Author: Awareness News

Why Gender Pay Gap Data Mislead Us: Understanding The Dynamics Behind The Numbers 

Posted on by Leave a comment
Reading time: 8 minutes

The gender pay gap index is often perceived as a clear and straightforward indicator of inequality: the lower the gap, the more equal a society must be. Yet, when looking at European data, this assumption immediately breaks down. Countries widely recognized for their strong gender equality, such as Finland and Denmark, show some of the highest gender pay gaps in Europe, respectively of 16.8% and 14.0% in 2023. Conversely, Southern European countries, typically portrayed as less advanced in terms of labor equality, often show lower gaps, such as 2.2% in Italy, 5.1% in Malta and 8.6% in Portugal.

Figure 1: The unadjusted gender pay gap, 2023 (difference between average gross hourly earnings of male and female employees as % of male gross earnings). Source: Eurostat 
Figure 2: Gender Equality by Country, 2025. Source: World Population Review 

This counterintuitive pattern raises a key question: why do some of the most gender-progressive countries display such large pay gaps? 

Understanding the answer requires unpacking what the gender pay gap actually measures and how structural factors shape the interpretation of the data. 

A counterintuitive European puzzle: how labor participation affects the gender pay gap 

According to Eurostat, the gender pay gap represents the average difference between male and female hourly earnings across an entire economy. However, this “raw” indicator does not adjust for variables such as employment rate, seniority, working hours, occupation, or industry composition. As a result, countries with very different labor market structures can produce misleading pay gap figures. 

In the European context, Nordic countries display among the highest female labor participation rates in Europe. In Sweden and Finland, around 75-77% of working-age women are employed, compared to roughly 52% in Italy, according to the Eurostat data for 2021. This fundamental difference has two statistical consequences:  

(1) More women participate across many sectors, including high-paying but male-dominated private industries, where pay disparities are more apparent.  

(2) In low-participation countries, many women who would earn less or face structural disadvantages simply do not appear in the labor market statistics. 

This means that a “low pay gap” can reflect fewer women working, not more equal pay.

Figure 3: Female labor force participation rate in Europe, 2024 (the average for 2024 in the European countries was 54.19%.The indicator is available from 1990 to 2024). Source: The World Bank 

Structural factors shaping the gender pay gap  

A low pay gap may also reflect structural constraints, cultural norms, or barriers that discourage women from entering specific sectors, or even from participating in the workforce altogether. In Italy, for instance, women are underrepresented in high-earning private-sector roles but are comparatively overrepresented in stable public-sector professions, where pay scales are more regulated. This combination tends to compress wage differentials and therefore “artificially” decrease the gender pay gap. 

By contrast, in Nordic countries women participate across a wide range of sectors, including those with substantial wage dispersion. This results in a broader and more accurate representation of gender differences in earnings. 

In this sense as well, a low pay gap is not inherently a sign of gender parity. 

The role of part-time work and occupational segregation 

A third major factor explaining the higher gender pay gaps in Northern Europe is the prevalence of part-time employment among women. According to Eurostat, countries such as the Netherlands and Denmark have some of the highest female part-time rates in Europe, compared to Southern European countries like Portugal, Greece, or Spain. Part-time jobs tend to be paid less per hour, offer fewer opportunities for career progression, and limit access to high-responsibility roles. Although part-time work in these countries is often facilitated by supportive family policies and may be a voluntary choice, it nevertheless contributes significantly to the gender pay gap. 

This pattern results in greater salary divergence between genders, even in settings where equality norms are strong.

Figure 4: Part-time Employment in Europe, 2021. Source: Eurostat 

The Nordic Gender Equality Paradox: when generous policies widen the gap 

One of the most discussed phenomena in economic literature is the Nordic Gender Equality Paradox. Although, as previously mentioned, Nordic countries consistently lead global rankings on gender equality, research by the National Bureau of Economic Research (NBER) has shown that highly generous parental leave policies can unintentionally amplify long-term differences in earnings. 

In countries such as Sweden, Denmark, and Finland, parental leave systems are among the most comprehensive in the world. While these policies ensure high levels of family wellbeing, they often result in women taking longer leave periods than men, leading to a slower re-entry into the labor market. This does not suggest that generous welfare policies are harmful; rather, it highlights how well-intentioned reforms can produce unintended labor-market outcomes when uptake remains uneven across genders. 

In Nordic countries, despite continued efforts to encourage paternity leave, women still take the vast majority of parental-care responsibilities. This persistent imbalance shapes career progression and contributes to long-term differences in lifetime earnings trajectories. 

Why public perception gets it wrong 

Public understanding of the gender pay gap is often shaped by simplified narratives, headlines, or assumptions based on cultural stereotypes about specific regions. Surveys conducted by the Pew Research Center show that people tend to overestimate gender differences in some contexts and underestimate them in others. 

Many assume that Nordic countries must have both high labor equality and low pay gaps. While this is true in some dimensions, such as political representation, education, and labor participation, pay gaps capture a more complex picture involving sectoral structures, parental leave, part-time work, and long-term career dynamics. 

Similarly, countries with low pay gaps are often assumed to be more gender equal, even though low participation rates, lack of childcare infrastructure, or rigid labor markets may paint a very different picture. 

This disconnection between perception and reality underscores the importance of interpreting gender statistics with nuance and understanding what each indicator actually measures. 

Conclusion 

The gender pay gap is a useful measure, but understanding what underlies it is essential. As European data shows, a low gap does not automatically signal high equality, nor does a high gap inherently indicate poor conditions for women. Instead, the gender pay gap must be interpreted within the broader context of labor participation, occupational patterns, welfare policies, and family dynamics. 

Nordic countries exhibit higher raw pay gaps because their labor markets include almost all women, across all sectors, roles, and wage bands, and because generous parental leave policies influence long-term earnings. Southern European countries show lower raw gaps largely because fewer women work and those who do tend to be concentrated in more regulated sectors. 

A nuanced interpretation is therefore essential. Understanding the mechanisms behind the numbers allows policymakers, students, and future professionals to build a clearer picture of labor market inequalities. Only by looking beyond surface-level statistics can societies meaningfully address the structural causes of wage disparities and design interventions that move beyond appearances toward real equality. 

Sources: Eurostat; OECD; The World Bank; CEPR – VoxEU: The Nordic Model and Income Equality: Myths, Facts and Policy Lessons by Mogstad M., Salvanes K. G., & Torsvik G.; World Bank Group, Gender Data Portal; European Commission; The World Economic Forum, Global Gender Gap Report; The Economist: A Nordic Mystery; National Bureau Of Economic Research: The Child Penalty Atlas by Kleven H., Landais C., & Leite-Mariante G.; Pew Research Center, Global Attitudes on Gender Equality. 

Margherita Ottavia Serafini 

Writer

Female Exodus: Why U.S. Women Are Leaving The Labour Market 

Posted on by Leave a comment
Reading time: 8 minutes

Since January 2025, more than 400,000 women have been leaving their jobs in the U.S., the steepest decline in over 40 years for mothers of young kids.  

A female exodus that is dangerously erasing years of hard-won advances women made, particularly coming out of the pandemic, when flexible work policies enabled unprecedented labour participation rates.  

Remote Work Trends And The Post-Covid Peak 

On the wave of lockdowns, in May 2020 pandemics pushed almost 40% of employed Americans into working remotely. An undeniable jump, if we consider that just 3 years earlier only about 9-10% of workers would be reported working remotely. Later on, as offices reopened, that number fell, dropping to around 5.2% by September 2022 for those working remotely due to COVID.  

However, remote work itself did not disappear. The pandemic left a mark in the labour market, as by early 2024 about 22.9% of U.S. employees were still teleworking. This shows how post-pandemic remote-hybrid work remained definitely more common than it was before, despite not reaching the emergency peak of 2020. 

Figure 1: Share of employment by gender in occupations that can be performed remotely. 
Source: U.S. Census Bureau and USDOL/ETA 

Flexibility, Remote Work, and Women’s Labour Force Participation 

Historically, women have been overrepresented in roles more adaptable to remote work, such as education, administration, and knowledge-based services. Thus, it is not surprising that when flexible work options arose, many women would capitalise on them.  

For both men and women, the possibility of working remotely decreased the likelihood of dropping out of work. But this effect was more visible for women. In fact, prime-age women’s labour force participation (ages 25-54) reached record levels in the U.S., hitting around 77-78% in 2023.  

Figure 2: Labor force participation of U.S. prime-age women (1982–2025), by age of youngest child. Mothers with children under 5 peaked at 71% in 2023, then dropped to 68% in 2025. 
Source: The Hamilton Project, Brookings. 

A Brookings analysis pointed out that since 2020 the group witnessing the fastest growth in labour force participation were those mothers with children under 5 years old. For most, indeed, remote and hybrid schedules created a bridge between work and family responsibilities, particularly also among highly educated or married women. Flexibility would not just retain workers, it actually unblocked participation from those groups previously precluded by rigid schedules.  

But numbers speak loud: nowadays, something is changing.  

Unaffordable Childcare and Caregiver Burnout 

What is happening in front of our eyes is a clear childcare crisis. The stress and pressure to manage both career and childcare leave women overwhelmed and exhausted. In the U.S., many women struggle to find affordable childcare in a country with one of the highest costs in the world, often 30% or more of an average family’s income.  

Figure 3: Cost of infant care as a share of median income across U.S. states in 2024. Darker shades indicate higher financial burden. 
Source: Economic Policy Institute, via CNN. 

Instead, countries such as Germany and Estonia have subsidised childcare, pushing down costs to near zero for many families. But many American mothers feel they have little choice but to quit their jobs. Similar story in the UK, where a recent survey has revealed that 43% of mothers revealed they had considered leaving their jobs due to childcare expenses.  

Years of underinvestment and the end of expiration of pandemic-era subsidies are leaving American childcare supply in crisis. Women who have fought for their careers are now forced to drop out to preserve their mental health and family well-being.   

Return-to-Office Mandates and Lost Flexibility 

In January 2025, President Donald Trump ordered federal employees back in-person five days a week, despite many had remote work arrangements and some had even moved far away from their offices. Major private employers, such as Amazon and JPMorgan, followed the same wave.  

It’s not a coincidence that women’s participation in the workforce is falling as flexibility disappears, says Julie Vogtman, senior director of job quality for the National Women’s Law Center. 

Yet, return-to-office policies are not proven to make companies more productive. For instance, one 2024 study Van Dijcke, Gunsilius, and Wright of resumes at Microsoft, SpaceX, and Apple found that return-to-office policies led to an exodus of senior employees, which posed a potential threat to competitiveness of the larger firm. In other words, employers are losing talented workers, whose skills and institutional knowledge are difficult to replace. A talent drain that can even weaken the overall economy’s productivity and innovation.  

To worsen things, women don’t feel respected in some workplaces, perceiving a clear cultural shift. Many have reported feeling less valued at work, with few diversity initiatives and a post-pandemic reversion to old norms.  

It’s a pure storm of fading flexibility, harsher office demands and eroded support systems.  

A McKinsey research suggests that women are even more likely to take on a lower-paying job if it implies benefits such as remote working and flexible schedules. If this trend increases, it will leave women disproportionately affected.  

Furthermore, as women leave their jobs, the Trump administration is looking for ways to encourage women to get married and have more children, so as to slow down the country’s decline in birth rate.  

Global Perspectives: Policies Matter 

“The U.S. is the only advanced economy that’s had declining female labor force participation in the last 20 years, and a lot of that is because of lack of social safety net and caregiving supports” – Kate Bahn 

Globally, about half of all women participate in the labour force, with huge regional disparities persisting.

Figure 4: Female labor force participation worldwide in 2024. Darker regions show higher shares of working-age women in the labor force, with stark contrasts between regions like Scandinavia and South Asia. 
Source: Our World in Data (2025), ILO Estimates. 

Deliberate policies have allowed women’s workforce participation to rise or held steady in many wealthy nations. Nordic countries like Iceland and Sweden lead in female employment, with gender gaps among the smallest in the world and a women’s participation rate of around 63-70%.  

These countries differ from the U.S. as they heavily invest in affordable childcare, generous parental leave, and flexible schedules. Even the UK, Canada, and China have recently improved childcare subsidies or free preschool hours to push mothers to work. France and the Netherlands have high part-time options keeping women in the labour force, whereas Japan is pushing for “women economics” incentivising female employment.  

On the other hand, countries that like the U.S. lack supportive policies see women pressed to choose between work and family, a choice that an emancipated society shouldn’t have.  

Conclusion 

Women leaving the workplace is not merely a personal or isolated decision. We are talking about a systematic problem depending on a complex interplay of societal norms, organisational practices and individual circumstances.  

Factors such as work-life balance, career progression opportunities, social norms and expectations shape many women’s career decisions. Understanding the multifaceted nature of this trend is essential for designing effective strategies to retain and support women, ultimately benefitting the overall society and economy.  

Sources: Bureau of Labor Statistics; Time Magazine; Allwork.Space; The Washington Post; University of Kansas (The Care Board/CBS News); Brookings Institution; Federal Reserve (FEDS Notes); World Economic Forum; Institute for Women’s Policy Research; KPMG; The Economist; The Hamilton Project; The New York Times; McKinsey Global Institute; Our World in Data; Qureos; Return to Office and the Tenure Distribution, Van Dijcke, Gunsilius & Wright, arXiv (2024) 

Rebecca Fratello 

Writer

Zohran Mamdani: A New Order? 

Posted on by Leave a comment
Reading time: 8 minutes

Zohran Mamdani was recently elected as the first socialist mayor of New York City last month. The city of Wall Street, billionaires and neoliberal globalization has just chosen a man who ran on a platform of housing justice, public transit, and redistributing wealth. “This isn’t just about New York,” Mamdani said during his victory speech in Queens. “It’s about imagining a different kind of future” (The New York Times, 2025). 

NYC’s position as the United States’ largest city, and  one of the world’s financial centers, is a strange bedfellow for an openly socialist politician. Some claim Mamdani’s victory represents the end of the neoliberal order within its home, yet others see it as a temporary response to exhaustion and inequality. However, it has opened a cultural conversation that stretches across the nation.   

Mamdani outside a New York bodega. Credit: Getty Images 

A Socialist in Finance’s Capital 

New York has always been a paradox: the home of billionaires and of the homeless, of high art and unpaid internships. Its contradictions are almost part of its brand. Yet it has recently gone through rapid change. The global financial center of the 1990s, of hopeful entrepreneurs and mid-western dreamers who wanted to make it big, has been lost. In its place is an almost dystopian reality: crime, economic hardship for most, abusive rents with frozen salaries, and an air of tension and distrust of institutional change. Yet here was Mamdani.     

Mamdani, born outside the US to an immigrant family, has spent years advocating for tenants’ rights and public housing (Burgis, 2025). His campaign focused on simple and popular ideas like rent freeze, free public transport, and reorienting city budgets towards public welfare (Reuters, 2025). In many ways, his election is the culmination of a cultural shift rather than a sudden revolution. Young voters, especially those under 35, have grown tired of capitalism’s unfulfilled promises. Rising costs of living, precarious work, and the digital age have made “socialism” no longer sound like a dirty word for American citizens (Pew Research Center, 2022). But was this truly a vote for socialism? Or simply a rejection of what came before? 

Exhaustion and its Opportunity 

Political scientist Michael Sandel once wrote that “populism arises when people feel humiliated by meritocracy” (Sandel, 2020). In New York, that humiliation took the form of unaffordable rent, crumbling infrastructure, and the sense that “success” was something reserved for the already successful. Analysts at The Atlantic argued that Mamdani’s victory was not a pure ideological triumph, but a reaction to systemic fatigue (The Atlantic, 2025). After decades of centrist mayors managing the city like a corporation, voters simply wanted something different. 

Even Mamdani’s critics concede that his authenticity played a role. He biked to campaign events, and refused large corporate donations (The Guardian, 2025). Instead, he built a strong grassroots support, being present in communities, engaging with his support base directly, and being present. For many disillusioned citizens, he felt real. This presence helped bridge the gap between the voters’ perception of socialism. Mamdani’s win reflects that broader transformation. He talks less about class war and more about “belonging”. An emotional register that resonates in a fragmented digital age, especially with younger voters. 

According to The New Yorker, his speeches mix activist language with pop-cultural references, a blend that feels “as Brooklyn as it is Marxist” (The New Yorker, 2025). This approach has helped him reach not only traditional leftists but also creative professionals and students who see themselves as progressive but not radical.  

Mamdani at his election rally, November 2025. Credit: Victor Llorente for The New Yorker 

A Collapse or a Shift? 

Is this the collapse of neoliberalism? Probably not. Neoliberal logic of competition, privatization, individualism still runs deep in American institutions. But culturally, the conversation has shifted, at least in urban areas. Mamdani’s rise suggests that alternative narratives are gaining legitimacy, especially among younger generations who grew up during crises rather than booms. 

When news of Mamdani’s election started appearing, some warned of market instability. Yet the stock market barely moved (Bloomberg, 2025). Finance is apparently extremely pragmatic: as long as Mamdani doesn’t impose sudden regulation, Wall Street stays stable. So far, his administration has taken a targeted approach by ending some luxury tax breaks, introducing rent caps, and expanding public transport funding (City Journal, 2025). These policies are ambitious but far from revolutionary. 

The US is still the economic powerhouse of the West, yet it is more apparently buckling under its own weight. Political tension is the highest it has been in the last 50 years, and it seems like something is brewing. Yet at the same time, its liberal institutions function in a similar way to capitalism: they allow voters to set the stage. The liberal order is strong in that way, it allows slightly different political ideas to test themselves in localised regions, before reabsorbing them into the fold. Mamdani’s politics are more democratic than socialist, and will not break with the Democratic’s party line of liberal democracy. Instead, he will serve as a political counterpart to conservatives in Washington DC: the new wunderkind, the shining light for democrats to follow.  

Bernie Sanders, Zohran Mamdani and Alexandria Ocasio-Cortez, the most prominent left-wing politicians of the Democrat Party, holding hands at a rally. Credit: ABC News 

Zohran Mamdani’s victory might not herald a new economic order, but it undeniably represents a new cultural mood: one where ideals of solidarity, justice, and public life are being reimagined. Can capitalism be “reformed” from within? Or must it be replaced by something else? Mamdani ‘s New York will prove a natural experiment for both questions. 

Sources:

Lucas Bernal  

Writer

Another War Arriving

Posted on by Leave a comment
Reading time: 8 minutes

Since the beginning of the year, relations between the United States and Venezuela have entered a particularly volatile phase. What began as U.S. efforts to counter alleged drug-trafficking networks operating out of Venezuela has escalated into a broader strategic standoff. Accusations, military posturing, and legal claims about sovereignty and intervention have sharpened the conflict and raised questions about international law, regional stability, and the future of U.S.–Venezuela diplomacy.

Image 1- Protest in Venezuela against U.S. actions. 

How the Crisis Started 

Since the beginning of his term, the Trump administration has linked Maduro’s regime to drug trafficking into the United States and the related problems these substances cause, such as crime and the growing influence of cartels. In 2020, during Trump’s first term, the Department of Justice issued a press release charging Nicolás Maduro and other senior Venezuelan officials with narco-terrorism, drug trafficking, and corruption. This shows that since his first term, Trump has associated Maduro with the drug trade and its consequences for the American population. This year, the White House decided to take more serious action regarding Venezuela. In August, Attorney General Pam Bondi decided to double the reward for information leading to Maduro’s arrest to $50 million. Soon after that, a stronger stance was adopted: an attack. On September 2, the U.S. Navy announced a strike on a vessel allegedly departing Venezuela and engaged in drug smuggling. The attack resulted in the deaths of 11 people and was seen as the first warning to Venezuela. Since then, the U.S. government has significantly expanded its operations in the Caribbean region, especially near Venezuela. For example, the Pentagon deployed an aircraft carrier group and other naval assets to the southern Caribbean as part of what the U.S. frames as “anti-narcotics operations.” 

The goals of the Trump administration 

As mentioned before, the U.S. describes the goal of this operation as a firm and protective stance against drug and crime cartels operating in the country. However, there might be other motives. Intelligence agencies—especially the National Intelligence Council—report that there is no conclusive evidence directly linking Maduro’s leadership to a centralized trafficking network. They also point out that Venezuela is neither a major cocaine nor fentanyl producer, nor a key transit point in narco-trafficking routes to the United States. This suggests that the White House has additional goals behind the operation. In addition to attempting to oust Maduro and push for regime change—intentions already hinted at publicly by the U.S.—two other motives stand out: asserting American strategic influence in Latin America and trying to gain leverage over Venezuela’s natural resources. The first comes from the growing Chinese economic and diplomatic involvement in the region. This has unsettled the Americans, and they have now adopted a new approach: align with Washington and receive benefits (as in Argentina’s case) or deviate and face costs, as happened with both Venezuela and, to some extent, Colombia. The second motive comes from suggestions that access to Venezuela’s vast oil and mineral resources is a secondary but key motive for this posture toward the South American country. For example, discussions allowing U.S. companies to regain access have appeared in reports surrounding the escalation. 

Image 2- Oil Reserves possessed by Venezuela

Venezuela’s reaction  

The Venezuelan government, led by Nicolás Maduro, has reacted strongly to all the U.S. moves and operations so far, treating them as a direct threat to national sovereignty and hinting at possible retaliation. Caracas has accused Washington of seeking regime change under the cover of a drug-war campaign. Seeing the need to be prepared, Venezuela is reportedly seeking military assistance from countries such as Russia, China, and Iran, requesting radar systems, aircraft repairs, and missile supplies to bolster its defenses. Maduro justifies these measures as necessary and has deployed warships, surveillance drones, and over 15,000 troops along Venezuela’s Caribbean coast and its border with Colombia. He has even called on civilian militias to enlist and train as part of a national defense posture, declaring, “In the face of this maximum military pressure, we have declared maximum preparedness for the defense of Venezuela.” Maduro also added that this was in response to the “eight military ships with 1,200 missiles and a submarine targeting Venezuela.” His Foreign Minister, Yván Gil, brought the matter to international forums, telling the United Nations that the U.S. deployment is “an illegal and completely immoral military threat hanging over our heads.” Caracas is thus positioning itself as being under siege by U.S. power, shifting the narrative away from drug trafficking and toward foreign aggression. He added that, according to UN data, only about 5% of cocaine exports allegedly pass via Venezuela, calling the U.S. narrative a “false narrative” aimed at regional destabilization. 

Image 3- Members of the Venezuelan army in a protest near UN headquarters in Caracas

International Reaction and Regional dilemma  

From the United Nations to Russia, these tensions have prompted a wide range of responses. The United Nations has repeatedly urged restraint by both the U.S. and Venezuela, warning that the military build-up and strikes risk regional peace and stability. For example, the UN noted that U.S. military deployments began in August 2025 and said any measure to counter trafficking must respect international law. In addition, at a UN Security Council meeting, multiple member states voiced concern; even some U.S. allies, such as France, Denmark, and Greece, joined the call for de-escalation and dialogue with Venezuela. Beyond the UN, both Russia and China have strongly condemned the U.S. military actions near Venezuela, calling them an “excessive use of force” and a violation of international law while reaffirming support for Venezuela’s sovereignty. Both countries maintain strategic energy and military ties with Venezuela, seeing the country as an important ally in the geopolitical chess of the region. Other reactions have come from the Caribbean states caught between support for U.S. anti-drug efforts and concern about militarization near their region. For example, Trinidad and Tobago’s Prime Minister aligned with U.S. security rhetoric, which drew both domestic support and regional unease. Brazil, for its part, is attempting a delicate balancing act: on one hand, it criticizes Venezuela’s democratic shortcomings (especially regarding elections and human rights), while on the other, it opposes external military intervention—such as by the U.S.—emphasizing sovereignty and the potential destabilization of the region. 

To sum up, the U.S.–Venezuela confrontation in 2025 has evolved from economic and diplomatic pressures into a much more confrontational and militarised phase. While the United States frames its actions as part of a fight against narco-trafficking and terrorism, Venezuela regards them as imperialistic and aimed at toppling the regime. With legal, military and diplomatic stakes rising, the risk of miscalculation or escalation is significant. All now turn to South America, a continent that has not seen an interstate military conflict since the 1990s, as it faces the alarming prospect of becoming the next front in this war-torn world. 

Sources:

 

Guilherme Mendonça  

Writer

Risk Repriced: How Political Instability Reshapes Market Confidence and Sovereign Costs 

Posted on by Leave a comment
Reading time: 8 minutes

When Markets Look At Politics 

We are used to thinking of financial markets as driven only by economic principles such as inflation, interest rate expectations, and growth forecasts. In this context, politics is background noise: unpredictable, difficult to quantify, and irrelevant to asset pricing. Yet this perception increasingly misrepresents reality. 

Political developments have become central to how markets interpret risk, reprice assets, and allocate capital.  

Nowadays, headlines from governments regularly trigger revaluations. Political uncertainty is growingly emerging as a source of volatility and a key determinant of sovereign borrowing costs. Every new cabinet announcement, legislative halt or budget negotiation is a signal investors have to price, quickly and with little margin for error.  

The uncertainty about future government actions may have a dual effect on market prices. In rare cases, it may represent policy flexibility against shocks. But in the majority of cases, it may actually reflect growing doubts about institutional resilience and future fiscal tracks. 

The market impact is clear: as stock prices respond to political news, political uncertainty leads to higher equity risk premium, increased asset correlation and consequently lower diversification benefits. 

To better understand how political turmoil can flow into financial markets, we can have a look at the most recent case: France. 

The French Distress 

In October 2025, France dived into a serious political turbulence after the resignation of Prime Minister Sébastien Lecornu just one day after announcing his cabinet. It’s the collapse of the fifth prime minister in just two years, a statistic that points out not just instability but a deeper fracture in the French political system. 

Public surveys reveal despair, pessimism and distrust as the prevailing feelings in French citizens. Worrying symptoms representing the profound current democratic crisis, not even two years ahead of the next presidential election.  

Financial markets, never known for patience but for how quickly they react, are clearly reflecting investors’ sentiment. Not surprisingly, French equity indices dropped, and bond markets did not do differently. For instance, yields on the 10-year French government bonds skyrocketed by 7-8 basis points, reaching around 3.58%.  The spread between French and German bond yields broadens as investors demand a premium for holding what they see as riskier sovereign debt.  

Figure 1: The yield gap widened sharply amid French political turmoil, reflecting rising investor risk premia on French debt. 
Source: LSEG via Reuters. 

The reason for this reaction? The answer is not that straightforward. No single event triggers the repricing by itself, but the clear loss of confidence in France’s fiscal policies plays an unequivocal role. The situation in France is getting complicated, both politically and economically.  

The general feeling speaks loud: France looks unable to find its way out of this malaise.  

Shifting Benchmarks 

Historically, France was perceived as relatively safe within the Euro area bond markets. Italian bonds, instead, have been telling a different story so far. Yet, trends are changing.  

Figure 2: French (red) and Italian (green) 10-year government bond yields nearly converged in late 2025, reflecting France’s political turmoil (rising yields) versus relative stability in Italy (falling yields). Source: LSEG via Reuters. 

As French borrowing costs have risen, Italian yields have followed the opposite direction. This shows how perceptions around France, once considered a core market, and Italy, long seen as one of the weakest ones instead, have radically changed. Investors are concerned that France will not be able to improve its fiscal position due to its political instability, thus pushing up its bond yields. Different story for Italy, where relative political stability and downward debt forecast have caused its bond yields to decrease.  

But be careful. For some, the narrowing of the French-Italian bond spread has more to do with French fiscal and political distress than an improvement in Italy’s market.  

Italy has been afflicted by chronic problems that will take a long time to fix. We are still talking about the euro zone’s second-largest debt as a percentage of GDP after Greece, with a growth of the economy being obstructed by a concerning falling population and low female employment.  

Still, the convergence of French and Italian bond yields serves as a striking illustration of the implications of political stability and credible budgeting on investors’ confidence.  

Indeed, global investors nowadays look at governance quality in advanced economies pretty much as economic principles to adjust their required returns. 

Impact On Growth And Market Confidence 

Beyond market volatility, political instability carries important long-term economic costs. Empirical research on advanced economies has demonstrated that an uncertain politics can cause delayed investment decisions, hard policy execution, and undermined growth prospects. In fewer words, high levels of political instability can overall cause worse economic output. 

The reasons are pretty intuitive: when governments are fragile or policy direction is unclear, businesses and consumers lose confidence. Private sectors struggle to create expectations, while public institutions turn less effective in providing structural reforms.  

But as fragmented governments are not able to enact reform, public finances deteriorate. In France, the continuous change in leadership has paralysed the adoption of a new fiscal regime, delaying important decisions on expenditure and taxation. This creates a dangerous loop: as fiscal negligence decreases investor confidence, sovereign borrowing costs increase, which displace public spending, which in turn further constrains the ability to enact future reforms.  

France, for instance, has gone through five prime ministers in just two years, its national debt exceeding €3 trillion, and it seems unable to create a credible path towards fiscal balance.  

Figure 3: France holds the third-highest debt burden in the EU, after Greece and Italy, exceeding 110% of GDP. 
Source: Eurostat.

Globally, the political instability of an advanced economy as France can have both negative and positive spillover effects on other regions as well. On one hand, investors may require higher risk premiums also from other countries perceived as politically vulnerable. On the other hand, such instability may cause a flight-to-quality flows, as capital would flow towards safer bonds such as Germany Bunds or U.S. Treasuries.   

However, the coincident fiscal crises in multiple large economies, might result in a broader reallocation of global capital away from equities and emerging markets, thus potentially threatening global growth. 

Institutions such as the IMF and OECD have pointed out how political stability and consistent fiscal policies are not only priorities at the domestic level, but also the foundations of international market confidence and macroeconomic resilience. 

Conclusion 

What France is going through right now is not just a domestic drama. We are using this case as an understanding of what can be the costs of institutional fragility in a period of high debt and fiscal uncertainty. When governments and their reforms falter, consequences can be urgent: higher borrowing costs, downgraded credit ratings, eroded currencies, and constrained growth.  

If investors would once see political risk as background noise, now they price it in their models and we need to discuss it. The bond market has become a criterion of credibility, which rewards discipline and punishes obstructions.  

The message to policymakers is clear: good governance is capital. Stability, transparency, and consistency are no more mere abstract democratic values, but economic assets bringing yield. We are still in a post-pandemic context with high interest rates and insecurities, and policy incoherence is no longer tolerated. 

Preserving market trust is vital. Governments must now handle both budgets and expectations. Credibility can be the cheapest form of stimulus for those countries facing high debt and structural change. And as France is showing, once lost, it becomes the most expensive asset to restore. 

Sources: Reuters; Euronews; Financial Times; Fitch Ratings; Eurostat; LSEG via Reuters; IMF; OECD; ECB; Political Uncertainty and Risk Premia, by Lubos Pastor & Pietro Veronesi; European Journal of Political Economy; Political Instability and Economic Growth: Causation and Transmission, by Maximilian W. Dirks & Torsten Schmidt.

Rebecca Fratello 

Writer

78 RPM: The Record That Revolutionized Music Before Vinyl Even Existed

Posted on by Leave a comment
Reading time: 8 minutes

Before 33s, before 45s, and long before Spotify playlists, music moved at a speed most people today have never experienced: 78 revolutions per minute. These shellac discs weren’t just early records — they were time machines, cultural capsules, and experiments in sound. Place a needle on one, and you’re instantly connected to a world over a century old: jazz spilling out of a New Orleans club, blues echoing from a Mississippi porch, classical orchestras captured in studios that smelled of wood, varnish, and ambition. 

Most music listeners today assume vinyl starts at 33 or 45 RPM. Few realize that for decades, 78s were the format that defined recorded music, shaping how songs were written, performed, and even how we perceive rhythm and melody. Though they were eventually replaced by longer-playing, more convenient formats, 78s left a legacy that still pulses in collectors’ crates, DJs’ loops, and archival vaults. 

The Speed That Defined an Era 

The story of 78 RPM begins with engineering necessity. In the early 20th century, phonographs were mechanical marvels, and shellac discs became their natural companion. Heavier and more brittle than modern vinyl, these discs required a rotational speed that balanced mechanical stability with audio fidelity. 78 revolutions per minute emerged as the practical standard. 

In truth, “78” wasn’t always precise. Early records spun anywhere between 70 and 90 RPM depending on the manufacturer or motor. It took time, industrial consensus, and international standardization to settle on 78 as the global norm. 

The speed shaped more than just playback — it influenced composition. With only three to five minutes per side, musicians had to convey emotion, narrative, and musical complexity within tight temporal confines. Jazz improvisations were sharpened, blues storytelling distilled, and early pop songs meticulously structured. In a sense, the 78 RPM record didn’t merely capture music — it taught music how to exist. 

Shellac, Sound, and the Magic of Imperfection 

Vinyl enthusiasts often speak of warmth, but 78s possess a different kind of sonic magic. Shellac, the brittle resin used in these discs, produces a crisp, raw sound rich with harmonic textures and subtle distortions. Every pop, click, and crackle is more than noise — it is character, history, and memory embedded in grooves. 

Under a microscope, a 78’s groove twists like a miniature landscape, encoding vibrations that a needle transforms into audible emotion. Unlike modern vinyl, which strives for uniformity, shellac records bear the fingerprint of the craftsman, the whims of the pressing plant, and even minor environmental changes like temperature and humidity. Playing a 78 is hearing music through the lens of its creation. 

Digital reproductions often flatten this experience. Even high-quality vinyl reissues cannot replicate the unpredictable textures, the tiny inconsistencies, and the tactile intimacy of a shellac pressing. A 78 is more than a recording — it is a mechanical performance frozen in time, waiting for a needle to breathe it back to life. 

Cultural Pulse: 78s Around the World 

78 RPM records were not only technological achievements — they were vehicles of cultural exchange. Jazz leaped from New Orleans to Paris. Blues traveled from the Mississippi Delta to London parlors. Folk songs crossed oceans and continents. 

The format’s limitations — brevity, fragility, and speed — shaped the music itself. Artists learned to tell stories quickly, to craft hooks that lingered after mere minutes. Many songs we consider timeless were written to fit the mechanical boundaries of a machine. Without 78s, the architecture of modern pop, jazz, and blues might be fundamentally different. 

Collectors and DJs today prize these discs for rarity and texture. Test pressings and private editions, often never reissued, offer glimpses of performances long forgotten. Modern musicians and experimental sound artists sample 78s for loops, textures, and crackles that are impossible to generate digitally. In these grooves, the past meets the present in ways that are both sonically rich and culturally profound. 

Revival and Preservation 

Despite their decline after the mid-20th century, 78s have experienced a quiet renaissance. Archivists, collectors, and experimental musicians recognize them not as obsolete relics, but as living artifacts. 

Audiophiles chase the shellac’s signature sound. DJs and sound designers exploit the harmonic richness and crackle for texture. Archivists study stylus sizes, playback speeds, and groove geometries to digitize recordings with scientific precision, preserving sonic history with astonishing accuracy. 

Playing a 78 today is almost ritualistic. Each disc demands careful handling, meticulous cleaning, and precise playback speed. Minor deviations in pressure or RPM can alter pitch, tone, and timbre. In a digital age of effortless streaming, the 78 reminds us that presence, patience, and touch are part of the musical experience. 

Hidden Stories in Dead Wax 

Beyond the music, 78s carry secrets in the dead wax — the area near the label. Engineers and pressing plants etched matrix numbers, signatures, or cryptic messages, often unnoticed by casual listeners. These micro-details transform each disc into a narrative object, a conversation across decades. 

Listening to a 78 becomes a multi-layered experience: the music itself, the physical artifact, the hidden inscriptions, and the echo of human hands that shaped it all. It is auditory archaeology, where every crackle and pop carries historical context. 

Why 78s Still Matter 

78 RPM records are more than nostalgia — they are lessons in creativity under constraint, artifacts of global culture, and experiments in the interplay of technology and artistry. They challenge modern musicians and listeners to remember that limitations can foster genius, that fragility can convey intimacy, and that the tactile, mechanical world still has a place in the age of digital perfection. 

Holding a 78 is an encounter with history, science, and art all at once. The grooves spin stories of a world that is gone but echoes in every note. In that fragile, spinning disc, music is alive in a way that no stream, download, or even modern vinyl pressing can replicate. 

Conclusion: Spinning Time 

So, the next time you see a 78, slow down. Place the needle carefully. Listen not just to the notes, but to the echoes of time: the hum of early engineering, the resonance of human hands, the fleeting perfection of a performance captured in a fragile shellac disc. 78 RPM may have been replaced by more convenient formats, but its spirit endures — crackling, raw, and utterly alive. 

To play a 78 is not just to hear music. It is to spin history, touch culture, and feel the heartbeat of an era that still pulses beneath the grooves. 

Sources: This article was written based on the author’s personal knowledge and passion for vinyl records, drawing from years of independent learning and experience, rather than specific external sources.

Teresa Catita

Editor and Writer

The Challenge of Renewables in the Energy Market 

Posted on by Leave a comment
Reading time: 8 minutes

Last month, the entire Iberian Peninsula experienced a surreal moment: a day without electricity, cut off from the rest of the world. Videos of the blackout quickly made the rounds online—many lighthearted and humorous—showing people taking to the streets, enjoying the unexpected break from technology, and drinking beers before the refrigerators got warm. 

But the event also sparked widespread speculation about its cause, which still remains uncertain. Among the many theories—though unconfirmed—one pointed to a largely overlooked issue: not the energy transition itself, but a specific and often neglected aspect of it—the non-dispatchability of renewable energy sources, and the challenges this creates for the entire energy market. 

Renewables and energy price volatility 

Renewable energy sources offer more than just an environmentally friendly alternative to fossil fuels. They also have the potential to enhance price stability in the electricity market. While fossil fuels are exposed to the volatility of international markets—often affected by geopolitical tensions, conflicts, or supply disruptions (such as the OPEC oil crises or the recent cuts in Russian gas exports)—renewables are locally produced and less susceptible to these external shocks. 

By diversifying the energy mix and reducing reliance on any single energy source, renewables help lower wholesale electricity prices, as shown by Cevik and Ninomiya (2023). But the benefits go beyond price levels: the increasing share of renewables in electricity production also reduces overall price volatility. In particular, it limits the extent to which spikes in fossil fuel prices—like those caused by sudden shortages or political tensions—can affect the broader energy market. This makes energy systems not only greener, but also more resilient and economically stable (Forrest and MacGill, 2013). 

The Role of Wind and Solar in Price Volatility 

Not all renewable energy sources are equal when it comes to price stability. It’s important to distinguish between dispatchable renewables—those whose output can be controlled, like hydroelectric power—and non-dispatchable or intermittent sources, such as wind and solar. To illustrate this, imagine a hydroelectric plant versus a wind farm. In a hydro plant, operators can regulate electricity production by controlling water flow. While it’s not completely immune to weather patterns, its output is largely predictable and controllable. 

Wind and solar energy, on the other hand, depend on weather conditions that are neither constant nor controllable. While forecasting technologies have improved, operators still cannot control when the wind blows or the sun shines. This unpredictability introduces greater volatility into the electricity market. 

Mohan et al. (2020) describe a phenomenon known as the “volatility cliff.” As the share of intermittent renewables increases, price volatility tends to rise. But beyond a certain threshold—what they call the cliff—this volatility can accelerate dramatically, leading to severe price swings and instability in electricity markets. This highlights the need to consider not just how much renewable energy we produce, but also what types and how they are integrated into the energy system. 

Figure 1 – Germsolar Thermasolar Plant in Andalusia, source Westend61 

Some Data on Spain and Portugal 

Looking at the Iberian Peninsula, Spain and Portugal form what is often referred to as an “energy island,” with relatively limited electrical interconnection to the rest of Europe. In 2024, wind and solar accounted for nearly 50% of the electricity mix in both countries, while renewables overall exceeded 60%. This is undoubtedly a significant achievement and a source of pride for the Iberian nations. However, such a high share of intermittent renewables also brings challenges. 

The first issue, as mentioned earlier, is volatility. Just two days after the well-known blackout, on April 30th, Spain’s electricity price jumped from €5.79/MWh to €31.83/MWh in a single day. Although Spanish prices have experienced sharper fluctuations in absolute terms in the past, this still represents an increase of over 450%—a reminder of the market’s sensitivity. 

The second issue is the mismatch between energy supply and demand, a challenge that is becoming more frequent with the growth of intermittent renewables. In 2024, Spain recorded 247 hours of negative electricity prices; Portugal, 196. Negative prices mean that producers are willing to pay to offload excess electricity they cannot store or use. As the share of wind and solar continues to rise, such episodes are likely to become more common. 

While this may seem like good news for consumers, in reality, it poses a serious problem for energy producers and investors. Uncertainty in revenues and the risk of selling electricity at a loss can deter investments in new renewable projects, paradoxically slowing down the green transition and the path toward decarbonization. 

Figure 2 – Energy Mix of Spain and Portugal, elaboration from Ember 

The Challenges 

These reflections lead us to consider the broader challenges that renewable energy brings to the energy sector—challenges that call for systemic reforms and improvements. 

First and foremost, as the share of renewables in the energy mix increases, it is crucial to simultaneously invest in energy storage technologies and grid-scale storage systems. These systems can help absorb excess electricity during periods of high renewable production and release it when production drops, directly addressing the problem of intermittency. However, such infrastructure is still expensive and complex to implement on a large scale. 

Second, a more integrated and interconnected European electricity grid is necessary. Enhanced cross-border interconnections would allow surplus energy from one country to be exported to another where it is needed, making the overall system more efficient, resilient, and less prone to localized imbalances. 

Third, we need to rethink and update the regulation of electricity market bidding systems. Current rules were designed for a fossil-fuel-dominated system and are increasingly unfit for a market where the marginal cost of renewable generation is often close to zero. Without reform, the current pricing mechanisms could undermine the profitability and long-term sustainability of renewable investments. 

The Delicate Balance of Decarbonization 

The challenge of decarbonization is a delicate one. A massive investment in renewable energy is not, in itself, a silver bullet—and, paradoxically, it can even become counterproductive if not accompanied by a broader reform of the entire energy system. A successful energy transition is not just about installing more solar panels or wind turbines; it’s about designing a system in which these technologies can function efficiently, sustainably, and reliably over time. 

The success of any well-intentioned initiative depends not only on its technical merits but also on its ability to remain attractive and sustainable over time. For renewable energy to remain appealing—not only to consumers but also to investors—it must offer price reductions, price stability, and long-term reliability. Maintaining this attractiveness requires thoughtful policy design, targeted incentives, and a regulatory framework that keeps pace with technological evolution and market dynamics. 

Sources: Aurora Energy Research, El Economista, Ember, Financial Times, …

Veronica Guerra 

Editor and Writer

US Aid Cuts Jeopardize Global HIV Prevention Efforts

Posted on by Leave a comment
Reading time: 3 minutes

In early 2025, the Trump administration implemented significant cuts to U.S. funding for HIV prevention programs, both domestically and internationally. These reductions have raised alarms among global health experts, who warn of potential setbacks in the fight against HIV/AIDS.

Impact on Global HIV Prevention

The U.S. President’s Emergency Plan for AIDS Relief (PEPFAR) has been a cornerstone in the global response to HIV/AIDS, providing two-thirds of international financing for HIV prevention in low- and middle-income countries. Since its inception in 2003, PEPFAR has saved over 26 million lives by investing in critical HIV prevention, treatment, care, and support programs across 55 countries.

However, a 90-day pause in U.S. foreign development assistance, initiated on January 20, 2025, disrupted these efforts. Although a waiver was issued to allow the continuation of life-saving humanitarian assistance, including HIV treatment, the pause created confusion and disrupted services at the community level. In Ethiopia, for instance, 5,000 public health worker contracts and 10,000 data clerk positions, crucial for HIV program implementation, were terminated.

The Global HIV Prevention Coalition warns that if U.S. funding is not restored, there could be an additional 8.7 million new HIV infections among adults, 350,000 among children, 6.3 million AIDS-related deaths, and 3.4 million additional AIDS orphans by the end of 2029.

Domestic Consequences

Domestically, the Centers for Disease Control and Prevention (CDC) has faced significant budget cuts, particularly in its Division of HIV Prevention. An analysis by amfAR indicates that increased funding to this division was associated with a nearly 20% reduction in new HIV infections across the U.S. between 2010 and 2022.

The proposed cuts threaten to reverse this progress. The CDC’s HIV prevention funding, which totaled about $1 billion in FY2024, supports state and local jurisdictions in conducting health surveillance and targeting communities effectively. Reductions in this funding could lead to increased HIV incidence, with negative implications for individual well-being, public health, and healthcare costs.

Organizational Restructuring and Layoffs

The administration’s broader restructuring efforts have also impacted HIV prevention. The CDC is undergoing a major reorganization, with several divisions, including those focused on HIV, set to become part of a new entity, the Administration for a Healthy America (AHA). This move follows significant downsizing, with the CDC workforce reduced by 3,500 to 4,000 through early retirements and layoffs.

Additionally, the Presidential Advisory Council on HIV/AIDS (PACHA) is being overhauled, with all members removed and no timeline provided for appointing new ones. These changes have raised concerns about the continuity and effectiveness of U.S. HIV policy.

Global Health Community’s Response

The global health community has expressed deep concern over these developments. UNAIDS Deputy Executive Director Christine Stegling emphasized that while treatment continuation is vital, prevention efforts are equally crucial to controlling the epidemic. She highlighted that the funding pause has led to the closure of many drop-in health centers and the termination of outreach workers’ contracts, depriving vulnerable groups of support.

The World Health Organization (WHO) also warned that prolonged funding cuts could reverse decades of progress, potentially taking the world back to the 1980s and 1990s when millions died of HIV each year globally.

Conclusion

The U.S. has played a pivotal role in global HIV prevention efforts. The recent funding cuts and organizational changes threaten to undermine years of progress, both domestically and internationally. Restoring and maintaining robust support for HIV prevention is essential to prevent a resurgence of the epidemic and to continue the global fight against HIV/AIDS.

Sources

https://www.reuters.com/business/healthcare-pharmaceuticals/trump-administration-plans-remove-all-members-hiv-advisory-council-2025-04-09

https://www.them.us/story/pepfar-hiv-aids-africa-marco-rubio-donald-trump

https://apnews.com/article/cdc-hiv-administration-for-a-healthy-america-8309109b91e6e4025878f335ea15dc96

https://www.ungeneva.org/en/news-media/news/2025/01/102724/unaids-welcomes-us-decision-keep-funding-life-saving-hiv-treatment

Afonso Freitas

Research Editor &Writer

The Economics of Mindfulness: Why Wellbeing Is a Business Case

Posted on by Leave a comment

Reading Time: 5 minutes

Reframing Wellbeing in the Modern Workplace 

As the nature of work becomes increasingly complex, digital, and fast-paced, employee wellbeing has emerged as a critical driver of organizational success. Far from being a peripheral HR topic, psychological wellbeing directly impacts core business outcomes – from productivity and innovation to turnover and engagement. The notion that investing in wellbeing is costly or optional is increasingly contradicted by empirical evidence showing that it is, in fact, a smart economic decision. 

Workplaces where employees report higher levels of subjective wellbeing – particularly job satisfaction – demonstrate significantly better performance outcomes, including labor productivity, output quality, and profitability. These relationships persist even when controlling for other HR policies, highlighting wellbeing as a distinct and measurable source of competitive advantage. 

Moving Beyond Perks: Systemic Approaches to Wellbeing 

Workplace wellness initiatives often focus on individual-level solutions like meditation apps, fitness memberships, or lunchtime yoga. While these efforts may reduce short-term stress, they fail to address the structural conditions that give rise to chronic strain, disengagement, and mental health risks. 

Interventions are more effective at the organizational or group level. Changes to work schedules, job roles, or team dynamics – especially those that increase employees’ control and participation – have demonstrated a broader and more sustainable impact on wellbeing. Employees who have autonomy in their tasks and a voice in how work is structured consistently report higher levels of job satisfaction, lower stress, and improved work–life balance. These outcomes are amplified in environments that support open communication and shared decision-making. 

Such systemic approaches suggest that wellbeing is not the result of individual resilience, but of healthy, empowering work environments that are intentionally designed. 

Technology and the New Frontier of Workplace Wellbeing 

In response to hybrid and remote work environments, organizations are increasingly turning to digital tools to support mental health and wellbeing. From immersive virtual reality (VR) environments that simulate calming nature scenes to AI-based tools that monitor emotional states via facial expressions, biometric data, or tone of voice, technology now plays a growing role in the design of workplace wellbeing strategies. 

Virtual reality programs have shown promising results in reducing stress and promoting relaxation in various workplace settings. Even short VR interventions with nature-based visuals or guided breathing exercises have been associated with measurable improvements in employee wellbeing. These technologies can serve as accessible and time-efficient micro-breaks, particularly in demanding or high-pressure environments. 

At the same time, the use of emotional AI raises critical ethical concerns. While emotion-recognition systems promise to enhance management decisions and detect early signs of burnout, they also risk turning the workplace into a zone of surveillance. Monitoring affective states without transparent consent or context can undermine psychological safety rather than support it. If technologies are used to control rather than empower employees, they may backfire – reducing trust and increasing stress. 

The key lies in intentional design and ethical implementation. When used responsibly and transparently, digital wellbeing tools can extend access to support and complement systemic approaches to workplace culture. However, technology must remain a tool – not a substitute – for genuine human connection, autonomy, and care. 

Wellbeing as a Catalyst for Innovation 

Wellbeing not only prevents burnout – it enables innovation. Employees who perceive their work as meaningful and values-aligned are more likely to engage in creative thinking, share new ideas, and take initiative. When employees experience purpose and psychological safety, their engagement spills over into behaviors that benefit the organization as a whole. 

Studies indicate that this effect is strengthened when organizational values align with employees’ own spiritual or ethical beliefs. A sense of authenticity and shared purpose in the workplace fosters emotional connection, which in turn drives proactive contributions and innovative work behavior. 

Resilience as a Buffer to Emotional Strain 

In emotionally intense or high-stakes sectors, such as healthcare, workplace resilience plays a critical role in protecting psychological wellbeing. Employees working under high stress, such as nurses in mental health services, report substantially better wellbeing when they experience resilience-supportive conditions like strong team relationships, opportunities for growth, and autonomy in clinical decisions. Higher resilience levels are associated with lower levels of anxiety, depression, and mental distress – even when job demands remain high. 

These findings affirm multidimensional models of wellbeing, which emphasize not just happiness or the absence of illness, but the capacity to grow, feel connected, and exercise agency in the face of adversity. 

From Support Programs to Cultural Shift 

Employee Assistance Programs (EAPs) remain widely used and often valued as accessible tools for short-term counselling and support. However, their long-term effectiveness depends on integration with broader workplace strategies. EAPs that operate in isolation, without addressing organizational culture or workload issues, may offer limited benefits. When combined with systemic measures – such as leadership development, trauma-informed management, or inclusive policy changes – EAPs can serve as effective pillars within a comprehensive wellbeing strategy. 

Designing for Sustainable Human Performance 

The research is clear: organizations that invest in structural wellbeing – not just individual coping – unlock higher engagement, greater innovation, and stronger business outcomes. Mindfulness, autonomy, psychological safety, and meaningful work are not luxury goods; they are essential design principles for the future of work. 

The economics of mindfulness lies in creating environments where people can thrive – not just survive. In doing so, companies don’t just promote wellbeing – they build better, more adaptive organizations for the long term. 

Sources

Bryson, A., Forth, J., & Stokes, L. (2017). Does employees’ subjective well-being affect workplace performance? Human Relations, 70(8), 1017–1037. 

Delgado, C., Roche, M., Fethney, J., & Foster, K. (2021). Mental health nurses’ psychological well-being, mental distress, and workplace resilience. International Journal of Mental Health Nursing, 30, 1234–1247. 

Fox, K. E., Johnson, S. T., Berkman, L. F., Sianoja, M., Soh, Y., Kubzansky, L. D., & Kelly, E. L. (2022). Organisational- and group-level workplace interventions and their effect on multiple domains of worker well-being: A systematic review.Work & Stress, 36(1), 30–59. 

Kirk, A. K., & Brown, D. F. (2003). Employee assistance programs: A review of the management of stress and wellbeing through workplace counselling and consulting. Australian Psychologist, 38(2), 138–143. 

Riches, S., Taylor, L., Jeyarajaguru, P., Veling, W., & Valmaggia, L. (2024). Virtual reality and immersive technologies to promote workplace wellbeing: A systematic review. Journal of Mental Health, 33(2), 253–273. https://doi.org/10.1080/09638237.2023.2182428 

Mantello, P., & Ho, M. T. (2024). Emotional AI and the future of wellbeing in the post-pandemic workplace. AI & Society, 39, 1883–1889. https://doi.org/10.1007/s00146-023-01639-8 

Salem, N. H., Ishaq, M. I., Yaqoob, S., Raza, A., & Zia, H. (2022). Employee engagement, innovative work behaviour, and employee wellbeing: Do workplace spirituality and individual spirituality matter? Business Ethics, Environment & Responsibility, 32(3), 657–669.

Mara Blanz

Research Editor & Editor

Friendship and Social Capital

Posted on by Leave a comment

Reading Time: 5 minutes

Human Features as Capital? A brief history 

    In 1776, Adam Smith wrote, in An inquiry into the nature and causes of the wealth of nations, that “The acquisition of talents during education, study, or apprenticeship, costs a real expense, which is capital in a person. Those talents are part of his fortune and likewise that of society”. This idea might seem quite intuitive for an inhabitant of the world in the 21st century, and even the greenest economist would associate these words with the foundation of Human Capital.  

    However, until the last century, this concept was actually quite unpopular. As Theodore Shultz points out in Investment in Human Capital (1961), investment in human is not devoid of moral and philosophical issues. His words, “It seems to reduce man once again to a mere material component, to something akin to property”, are especially evocative, considering the 13th Amendment to U.S. constitution, which abolished slavery, had entered into force not even one century before.  

    With the advent of statistics and nation-level measurements in the period of WW2, researchers started to observe that increases in national output could not be fully explained by increases in physical capital. It became possible to link the accumulation of skills, capabilities and knowledge humans with these unexplained variations in growth.  

    Today, the World Bank defines Human Capital as “The knowledge, skills, and health that people invest in and accumulate throughout their lives, enabling them to realize their potential as productive members of society.” 

    But what aspects of the multifaceted human being are included in this definition? Reading further, the WB specifies: “Investing in people through nutrition, health care, quality education, jobs and skills helps develop human capital, and this is key to ending extreme poverty and creating more inclusive societies.”  

    Human Relationships as Capital  

      After accepting the “capitalization” of individual’s traits, a more recent step has been recognizing that humans are social animals, and therefore, their relationships are a fortune too. The concept of Social Capital generally refers to social relationships between people that have productive outcomes. In a nutshell, Portes (1998) explains it as “whereas economic capital is in people’s bank accounts and human capital is inside their heads, social capital inheres in the structure of their relationships”.  

      Social capital is for sure a peculiar form of capital: it does not reside in any individual entity, but it’s embedded in society, it lies in relationships, it’s rooted in networks. However, just like any other type of capital, it requires investment and maintenance to yield returns. 

      If defining the determinants of human capital is not an obvious task, defining those of social capital is even more challenging. The Institute for Social Capital indicates a range of dimensions including trust, togetherness, volunteerism, generalized norms, everyday sociability, and neighborhood connections.

      In essence, applying this theory, helping an old lady cross the street, having a neighbor who looks after your child when you’re sick, or trusting the police—all of these actions contribute to a web of reciprocity that will eventually benefit either the individual or the broader society. 

      Just as human capital was initially controversial, social capital was—and perhaps still is—a contested concept. For sure, its reputation increased after the publication of Making Democracy Work: Civic Traditions in Modern Italy by the political scientist Robert Putnam. Focusing on Italian regional governments, he found how government performance was strictly linked to traditions of civic engagement.  

      Friendship as Social Capital 

        Within this broader framework, friendship emerges as a particularly powerful and personal expression of social capital — one that not only supports emotional well-being but also shapes long-term economic and social outcomes. 

        If friendship is part of human capital, then it somehow has impacts that extend beyond the individual to society at large. And it might be more powerful than one can think. In a 2022 study on networks and friendships, Raj Chetty’s and colleagues found that education, racial segregation, education, and family structure were not as important as cross-class connections in determining upward social-mobility. In fact, among all observed components of social capital, friendship across socioeconomic lines was the only one driving mobility. Social cohesion and civic engagement, by contrast, did not seem to play a role.  

        The relationship between friends also shapes the social tissue of communities. In Bowling Alone, Putnam describes how American society, one strong and civic engaged, is now degrading through the whimsical metaphor of bowling. The evocation of many lonely bowlers, with a nostalgic comparison to bowling leagues playing together, reflects the individualist derive of society.  From this point of view, friendship and social interactions are a sort of public good, and not just a private comfort. The weaking of these relationships has consequences that go beyond individual loneliness, but undermine the health of society. 

        Relationships and Policy Makers 

          Friendships, connections, networks, and trust — they all contribute to both individual well-being and a healthier, more cohesive society. Yet we rarely hear politicians or policymakers address these topics directly. In an era where society is becoming increasingly individualistic, the case for investing in social capital becomes even more urgent. Urban planning, for instance, can be intentionally designed to promote cross-class connections and neighborhood friendships. The creation of public and recreational spaces that facilitate meeting and incentive people to socialize, promotion of sports and community strengthening activities can be impactful policies for boosting social capital. Reinvesting in friendships and ways of making them happen it’s not just about enhancing well-being, it’s a necessary step to rebuild a strong social fabric, that can sometimes be as important as and educated or healthy community. 

          Sources:

          Chetty, R., (2022). Social capital I: measurement and associations with economic mobility https://www.nature.com/articles/s41586-022-04996-4 

          Goldin, C. (2016). Human Capital. https://scholar.harvard.edu/files/goldin/files/goldin_human_capital.pdf

          Institute for Social Capital. https://www.socialcapitalresearch.com/literature/evolution/

          Putnam, R. D., Leonardi, R., & Nonetti, R. Y. (1993). Making Democracy Work: Civic Traditions in Modern Italy. Princeton University Press. https://doi.org/10.2307/j.ctt7s8r7 

          Putnam, R. D., “Bowling Alone: America’s Declining Social Capital” Journal of Democracy, January 1995, pp. 65-78. 

          Schultz, T. W. (1961). Investment in Human Capital. The American Economic Review, 51(1), 1–17. http://www.jstor.org/stable/1818907 

          World Bank: The Human Capital Project https://www.worldbank.org/en/publication/human-capital 

          Veronica Guerra

          Research Editor & Writer