foot in so that it wouldn’t slam shut, and gradually the other,” he describes.
Research journey
In his research, Bajgar mainly deals with the causes of the slowdown in labor productivity growth that can be observed in developed countries in the last ten to twenty years. This also goes hand in hand with the slowdown in wage growth. “For the first time, for example, young people in the West are poorer than their parents were at the same age. People are dissatisfied, and this is reflected, for example, in the fact that they listen to populist politicians,” he emphasizes. “However, most of the explanations are somehow related to science, research and innovation, because these are the only sources of growth in developed economies in the long term. However, science and research are significantly burdened by market failures, mainly due to the positive externalities they create. That is why the state intervenes in them and subsidizes them in various ways. In my research, I deal with the impacts of public policies in the field of science and research. I am interested in whether they are effective and how to do them better,” he explains.
He also deals with such questions in the project Leveraging unique microdata to study the effects of public support for business R&D, supported by the Grant Agency of the Czech Republic. In one part of the project, together with Martin Srholec from CERGE-EI, they examine research and development subsidies paid to companies by the Technology Agency of the Czech Republic. “We estimate the causal effects of subsidies using the so-called regression discontinuity, where we compare projects just above the line that received a subsidy with projects just below the line that did not receive a subsidy,” he says. In the second part of the project, together with experts from the OECD, they estimate the effects of tax deductions for research and development. “In the third part, I am collaborating with Keiko Ito from Japan and Jonathan Timmis from the World Bank. We have unique data available where we can see which company supplies components to which company. We use them to estimate how knowledge from research and development spreads in supply networks,” he describes.
Recently, however, so-called industrial policy has returned to the forefront of his research interests – policies that actively influence the structure of the economy, which he was already interested in during his master’s studies in development economics. “But the issues of supporting specific sectors are particularly fascinating. Is it good for the state to say that this or that sector has the greatest potential, and then somehow coordinate or subsidize its development? In recent decades, most economists would say no. But this is precisely what many governments have been doing recently, for example in the area of semiconductors or green technologies. Under what conditions is industrial policy justified? How can it best be practiced? That interests me,” notes Bajgar.
His project, supported by the PRIMUS program of Charles University, also addresses this topic. Among other things, it examines the mechanisms by which subsidies are allocated to companies. In a number of countries, there is an extensive apparatus of external evaluators that selects the best projects from the submitted projects to receive subsidies. “I am investigating whether the evaluators can actually identify the best projects. If this turns out not to be the case, the question arises whether it would not be cheaper and more transparent to distribute subsidies among the projects that pass the basic screening randomly or across the board in the form of tax breaks. If, on the other hand, we can select the best projects, perhaps we should concentrate a larger part of the funds on them,” he emphasizes.
Challenges of the next years
The last two years have brought major changes to Bajgar from a professional perspective. He took up the position of assistant professor at IES in January 2023. Since then, he has started teaching new subjects, received two grants and started several promising research projects. And where is he headed in his academic career? His priority is to do the best research possible – on important questions, on the best possible data and with skilled co-authors. But the change in role on individual projects represents a significant change for him now.
“Until now, I was used to working on my articles – from data preparation to econometric estimates to writing the article. However, the grants I have received allow me – and at the same time force me – to hire younger researchers who will help me with more time-consuming research activities, so that I can be involved in multiple projects at the same time and also have time to monitor scientific literature and think creatively,” he says. “This change of roles is not easy and I have a lot to learn, but at the same time it attracts and enjoys me. Leading and mentoring students who are considering a scientific career as best I can is one of my great challenges for the coming years,” he concludes.
